Doing Business Outside The United States

Speaker: William A. Price,

Attorney at Law

www.growthlaw.com

Illinois Exports, 2007-2014• 284 Exporters, of whom 187 were small businesses• $39 Billion in transactions• Top Destinations Netherlands,Kazakhstan,Mexico

Illinois Exporters, Local ExamplesExporter City District Product

Total Disbursements

Total Export Sales Supported

Navistar International Corp

Warrenville 14

Motor Vehicle and Parts Manufacturing and Sales

$360,000,000 $0

JoemChem LLC Elburn 14Chemical Manufacturing and Sales

$22,242 $22,242

Miner Enterprises Inc

Geneva 14

Transportation Equipment Manufacturing and Sales

$2,307,996 $2,307,996

Weiler Engineering Inc.

Elgin 14Machinery Manufacturing and Sales

$2,768,238 $3,193,673

International Sales Options• Sell to or make things for customers that come here,

online or in person• Find an agent or distributor to recruit customers or

international partners• License technologies or products or services to

international partners• Provide international credit, product or service

support, or traveling project people• Set up joint ventures• Own local stores, sales operations, or

manufacturing plants

International Supplier Options• Phone, text chat, or speaker staff from international

call centers for US conversations • China, Korea, and other printers or manufacturers• “Outsourced” services elements for law, medical

transcription, software development• “E-lance” or other freelance services bids and

projects

Friedman: The World Is Flat

HOW CAN YOU FIND THEM?

International Partners or Customers

JUST GOOGLE THEMEveryone Is Online, Now

More Customer Finding Options• Be visible in every directory you can find• Buy Google and international search engine (e.g.

Baidu, in China) ads, adwords (with proper translations, not just Google Translate)

• Advertise in trade journals/sites that have high world market visibility (e.g. Allured Publications, Carol Stream, for personal care products)

• Go on state, federal, or association trade missions (e.g. Alliance of Merger and Acquisitions Germany meeting, October 2013)

More Supplier Finding Options• International network directories (e.g. Hieros

Gamos, for lawyers, or local equivalents for lawyers.com)

• Ask your competitors who they use (e.g. China manufacturer for Kitsune: of Foxes and Fools card game)

• Get referrals from professional association colleagues with international networks (e.g. Mauritius counsel, from a Baker & McKenzie predecessor at the ISBA)

AND WE’RE HERE TO HELPWe’re From The Government

Federal Trade Assistance• International Trade Administration Services:

http://trade.gov/our-services/

• Small Business Administration Export Advice:

http://www.sba.gov/category/navigation-structure/exporting-importing

• US Embassy Based Trade & Commercial Officers

http://export.gov/worldwide_us/index.asp

PAYMENTS AND FINANCEAvoid Red Ink At Light Speed

International Payments• Letters of Credit: Banks guarantee payment after

your or customer payment conditions met (clears customs, passes inspection, accepted by customer, etc..: Available from banks involved in international trade, correspondent banks abroad

• NOT routine Visa/Mastercard: MANY fraudulent transactions

• “Wire Transfers” to your or customer bank accounts are routine, but KNOW YOUR CUSTOMER OR SUPPLIER BEFORE YOU TRUST THEM WITH YOUR ACCOUNT NUMBER

Private Financing Sources• Purchase Order Financing: 75% (at most) available

from the P.O. your customer gives you, 1.5% per month plus factor fees

• Accounts Receivable Financing: 90% availability possible once your invoice is due, same factor fees and percentage

• Your customer’s credit counts, not yours

Growthlaw.com deals with funds with billions of $$ available

Public Financing Sources (Export)• “SBA Express”: Your bank issues, same as SBA

Express (75% of transaction available), short form to apply

• SBA 7(a): Your bank issues, same as domestic 7(a) in fees, rates up to 2% over prime but negotiable

Tip: Get a bank familiar with international trade, not just local retail as your SBA lender, and beware of random reductions in % of deal available on a/r finance

Public Financing II: Export Banks• Export Loans Above SBA Limits: Export-Import Bank

of The United States:

http://www.exim.gov/

• Project Financing: The World Bank

World Bank Credit Guarantees Available

• Political Risk Insurance: OPIC

Overseas Private Investment Corporation

THE STAGES OF A DEALAre We There Yet?

Stage One: Romance• Identify the International Customer/Provider/Partner• Negotiate a Noncompete/Noncircumvent Agreement• Get Or Provide A Fair Market Price Quote

Stage Two: Specifications• International Sales Or Project Contracts: No UCC to

supplement terms agreed by the parties• “Incoterms” like “FOB” (ship to or from where, who

pays freight and customs costs, other import and export taxes)

• Deal elements different for manufacturers representative, or merchant buyer, or local manufacturing, or sale of equipment or services

Stage Three: Arguments• Multiple Shipments Means More Chances To Mess

Up: Identify quality, quantity, currency risks and deal with in agreements (or later, at more cost)

• International Arbitration: 7 years for Caterpillar in Spain, since inherited contract and lack of rules in a merger

• “Guilt Is The Gift That Keeps On Giving”: Relationships matter more than rules or process

• Springing Foreclosures, Credit Guarantees, Risk Insurance, Limited Commitments If No Agreement

TRADE RISKSHow Did THAT Happen?

International Payment Risks• Currency Values Change: Dollar vs. Yen or Renimbi

or Forint Different Values Different Years• Hedge Transactions Can Limit Risks• Repricing Of Deals Annually Or By Shipping Cycle

Can Limit Risks• Be Aware Of Currency Markets As You Negotiate

Terms of Trade

International Shipping• Fast By DHL, And Very Expensive• Slow By Ship: 6 months to a year? But CHEAP• 10 X Difference to ship by Container, By Pallet, or

By SKU: Aggregate Your Shipments• Ports/Regions Can Close: Vary Your Routes And

Providers, Or Have Local Cover

Systems Are “Wonderful”• SAP Initiation For Vietnam Production: Hathaway

lost Christmas• “The Check Is In The Mail”: Kenya and Other

Corrupt Local Post Offices• “Shipment? What Shipment?” Use experienced

freight forwarders and shippers, make sure all paperwork for transfers is complete before you ship: and track all movements

Any Questions?

William A. Price (Bill)

Attorney at Law

www.growthlaw.com

wprice@growthlaw.com

Phone/Fax 1-800-630-4780