Transport, compliance, jurisdictions and finance
Transport and distribution
- Sea freight — cheap per unit, slow (weeks), and moves in container-sized quantities. The default for most physical exports from New Zealand.
- Air freight — fast (days), several times the cost, and used for high-value, perishable or urgent goods.
- What the choice affects beyond cost: how much stock is tied up in transit, how quickly the business can respond to a reorder, and whether a perishable product is sellable at all when it arrives.
- Distribution in-market — who takes the product from the port to the customer:
- a distributor, who buys the stock, warehouses it, sells it on and takes a margin
- an agent, who sells on the business's behalf for a commission but does not take ownership
- direct to retailer, which keeps the margin and requires the business to do the work
- direct to consumer online, which keeps the most margin and requires the most capability
Compliance and jurisdictions
- Every market has its own rules, and they are the most common reason a first shipment is held:
- Product standards — ingredients, additives, materials, electrical and safety requirements
- Labelling — required information, language, nutritional format, country of origin, warnings
- Certification — food safety, organic, halal, and sector-specific approvals
- Import documentation — invoices, packing lists, certificates of origin, phytosanitary or veterinary certificates
- Customs and biosecurity at both ends
- Jurisdictions matter for contracts as well as products: if a dispute arises with a distributor, whose courts decide, and under whose law? A contract that specifies a jurisdiction the business could never afford to litigate in is effectively unenforceable.
- Intellectual property is territorial. A New Zealand trade mark protects nothing offshore, and in many countries the rights go to whoever registers first. Registering in the target market before entering it is a compliance question with commercial consequences.
Trade agreements and tariffs
- A tariff is a tax on imports, paid at the destination border, which raises the landed cost and therefore the shelf price.
- A free trade agreement reduces or removes tariffs between its parties, which makes an exporter more competitive against local producers.
- Rules of origin decide whether goods qualify: the product usually has to have been substantially produced in the country claiming the benefit, so a business assembling imported components may not qualify.
- Non-tariff barriers — standards, quotas, licensing and inspection requirements — can matter more than tariffs and are not removed by an agreement.
- Check the current position for the specific product and market on official sources. Agreements are renegotiated and tariff schedules phase in over years.
Finance and getting paid
- Getting paid is the risk students underestimate most. The buyer is in another country, under another legal system, and pursuing them is usually not worth what is owed.
- Payment methods, from safest to riskiest for the exporter:
- Payment in advance — safest for the exporter, hardest to get a buyer to agree to
- Letter of credit — the buyer's bank guarantees payment provided the documents match exactly. Secure, and it costs money and administrative care
- Documents against payment — the shipping documents are released only when the buyer pays
- Open account — the goods are shipped and the buyer pays later. Normal between established partners; a large exposure with a new one
- Credit insurance covers the risk of non-payment, at a cost.
- Exchange rates move between quoting a price and being paid, which can remove a whole margin. Options: price in New Zealand dollars and pass the risk to the buyer; use a forward contract to fix the rate; or build a buffer into the price. Each has a cost — pricing in New Zealand dollars is the simplest and can lose the sale.
- Tax. Exports and the destination country's consumption taxes and duties both need advice. This is a question for an accountant, and it belongs in the consultation.
Cultural intelligence in the export process
- The guide names cultural intelligence first in its list of export process content, and it runs through everything above:
- how negotiations are conducted, and how long trust takes to establish
- what a contract signifies — a final agreement, or the start of a relationship
- how disagreement and refusal are expressed, so you can tell a no from a maybe
- packaging, colours, numbers, imagery and names that carry meanings not visible from here
- who has to be present, and who has to be consulted, before a decision is made