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Strategies for International Trade on the Internet

By Barney Lehrer

The Internet is becoming the main communications and marketing medium for international business to business wholesale trade. Never before have importing and exporting companies been able to find buyers and sellers in overseas markets with relative ease and low initial expense.

"Trade Leads"

There is a plethora of business leads on the Web. Trade Leads are bulletin board type postings of notices to buy or sell products or services internationally. There are essentially two types of trade lead Web sites. The most common is a free-for-all bulletin board where anybody with a computer and a modem can post any offer they want. The other is a moderated Site, where the person posting the lead must register and provide some information about their business. A "moderator" selects and edits the leads before posting them. Some sites also include some due diligence.

The main premise of "trade leads" is that, with the easy and low cost access to the medium and the immediacy of reaching businesses all over the world, international commerce will become more direct, "disintermediated," (http://www.coastalair.com/acis2-98/barney.htm) and more efficient. Although the promise exists, the reality is a still inefficient system.

I have identified a few hundred systems that list offers to buy and sell on a wholesale basis internationally, most of which are listed on our Web site at http://www.fita.org/tradehub.shtml.

The largest system of "Trade Leads" is the United Nations Trade Point Development Center, financed by the UN (http://www.untpdc.org/untpdc/eto/index.html). Originally put together to assist companies in Third World countries find overseas markets, the system is a huge free-for-all bazaar of trade leads (they claim to have listed more than 1 billion trade leads since the inception of the system) with attempts at integrating a Smart Card payment system. Ideally this is a major indication of trade in the future. At present it is mostly a resource guzzling system.

The National Trade Databank leads are a combination of requests taken from companies that have contacted US Foreign & Commercial Service officers in US embassies and consulates thought the world and government purchasing requests from other countries. Each lead give some basic due diligence information such as bank name, size of company, and comments by the local USFCS officer.

Vertical Directories

There now is a proliferation of "vertical" industrial Web sites that offer industry specific directories and industrial news. These directories often do not list specific leads but rather serve as industry specific listings. VeritcalNet has specific sub-industry Web sites such as "fiberoptics.com", which lists companies with that produce fiber optic related products and provides industry news trade leads and job postings.

The major industrial directories such as Kompass and Thomas Register also allow free extensive industry specific searches.

Reaching target International Markets

Similar to the "Vertical Directories" are hundreds of regionally specific business directories. Our Web site has a thorough list (http://www.fita.org/webindex.html) and the "E-Directory" has links and direct searches of hundreds of country specific search. These are excellent ways of targeting companies in specific regions of countries. Kompass (http://www.kompass.com) also allows free extensive regional specific searches by allowing multiple searches of their numerous country specific industrial directories.

Due Diligence

The unreliability of most of the leads available on the Web has caused new breed of due diligence services. First stop in a due diligence search should be the new Internet based services offered by Dun and Bradsheet. Dun & Bradstreet has created a series of credit and company information reporting services on the Internet at prices ranging form free (Companies OnLine) to $85. D&B also offers company information on more than 19 million overseas companies (http://www.dnb.com/products/secure.htm#gcl). There are also 47 country specific credit reporting agencies listed in the Creditworthy Directory. And Owens Online offers full international credit reports.

A new attempt at due diligence on trade leads is a service established by a Tradewinds, a large trade lead site. The International Trader Information Bureau is an attempt at self policing.

Internationalization and Localization Issues: Beyond Translation

Because the Internet opens your products to the world, translation is not any more the whole story. The concepts of internationalization and localization will be more crucial as business on the Internet grows. Bowne Global defines internationalization as, "Designing and building products so they can be easily adapted into various target languages and regions without requiring subsequent engineering changes." And localization as, "The process in which the various elements of a product are transformed for use in a specific locale or target market." These concepts go way beyond simply translating a Web site. It means a complete adaptation of a foreign culture onto a product. As much as one talks of English being the dominant language of business and the Internet, the successful international businesses will have to look closely at internationalization and globalization of their products.

Pricing for International Sales

Finally, how do you price your products? At this point, most companies in the world expect to be quoted by US companies in US dollars. But a big change is about to happen with the introduction of the Euro. For the first time there is likely to be a competing dominant currency, representing an economy equivalent in size to the US. Within the next few years it is likely that your overseas customers and suppliers will request and quote at least some of their prices in Euros.

In the meanwhile, it is also often necessary to quote or receive quotes in foreign currencies. Oanda is perhaps the best conversion utility on the Web.

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