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Both national and international norms and regulations influence export trade. That, of course, makes it a difficult venture to manage. In other words, it encompasses a broad geographical region and incorporates various socioeconomic situations and norms. This is the case in many trading countries.

The decision to enter an export market should be made after carefully weighing the advantages and disadvantages. To be an effective exporter, avoid playing the in-and-out role since this would harm both the new exporter’s reputation and the country’s reputation as a dependable international trader.

Internal Company Assessment

The decision to export or not export should be based on an assessment of the company’s export readiness as well as the product’s preparedness for the desired export destination. The variables to be investigated in order to complete this assessment are as follows:

  • The commitment of the top-level Management;
  • Adequate managerial and qualified staff; 
  • Skilled and experienced personnel to handle the various aspects of exportation;
  • Sufficient production capacity—that is, adequate factory space, warehousing, machinery, and accessibility to raw materials to meet the demands of the importers;
  • Adequate financial resources to purchase capital equipment and spare parts, raw materials as well as working capital;
  • Ability to produce and adapt products with real export potential using cost-effective methods; and
  • Ability to provide after-sales services in the importing country, if required.

Foreign-Market Assessment

The company may decide to export after conducting an internal examination. However, before taking any efforts to export, the potential exporter must conduct market research. To successfully export your product, you should conduct research on overseas markets. Of course, the goal of the research is to discover marketing opportunities and limits abroad, as well as prospective purchasers of the export goods.

Market research can be defined as the systematic gathering and analysis of market information in a foreign market or markets systematically to better determine the potential for a particular product or service in that market. Market research encompasses all methods that a company can use to determine which foreign markets have the best potential for its products. The results of such research inform the firm about the following, among other things:

  • The largest and most promising markets for its product;
  • The fastest-growing markets for the product;
  • The trends and outlook of these markets; and
  • The practices of these markets and of the other exporting companies of the product which the company has to compete. with 
  • Market research generally consists of two elements: desk research and field research.

Research

Desk research is the initial step. It involves collecting and analyzing the data available from local sources within Ethiopia. Some of these sources are chambers of commerce and sectoral associations, the National Bank of Ethiopia, and the Ministry of Trade and Industry. 

The information obtained from these sources can help eliminate less suitable markets at an early stage, as can much of the information obtained on the target market before making the field trip to ascertain whether the foreign market is promising enough to justify the costs of the field research.

Field research is used to test the findings of your desk research and to meet with key potential customers, agents, and distributors.

Your company may find the following approach useful: It involves screening potential markets, assessing the targeted markets, and drawing conclusions.

Screening Potential Markets

Step 1: Obtain export statistics that indicate the most common export products to various countries. Published export statistics provide a reliable indicator of where Ethiopian exports are currently being shipped. The Ethiopian Revenue and Customs Authority and the Central Statistics Authority provide these statistics in a published format.

Step 2: Identify five-to-ten large and fast-growing markets for the firm’s product. Look at how well they were doing over the past three-to-five years. Is market growth consistent from year to year? Did import growth occur even during periods of economic recession? If not, did growth resume with the economic recovery? 

Step 3: Identify some smaller but fast-emerging markets that may provide ground-floor opportunities. If the market is just beginning to open up, your competitors may be fewer than they are in established markets. Growth rates should be substantially higher in these countries to qualify as up-and-coming markets, given the lower starting point.

Step 4. Target three to five of the most statistically promising markets for further assessment. Consult the Ministry of Trade and Industry, the National Bank of Ethiopia, the CSA, business associates, freight forwarders, and others to evaluate targeted markets further.

Assessing Targeted Markets

Step 1: Examine the trends for your company’s products as well as related products, which could influence demand. Calculate the overall consumption of the product and the amount accounted for by imports. Some institutions offer industry sector analyses (ISAs), country commercial guides (CCGs), and other reports that give the economic background and market trends of each country. Demographic information (such as population and age) can be obtained from the World Population (Census) and the Statistical Yearbook (United Nations). 

Step 2: Ascertain the sources of competition, including the extent of the production of the domestic industry and the major foreign countries with which the firm is Competing in each targeted market, by using ISAS and competitive assessments.

Step 3: Analyze factors affecting marketing and use of the product in each market, such as end-user sectors, channels of distribution, cultural idiosyncrasies, and business practices.

Step 4: Identify any foreign barriers (tariff or non-tariff) for the product being imported into the country. Identify any barriers (such as export controls) that affect exports to the country.

Step 5: Identify any foreign government incentives that promote the exportation of your particular product or service.

Drawing Conclusions

After analyzing the data, the company may conclude that its marketing resources would be applied more effectively in a few countries. In general, if the company is new to exporting, efforts should be directed to fewer than ten markets. Exporting to one or two countries will allow the company to focus its resources without jeopardizing its domestic sales efforts. The company’s internal resources should determine its level of effort.

In general, here below are the pieces of information to be gathered on the different potential markets and analyzed:

A) Use of Trade Intermediaries Exporting is usually divided into the direct and indirect distribution of exportable goods. Direct export means that the exporting company itself operates in the foreign market, either by being physically present in the foreign market or through selling agencies originating from the exporter’s country.

Indirect exporting involves selling through a third party as an intermediary between the exporter and the end user.

The most common intermediaries include distribution networks such as the following: Physical representation is not normally recommended for a new exporter, as it is far from easy. 

Operating through an agent/importer, importer, or wholesaler, however, provides a new exporter with a low-risk option that should be pursued before venturing into other trade Channels. The different channels should be carefully studied before one embarks on exporting. 

B) General Information 

  • Geographical area/location; 
  • Population defined by race, religion, income, age, and sex distribution; 
  • Languages—official, indigenous, and others;
  • major commercial and industrial regions and centers; and the literacy rate and the average educational level.

C) Form and Nature of Government

  • The responsibilities of central and regional governments; 
  • Political attitude towards Ethiopia; and 
  • economic and social policies.

D) General Marketing Factors

  • General market conditions; 
  • Consumers’ tastes and preferences;
  • Trends in the competition;
  • Price quotations and payment terms;
  • The standards used, the weights and measures;
  • The advertising and publicity media;
  • The leading import houses;
  • The main shipping and air links;
  • The pertinent government ministries and departments;
  • The pricing structure of products;
  • Free trade zones;
  • Trade fairs and exhibitions; and
  • A list of potential distributors and agents.

E)   Economic Indicators

  • The national currency and the stability of the exchange rate; and
  • Import and export statistics.

F) Banking Infrastructure

  • The number, types, and competency of the banks; and
  • Import and export statistics.

G) Transport and Communication

  • The main ports and facilities;
  • Shipping services;
  • Airports;
  • Freight services;
  • Inland transport routes; and
  • The condition of the roads,

H)   Data on Foreign Trade

  • Total trade;
  • Main imports;
  • Main exports; and
  • Trade with Ethiopia, in terms of both value and volume.

I)  Market Access

  • General import policy;
  • Membership in a customs union or any other free-trade area; and
  • Special trade relations, if any.

J) Import Licensing

  • Categories, the basis of allocation, and procedures.
  • Rates, the basis of assessment, surcharges, and other taxes.
  • Entry regulations and procedures;
  • Free ports and bonded warehouses; and
  • Samples, advertising,g and postage packages.

K)  Other Factors

  • Foreign-exchange controls, repatriation of profits, and convertibility of currency;
  • Food, health, safety, and quarantine requirements;
  • Marketing, packaging, and labeling regulations; and
  • Shipping and other required documents.

Product and Market Selection

Product Selection

There are several ways to evaluate the export potential of products and services in overseas markets. The most common is to examine the success of the products domestically. If your company succeeds at selling in the Ethiopian market, there is a good chance that it will also be successful in foreign markets, at least in those where similar needs and conditions exist. Examining the product’s unique or important features is another way to assess your company’s exporting potential. If those features are hard to duplicate abroad, then it is likely that you will be successful there. A unique product may have little competition, and the demand for it might be quite high.

Finally, your product may have export potential even if there are declining sales in the Ethiopian market. Sizeable export markets may still exist, especially if the product once did well in Ethiopia, but is now losing its market share to more technically-advanced products. Other countries may not need state-of-the-art technology and/or may be unable to afford the most sophisticated and expensive products.

In general, the product(s) to be selected for export should have a competitive advantage in the targeted foreign markets. 

Market Selection 

After studying and analyzing data on several markets and identifying the products to be exported, the prospective exporter must select the potential market(s). The following should be kept in mind:

  • To start with, the exporter should concentrate on at least two markets and gradually expand; 
  • Select those markets that have a good potential, in terms of size and purchasing power;
  • Choose markets that offer preferential access to Ethiopian products, whenever possible;
  • Start with closer and more accessible markets, in terms of distance and transportation;
  • Choose those markets where your company’s product can be sold without costly adaptation; 
  • Don’t overlook the smaller and less obvious and perhaps less competitive markets;
  • Entry into a market that has no Strict exchange-control regulations or import restrictions would be advantageous;
  • Avoid markets where the peace is fragile; and
  • Avoid too-distant markets with poor transport connections.

Establishing and Maintaining Contacts with Foreign Markets 

When the most promising potential markets have been selected, there is a need to remain in touch with the selected foreign markets. This can be accomplished by doing the following:

  • Sourcing of potential buyers by using business directories, trade-information centers, and banks as well as by participating in trade missions; participating in trade fairs and exhibitions;
  • Visiting the targeted market to meet with prospective buyers and to renew contacts;
  • Contact and use Agent/ Distributor Service (ADS) to locate foreign agents and distributors abroad;
  • Try to get an International Company Profile (ICP), a background report on a specific foreign firm prepared by commercial officers overseas. These reports include information concerning the type of the organization, the year of its establishment, the number of its employees, its reputation, the territory it covers, the preferred language, the product lines handled, the principal owners thereof, and the financial and trade references.

When you pay personal visits to prospective buyers, be sure to take with you samples of your products or well-prepared brochures and ample supplies of your business cards. 

Sources of Market Information 

In Ethiopia, there are several institutions whose raison d’être is to assist the business community. The exporter is advised to become a member of these institutions to benefit from their many services. Here below is a summary of the sources of information and the services that are available to the business community: 

Chambers of Commerce and Sectoral Associations

The business community in Ethiopia has access to the most recent information on global market trends and developments thanks to the Chambers of Commerce and Sectoral Associations. They primarily help exporters, importers, potential exporters, and the business community as a whole to locate, develop, and seize opportunities in the global market.

Publications and trade directories are typically available in hard copy at the libraries and reference departments of chambers of commerce and sectoral associations. In this regard, a special mention is made of the Addis Abeba Chamber of Commerce and Sectoral Association, which renders electronic-related services as well. This chamber has an information department and a documentation center and has joined the pioneering chambers of the world to form the World Chambers Network.

The information sources available from the Documentation Center of the Chamber include the following:

  • Trade directories (the addresses of importers, exporters, manufacturers, products, etc.);
  • Market studies;
  • Company profiles;
  • Product reports; and
  • Trade journals and magazines.

The Information Department of the Chamber offers the following: 

  • Internet-related services (trade opportunities and inquiries);
  • Access to major international business databases through the Internet; 
  • Computerized databases on Ethiopian products, exporters sellers, international and importers, trade foreign buyers and exhibitions, global trade statistics

Business Development Services (BDS)

Since 2001, about 30 public, private, and commercial business-development institutions have introduced the facilitation of Business Development Services (BDS) in Ethiopia. But in order to become sustainable, BDS delivery from private, commercial BDS providers needs to be strengthened even more. Business development services (BDS) are a broad category of non-financial services that private suppliers (BDS providers) offer to business owners, who use them to operate and expand their enterprises profitably. The types of services offered in a BDS system that is operating are determined by the demands made by the businesses.

The services rendered by a BDS include the following:

  • Market information; market linkages; trade fairs and exhibitions; development of samples for buyers; sub-contracting and outsourcing; marketing trips and meetings; market research; market-space development; showrooms; packaging; advertising; 
  • Linking MSEs to input suppliers; enhancing suppliers’ capacities to regularly supply quality inputs; facilitating the establishment of bulk buying groups; information on input supply sources;
  • Technology transfer/commercialization; linking SMEs to technology suppliers; facilitating technology procurement; quality-assurance programs; equipment-leasing and rental; design services;
  • Mentoring; feasibility studies and business plans; exchange visits and business tours; franchising; management training; technical training; counseling/ advisory services; legal services; financial and taxation advice; accountancy and bookkeeping;
  • Storage and warehousing; transport and delivery; business incubators; telecommunications; courier services; money transfer; information via print, radio and TV; internet access; computer services; secretarial services;
  • BDS providers do not provide direct financial support, but link businesses to banks and micro-finance institutions; provide information on credit schemes and conditions; encourage savings; assist in business planning for loan applications.

The Export Facilitation and Incentives Directorate of the Ministry of Trade and Industry

The Ethiopian Export Promotion Agency [EEPA], which was established at the end of 1998, has since taken the place of the Ethiopian Trade Point, a trade facilitation center that was initially established by the Council of Ministers Regulation No. 20/1997. The Ministry of Trade and Industry merged with the Ethiopian Export Promotion Agency in the middle of 2005, giving it a diminished status and the name Export Promotion Department. Furthermore, there have been changes made to the Export Promotion Department. It was replaced by the 

Export Facilitation and Incentives Directorate at the end of 2009. The Directorate is responsible for providing professional support, solving/mitigating exporters’ problems, linking up Ethiopian exporters with foreign importers, collecting, analyzing, and disseminating trade information to the community, facilitating the implementation of export tv, encouraging the existence of coordinated and efficient wakening conditions among producers, exporters and service providers, 

For further information, you may contact it at the following address:

The Ministry of Trade and Industry, Export Facilitation and Incentives Directorate,

P.O. Box 704, Addis Ababa.

Tel.: 251 11 551 80 25, + 251 551 80 29 Fax: + 251 11 551 54 11, + 251 11 552 42 85Web  page:https://www.moi.gov.et/

The Agricultural Marketing Directorate of the Ministry of Agriculture and Rural Development

The Ministry of Agriculture and Rural Development’s Agricultural Marketing Directorate is in charge of supporting exporters’ participation in international trade fairs and exhibitions, promoting the export of agricultural products like coffee, oilseeds, fruits and vegetables, cereals, live animals, and animal products to foreign markets, and establishing connections between exporters and foreign importers of pulses, oilseeds, coffee, and tea.

For further information, you may contact it at the following address:

The Ministry of Agriculture and Rural Development, Agricultural Marketing Directorate

Website: http://www.moa.gov.et/

+251 0155180 40 +251 552 82 98

p.o.aox: 62347, Addis Ababa,

CBI (Centre for Promotion of Imports from Developing Countries)

The CBI is a ministry of foreign affairs agency that is part of the Netherlands’ development cooperation effort.

Its main objective is to contribute to the economic independence of a selected number of countries in Africa, Asia, Central, and South America, near the Mediterranean Sea, and on the islands of the Pacific Ocean by promoting the exports of goods and services from these countries to Western Europe.

To achieve this objective, the CBI has developed varied packages of services and export-coaching programs available to business-supporting organizations, manufacturers, and exporters in these countries.

The CBI provides 3SOs with up-to-date information about European markets. You will find information on trade flows, market developments, market opportunities, prices, and potential business partners. In addition, it supports BSOs in creating their market information services. It includes information about the pertinent governmental, voluntary, and non-tariff barriers. It has an online facility that links well-versed suppliers in developing countries eligible for CBI assistance to reliable importing companies in the EU.

Website address:https://www.cbi.eu/

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