Why Is Export Important – Meaning, Benefits. How to Export Goods Correctly?

Export is the process of sending goods abroad, purchased by foreign buyers, intended for sale in other countries’ markets. Every business that aims to be successful understands that entering foreign markets allows it to gain additional resources for growth and expansion. However, organizing exports requires thorough preparation.

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What Is the Significance of Export in a Company’s Operational Activity?

To enhance efficiency, businesses need to invest in new equipment, implement modern technologies, and other innovations. This requires additional resources. Selling goods and services in foreign markets increases the company’s sales volume and income.

It’s important to consider that the purchasing power of customers in economically developed countries is much higher than in domestic markets. In the long term, after covering all export organization costs, a company can significantly increase its profitability.

Why Is Export Beneficial for a Company?

Let’s look at the main benefits that companies gain from exporting:

1. Economies of Scale. By entering foreign markets, a company expands its production to meet the demand of both foreign and domestic customers. As production volume increases, the cost of manufacturing one unit of goods decreases, leading to more efficient use of production resources.
2. Increased Competitiveness. To successfully compete with local manufacturers and importers in foreign markets, a company must quickly adapt to new conditions and enhance the competitiveness of its products.
3. Diversification. By selling products in multiple foreign markets, a company can diversify its risks. Its operations will be less affected by economic changes in a single country, such as currency fluctuations or a sudden drop in market demand.

It’s a common misconception that export is only for large companies. Many small businesses produce unique and niche products that are in high demand in foreign markets.

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Properly Organized Export Is an Opportunity to Effectively Enter Foreign Markets

To avoid issues arising from insufficient awareness, it is crucial to organize export responsibly following this algorithm:

1. Research Foreign Markets. Decisions to enter foreign markets should be based on research of the demand and supply levels for the product you plan to export, the level of competition, and existing market entry barriers.
2. Align Your Product with Market Requirements. Ensure your product meets the selected market’s requirements and, if necessary, obtain certifications and licenses.
3. Understand Local Culture and Consumer Habits. Familiarize yourself with local religious and cultural specifics, and consumer habits. Also, determine the foreign language for negotiations and prepare contracts and other documents accordingly.

4. Assess Your Resources. Analyze whether you have sufficient finances, production capacities, raw materials, and staff to manufacture and export the product in the quantities and timeframes specified in the contract. Adjust the production process if necessary.
5. Organize Logistics. Consider that export involves mandatory customs clearance. Allocate time for preparing and submitting the necessary documents to customs authorities, and paying taxes and fees.
6. Understand Currency Regulations. Familiarize yourself with the rules for receiving and declaring revenue in the appropriate currency.
7. Evaluate Risks. Assess the risks at each stage of export and mitigate them.

It’s important to understand that export creates potential for a company’s development. Therefore, a cohesive team of specialists willing to learn and handle various complex tasks is essential.

Conclusion

For businesses, export is the simplest way to enter foreign markets with their products. They manufacture their goods in their home country and sell them in foreign markets. The main goal of organizing export activities is to maximize profits by increasing sales volumes in foreign markets, leading to economic growth. Moreover, export allows for risk diversification, cost savings from increased production volumes, and enhanced competitiveness.

Frequently Asked Questions about Export