basic-guide-to-exporting_Latest_eg_main_086196

negotiations and agreements with its partner should include explicit provisions forrepairs, maintenance, and warranty service. The cost of providing this service shouldbe negotiated into the agreement.If the product being exported is to be sold directly to end-users, service and timelyperformance are critical to success. The nature of the product may require delivery ofon-site service to the buyer within a very specific time period. You must be preparedto negotiate such issues. On-site service may be available from service organizationsin the buyer’s country, or your company may have to send personnel to the site toprovide service. The sales contract should anticipate a reasonable level of on-siteservice and should specify the associated costs. Existing performance and servicehistory can serve as a guide for estimating service and warranty requirements onexport sales. This practice is accepted by small and large exporters alike.If your export activity in a particular regiongrows to a considerable level, it maybecome cost effective for your company toestablish its own branch or subsidiaryoperation in the foreign market. The branchor subsidiary may be a one-personoperation or a more extensive facilitystaffed with sales, administrative, service,and other personnel, most of whom arelocal nationals. This high-cost option enables you to ensure sales and service quality,provided the personnel receive ongoing training in sales, products, and service. Abenefit of this option is the control it gives you, coupled with the ability to servemultiple markets in a single region. Be sure to investigate the tax and foreigncurrency consequences of operating a foreign branch office that collects moneyfrom buyers.If you have neither partners nor joint venturearrangements in a foreign market, you must be preparedto accept return of merchandise that the foreign buyerrefuses to take. This situation is not likely to occur incash-in-advance transactions or with orders entailing aconfirmed letter of credit. However, in an open-accountor documentary collection transaction, the buyer isin a position to refuse delivery of the goods withoutsuffering financial harm. If you cannot find anotherbuyer in that market or if you elect not to abandonthe goods, you will be faced with the fees and chargesDepending on your product orservice, you may need a localcontractor or subsidiary who canmeet directly with customers.Don’t be afraid to setup contingency plans,or to calculate costbenefitfor difficultdecisions. Planningin advance will saveheadaches later on.associated with returning the goods to the United States. Your freight forwarder, whocan be of great assistance in this process, should the need arise, can quote you a pricefor return of the goods.198U.S. Commercial Service • A Basic Guide to Exporting