The FITTskills International Trade Finance course offers a comprehensive list of three finance tools available to international trade professionals. The payment types described are flexible, adaptable, and enduring due to their numerous features, variations, and options.

 1. Open Account

Open account payments are essentially transfers of funds to the account of the exporter.

Historically, open account payments have been used in trade between very stable and secure markets, such as the United States and Canada, or in intra-EU trade, and in cases where the trading relationship is established and trusted. Open account payment terms are those under which the seller extends credit to the buyer, finances the whole sale, and sends a standard invoice demanding payment within 30 to 60 days of receiving the goods. In addition, terms are suitable for a very strong buyer-seller relationship with a creditworthy client. Much of the trade between Canada and the United States is done on an open account basis.

Trade on open account is also increasingly the preferred mode of payment across much of the globe, even in markets once considered sufficiently risky to warrant the use of documentary credits. This shift, driven by large global importers, introduces additional risk for exporters in that payment is effected after the delivery of goods and/or services, sometimes for as long as ninety days after delivery.

This method has some potential risks as the importer could, for example, become insolvent, or the country of import could experience political turmoil, preventing payment. In such cases, the exporter loses control, and usually title, to the goods and/or services and has limited recourse to recover payment.

From a documentation standpoint, aside from the commercial invoice being issued by the exporter in an open account transaction, this transaction normally also involves an ocean bill of lading (i.e. if ocean shipping was part of the agreed-upon terms and a shipping container of goods has been sent). In these instances, the exporter will usually send all original copies of the ocean bill of lading (i.e. those issued by the shipper as receipt for the goods) to the buyer. The ocean bill of lading serves as the title to the goods so, upon receipt, the buyer (or the buyer’s designate) can present an original copy of the ocean bill of lading at the receiving port to get the shipment released.

2. Payment in Advance

In contrast, advanced payment options present the highest risk to the importer, given that the exporter could easily receive the funds and not carry through with the promised shipment.

Advanced payment is payment made ahead of its normal schedule, such as paying for a good or service before receiving the good or service.

Exporters sometimes require advance payments by importers as protection against non-payment or to purchase supplies to fulfill the order. Higher advance payments may be required for specialized products as a hedge against buyer default when it may be more difficult or impossible to sell the products to a secondary buyer.

Even with the best intentions and good faith, factors could prevent a willing and well-intentioned exporter from completing a payment as promised, such as political turmoil, exchange controls, and other unforeseen events.

As a result, payment in advance is rarely used for transactions that are structured on a recurring basis. However, advance payment is frequently used when the reputation of the exporter is well-established and the importer sees little risk in an advance payment. This establishes the importer’s credibility and is often seen as a show of good faith. In these situations, the initial payment in advance transaction is used to gain the confidence of the exporter, and it is often accompanied by negotiations that are intended to lead to better payment terms on subsequent transactions, such as open account, as described above, or documentary collections, which is explained next.

3. Documentary Collections: Sight and Term Drafts

Documentary collections provide some level of security but, like advance payments, are typically used in established trading relationships where stable and lower-risk markets are involved.

Documentary collections are types of financial transactions where banks acts as intermediaries between the importer (buyer) and exporter (seller), in effect, agreeing to facilitate payment to the exporter only once a set of shipping documents have been prepared and presented to an intermediary bank.

In a documentary collection, the exporter ships goods to an importer and mails the shipping documents, through its own bank, to a collecting bank in the importing country, which obtains payment from the importer in exchange for the documents. By using a bank as an intermediary, the exporter keeps title to the goods until payment is received in a sight draft transaction or until the importer issues a formalized promise to pay by way of an acceptance in a term draft transaction. Documentary collections are usually subject to a set of rules and practices called the Uniform Rules for Collections (URC), which is published by the International Chamber of Commerce (ICC). The importer and exporter will negotiate specific terms based on factors, including:

• Timing of payments and disbursement based on each party’s respective needs
• Negotiating leverage
• Prevailing competitive environment
• Cost of financing in one jurisdiction versus the other

In addition, payments via documentary collections may be considered as Documents Against Payment (D/P), also known as a sight draft, or may be considered as Document Against Acceptance (D/A), also known as a term draft. The key difference between these two types of documentary collections involves the timing of payment to the exporter, as explained in the following.

Documents Against Payment

Documents Against Payment (D/P), or sight draft, is a type of documentary collection where the exporter instructs the presenting/collecting bank to hand over shipping and title documents for the goods to the importer, only if the importer makes the full payment.

Documents Against Acceptance

Documents Against Acceptance (D/A), or a term draft, is a type of documentary collection where the payment due date can be determined based on the date of the receipt and acceptance of documents from the exporter (payable at 60 days’ sight) or based on the shipment date reflected on the transport documentation (payable at 90 days after the on-board date shown on the ocean billing of lading).

Even under D/A, which gives the importer additional time to pay, an exporter may choose to receive funds immediately by selling the accepted payment undertaking at a discount – usually to a bank. This allows the exporter to receive funds immediately in exchange for applicable fees and interest, while permitting the importer to pay at the original, deferred due date.

Documentary Collection Cycle

Documentary collections afford some degree of incremental protection to both parties in comparison to open account payments. The importer will not authorize payment to the exporter without receipt of a set of shipping documents through a neutral third-party, and the exporter has the assurance that shipping and other commercial documents required to claim the good shipped will not be released to the importer unless payment is authorized or a draft for future payment is accepted.

Will you use these payment tools on your next international trade deal? Let us know in the comments down below.

Sampling is one of the primary ways to gather the important data you will need in order to be successful in a new market. The FITTskills Feasibility of International Trade course delves into the best methods for researchers to create a representative sample.

For researchers to make conclusions about the population from the sample, it must be representative.

This means the sample group should include the same major characteristics of the larger group, as well as be chosen in a way that will reduce the likelihood of selecting members who are not representative of the population as a whole.

To accurately create a representative sample, researchers must ask themselves a simple question.

What Sampling Methods Will Be Used?

After defining the sample characteristics, the researcher must choose members of the sample to participate in the study. To do this, researchers use either of the following:

A probability based method

This is a random selection method, in which respondents in the sample pool each have a pre-established chance of being selected for the survey.

A non-probability based method

 This is a selection method in which respondents are chosen because of convenience, judgment, or through quota methods.

The probability sample provides data that can be statistically tested to identify the degree of its similarity to the larger population. Even so, there may be errors that have nothing to do with the sampling method. This possibility should be considered when evaluating the cost/value trade-off of using a probability versus a non-probability based sample.

Probability based methods of sample selection can take a great deal of time and expense that can be magnified when applied internationally.

To benefit from the precision of these methods, a researcher must be sure the sampling tool is complete and current, as well as be sure that the individuals who are randomly chosen are accessible. The expense of this approach is justified by the benefits gained.

The non-probability based sample is often selected because of cost, time, and value considerations, or because the entire population might not be available to the researcher. The ability to identify and access an unbiased random sample might be hampered by cultural factors or logistical problems. In such cases, the precision of the probability based sample is lost, making the high cost difficult to justify.

If the survey is being used to gather more general ideas or trends, a non-probability based sample can be adequate, if it is carefully chosen. The researcher should understand there is no method to statistically test whether it is representative of the entire population.

There are four generally accepted methods of selecting a non-probability based sample:

 1. Convenience

This is the least reliable, the least expensive, and the easiest method. The researcher chooses whoever is close and easy to access. For international trade research, this method might be difficult to implement if the company has no previous contact in the market, because selecting people who happen to be passing by might not be acceptable. An example of the convenience method is taste-testing in a supermarket.

2. Judgment

This is a more reliable method than convenience because respondents are chosen based on some pre-defined characteristic. An example is the use of key clients to test changes to a product.

3. Quota

This involves a greater effort to define the sample, but offers higher reliability and a greater degree of similarity with the characteristics of the population. at large. The researcher specifies the characteristics of value to the research question and selects a group that has the same proportion of these characteristics as the larger population.

4. Sample size

As with the method of choosing the sample, the researcher can use either a qualitative or a statistical approach to selecting the sample. The choice depends on the degree of accuracy and the amount of acceptable risk.

There are several methods of gathering primary data. Focus groups are a very effective way of obtaining qualitative data, while surveys and questionnaires can deliver qualitative or quantitative data, depending on how the survey is designed. Developing questions for surveys, interviews, and focus groups requires skill and experience. Poorly worded or structured questions will produce inaccurate results.

The method chosen for a research project will depend on the type of data that is required and the research objectives that must be met.

An essential consideration for primary research is selecting a sample to survey. It is too impractical for companies to survey an entire population to gather research, but it is important to select a sample best matching the population at large in order to gain the most realistic results.

Are there more factors to consider when making sample group that we haven’t listed? Share them with us in the comments down below.

Bernadette Terry always wanted to see the world and meet new people. Her passion for travel is what led her to one of her first jobs, working as part of a UK travel company’s marketing department to promote vacations in Europe. In this role, Bernadette had the opportunity to travel across Europe.

After joining the UK Government, Bernadette decided to shift the focus of her career to international trade. Bernadette was offered and subsequently took the role of International Trade Advisor with UK Trade & Investment. As a department of the federal government, UK Trade & Investment (now the UK Department for International Trade) specializes in international trade and foreign direct investment.

In this role, Bernadette worked with a wide variety of organizations to encourage new and existing exporters from the UK to build trade relationships around the world. She led various international trade delegations and also facilitated many inward international delegations and trade promotion events. Bernadette worked as part of a team to implement new pilot programs and initiatives to support international trade and investment and regional economic development.

As an international trade advisor, Bernadette provided strategic advice and support to companies at all stages of international trade, including those who had never exported internationally before and helped them to reach global markets. Thanks to her support, Bernadette’s clients won various regional and national awards in the UK, including ‘Best New Exporter.’

Building bridges for businesses on opposite sides of the Atlantic

In 2004, Bernadette emigrated to Canada. She worked in various roles in the private sector before taking a new role with UK Trade & Investment in Canada as a Trade Officer in 2006.

After all she had achieved, Bernadette still wanted to add onto her vast experience. She then decided to enroll into the FITTskills training program, which would put her on the path to earning the CITP®|FIBP® designation.

“It was very challenging at times to complete the online courses while working full-time and traveling on business. I was fortunate that I was already an experienced international trade professional and had the benefit of assisting hundreds of companies from different sectors with their international expansion, which gave me additional perspective.”

“I already had many years of training and experience in international trade from my work in the UK. When I emigrated to Canada, I felt it would be useful to obtain a professional qualification, especially one with a Canadian/North American perspective.”

Bernadette’s hard work paid off when she attained her CITP®|FIBP® designation.

By 2012, Bernadette had moved on from UK Trade & Investment to Invest Ottawa. There she acted as Senior Business Development Manager for the International Trade and Investment team. Bernadette supported local companies to explore new markets and expand internationally. She facilitated international trade opportunities, foreign direct investment and business expansion into Canada.

As part of her work, Bernadette organized and facilitated successful trade delegations and international trade events in Canada and all over the world.

She used these opportunities to build strategic partnerships. One such partnership included developing a Soft Landing exchange program to facilitate new business opportunities between Canada and Europe.

The Soft Landing program was developed to help start-ups and young businesses conduct international trade and develop their exports. Companies can utilize this program to open new markets, close international sales, secure investment, and connect with new partners abroad.

“I have worked on many international trade missions and international trade events over the last 16 years, and have been very proud to assist hundreds of companies and organizations with their international expansion,” said Bernadette

Branching out on her own as an expert trade practitioner

Bernadette’s exceptional skills and experience in international trade allowed her to start her own international consulting company in 2016, BTI Global Innovation Inc. Her company works with various international clients, both from individual companies and government organizations.

Being the client-focused trade practitioner she is, Bernadette focuses on how her designation benefits her clients.

The CITP professional designation was created to prove an individual’s level of competency and experience in international trade and is therefore a useful reference for potential clients.

Bernadette has always been and will always be a client-focused international trade professional. Since attaining her designation, Bernadette has continued to help companies to establish themselves on the global market and helped them to benefit from international trade. We look forward to seeing Bernadette continue to add to her incredibly extensive experience.

Reverse supply chain management has received greater industry interest in recent years, driven by growing concerns about environmental protection issues, recycling, sustainable development, and safety regulations. These issues have spurred organizations to think about how their product will impact the environment, and what sort of carbon footprint it will leave.

A growing number of manufacturers accept product returns at the end of their initial post-consumer lives and reuse the products to get more value from the product.

Companies are adopting this green influence on reverse supply chain because customers have shown they value companies with strong social and environmental corporate policies. Other companies have adopted greener policies because, not only does it improve customer opinions on the company, but also provides a competitive advantage by reducing costs. The updated 7th edition of the FITTskills Global Value Chain course looks at this trend towards circular supply chains.

Countries taking the circular approach

The increased importance of reverse supply chain as a source of value has led companies to adopt a circular supply chain approach, which reduces waste, provides an alternative source of inputs, and takes advantage of the original forward supply chain investment.

The move towards circular supply chains by organizations is being pushed forward by important international regulations and new environmental approaches:

• European Union Packaging Directive: Initiated in 2001, this directive requires all countries in the E.U. to recycle 50 percent of their packaging waste or incinerate it to provide energy.

• Japanese recycling laws: In Japan, businesses are responsible for recycling packaging materials into reusable.

• California recycled content laws: California requires manufacturers to recycle 25 percent of all plastic containers.

• UK Landfill Directive: In 2007, an addition was made to this legislation that requires all UK-based companies to recycle or treat their waste products, regardless of their size and turnover.

The European Commission has adopted a Circular Economy Package with ambitious 2030 targets. It includes revised legislative proposals on waste to accelerate Europe’s transition towards a circular economy.

The switch will increase global competitiveness, foster sustainable economic growth, and lead to the creation of new jobs.

Consumers hold the power

Another reason for the growth in reverse supply chain management strategies is consumer power. With a global market and Internet commerce, customers have a wider range of companies to purchase from than ever before.

Consumers are also becoming more informed about the products they purchase and are showing increasing concern about the conditions under which products are manufactured and disposed.

Customers now expect to be able to return products they do not like or were purchased in error.  They expect to be able to exchange older goods for new products so they do not have to be concerned with disposal or recycling issues. Repairs and warranty service are an accepted part of customer service. Slow or poorly managed service in these areas can result in a loss of customer loyalty and negative publicity.

The transition from a linear supply chain to a circular supply chain requires organizations to rethink how they imagine their supply chain. They must envision it as a network with materials and goods circling through the chain in various ways. Some considerations for creating circular supply chains include:

• Outputs become inputs because goods don’t end their lives with customers, but become an input into the supply This means accounts payable and accounts receivable processes will form a loop instead of a straight line.
• The use of information communication technology (I.C.T.) to coordinate all the moving parts a circular supply chain requires action in real time, otherwise a circular supply chain is not
• Assessing reuse opportunities requires researching suppliers and working with the top tier for a common vision towards a circular supply chain while ensuring Corporate Social Responsibility (C.S.R.) standards are
• The cash flow demands of a circular supply chain, compared to a linear one, may be The margins might improve, but a supplier’s need for cash may change.
• The management of components, such as the evidence, materials, production information, and components for the entire life cycle, requires making a detailed plan.

The Circular Economy

The new sharing economy business model, the move to circular supply chains, and the move to find more environmentally friendly ways to deal with waste, are a part of the circular economy movement.

A circular economy can be understood as an economy that is restorative and regenerative by design and aims to keep products, components, and materials at their highest utility and value at all times.

A circular economy is alternative to the traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extracting the maximum value while the product is in use. When the product has reached the end of its life-cycle, then core materials are recovered and regenerated.

The circular economy is waste-free and resilient by design. It is a new economic model that is ambitious as well as practical. Designing the economy in such a way that is restorative of ecosystems, ambitious with its innovation, and impactful for society, is a bold challenge. But it is achievable when guided by these simple principles.

• Ecosystems support rebuilding
• Use resources to generate value, and not just financial value
• Support healthy societies and cultures
• Raw materials can be cycled indefinitely
• Support human health and happiness

The circular economy is built on the concepts of “making more with less” and “modelling life cycles in the natural world”, as a network of interdependent, ongoing cycling systems. At the root of these circular economy definitions are the concepts of innovation, collaboration, waster reduction, regenerative ecosystems, and reuse and recycling.

Is your organization making the transition toward a circular supply chain? Why or why not? We want to hear from you in the comments down below. 

The challenges of e-commerce are becoming easier to overcome due to the increasing familiarity with it in many markets as well as advancements in the online shopping ecosystem. Be that as it may, there are still issues requiring research and thought when setting up an e-commerce operation.

Some of the challenges posed by e-commerce have been outlined in the updated 7th edition of the FITTskills International Sales and Marketing course.

1. Distrust in the security and privacy of online transactions

Companies that establish e-commerce operations face several security risks, including:

• Denial of service: These attacks stop authorized users from accessing a website, resulting in reduced functioning of the website or its complete
• Unauthorized access to sensitive information: Hackers can obtain intellectual property and alter it, destroy it, or steal it to sell to a competitor.
• Malicious alterations to websites: Hackers have been known to alter website content to negatively impact a company’s reputation or to direct customers to competing websites when they click on a link.
• Theft of customer information: Many cases have arisen where customer credit card details, addresses, and other personal information have been stolen for criminal
• Damage to computer networks: Viruses and worm attacks can seriously affect a company’s
• Creation of counterfeit sites: Fake websites can now be created easily and at little cost to the fraudsters. These sites look identical to the authentic versions and can cause serious damage to company valuations and reputations.

To deal with these risks, companies must establish various levels of e-commerce security.

Authentication systems, such as usernames and passwords, are a basic level of control to help ensure only authorized employees have access to the website or customer information. Firewalls prevent external users from gaining access to information held on company computers, while intrusion detection software can provide an early warning for hacking attacks.

2. Viruses, malware and online attacks

As well as the financial losses, companies can also suffer a loss of reputation or market share. Companies could also open themselves up to face criminal charges.  Companies must follow government guidelines as to the level of e-commerce security and privacy they must implement.

If an attack occurs, and these guidelines have not been adhered to, a company can be prosecuted.

Viruses, Trojan horses, and worms are malicious software programs designed to damage computers in some manner. Viruses and worms infect a computer, replicate, and spread. Trojan horses are malicious programs hidden in what appears to be reputable or helpful software downloaded onto a computer. Attacks by these types of malicious programs can have serious consequences, including:

• Deletion of company data, or inability to access data
• Recording of keystrokes made by an authorized user, enabling theft of passwords and usernames
• Hijacking of the computer system
• Forwarding viruses to customer and partner computers

Companies must ensure all computers have firewall and virus protection. Employees should also be advised to not download unauthorized programs or documents from the Internet. It is also advisable to avoid opening email attachments unless the employee is expecting the named attachment to be sent to them. Companies should also make backups of essential data and store them on external drives, in cloud storage, or with reputable data storage companies.

3. Payment options and reliability

While some customers still have concerns about security and the privacy of information over the Internet, the advancement of new privacy and financial e-commerce security technologies have calmed many such fears. In addition, the expansion of connectivity bandwidth and the availability of high-seed downloads is continuing to revolutionize the sales and distribution of digital products and services.

To gain the confidence of customers, companies offer alternative payment methods so customers can select the option which makes them feel most comfortable.

Numerous online payment mechanisms exist today. PayPal is a highly subscribed service, promising secure payment in multiple currencies. Wire transfers and pre-paid accounts are other secure payment methods often offered to customers.

Companies can use other approaches to instill trust in customers both during the early stages of the decision-making process and after a sale. Trust can be built by providing efficient and reliable services that meet customer needs. For example, Tesco (a U.K.-based food retailer) has an online food shopping service. Customers can log onto the Tesco website, select their groceries and when they would like the items delivered to their home. For working customers who have little free time, this convenience often outweighs the need to personally select fruit, vegetables, and meat. And if customers are satisfied with the quality of the products delivered, they will become repeat customers.

When e-commerce operations follow an omnichannel approach, they are wise to implement fraud management efforts across channels. In doing so, they can quickly detect and address suspicious activities, no matter where and how they occur. In so doing, they offer a more secure shopping experience.

4. Complexity, uncertainty, and fraud

The O.E.C.D. Observer published a spotlight on the digital economy in 2016. The article addresses the untapped potential of e-commerce. Across the 35-member countries of the Organisation for Economic Co-operation and Development (O.E.C.D.), half of all consumers made an online purchase in 2014, but 75% of those consumers connect to the Internet daily.

This is reason to conclude there is untapped potential, particularly for cross-border e-commerce.

To illustrate, only 15% of consumers in the E.U. shop online from another E.U. Member States. The O.E.C.D. considers the reasons why the full capacity of digital consumption has still not been reached despite improved consumer access to goods and services at competitive prices due to the Internet and mobile technology.

The O.E.C.D. notes “online shoppers complain about complexity and uncertainty about delivery for instance, or dispute resolution, and can be victims of misleading or fraudulent business practices. And improvements in business transparency, such as who to contact when a problem occurs with a good or a service, don’t often extend to improved disclosures about how personal data may be collected and used by businesses online. Although consumers now have more tools to help police market conduct, the role of well-equipped consumer watchdog authorities, like the French D.G.C.C.R.F., remains essential to enhance trust in the digital marketplace.”

Has your organization had to overcome technical hurtles in order to offer a smooth e-commerce experience? Tell us about it in the comments down below.  

Representing the bright future of trade as Student of the Year

Satyajeet Kumar, Discovery Community College

The 2016 winner of the FITT-EDC Student of the Year award was presented to Satyajeet Kumar, a graduate of the International Trade Management program at Discovery Community College in British Colombia.

Satayjeet was awarded Student of the Year because he attained the highest-grade point average after completing all eight FITTskills courses.

The award was presented by staff from FITT’s strategic partner, Export Development Canada (EDC), who are thrilled with Satyajeet’s achievement.

“EDC is honoured to present the 2016 Student of the Year award to Satyajeet Kumar,” said Catherine Decaire, Senior Vice President of Corporate Affairs for EDC.

“Satyajeet represents the bright future of international trade. Through his hard-work and determination, Satyajeet has shown he will go above and beyond to succeed. We whole-heartedly congratulate Satyajeet on his achievement.”

Satyajeet’s program coordinator at Discovery College, Fouad Menassa, was equally proud of his accolades.

“Discovery College and the International Trade Management program are proud of Satyajeet’s achievement. Following his enrollment into the program, Satyajeet proved he was an attentive and excellent student. We wish him success in the future.”

Receiving this prestigious recognition was something Satyajeet couldn’t wait to share with his family.

When I received the mail from FITT about Student of the Year, I was so surprised and was so happy because I was not expecting it. It was a proud moment for me, being able to say I am the Student of the Year. It really does make me and my family proud.

As he prepares for his future career, Satyajeet wants to use his skills to help members of his community live better lives.

“My career goal is to invest my time into setting up an IT infrastructure in the Canadian healthcare system, so I can help improve my community members’ lives.”

Exceptional plan to expand an audio company wins the International Marketing Plan Award

Russell Leith Yearwood, Vancouver Career College  

The International Marketing Plan award is given to the student who attains the highest grade for a completed marketing plan for the FITTskills International Marketing course. This year’s International Marketing Plan award winner is Russell Leith Yearwood from Vancouver Career College.

Russell’s project was a Trade Management Report, in which Russell created a foreign market expansion plan for a fictional company. Russell outlined how Zexer Audio, the fictional audio technology company Russell created, could expand their business into the U.S. market.

The assignment earned a grade of 98%, the highest in his cohort.

Irene Jeremic, head of International Business and Law Lecturer at Vancouver Career College, was highly impressed by her student’s achievement.

“The award is very humbling and our college is grateful for being able to change lives through education. The recognition not only validates our approach to learning through engagement and empowerment, but it also crowns Russell’s hard work at the college.”

Moving forward, Russell plans to keep busy, learning as much about international trade as he can.

“I am aiming to increase my knowledge in finance, gain further work experience in global investments, and then I aim to help foreign entrepreneurs invest and expand into Canada.”

International Business Plan Award winner stands out with baseball bat exports

James Amelotte, Algonquin College

The International Business Plan award is given to the student who has received the highest grade for submitting a completed business plan for the International Trade Management course in the 2016 academic year.

The winner of the International Business Plan award was James Amelotte from Algonquin College.

Norman Hotchkiss, program coordinator for the International Business Management program at Algonquin College, was proud of his student, but not surprised to hear of James’ achievement.

“It is fitting James won the Business Plan Award. As a baseball pitcher, he actually knows how to throw different pitches to different batters and is very familiar with targeting those pitches. Both are useful skills in writing a business plan, but it was his commitment to learning and improving that ultimately created his winning plan.”

Contrary to his professor’s reaction, James was in shock when he learned that he had won this award.

“When I first heard I had won the award, I was in disbelief. But now, after some time, I can truly say I am proud and honoured to be the recipient of this award after knowing how much time and effort had gone into the completion of my business plan.”

James developed a business plan focusing on exporting wooden baseball bats to the market of Venezuela. He chose Venezuela as his target market because of their professional baseball league and their geographical location in South America.

James plans to use his award as proof of his hard work and abilities as an international business professional. His ultimate goal is to secure a position with an international organization, which would allow him to work with people from all over the world.

FITT Achievement Award goes to talented student working to help Syrian refugees

Maysa Balout, Fanshawe College

The FITT Achievement Award is presented to the student who has shown a combination of community involvement and academic success. Selected by the awards committee, nominees are put forward by either themselves or their peers.

The FITT Achievement for 2016 was awarded to Maysa Balout from Fanshawe College. Maysa has gone above and beyond in her studies and to help her community.

Albert Knab, former coordinator of the International Business Management program at Fanshawe College, spoke highly of Maysa and her hard-work.

“Fanshawe College is very proud to consider Maysa Balout one of their alumni. It is no surprise Maysa’s professional and business skills are as outstanding as her academic performance. While studying at Fanshawe, she maintained a perfect GPA, worked with the Supply Chain Association, as well as volunteered with the London Muslim Mosque to help settle Syrian refugees into the community.”

“I am truly honoured and grateful for the award. I have gained additional confidence and speaking points to add to my resume, which is always a nice bonus!” Maysa says.

Moving forward, she sees the FITT Achievement Award being a great feather in her cap when job hunting and networking.

This award will be such an influential speaking point when going for interviews or business conferences. It will help advance me in my career by showing people I am serious about international trade.

Maysa was chosen, in part, due to her community work helping Syrian refugees establish themselves in her city.

“When the influx of refugees began, London, Ontario received a lot of them. I collected donations of clothes from friends and family and drove them to the donation centre for distribution to refugee families.”

Maysa’s dedication, to both her education and her community, is unique and balancing the two can be very difficult in a demanding academic year. Her ability to do just that made her the ideal winner of this year’s FITT Achievement award.

Congratulations to all of this years’ FITT Educational Award winners! We look forward to seeing you take the world of international trade by storm.

Please feel free to congratulate the winners and offer any helpful advice in the comments down below.

As the dangers of climate change become more prevalent, more regulation regarding how to safeguard the environment is being put in place.

Environmental regulations are developed by governments and organizations to protect their environment, not only related to off-shore or contract manufacturing, but also for product and packaging disposal. As a result, manufacturers must pay careful attention to the environmental impact of their operations.

Are you up to date with the new standards?

Every international trade professional must be aware of the various environmental regulations at play in a given market. The updated FITTskills 7th edition Products and Services for a Global Market course outlines the importance of environmental regulations.

 Environmental regulations vary from country to country and from product to product.

For example, the performance of the agri-food sector is closely related to the environment. Common issues are related to pesticide and herbicide use, discharge of chemicals into rivers, recycling of a certain percentage of products, and the storage of hazardous waste.

Environmental packaging regulations present food companies with challenges due to existing health standards already imposing strict constraints. Changes to packaging mandated by regulations can make the product less convenient for consumers, which can affect sales. Infractions of environmental regulations are much more important to the general public, especially in developed countries.

Consumer awareness and purchasing power ensures organizations are more responsive to making changes to products, packages, and processes to make sure environmental issues are acted upon, even if they are not regulated.

Environmental regulations – good or bad for trade?

Since the 1970s, environmental protection and sustainability, and their perceived status as barriers to competition and trade, have been hot topics in industrialized countries. Industries are concerned that initiatives to reduce the impact of industrial air pollution and regulated waste disposal would put them at a competitive disadvantage with their competition in other countries not subject to the same regulations.

On the other side of the issue, nations are concerned about countries with lax environmental regulations. The fear is these countries will encourage companies to move and set up manufacturing facilities there, as opposed to operating in nations that have implemented regulated environmental policies. At the international level, there are moves to address environmental concerns, including the conventions on climate change such as the one in Kyoto and, more recently, in Paris.

In 1972, the Organisation for Economic Co-Operation and Development (OECD) published Guiding Principles Concerning the International Economic Aspects of Environmental Policies. Among its recommendations was the proposition that industries be forced to pay for all required upgrades to meet environmental regulations.

This recommendation was made with the goal of obtaining uniform practises while addressing subsidy concerns. The fear was some governments would reimburse businesses for equipment or facility upgrades as an incentive to conform to regulations. This would amount to an unfair competitive advantage for those in nations not doing the same.

Sustainability as a guiding principle

In both the General Agreement on Tariffs and Trade (GATT-Article VI) and the General Agreement on Trade in Services (GATS – Article VI), the World Trade Organization (WTO) reinforces sustainable development as a guiding principle.

It provides member countries with the option of implementing environmental trade policies and regulations necessary to protect the health and lives of animals and humans.

However, these measures must not be implemented purely as a disguised form of restricting international trade.

Manufacturing and marketing in countries with less stringent environmental regulations may be a cost advantage for organizations, but given the rise of consumer awareness, corporate social responsibly, and the use of the Internet for social commentary, it is important to be aware of the marketing implications of taking advantage of weaker environmental protection regulations when operating in other countries.

An example of environmental compliance in action is the situation from 2013 regarding micro-bead pollution.

Learn from microbeads ban

In 2013, the Marine Pollution Bulletin published a paper describing how the Great Lakes were under threat by tiny plastic microbeads found in facial scrubs. One bottle of facial scrub could send as many as 330,000 microbeads down the drain, where they are too small to be filtered out by wastewater facilities and so they eventually make their way into the lakes.

Once in the lakes, the microbeads settle at the bottom and choke out plant life, attracting hungry creatures, who mistake them for fish eggs. Once ingested, the animals cannot digest them due to the plastic and, ultimately, the animals starve to death. The plastic accumulates in animals along the food chain. Furthermore, plastic acts as a sponge for pollutants like motor oils and pesticides. These toxins work their way into the bloodstreams of animals throughout the food chain, including fish consumed by people.

Environmentalists say there is not much that can be done about the plastic already in the lakes. Instead, they are focusing their efforts on preventing more plastic from entering the water.

In the United States, many states have discussed bills banning the sale and distribution of soaps, toothpastes, and other products containing microbeads. Manufactures put up little resistance and agreed to the deadlines to phase out microbeads.

Unilever, which owns soap companies including Noxema, Dove, and Axe, completed the phase out of microbeads in their products by 2015. Companies like L’Oreal, Colgate-Palmolive, Procter & Gamble, and Johnson & Johnson all agreed to stop using microbeads in the products.

What changes has your organization made to conform to environmental regulations? Let us know in the comments down below.

Julio Pacon is a man of many passions, from playing basketball or piloting a Catamaran to watching the latest episode of Game of Thrones. But Julio’s biggest passion is for international trade.

Julio earned his first of many degrees in 1996, when he graduated from the University of Lima with a Bachelor’s in business administration. Following that, Julio earned his administrator’s license, graduating with honours.

After earning his degree and license, Julio got his start in the field of international trade. Julio worked for PepsiCo, in their Frito-Lay division as a trade marketing manager. There, he was responsible for negotiating and managing the execution of marketing initiatives on behalf of the company.

Recognized for a job well done

While there, Julio helped to increase sales by 24% in 2004 and 2005 for Frito-Lay. He also was responsible for leading new projects, including bulk packages of snacks and 20 kg. bulk packages of a local flavour salsa.

These achievements earned Julio some much deserved recognition. For both 2004 and 2005, Julio earned the ‘Best Sales Performance’ award given by PepsiCo to their best sales performer for the year.

Deciding he wanted to expand his education even further, Julio decided to move from Peru to Canada. Once settled in Montréal, Julio went to McGill University to earn his post-grad certificate in marketing.

As he studied in McGill’s library, Julio received an interesting email. He quickly realized the founder of VLM Foods had reached out to him with an exciting proposition. VLM had recently lost their junior trader for South America and the company was in search of someone who knew the market thoroughly. Julio eagerly accepted the role of business development manager, which he holds today.

Excelling in a difficult situation

In Julio’s role as business development manager, he is responsible for developing new opportunities in international markets. He also utilizes local and overseas sourcing networks to distribute healthy ancient grains and tropical fruits to the region.

While he was eager to take on this new challenge, it was no easy task. The previous employee had erased all his files and emails with the company, so Julio was forced to start from square one. Despite this monumental hurtle, Julio faced it head on.

He started contacting the current clients of VLM Foods as well as the Canadian Trade Commissioner Service (TCS). As he established working relationships with existing clients, Julio began traveling abroad to establish new partnerships.

One of the projects Julio has worked on for VLM Foods Inc. that he is especially proud of is opening the South American market to I.Q.F. (Individually Quick Frozen) products.

These are frozen fruits and vegetables that are each individually frozen, as opposed to being frozen together as a whole, also known as being block frozen. The advantage in this approach is two-fold. One, the flavour is better preserved; and two, the contents of the packages can be individually served and the package resealed for later.

Julio worked diligently to bring I.Q.F. products to South America. Working with the South American branches of his clients, Julio helped to increase the I.Q.F products lines entering Latin American retail stores.

It was an exciting opportunity. It took about a year to get in place. There is a misconception about frozen veggies in South America. They’re seen as not fresh, when in fact the opposite is true. I.Q.F. products are frozen and shipped when at they’re at their freshest. So, it was about changing the people’s thinking. This was just about seeing an opportunity and being in touch with the trends of the market.”

I.Q.F. products can now be found in a multitude of stores across South America, in part, thanks to the efforts of Julio.

Julio isn’t just content working hard for VLM Foods. He also volunteers his time with the Latin American Chamber of Commerce of Québec. Working as the International Commerce Director, Julio has been recognized as best volunteer not once but twice by the non-profit. Julio also serves on the board of the Chamber of Commerce.

Achieving an extra level of credibility for his clients

Though Julio had already achieved and learned a great deal, he wanted to continue his education. As he developed his career at VLM Foods, he earned a diploma in operations and logistics management from HEC Montréal. He also wanted to show his clients he was expertly skilled in international trade.

FITT is the only recognized international forum that promotes an actual trade designation from all the international commerce diplomas I’ve searched in the past. Not only that, the benefits FITT membership provides, including the newsletters and updates on international trade, are great.”

Julio excelled in all his FITTskills courses, but he had a particular affinity for the International Sales and Marketing course.

“I really liked how the course taught me to learn about a new market before entering it. It also emphasized the importance of face-to-face interactions, which I’m a fan of and is especially true in the Latin American market.”

When asked how he felt about finally earning his CITP®|FIBP® designation, Julio had a simple response.

“Amazing! After a long learning process, validating my diplomas and experience, and taking the exam, all I can say is that it was worth it. The CITP®|FIBP® certification proves to your clients that you are good at your job.”

Moving forward with his CITP®|FIBP® designation, Julio sees himself taking on a major role with VLM Foods. He is currently building an international sales team to help expand I.Q.F. products to even more markets. We look forward to seeing Julio continue to add to his already impressive career.

Despite a massive trend towards automation, exporting services still requires a high-degree of human involvement in development and delivery. It still requires a human touch.

When exporting services, the same basic rules for trading goods apply, but there are key differences. These include how the services are marketed and which taxes and regulations are applicable. These differences affect costing.

The services being provided tend to be less tangible than goods, and there is more variability in quality.

International clients often demand a high-degree of customization of the service to fit their particular needs and context.

This can make the cost and pricing analysis for service exports challenging compared to an analysis for tangible goods.

To ensure a venture will be profitable, all these factors, as found in the FITTskills Feasibility of International Trade course,  must be considered carefully during the costing and pricing analysis.

The service export sector is growing

Services are becoming a dominant driver of economic growth, both in developed and developing countries.

However, awareness of the services sector’s potential is still at a relatively low level. Developing countries are making the shift towards services much sooner than their developed counterparts.

Services can provide an alternative engine of economic growth, enabling late-comers to development to by-pass the traditional manufacturing route. Meanwhile, despite strong global growth, service exports continue to make up less than 25% of the world exports. This discrepancy between the size of the sector and its importance in exports points to a major untapped potential in the services trade.

The process of analyzing service export cost and pricing

The process of cost and pricing analysis for services involves the same three stages as for goods:

1. Determine the cost of exporting services.
2. Elaborate a pricing strategy.
3. Assess the viability of the transaction.

The approach to exporting services is similar when exporting tangible goods, however, there are some important differences to be considered. Organizations may be exporting services linked to goods, for instance training related to exported software. An organization may be exporting pure services, such as management consulting, education, or health services. It is sometimes more challenging for an organization exporting only services simply because establishing an international profile without a tangible product can be difficult and requires serious resources.

Step 1. Determine the cost of exporting your service

Service exporters must fully account for all of the costs involved in delivering internationally. Once the delivery mode is determined, a costing sheet must be developed or customized to address all relevant factors. The export of services is a highly variable field, and the potential costs will differ depending upon the delivery mode, the type of service, the industry sector, and the target market. Organizations should consider potential after-sales costs that apply, such as providing ongoing client support.

Step 2. Elaborate a pricing strategy

Once the costs are identified, service exporters must choose an appropriate pricing strategy. Market research will provide market intelligence related to the offered service.

Before setting a final price, exporters need to ensure they have considered the promotional costs of providing the service in-market.

Three reasons calculating a separate price for each export market is important are:

• Costs vary between markets
• Competitors’ pricing strategies will differ depending on the target market.
• The price end users are willing to pay will differ depending on the target market.

Some common pricing models for services include: cost plus pricing, competitive pricing, premium pricing, and penetration pricing.

Cost Plus Pricing

Cost plus pricing requires an accurate understanding of total costs for delivering the service into the target market as well as how to reflect a price compatible with the perceived market position.  It is important to have an understanding of the average margin for the industry in the export market. A drawback to using cost plus pricing is that an organization may not be competitive in some markets (for instance, this may be by over or under pricing). Organizations may be able to discount or match a competitor’s price, if local resources are less expensive than domestic ones. Final pricing should reflect a balance between affordability for customers and the desired profit.

Competitive Pricing

Competitive pricing involves setting the price of a service based on what the competition is charging. This is due to the assumption that the market has already reached a price equilibrium and competitors are setting their price to that. This can improve market access, especially if new services can be released shortly after market entry with demonstrable benefits and features. This is an acceptable strategy of service, if the service can be delivered at similar cost levels to other providers in the market; otherwise, it may not be feasible. Competitive pricing can make premium pricing difficult in the future, as it signals a ‘value of money’ or ‘affordable’ market position.

Premium Pricing

Premium pricing is a static strategy based on what the market will bear. It is a good export strategy as it is more profitable and provides a greater profit margin to cover cost increases. This strategy may allow an organization to maintain a price in foreign currency by absorbing negative impacts in exchange rates. As there is perceived value in innovative and uniquely packaged services, premium pricing can be an acceptable strategy. It also allows an organization to establish a premium brand in the market, offer discounted rates to loyal customers without reducing profit, and meet competitive threats over time.

Penetration Pricing

As with the export of goods, service exporters can choose to price their service low so that they are perceived as excellent value for the money. This strategy can reduce the time to get market entry, while sacrificing early profit margins. This process must be tightly controlled. Representatives and partners must understand that market success will bring future price increases to cover lost margins and achieve rightful market positioning. This strategy must be used with caution and its implementation carefully monitored.

Step 3. Assess the viability of the transaction

Finally, as with the export and import of goods, organizations must conduct a final assessment to determine whether the transaction is viable.

Comparing a comprehensive listing of costs that will affect the final price will provide critical information regarding the potential profit. Service exporters can then decide whether or not to move forward with a particular venture.

What strategies did you use when you took your service international? Let us know in the comments down below.

Any market entry strategy can involve working with a business partner. Direct exporters may partner with distributors and indirect exporters may partner with trading houses. All forms of strategic alliance involving partner organizations, mergers, and acquisitions are more likely to succeed if an organization has developed a working partnership with the target organization first.

Even with Greenfield investment, an organization might need to work with a foreign partner to, for example, find financing or obtain supplies for a newly built factory.

Local partners can provide on-the-ground knowledge and contacts. Foreign partners also help reduce the risk to the organization.

In a broad sense, partners can also include governments and other organizations, such as financial institutions. Governments play a significant role in the promotion of international trade and offer a number of support services to organizations to facilitate expansion into markets. The same can be said for non-governmental organizations (NGOs) and industry associations. Consultants also provide international trade services that organizations can access. Financial institutions can play a supportive role for organizations embarking on international trade.

The success or failure of market entry depends on the partners with which an organization works. The search for the best partner possible can be both time consuming and costly. Partnerships can succeed only if the participants are willing to devote sufficient time, energy, resources, and skilled people to make them work. This includes the effort needed to find the right partnership. The updated FITTskills seventh edition International Market Entry Strategies course dives into where you should be looking when searching for a foreign business partner.

Finding the Right Business Partners 

Organizations may have to evaluate many candidates before a suitable partner is found. Fortunately, there are many sources of information and assistance that can provide the names of potential candidates, supply background information about them and help verify information provided by the candidates. Such information is vital to building your team of foreign partnerships.

1. Business Associates

Effective partnering depends on effective networking. This is especially true for small businesses. Formal and informal business links are important ways of developing contacts, securing business information, initiating cooperative activities, gaining access to new sources of capital and obtaining technology.

Business associates with experience in the target country are especially valuable, as an organization can often hear about a potential partner when discussing other matters with a business contact.

Initial exploratory meetings with potential partners often produce much better insight into market dynamics, segments, and competitors. This means early meetings with other market insiders are often an incredibly valuable source of information.

Networking through people you have a relationship with is one the best ways to find potential partners. Personal introductions carry a certain level of trust, so start searching for introductions to likely partners. Let people close to you know you are looking for a partner. Ask for introductions. People are often willing to share their networks when it seems like a ‘win-win’ for everyone involved.

If you identify someone specific you would like as your partner, ask your network for introductions. You would be surprised how often you’re only a couple of introductions away from almost anyone.

2. Business Associations

Business associations include chambers of commerce, boards of trade, industry associations, and bilateral business councils set up to develop trade with specific target countries. These associations can provide contacts and business information. Chambers of commerce and industry associations in target countries are also good sources of information. In many countries, industry associations maintain industry statistics as well as membership lists.

3. Business Advisors

Organizations should consider using consultants and specialists, such as lawyers and accountants, to search for potential partners. Although this can add to the expense of market entry, business advisors can use their experience to set up new networks rapidly and speed up the introduction of contacts.

For smaller organizations new to international trade, such services can greatly decrease the time involved in establishing an effective partnership.

Some organizations with investments in a group of local firms might seek partnerships with organizations that have invested in a complementary group of firms, as a means of helping their clients expand and develop.

4. Financial Institutions

Banks, individual traders (brokers), export credit agencies (ECAs), and trading organizations are all useful sources of information about potential partners in target market. An organization’s bank has a vested interest in the organization expanding its business successfully, and if bank has a branch in the target country, the local branch will usually provide a broad range of local business information.

An organization’s relationship with relevant financial institutions can be critical for international trade, not only in terms of partnerships, but for all types of market entry strategies. Financial institutions can often provide referrals to other institutions and individuals that can assist the organization in achieving its goals. Financial institutions can also provide information and support towards financing a venture. They are also excellent sources for information about current governmental and non-governmental programs, such as foreign investment programs.

5. Social Networking Sites for Entrepreneurs

Similar to business associations, online communities of entrepreneurs can be a good source of information related to potential partners.

There is a growing number of social networking sites devoted to making connections between potential partners. They provide a platform for sharing information and often encourage discussion.

This can be a unique way to access current information and opinions related to the target market and potential partners.

How did you your business partners help your business grow? Let us know in the comments down below.