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Posted by arlene

You may think this next section is somewhat out of place titled “The Internet and the Law”—we’re going to talk about much more than the legalities of international trade. If you are new to international (or even interstate) commerce, you should consult with an attorney before exploiting these new markets. There are some issues you should address with your attorneys, accountants, and company decision makers. The issues range from tariffs to shipping costs, and they represent just the tip of the iceberg.

The World is in your pocket— Don’t be tired of trying

Over the last decades, businesses have shifted more and more of their attention to the global marketplace. Advances in communications and shipping have enabled many businesses to expand farther than they ever dreamed. The World Wide Web has done much to complement this shift. The Web reaches every continent and a rapidly growing list of countries. The Web makes marketing your products in your home state nearly equivalent to marketing your products to the other side of the globe (technologically speaking anyway). But business is much more than marketing technology. Conducting a successful international campaign requires a new understanding of languages, customs, laws, currency, billing, shipping, and warehousing. Translating your on-line catalog into seven different languages is not enough.

The technology of the Web may be nearly universal, but little else in this world is. If you plan on using the Web to expand into new markets, do so with a complete plan that addresses the financial, technological, logistical, and legal issues. And as you probably guessed already, you’ll need to consult a legal expert. Remember that although the Web can certainly help you reach new markets, it does not fully empower you, or entitle you, to reach and support those markets.

Web Marketing Busy with Import and Export

Making your way safely through the labyrinth of import/export laws to reach your new international customers may be more than you can handle. Before you dive in head first, you must decide whether you even want to move into international trade. Nobody says your company has to sell to overseas customers. Maybe you don’t have the resources to address import/export laws. Maybe tariffs and shipping costs will price your product out of its intended market. Maybe foreign markets will simply not be interested in your products.

The first rule to remember about international trade is that customs laws differ from country to country. You won’t be able to establish a single international shipping procedure that works everywhere. When you sell to foreign markets, you must customize your shipping procedure by product, region, and country.

To assist you in the processing, shipping, and delivery of your products overseas, you may want to hire a customs clearing agent in the country where you’ll be doing business. Clearing agents help companies outside the country get their products smoothly through customs (or as smoothly as possible). In most cases, clearing agents also compute tariffs for you, and some will invoice you separately for tariffs, so you can pay them after your product goes through customs.

The paying of tariffs and other taxes is another expense you must take into account when deciding whether to sell to international customers. One tax you can almost count on paying every time is the so-called value- added tax (VAT). This tax is computed as a flat percentage and tacked onto the price of the goods. Although not used in the United States, this tax is very prevalent in Europe and South America. These taxes are designed to increase the prices of your products and make them less attractive to foreign buyers. Make sure you calculate these increases and inform your potential customers through your Web site that the prices they pay will be higher than those paid by domestic customers.

One possible escape clause here is the “minimum price threshold.” If your product is priced below a certain point, most countries won’t charge a VAT. Thus by pricing your products carefully, you can avoid many shipping problems. Once again, each country’s laws are different, so check each threshold price.

If you determine that tariffs and import/export restrictions are not too much of an obstacle, it’s time to develop several business models that detail shipping and warehousing issues. Be sure to think of every detail of your business—things you might take for granted for domestic and local business. For instance, is your packaging and documentation written in the appropriate language and dialect? Can you provide on-site, or even telephone, support to international customers without additional compensation, or should you partner with other companies in the new market that can support your products? (Luckily, you can provide Web-based support for your international markets with very little additional overhead.) To address these issues, you will need much more than a good Web designer (no matter what your Web designer tries to tell you). For your own sake, make sure you have the appropriate expertise from the start.

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