Export Labeling Requirements and Full Container Loads

Another Key aspect of the search and learn tactic of export sales is the buyer overseas has no better idea of labelling requirements, government permits, etc than you do.  The idea that a third party somehow, anywhere can assist you in getting that right is delusional.   Further, if this "helper," whether official or consultant, is wrong, they have no skin in the game.  Too bad for you. Not only is labelling requirements, permits etc chaotic for the USA importer, so it is for the overseas importer too.  The only reasonable tactic is trial run.

The very best defense one has in importing, whether overseas or here, is precedent.  "This is what we did last time...!"  No one likes to contradict another easier precedent.  Turf battles and hurt feelings play a big part in government, government workers must tread lightly when contradicting earlier work. So while slightly, slowly growing minimum orders serves the importing testing the market, it at the same time serves the importer in testing the system.

But contradiction also can and will happen.  In USA importers can see what controversies have happened before in their product category by going to

http://rulings.cbp.gov/

and entering their product... say yours is from coca leaves, so you enter that,  and see

http://rulings.cbp.gov/index.asp?ru=m81368&qu=coca+leaves&vw=detail

Well, if you are exporting your buyer overseas will research such things too.  It is not your job to worry about the requirements overseas.  And if you are wrong, then you get blamed.  No good deed goes unpunished.

If I can bring in one small shipment, sure I am risking the $2000 or whatever, but all the "overseers" are at once not terribly concerned about such a small shipment nor am I risking much.  If it goes bad as an importer overseas, then I am not out too much.  As the exporter from USA, since I have been prepaid I am out nothing.  Either way, both sides want small test shipments upon which to build trade.

Oddly, the schools, export promotion entities, banks, all seem to presume export means full container loads (fcl).  Nothing could be further from real world experience and practice. The people who actually handle shipments, 3PLs, airlines, steamship lines realize most of their cargo is lcl (less than container load).

I have a little lesson plan on ocean freight that demonstrates how illusory the "full container load" savings benefit is, and I am happy to send a .pdf of the same to anyone interested.Feel free to forward this by email to three of your friends.

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Bulgaria, Jews, Holocaust and Kingdoms

One does not hear much of Bulgaria, but it came to my attention this week as I attended a three day conference on the holocaust and memory at the University of Washington.  It seems young scholars worldwide are digging a little deeper into the holocaust and finding remarkable patterns.  More anon.

One thing I heard was no Jews from Bulgaria died, although Bulgaria was a Nazi ally during the war.  Neighboring countries Greece, Turkey, Romania, yes, Bulgaria no.  Italy and France, yes. Where Bulgarian soldiers occupied other lands, like Greece, Jews were transported out to their deaths.  But none in Bulgaria proper.  In a conference dedicated to discovering patterns, I wondered at this anomaly.

One of the presenters noted that "Jews who died were denied state protection."  To which my mind immediately retorted "Jews who died expected state protection."  And my hypothesis formed.

I formed a hypothesis based on my reading of the bible, but was reticent to pose it to the near 2 dozen scholars who were presenting papers.  My reticence was related to the fact that in three days of research presentation by over a dozen Jewish scholars not once was God mentioned.

When the discussion was opened to allow questions form the audience, one yarmulka'd fellow asked a religion-based question and his was the only question in those three days that no one deigned to answer.  It was weird.  Afterward I consoled the fellow by noting these were social scientists and there was no religion in their inquiries.  He began to object and I suggested the University needed to run a conference on the Holocaust and God.  He like that idea, and so do I.  Indeed, in Micah 6 v 3 God asks to have any case against Him laid out.

It is little remarked that democracy is not considered a legitimate form of government by any of the three major religions.  Kingdoms are a permitted evil, over God's protest, but thus legitimate.  (1 Samuel 8)  The last century was the cruelest and bloodiest in history as democracies emerged.

So to the pattern:  where Jews expected state protection, they died.  Where Jews were subject to kings, they survived.  Bulgaria, although allied with nazi Germany, was ruled by Czar Boris III.  The UK, the Jews survived.  Lichtenstein, Jews safe and some even escaped Germany.

Kingdoms where the monarchs capitulated the Jews did poorly, for example, the Netherlands and Norway.  Would kings stood their ground!  On the other hand, the Kingdom of Sweden actually rescued Jews from Denmark, another capitulated kingdom.  It seems to me if your motto is "never again" you might want to investigate where it did not happen in the first place.

Switzerland stands out as a democracy whose Jews survived.  But Switzerland seems more anarchic than democratic.  And as an anarchist, I would would say that.

(By the way: name the King of England during WWII.  Name the King of Sweden during WWII.  Or the Prince of Lichtenstein.  I know you never heard of Czar Boris III.  Funny that, the ones who saved Jews are unknown, but Eichmann, Hitler, Himmler etc are all household names.  State actors as malefactors we know, kings ruling at God's sufferance, no. This rather suggests kings protecting Jews is not remarkable, but that at state actors would kill Jews one is shocked, shocked...)

These young scholars are all studying the state and historical records to divine how it all worked, and how people reacted.  The yarmulka'd fellow I think was recommending they look into another historical record, the bible.  God relented and allowed kingdoms.  But He never allowed democracy. The American founders were never so impious as to form a democracy, they formed a republic.  Even the Soviets knew better, forming the Union of Soviet Socialist Republics, or CCCP in Cyrillic.  He who pays the piper calls the tune. Is research focussed on the state because it is paid for by the state?  Is it focussed on the state for disappointment in the state?  Is there a presumption there is only the state, so "never again" is just a matter of getting the state right?  (And since the state is only people, it is a matter of getting the right person.  And if need be, a strong person, an ubermensch?)

Some Bulgarians overthrew their kingdom upon Boris's death, and thus began a 40 year stretch in the desert under Soviet hegemony for Bulgaria.  Bulgaria has emerged somewhat independently and tentatively as a republic, something of a disappointment to the powers that be for Bulgaria not more wholeheartedly embracing modern capitalism, echoing no doubt nazi consternation for failure to get with the program during that adventure in capitalism.

Bulgaria has what seems to be a magic number for free-ish polities, and that is the 7 million citizens like Hong Kong and Switzerland.  Maybe the Bulgarians will restore their kingdom, or go even farther and restore the peace and prosperity of anarchy.  In any event, "never again" does not play in Bulgaria because it didn't happen there in the first place.  Long live the king, if not free markets.

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The Lie of Too Big To Fail

How do we know that too big can fail with no adverse results, well too big often fails with no adverse result.

 Enron Chairman Kenneth Lay had been a top contender for Treasury secretary in President George W. Bush’s administration. Then in the blink of an eye, the entire company was revealed to be an accounting fraud from top to bottom, collapsing into a $63 billion bankruptcy, the largest in American history. Other companies of comparable or even greater size such as WorldCom, Tyco, Adelphia, and Global Crossing soon vanished for similar reasons.

We need to think "too big to bail" not too big to fail.

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Bamboo Bicycles

Having spent a decade trading in native handicrafts, especially bamboo, I do have an affection for the fibre and its uses.  Now comes a company from Seattle (a city that reminds us of St. Paul "where sin abounds, grace abounds all the more...) that makes bicycle frames out of bamboo.

http://www.monsooncycles.com/?page_id=17

The prices seem on par with titanium.  A few months ago I covered a fellow in Portland creating wooden bicycles.

It breaks my heart to think there are countless people heading out to work to push paper and whatever, instead of create, laugh, be serious and all the good things that come with being customer-employed (no such thing as "self-employed.")

There is something you should be doing.

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Crowdfunding in Hong Kong

With the hysterical fury to mulct as much as possible from any and all sources to keep the zombie banks alive, the USA regime is killing the crowdfunding initiative.  At the same time, it grows in Hong Kong.

Ms Hwee, whose background is in direct investment, saw an opportunity to create a business model for investors to get behind smaller, individual projects that couldn’t get funding from institutional investors. As crowdfunding became more popular overseas, especially through such sites as KickStarter, Ms Hwee began receiving more project referrals, and FringeBacker was launched in September 2012. 

We need a special economic zone in USA, like China has Hong Kong.  One country, two systems, such as communism can abide. I think that peninsula upon which Detroit reposes would be an excellent candidate.

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How Much Design?

On May 1, 2013, at 9:02 AM, RG wrote:

 I'm learning that a lot of people believe new products need to be 100% right. I can't describe the aesthetics to the customer in detail because the factory needs to design this as best they can, but I guess you can't test the idea completely before samples.

***You need only get to where you get enough orders from the market to cover the suppliers minimum in a workable amount of time profitably.  If you do any less, you have to re-do. If you do any more, you've wasted time and money.***

What do you think re: designing by yourself and working with the factory?

***I do everything, what is necessary and sufficient in this case?***

If I am honest the reason I have not progressed it more quickly, apart from being busy, is a fear that once a 60% right product hits the market someone will immediately recognize its a good idea and design it a lot better - and my ability to market vs theirs.

***So what?  Who says it is down to you to get this benefit on the market?  If it is for someone else, then let them do it.  In the meantime, age quod agis. If there is to be failure, it will only up new opportunities.***

Also, I'm not sure how much I should fund improvements in design before it is good enough to sell. I could just make it myself at home though!

***If you can start there, then do so...  

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Error In Entering Export markets

One reason people fail in opening an export market is they see the huge numbers (USA is only 5% of the world market, so the world is 95%) and go after the huge market.  Think of the world market for a category you trade in, say a pineapple jelly, as a large circle.  Now draw a tiny circle within that large circle.  Well the market for pineapple jelly is the big circle, the market for YOUR pineapple jelly is the tiny circle.  To get going on the right track, go after the tiny circle as a market.

The illusion of the huge market leads to an illusion of higher stakes, and thus more caution.  Call a lawyer, find out what contracts are necessary to protect oneself in int'l trade, what are the labelling requirements for each country, and then what programs might there be to assure payment in the risky world of transnational business?  And of course, IPR only applies to USA when one is awarded such property, one needs to first to secure IPR in each country before one proceeds.

What follows is an amazing waste of time talent treasure blood sweat and tears for what should not take more than 2 or 3 hours to arrive at, once and for all, an export offer that will work in all times and places worldwide and is no more difficult to fulfill, and no less profitable, than any domestic order.

It is quite simple, the trick is to enter exporting as a low stakes, low effort project:

1. What is the minimum (never maximum) order you can stand to sell?  (Say $2000.00)

2. What are all the costs associated with getting an order of that size and weight sitting on a ship in an export port (say you are in San Francisco, so Oakland).  You work with a freight forwarder to establish this.  Say all costs in are $350.00.  So add your $2000 minimum and now your MOQ is $2350.00, FOB Oakland.  (And this is why they say there is more money in export than in domestic sales; well, yes, but no more profitable, nor any more difficult).

3. The terms of sale are cash, prepaid.  Any importer with distribution anywhere in the world can afford this, and want this.  As a test order.  No buyer wants to test a large amount.  In this way you make it easy for far more buyers in far more places to try out your product in places undreamt of.

4. Post this on your website for the entire world to see.  Any and all can place an order at any time, no questions asked.  "but but but...  what about lawyers and bankers and foreign labelling requirements and documentation and so on...?"

Not your problem.  You've been paid.  Any and all problems your customer overseas experience is both his problem and his fault.  he knew that placing the order, and one reason he is willing to place the order is to find out just how many problems he will encounter in a real transaction.  He knew he might have to lose the shipment.

The reality is there are 10,000 people around the world who'd like a free sample which you pay to ship worldwide.  Ignore that scenario.  There are 100 people who might be potential buyers.  There are ten of those who will actually place that FOB MOQ order.  And then there is one who will reorder.

You need to utterly ignore the 9,990 who are not really your market anyway, and make yourself available to the 10 who may actually order.  You need know absolutely nothing about anything regarding 9,999 of the above.  the only time you begin to ask any question is of the only one who reorders.  The one of the 10,000 who reorders found a market.  Now you can get interested.

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Exporting As A Small Business

Here is an article by an exporting consultant citing a Commerce Department study:

A Commerce Department report says that the primary reasons more firms don’t export are:

• We have better market prospects here in the U.S. (36 percent)
• Exporting would not be profitable for us (21 percent)
• We are just too small for exporting -- it is for large firms (15 percent)
• We don’t have enough information about foreign markets (8 percent)
• Exporting is too risky for small firms like ours (6 percent)
• We cannot finance export sales (4 percent)
• Other reasons (10 percent)

As those who have taken my seminars know, every one of those objections can be overcome by these elements:

1. There are foreign markets more dynamic than USA markets as far as growth goes.  You can know this by simple research.

2. Export orders are profitable, if you

a. charge the same as a domestic order

b. add the extra costs to arrive at a FOB price on an export offer.

3. Something like 92% of USA exporters are small businesses.

4. All the information you need to know about a foreign market can be had in a ten minute trade data review at USITC.gov. you learn which countries are the best prospects for your product and the price being paid by foreign customers.

5. If you follow the small MOQ order tactic to "search and learn" about the markets, you take no risks of a non-monetary type (legal jeopardy for noncompliance, etc).

6. If you follow the small MOQ order tactic to "search and learn" then your strict FOB/prepay price quote eliminates any need for finance, for you get prepaid.  Now there are misconceptions that a letter of credit assures payment (not true in theory, law or practice) and that wire transfer can be pulled out after it appears to have been credited to (debited to?  I never get the terms right) your account.

In a series of seminars which bankers were present, I was reminded that one should have a receiving account number and the banks can sweep that and move the money to another account so there is no way money showing up in the receiving account can be got at after it is swept.  (Talk to your banker about it.)

As to other reasons, since they are not stated, I would welcome hearing what those are.

The article goes on to note that there are plenty of companies who are small and exporting, regrets they do not do more than minimal market study, yet recommends they do more.  I say stick with success, do what is only necessary and sufficient to get export business, but in all cases make that first order profitable, or not at all.

***John Spiers will be offering an all-day seminar on small business international trade start up at Orange Coast College, Los Angeles Area, June 29, 2013.  Full info here...***

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Bitcoins as Tallies

Whenever they dig up some lost city wiped out in a flash, they do not gold and silver coins in everyone's pockets, nor buckets of precious metals buried here and there, they find tallies.

Bitcoin is not a money, it is not even a currency, it is a tally.  Here Hugo Salinas Price makes an excellent summary:

The Bitcoin is an example of the tremendous hold that the idea of the omnipotence of technology to solve human problems has upon humanity. However, technology cannot create matter; it cannot create commodity-money, as it cannot create petroleum. Technology may give various forms to matter, but it cannot create matter or substance, and money must be the substance that is most accepted in commerce. All the Ph.D.s and Nobels in Economics are playing games to keep the world entertained. The less their pronouncements make sense, the wiser they think we will consider them.

You tell me: What is the future that awaits a humanity so confused that it can no longer distinguish between an abstract concept and what is real and material? Very confused people are participating in speculations in imitation currencies – dollars, pounds, euros, yen, yuans, Bitcoins - in the hopes of obtaining some profit or benefit, because unable to think for themselves, they can do nothing but speculate – and ruin themselves.

Read Price's whole article.  Mish quotes the above in an article his post on bitcoin where he interviews a merchant building a biz on bitcoin transactions.

How can this be if bitcoin is neither money nor currency?  For most of history, most business transactions required neither money nor currency.  Most business is on creit among the players, very local and trust based.  Everyone kept tallies, and to fool around is to go out of business for lack of trust and cooperation.

With banking, and then lending at usury, and then lending fractional reserve at usury, and then lending only the unbacked fraction of the reserve at usury, "credit" could be lent apparently cheaper ay usury than otherwise, at least for those who pursued foolish risk.  The result is the boom and bust cycles. the bonus to the rise of the state was all this lending took record keeping, and states could use the records to tax transactions.

Another aspect to worsen the economies was selling debt on secondary markets.  Once no one in his right mind would buy debt, and it was not legally permissible anyway for you to sell a loan made to me to a third party.  I have no idea who the third party is, I contracted with no third party, so why would I be obliged to pay that third party anything?  What was once local and immediate consideration of each other's creditworthiness among each other kept busts at check, but once fractional reserve and selling debt on secondary markets occurred, the boom where the damage is done occurs, and then the bust where schmucks are assigned the debt follows.

The fisherman sells his fish for $5 on credit to a trader who sells is for $7 on credit to the fishmonger who sells it for $10 on credit to the restauranteur who sells it for $20.  The customer who extinguishes the fish funds the settling of his bill for $30 with silver.  All those back on up the line who extended credit (at no interest) get paid back eventually.  As you can see of all the economy, most is on credit.

But is was safe and legitimate because it was local ad limited to those who would suffer if there was a default.  None of this "I take the profits, taxpayers take the loss" we have in capitalism.

We need to return to free markets to regain our economy and security.

AS for bitcoins, they are just a tally outside the tax system, like we once had.

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Professor Michael Sandel Gets it Wrong

Capitalism and the free market do not mix.  It is one or the other, the more of one the less of the other.  Here a college professor is right to criticize capitalism, but then mixes up crony capitalism with the free markets.  It is no wonder our economy is in such a mess when top, most popular professors cannot keep the most fundamental points straight.

“Without being fully aware of the shift, Americans have drifted from having a market economy to becoming a market society ... where almost everything is up for sale ... a way of life where market values seep into almost every sphere of life and sometimes crowd out or corrode important values, non-market values.”

A country that has a Federal Reserve Bank cannot be a free market, so that problem goes back far before the time frame Dr. Sandel is observing.

Examples ... for-profit schools, hospitals, prisons ... outsourcing war to private contractors ... police forces by private guards “almost twice the number of public police officers” ... drug “companies aggressive marketing of prescription drugs directly to consumers, a practice ... prohibited in most other countries.”

Companies that do work for states, such as imprisoning people, are hardly free market actors.

More: Ads in “public schools ... buses ... corridors ... cafeterias ... naming rights to parks and civic spaces ... blurred boundaries, within journalism, between news and advertising ... marketing of ‘designer’ eggs and sperm for assisted reproduction ... buying and selling ... the right to pollute ... campaign finance in the U.S. that comes close to permitting the buying and selling of elections.”

This is just lending state power to cronies, hardly the stuff of free markets.  Prof. Sandel is not calling for elimination of the problem, just that he should be in charge.  Prof. Sandel has had 30 years of students graduating from his very popular classes.  What has happened in the 30 years he has been teaching?

Update:  Whoa...  Mish covered the same topic and article and comes out a bit more forthright.

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