homebased_exporters.htm

Finding a niche market in the global economy may be just the right business for a savvy home-based entrepreneur. Thanks to the Internet, anyone, anywhere, can be completely connected to other people around the globe. What's more, even very poor areas like parts of Latin America, Southeast Asia, and Africa have become connected by the advent of the cell phone and other wireless devices. These advances have gone a long way towards overcoming a lack of communication infrastructure.

To maximize profits, the global trader must stay knowledgeable about international economics, especially foreign exchange rates. These can point to markets of opportunity, such as those that now exist (summer 2003) in the European Community. During the first half of 2003, the USD (US Dollar) has fallen over 20% against the EURO.

There are many available sources of foreign exchange (FOREX) information. An easy-to-use site is www.x-rates.com/. There is much more about FOREX in another October MoneyPak article, “Some Uses Of Foreign Exchange."

Currency swings can bring increased profits from more sales to your local company, but if you are really good at global trading, you may want to establish an offshore company to sell your products. This foreign company could then convert the EURO, for example, into USD. Since the EURO will buy more USD outside the U.S., you would have more dollars available overall—extra profit for you.

However, it's a good idea to wait until you know what you’re doing before you open an offshore company. Currency fluctuations never last forever and often change significantly and quickly. You must stay up-to-date with your economic data.

Exporters of consumer goods usually reap the greatest benefits from a declining dollar, and this is exactly the kind of business where you would expect to find a home-based entrepreneur.

Why Home Businesses Can Operate Globally

What chance do you, working from home, have in global trading alongside corporate giants? The U.S. Department of Commerce says large companies generate only about 4% of export sales. Who makes up the other 96%? Small entrepreneurs and start-ups do the job! That’s you.

A major reason for the success of small firms is flexibility and the ability to act quickly. Larger businesses in the U.S. take great pains to continually improve products, strengthen their business organizations, and associate a brand with everything they produce.

According to "Culture Matters," edited by Lawrence Harrison and Samuel Huntington, the Chinese and other East Asian manufacturers have chosen a different strategy that has been quite successful: they simply find out what somebody wants and make it.

Small U.S. exporters are able to identify demand and sell products in a similar way. There are several unique qualities that might make a product desirable to a foreign buyer. One is the simple fact that it was made elsewhere. Another is non-availability of raw materials, while still another is lower production cost. Find a product people want with these features, and you’ve got a winner.

This is just like domestic market research, except you are doing it in the world market. Knowledge of local culture is helpful to know how other people react to a product.

Places to Look for a Global Market Niche

There’s a whole world of countries with whom to trade, but the U.S. Census Bureau lists these among the top 10 U.S. trading partners: Canada, Japan, Mexico, UK, Europe, and China. Here are some Websites to help you find your niche:

Commercial Service, Canada, www.usatrade.gov/Website/ForOffices.nsf/IISKey/
563900FF370EF509852568370080734B
Country Commercial Guides, www.usatrade.gov/website/ccg.nsf/ccghomepage?openform
US Census Bureau, Foreign Trade Division, www.census.gov/foreign-trade/www/index.html
US Commercial Service, The, www.export.gov/comm_svc/
US Department of Commerce, www.commerce.gov/
Don’t Ignore Cultures Different From Your Own

Above we mentioned,China as one of the top 10 U.S. trading partners. It is likely to grow exponentially in the future. Why?

China is a different kind of market. It is huge, with over 1.3 BILLION people. True, many are poor living on farms and widely dispersed, but the farther South and closer to Hong Kong you get, the more urbanized they are. You must know what part of China you are investigating for your market.

Less than 6% of Chinese have Internet access, but that’s almost 57 million users, second highest in the world. Furthermore, there are three times that many cell phone users, about 162 million. The percentages are small but the numbers are overwhelming.

Earlier, we mentioned culture. The East Asian cultures, including China, have developed their commerce using widespread family ties. This happened because, until recently, there was no concept of Western law based on Roman principles. As explained in Culture Matters, there was no one to trust except family.

So, how do you do business with the Chinese? It’s who you know! You must spend time, perhaps years, cultivating an honest trustful relationship. Then you can do business. If you are in a hurry, try to find a Chinese partner or associate who already has established ties.

While some cultural barriers are more time-consuming to overcome than others, all countries have cultural differences that the successful entrepreneur must recognize and satisfy. As with domestic customers, the way you take care of their needs will define your bottom line. Many a dot-com ignored this and disappeared.

Niche Market Ideas and Resources

One export niche market exists with many agricultural and food products. In the U.S., some products can be grown that other countries can’t produce.

Specialties like dried foods, special snack items, and unique processed foods all lend themselves to small exporters. Often the exporters are the farmers themselves, most of whom are very small units.

If this area interests you, your state agricultural service can provide help. An example is Agricultural Utilization Research Institute sponsored by the State of Minnesota (www.auri.org/).

National governments provide resources for small exporters, too. An example is the Canadian Forest Service (www2.nrcan.gc.ca/cfs-scf/Canada_wood/english/view.asp?x=27&mid=101). The report listed here gives some strategic considerations for small, wood-product providers. Niches develop because buyers perceive unique quality, appearance, or end uses for products.

More ideas for finding and developing niches may be found by searching Google at www.google.com/ using the keywords “export niche markets,” along with variations.

Export.Gov (www.tradenet.gov/) is the U.S. Government Export Portal. This site will lead you to sources of leads and export information. Many are free, but some charge various prices. Export.gov can also help with the basics of exporting and market research.

Many other national governments provide these services as well. Search anywhere using the keywords “export trade leads,” and you will find a lot of help for your own small export business.

In the United States, each state has some kind of trade mission assistance to enable exporters of all sizes to participate in foreign trade missions, even if they are unable to personally be a part of the mission. If you are not ready to export, they will help you, as well as advise about legal issues, languages and cultures, Letters of Credit, and all the other basic export requirements. An example of such a resource is the North Carolina Export Ready Program at www.exportnc.com/ready/.

International trade is a substantial way to increase economic activity worldwide. It expands the market for unique goods and services outside of the producer country and thus increases that county’s revenues. For these reasons, most national and local governments are quite willing to help local entrepreneurs.

SOURCES

Harrison, Lawrence E., and Huntington, Samuel P., Editors. Culture Matters. Basic Books, 2002, p. 250.

RESOURCES

China

For help establishing trade relations with Chinese buyers, http://www.business-china.com/

CIA China Fact Book, http://www.cia.gov/cia/publications/factbook/geos/ch.html

China trade assistance from the United States-China Business Council, http://www.uschina.org/

The Information Network for China, http://www.chinaonline.com/

Canada

Canadian Forest Service, www2.nrcan.gc.ca/cfs-scf/Canada_wood/english/view.asp?x=27&mid=101

Commercial Service, Canada, www.usatrade.gov/Website/ForOffices.nsf/IISKey/
563900FF370EF509852568370080734B

Foreign Exchange

Foreign exchange rates, training, and information, www.x-rates.com/

U.S. and Other International Trade Resources

Agricultural Utilization Research Institute sponsored by the state of Minnesota, www.auri.org/

Country Commercial Guides, www.usatrade.gov/website/ccg.nsf/ccghomepage?openform

North Carolina Export Ready Program, www.exportnc.com/ready/

US Census Bureau, Foreign Trade Division, www.census.gov/foreign-trade/www/index.html

US Commercial Service, The, www.export.gov/comm_svc/

US Department of Commerce, www.commerce.gov/

US Government Export Portal, www.tradenet.gov/

Article by Yank Elliott, a home-based entrepreneur and freelance business writer in Belhaven, North Carolina, USA. His Website is www.furriwhalesworld.com. He is currently a staff writer for IAHBE. Contact Yank at globalbiz@furriwhalesworld.com.