Market Access Manual for Artisans Rev2 - Caribbean Export ...

MARKET ACCESS MANUAL FOR ARTISANS
NAVIGATING THE US & UK MARKET
DECEMBER 2010
Prepared by Business Bridges Company Limited
www.businessbridgestt.com
Caribbean Export Development Agency
P.O. Box 34B, Brittons Hill
St. Michael, BARBADOS
Tel: 246‐436‐0578
Fax: 246‐436‐9999
E‐mail: info@carib‐export.com
Website: www.carib‐export.com
1
Page 1

TABLE OF CONTENTS
1. Introduction
Page
4
1.1 Purpose of this manual 4
1.2 How to use this Manual 4
2.Overview
5
3. Market Access Conditions – Navigating the USA and UK market
5
3.1 Profile of US and UK consumers 5
3.2 Opportunities for Caribbean Artisans in US and UK markets 8
4. What is happening in the US & UK Markets? 11
4.1 Strengths, weaknesses, opportunities and threats 11
4.2 Key players in US & UK MARKETS 12
4.3 Market Segmentation by Price/Product/ Segment 13
4.4 US and UK Market Trends 14
4.5 Market Segmentation by Product Function 15
4.6 Main Handicraft Product Categories and Price Segments‐ UK and US 16
4.7 Points to consider in accessing segments of the US and UK Market 17
5. Distribution Channels 18
5.1 Importing Structure 18
5.1.1 Importing Structure in the US and UK markets. 19
5.2 Method 1: Trade Shows & Importers/Wholesalers 19
5.3 Method 2: Agents 20
5.4 Direct to Consumer Retailers 21
5.5 EU Distribution Channels 22
6. Online Sales /Social Media and Caribbean Artisans
23
7. International Regulatory Requirements 23
7.1 Labelling & Packaging 23
7.2 Restrictions on Wood Packing Material 24
7.3 Shipping to the US 27
7.3.1 Commercial Invoice 27
7.3.2 Pro Forma Invoice 28
7.3.3 Frequent Errors in Invoicing 28
7.3.4 Freight Forwarders 29
7.3.5 Airbill or Bill of Lading 29
7.3.6 US Customs Fees 31
8. UK Customs Duty and Import Regulations 31
9. Frequently Used Export and Import Terms
32
9.1 Ex‐Factory 32
2
Page 2

9.2 FOB Terms of Trade 33
9.3 CIF Terms of Trade 33
9.4 Landed
9.5 Bill of Lading
9.6 Packing List
9.7 Airway Bill
10. Costing & Pricing for Export- Practical Example 34
11 Appendix 1
36
12 Bibliography 38
13 Additional Resources 38
List of Wholesalers in the UK 36
Major Retailers in the UK 37
33
33
34
34
3
Page 3

1. INTRODUCTION
“Artisanal products are those produced by
artisans, either completely by hand, or with the
help of hand tools or even mechanical means, as
long as the direct manual contribution of the
artisan remains the most substantial component
of the finished product. Using raw materials
from sustainable resources the special nature of
artisanal products derives from their distinctive
features, which can be utilitarian, aesthetic,
creative, culturally attached, decorative,
functional, religiously and socially symbolic and
significant”
UNESCO/ITC Symposium on “Crafts and the International market: Trade and Customs
Codification.” Manila 1997
1.1 PURPOSE OF THIS MANUAL
This guide provides a step by step practical approach for present and future artisans interested
in raising their export competitiveness and positioning their goods in US and UK markets. Based
on the export opportunities presented by the CARIFORUM‐European Community (EC) Economic
Partnership Agreement (EPA) the manual will also provide practical information on market
access opportunities and limitations in the European Union (EU) with specific reference to
United Kingdom (UK) market, how to penetrate these markets, and how to establish important
points of contact.
1.2 HOW TO USE THIS MANUAL
The manual can be read and re‐read in whole or in part. It is simple and practical in its linear
progression; you may use and apply the information that best adapts to your specific business
needs at any given time. It is envisioned that the concepts shared in this document will allow
current and potential exporters to analyse the potential market for their goods, and the
strategies needed for accessing and establishing a presence in the United States (US) and United
Kingdom (UK) markets.
4
Page 4

2. OVERVIEW
Over the years, the handicraft industry has become one of the most vital sources of income for
developing countries which are rich in supply of natural fibers and raw materials that lend their
resourcefulness to talented artisans. However, with increased globalization products are
becoming more and more commoditised, with artisan producers facing increased competition
from producers all over the world, particularly from China and other Asian countries.
Moreover, the challenges of deteriorating economic conditions and frequently changing market
trends to strongly influence consumer purchasing patterns which make it particularly difficult for
handicraft exporters to successfully penetrate global markets particularly in the United States
and Europe. On the other hand, it can be argued that with globalization, these markets also
offer unique opportunities for local artisans as the demand for unique hand crafted, ethnic
goods continues to rise. This can be attributed to more educated and socially responsible
consumers who directly influence the value chain, and the growing number of products that are
being demanded by a more lucrative segment of the handicraft market. Consumers are
demanding goods which are unique, decorative, functional and less and less homogenized.
It is therefore imperative that Caribbean handicraft producers begin to address a number of
their shortcomings. There must be a greater willingness to tailor designs to match buyer
requirements, provide timely production and delivery, and improve on quality and efficiency in
view of increased price competition and consumer expectations. In addition, Caribbean artisans
must take into consideration that in order to meet these expectations it may require further
financial and physical investment on their part as they would most likely need to improve their
working methods.
3. MARKET ACCESS CONDITIONS – NAVIGATING THE US AND UK MARKET
The Caribbean handicraft sector possesses a distinct advantage over their major competitors
such as India, China and Africa as the region is a well sought after tourist and leisure destination,
especially to individuals based in the US and UK.
Over the years the handicraft sector therefore became heavily reliant on this influx of tourists to
the various islands in order to secure revenue for their handicraft work. However, with
challenging economic times tourist destinations have seen a severe decrease in visits from their
North American and European counterparts which means that local artisans have been forced to
find innovative ways to reach potential customers. However, to successfully penetrate the US
and UK markets artisans must first understand the conditions of these markets and more
importantly the types of consumers in these markets.
3.1 PROFILE OF US & UK CONSUMERS
US Consumer
5
Page 5

US consumers have very high expectations. They are confronted with hundreds of products and
advertisements on a daily basis and expect high quality at reasonable prices. Women in the US
are the primary consumers of handicrafts, home and fashion accessories, which they use to
change looks without investing in entire makeovers. This consumer is generally willing to pay for
something if she finds it truly unique and desirable.
Country Characteristics Pros Cons
United States A strong desire for the
unique, the interesting, and
products with a history.
Traditionally a strong market,
and continues to grow, mainly
on the back of multi‐ethnic
immigration.
Country Characteristics Pros Cons
United States The US has a high level of
internet penetration
The US has the most diverse
economy in the world giving
handicraft producers a wide
range of customers to which to
sell their products.
Country Characteristics Pros Cons
United States It is a trend‐driven industry
which means new products
are the lifeblood of a
successful selling season.
While the US accounts for only
about 4 percent of the world's
population, its GDP is 26
percent of the world's total
economic output.
Country Characteristics Pros Cons
United States US is import‐friendly Handicraft producers face
fewer barriers to entering the
market than European
markets.
Country Characteristics Pros Cons
United States The US is English speaking
which makes it easier for
Caribbean producers to
communicate with potential
partners, consumers, etc.
UK Consumer
Large market of Caribbean
Diaspora.
Price‐sensitive, price per unit
realised in this market tends
to be lower than in other
countries. The US is a very
competitive market. To
succeed, you need to offer
customers real value for
money.
Design and style are also very
important ingredients to the
US market. Hence, Caribbean
artisans must present forward
thinking products.
Caribbean artisans need to
consider the impact of the
additional costs of exporting
on the final price of products,
when competing with US‐
based or other international
suppliers where the cost of
production might be lower.
Some handicraft products
may require additional
certification when exporting.
Caribbean artisans must be
willing to adjust their product
lines, prices, volumes to
adapt to US market
conditions.
Generally, it can be said that British consumers are very proud of their homes and are eager to
undertake constant renovation, restyling and decoration. The growing awareness of fashion and
household design will serve the industry well. Even if the last few years were somewhat
disappointing, there is great scope for growth due to replacement sales. More importantly,
increasingly fashion‐led consumers at the higher end of the market are searching for decorative
and gift articles that have a higher content of fashion than mere practicality.
6
Page 6

The British also have a profound gardening culture. The garden decoration market is forecast to
grow because of the shift towards decorative rather than purely practical designs.
Country Characteristics Pros Cons
United Kingdom Large Market for Caribbean
Handicrafts.
Fashion led consumers
attracted to decorative and
functional handicrafts.
Prominent destinations
especially for their former
colonies. UK imports
estimated at UK£6,480
(2005)
Country Characteristics Pros Cons
United Kingdom Like the US, the UK has a high
level of internet penetration
Due to their high level of
internet penetration e‐
commerce can be a
particularly cost effective
way of selling directly to UK
consumers.
Country Characteristics Pros Cons
United Kingdom The UK is also English
speaking which makes it
easier for Caribbean
producers to communicate
with potential partners,
consumers, etc.
There are fewer entry
barriers for Caribbean
countries that belong to the
Commonwealth Group of
countries as they receive
special conditions for
exporting to the UK.
Economic Partnership
Agreement allows for
preferential trade, fewer
trade barriers for CARICOM
artisans.
Country Characteristics Pros Cons
United Kingdom Design and style is also very
important to them but they
are less price sensitive than
their US counterparts.
They do have a large local
industry for handicraft
producers that can offer more
reasonable prices.
Freight costs and entry
barriers may be higher in UK
market.
India is one of the largest
exporters of handicraft to the
UK. She also belongs to the
group of Commonwealth
countries which means
Caribbean artisans will be
competing against them in
product style and price.
If Caribbean artisans are to reach the consumers they want they must among other things:
� Keep updated on existing or upcoming home and fashion trends, designs, colours.
� Identify market niches where new product developments can be exploited.
� Get product developers to assist in the creative process for new product development.
� Use socially and environmentally friendly materials.
� Find alternative uses for traditional materials.
� Target new market segments e.g. furniture, decorative and functional gifts, Eco and fair
trade segments. For example, if the products were made by an underprivileged or
disadvantaged group of individuals or community or if the product shows that there has
been optimum use of resources in an eco‐friendly manner it will be entitled to be
marketed under the 'Fair Trade' banner. (See Box 1 below for further explanation on
'Fair Trade').
� Tailor products to suit these trends and not just produce goods because they like it.
� Find ways of producing goods that can accent another design or trend.
� Follow the economic situations of these two markets and price their goods accordingly.
7
Page 7

� Search for niche markets that other competitors may have overlooked. For example,
custom made handicraft that can be useful to the gardening culture of the British, can
be considered.
Box 1: The FINE 1 definition of Fair Trade
In the retail trade some handicraft articles and decorative articles can be marked with a FAIRTRADE mark,
thereby indicating that the products are traded with concern for the social, economic and environmental
well being of the producers in developing countries. The FAIRTRADE mark can serve to distinguish the gift
and handicraft items positively from other products. Any company can apply to obtain the rights of using
the mark, though the procedures to obtain the right to use the mark can be time consuming and is related
with costs. For more information on the FAIRTRADE label, please refer to the Fair Trade Labeling
Organization International (FLO) www.fairtrade.net.
Some examples of Fair Trade companies that operate in the UK and US can be found in Appendix 1
3.2 OPPORTUNITIES FOR CARIBBEAN ARTISANS IN THE US AND UK MARKETS
There are a number of opportunities for Caribbean artisans in the US and UK markets given the
advantages of economies of scale 2 their competitors present. One strategy is to improve on
access to these markets as Caribbean countries are smaller than their competitors and can
therefore be more flexible in changing their methods of production to suit market tastes.
Another strategy is to promote products under one umbrella brand. A brand that produces
quality products, invests heavily in innovation, research and new product development ‐ an
overall branding strategy which allows regional exporters the opportunity to access and exploit
new markets. This strategy will provide more services and artisans will become more
“manufacture oriented” in their operations. As a result, the quality of their products will be
consistent, quantities will be realised and they will be able to offer more competitive prices.
Caribbean artisans can also consider the following trends for various segments in the handicraft
industry and concentrate their production lines in the most promising segments:
1 FINE brings together the Fair Trade Labelling Organisation (FLO), the International Federation for Alternative Trade
(IFAT), the Network of European World Shops (NEWS) and the European Fair Trade Association (EFTA).
2 Economies of scale refer to the cost advantages that a business obtains due to expansion.
8
Page 8

Product Trends for Home Decorative
Accessories
Product Trends for General Gifts:
Candle sales slowing. Desk accessories fastest growing category.
Tabletop gifts surpass frames. Fashion jewelry 2nd largest category.
Sales of kitchen accessories & décor increase. Men’s gifts increasing annually.
Clocks remain stable.
Garden décor sales have slowed.
Home textiles sales increase rapidly.
Soap & personal care, spa products become big
sellers.
Having up‐to‐date information on new market trends pertaining to specific product categories,
or various segments that are increasing in sales is critical in order for Caribbean artisans to tap
into niche markets within the different product categories.
There are basically two retailers of gifts in the US and UK
1. Mass Merchant / Department Stores e.g. Macy’s and Bloomingdales in the US and
Debenhams and Marks & Spencer in the UK
2. Specialty Retailers e.g. museums, hospitals, airport gift shops and gift boutiques in
restaurants, hotels and resorts.
The following table gives an idea of the estimated percentage market share and total sales in
billions for the US and UK handicraft market segments in 2006. During the recession in 2008‐
2009 handicraft exporters generally saw a plunge of 25‐30% in their sales. As the purchasing
power of consumers in developed countries weakened, demand for handicraft items like purses,
handbags, traditional wear and home‐furnishing accessories shrunk drastically. However, in
2010 the market was expected to begin growing again and therefore Caribbean artisans should
prepare to gain entry into these markets for the upcoming periods.
9
Page 9

Illustrative Product Examples (2006 estimated market share
and total sales in billions)
• Baskets
• Handbags
• Picture frames (of wood and
metal)
• Wall décor items
• Boxes
• Decorative accessories
• Ornaments
• Vases
• Candles/Candleholders
• Ceramics
• Sculptures
• Masks
• Bowls and dishes
• Furniture
• Embroidered and sewn
textiles
• Papier mâché
• Jewelry
• Musical instruments
• Toys
Decorative accessories (31%)
$22.6 (4.1% growth projection for
2007)
Accent furniture (20%)
$14.5 (3.6% growth projection for
2007)
Portable lamps (11%) $7.7 (3.3%
growth projection for 2007)
Top U.S. / UK Retail Channels
(2006 sales in $ millions and %
change from 2005)
• Home accent/gift stores ($8,840; up
4.0%)
• Direct-to-consumer channel ($4,335;
up 6.4%)
• Discount stores/off-price retailers
($4,145; up 6.8%)
• Lifestyle stores ($2,555; up 5.1%)
• Department stores ($670; down
0.7%)
• Craft/fabric stores/chain ($585; up
2.6%)
• Interior designers ($445; up 3.5%)
• Traditional furniture stores/chain
($362; up 3.4%)
• Home improvement centers and
warehouse clubs ($207; up 6.2%)
• Traditional furniture stores/chains
($3,930; up 3.4%)
• Discount stores/off-price retailers
($2,735; up 7.3%)
• Home accent/gift stores ($2,235; up
2.8%)
• Lifestyle stores ($1,880; up 4.4%)
• Interior designers ($1,200; up 4.3%)
• Home improvement centers and
warehouse clubs ($645; up 4.9%)
• Department stores ($560; up 2.8%)
• Direct-to-consumer channel ($558; up
7.3%)
• Craft/fabric stores ($125, up 4.2%)
• Discount stores/off-price retailers
($1,890; up 5.0%)
• Home improvement centers and
warehouse clubs ($1,520; up 7.4%)
• Home accent/gift stores ($920; down
0.5%)
• Lamp and lighting stores/chains
($900; no change) Traditional
furniture stores/chain ($669; up 2.9%)
• Interior designers ($470, up 2.2%)
Direct-to consumer channel (425 up
6.3%)
• Lifestyle stores ($308; up 2.7%)
• Department stores ($295; no change)
10
Page 10

Generally, markets for handicrafts are reported to be very attractive as there are low barriers to
entry, access to a wide range of consumers and limited market access requirements. The general
view of crafts and giftware is therefore that the markets are increasing at a relatively steady rate
and hold reasonable prospects for growth in the future. Therefore Caribbean artisans stand a
relatively strong chance of successfully penetrating the US and UK market with a comprehensive
market penetration strategy.
4. WHAT IS HAPPENING IN THE UK & US MARKETS?
In 2006, the global market for home accessories was estimated to be at least $100 billion
according to a study prepared by US Aid on the “Global Market Assessment for Handicrafts”.
The US was the largest importer of the home accessories and was valued at $67 billion. 3
According to the U.S. Department of Commerce, the United States market has a strong desire
for the unique, the interesting, and products with a story. However, the US market is price‐
sensitive, and hence price per unit realised in this market tends to be lower than in other
countries. Nevertheless, this is traditionally a strong market, and continues to grow, mainly on
the back of multi‐ethnic immigration.
The UK is recognized as the 2 nd largest importer for handicraft products in the EU (after
Germany). Giftware imports in 2005 by the UK are estimated to be UK£6,480 million –a growth
of 2.2 % over the previous years’ estimates 4 . While in 2006 the the percentage of imports into
the UK coming from the developing countries was slightly more than 46%.
The British market though is clearly divided between people from the South East (basically the
London area) who have a higher income and prefer more fashionable products and people from
the North, who are very price conscious. The forecasts indicate only a slow rise in population
and in consumption over the next few years.
4.1 STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS- HANDICRAFT SECTOR
We can bring the analysis of the global gift and craft market together with the fair trade
handicraft overview as follows:
STRENGTHS WEAKNESSES
� Some producers have made significant
improvements in quality control and product
development for the export market, winning
commercial contracts.
� Women – the most frequent purchasers of gifts in
UK and US – have greater financial independence.
They may buy more themselves, and also buy for
others.
3 The second largest market is the E.U. collectively followed by Japan and Hong Kong.
4 Giftware 2001 Market Report, Keynote Ltd. UK
� Handicrafts, unlike fair trade foods, are not repeat
products.
� Alternative Trading Organizations (ATOs) and fair
trade importers have historically lost market share
to commercial importers.
� Expenditure is very seasonal (dominated by
Christmas)
� World Shops generally lack professionalism.
11
Page 11

OPPORTUNITIES THREATS
� People in Western markets are living longer:
increasing the number of gift-buying occasions. The
‘grey market’ (the over 50s) often have high
disposable incomes.
� Internet and digital TV may provide new
opportunities for sales.
� Growing public awareness and interest in UK and
USA in ethical and fairly traded products.
4.2 KEY PLAYERS IN THE US & UK MARKETS
� Global recession
� Stiff competition from China and South East Asia,
where labour rates are very low.
� Traditional giftware faces competition from ‘gift
experiences’, where vouchers can be exchanged for
activity days.
� ATOs and importers are focusing on food products to
increase sales (especially in mainstream outlets)
In order for Caribbean handicraft producers to further understand the breakdown of the US and
UK consumers it is important to look at the major players in these two markets.
Key Players in the US Market
According to the US Aid Study, potential buyers of handicrafts in the US were as follows:
• Specialty and lifestyle stores ‐ this category looks for unique products not available at mass
retailers. For example, Crate & Barrel, Pier 1 Imports, and Pottery Barn. They are focused on
either a single category of merchandise or a few closely related categories. Some offer low
prices with limited service, while others seek to differentiate themselves through higher‐
quality service.
• Catalog and internet retailers - is the direct to consumer channel. A high percentage of
young consumers in the US, including Hispanics and African Americans, are buying home
accessories through this channel. They include Sundance Catalog
(http://www.sundancecatalog.com), Smith & Hawken (http://www.smithandhawken.com),
and L.L. Bean (http://www.llbean.com). While some of these retailers sell large volumes in
various categories, others are not big enough to support container‐size orders; thus, product
is sourced both directly and through wholesale importers.
• Independent retailers - are small stores such as tourists’ shops, art galleries and museums.
This channel has been traditionally a large and constant outlet for handicrafts and there is a
growth in the luxury market.
The following are examples of independent retail stores in the U.S. market:
• Home accent and gift stores comprise the largest independent retail outlet category for
home accessories, with estimated 2004 sales of $14.6 billion and projected 3.1 percent
growth to $15 billion in 2005. These stores are local or regional companies that carry gift
items, accent furniture, tabletop items, and decorative pillows, among other products. A
number of small lifestyle stores also fit the independent retailer category. This channel
presents opportunities for developing-country producers because of the retailers’ typically
more usual product mix, smaller unit quantities, and fewer production requirements.
12
Page 12

• Museum stores, which include retail stores at museums, zoos, and parks (such as the
Smithsonian and San Diego Zoo), are frequent buyers of handicrafts. They are not able to
order large volumes, but tend to be stable buyers and open to sourcing from developing‐
country producers (zoo stores in particular). However, most must sell primarily products
that are directly related to current exhibits in order to maintain their tax‐exempt status.
Consequently, the market for Caribbean products, for example, would be limited to
museums that have an exhibition on themes related to the Caribbean. According to the
Museum Store Association in the United States, in 2002, net sales of individual museum
stores ranged from less than $5,000 to $17 million, with median net sales at $137,457.42
• Alternative trade organisations and fair trade retailers purchase primarily from artisans
(typically through development projects or agents), fair trade importers and exporters,
charitable organizations, and other ATOs. In addition, certain specialty shops, while not
dedicated fair trade retailers, may be interested in a particular culture or cause and
purchase small amounts of fairly traded handicrafts as a way to support artisans and raise
consumer awareness. In the United States Ten Thousand Villages is perhaps the most widely
recognized ATO, with more than 160 retail locations and sales of $22.8 million in 2005
(about half of which were wholesale).
In the UK a similar structure to the US exists, but the market is dominated by wholesalers who
act as intermediary buyers for retailers. Some of the major companies in turnover in the British
gifts and decorative articles market are:
� Royal Doulton, ceramics and glass (www.royaldoulton.com)
� Habitat UK, home decorations (www.habitat.co.uk)
� Lakeland Limited, metal and plastic home and garden decoration
(www.lakelandlimited.co.uk)
Caribbean producers must align their marketing strategies to reach the different segments of
the markets. It is difficult, if not impossible to target the entire handicraft market, but choosing
a specific niche and market segment is critical to Caribbean artisan’s future success. Greater
incorporation of online and social media is also vital and easily accessible to Caribbean
entrepreneurs, and if done well it can target very specific and important market niches.
4.3 MARKET SEGMENTATION BY PRICE/PRODUCT/SEGMENT:
Segmentation in the market for handicrafts and gift items is an important means of
understanding the market. The position of a client in the market influences many aspects of his
buying behaviour and, as a consequence, the offer to be made. For instance, selling to the top
end of the market requires less emphasis on pricing than on high quality and distinctive design.
Selling to large department stores in the middle segment of the market means that, apart from
reasonably sharp pricing, the highest attention should be given to logistics: labelling, packaging
and timely transportation, and to offering easy‐to‐sell products. And if a client is in the lowest
price‐segment, it is important to offer the lowest possible price.
13
Page 13

The US gift and home furnishings market a sub‐category of the handicraft sector can be divided
into three segments of buyers according to their requirements for price, design, quality and
volume:
Market Segmentation Characteristics
High-end market Low‐volumes, high‐prices, design and fashion‐
driven products, exclusive brands, exceptional
quality, demanding customer services.
Middle or mainstream market Larger volumes, moderate prices, appreciation
of design and uniqueness, good quality.
Mass market Very high‐volumes, low‐prices (price is the
number one factor in buying decision), and less
value placed on design, quality or uniqueness.
Select the customer that matches your price point, quality, design and volume needs.
4.4 US AND UK MARKET TRENDS
UK consumers of home accessory products have traditionally favored unique, high‐end items,
though they tend to have smaller homes and are more minimalist in their furnishings. Market
experts reason that this leads to greater selectivity, with a focus on quality over quantity, a
direction the US market may be moving in over the next decade as collapsed real estate prices
triggered a trend toward smaller homes. With greater selectivity in purchases of home décor
items, American consumers are expected to spend more on gifts, opening up opportunities for
both high‐end home accessories and new creative gift products. The luxury market segment
covers all product categories and offers excellent opportunities, current and future, for
handmade products. It should also be noted that some traditional big box stores such as Pier 1
imports, IKEA have now begun to carry ethnic product lines in different market segments.
14
Page 14

PRICE SEGMENTS FOR HANDICRAFT PRODUCTS IN THE US AND UK
Segment
Luxury/High-End
(terms used
interchangeably)
Price Range
Example
$200–$1,000
retail and up
for a wall
décor item
Middle $75–$200
retail for a wall
décor item
Low-end Under $75
retail for a wall
décor item
Key product
characteristics
• Very high quality
• Product looks like
artwork that belongs
in a wealthy setting
• Innovative design
• High‐quality
packaging, labeling,
and marketing
materials
• Purchasing priorities
are design and quality
• Product must have
value and be
affordable
• Purchasing priorities
are:
#1 design
#2 price
#3 quality, which must
match the price
• Lower‐end, cheap,
and readily available
• Might have a good
look, but quality is
lacking
• Cheaper materials
(e.g., iron instead of
brass)
• Lower‐quality finishes
• Purchasing priorities
are:
#1 price
#2 design
4.5 MARKET SEGMENTATION BY PRODUCT FUNCTION
Examples of
U.S. retail
stores
• Neiman Marcus
• Saks Fifth Av.
• Expensive
independent
stores
• Pier 1 Imports
• Crate & Barrel
• Cost Plus
World Market
• Sears
• Target
• Wal‐Mart
• Kmart
• Home Goods
Examples of UK
Stores
• Harrods
• Marks & Spencer
• Selfridges
• Debenhams
• TJ Hughes
• House of Fraser
• John Lewis
• Fenwick
• Allders
• Woolworth’s
• TESCO
The US and UK market and much of the global market operate according to standard product
categories that are organised by product function. Defining your target product category helps
buyers understand your collection. A global buyer is much more likely to understand your
products if they are labeled as table top or home accessories than if they are labeled only as
traditional crafts or handmade or artisan made.
15
Page 15

4.6 MAIN HANDICRAFT PRODUCT CATEGORIES & PRICE SEGMENTS- UK AND US
Product Category Characteristics Segment
Functional wares Items made in a workshop or small factory
that mass‐produces handmade goods such
as pottery, tiles, or furniture for national or
export markets.
Traditional art Ethnic crafts marketed locally by creating
interest in the culture and by maintaining
high quality.
Designer goods Sometimes based on local crafts but always
redesigned by foreigners to suit fashion
trends in the export market.
Souvenirs Inexpensive, universal trinkets or simplified
traditional crafts made for local retail or
sold through international development
agencies as tokens of good will.
Standard product categories:
Low‐end market and is sold
through big‐box stores.
Mid‐to‐high‐end markets and is
sold by small chains and
independent retail stores.
High‐end market segment and
is sold by specialty stories.
Low‐end market and is sold by
souvenir and gift shops in
resorts and vacation areas.
� Gift � Accessories (fashion) � Bath & Scents
� Tabletop � Toys, Games & Dolls � Floral & Garden
� Decorative Accessories � Pet Products � Wall Art
� Home Office & Stationery � Furniture � Lightings
� Gourmet/Kitchen
POINTS TO CONSIDER:
� New product designs utilitarian, aesthetic, creative, cultural attachments, decorative,
functional, religiously and socially symbolic and significant.
� Increased polarization in US and UK markets.
� Low‐end and luxury market segments are growing.
� Middle markets are stagnating or shrinking.
� Low end segment cheap imports are driving down average retail prices.
� Consumer expect of better quality at a lower price.
Caribbean artisans can access new markets by developing unique selling positions for their
goods; producing handicraft goods that target different types of consumers and different
segments of the market. Consumers have become increasingly price sensitive due to the recent
financial crisis and are still not willing to compromise quality, delivery times, or service.
16
Page 16

4.7 POINTS TO CONSIDER IN ACCESSING SEGMENTS OF THE US AND UK MARKET:
YOUR BESTSELLER
If your company manufactures more than one product, you should start with the one best suited
to your targeted market. Ideally, you choose one or two products that fit the market without
major design modifications. Make what you are good at and what you know, inspired by your
culture. Make everything as perfectly as you can, especially the finishing.
QUALITY COMES FIRST
The international consumer constantly expects higher quality at a better price, and this
expectation leads to re‐structuring the medium and low‐end market that many Caribbean
handicraft items belong to. Caribbean handicrafts are renowned for their beauty and unique
intrinsic workmanship; therefore, to position yourself in the marketplace, you should always
produce the best possible quality you can, even for inexpensive items. Constantly strive to
improve quality.
DIFFERENT PRODUCTS FOR DIFFERENT CUSTOMERS
When you (and many other exporters in your area) sell the same things to multiple buyers, the
market quickly becomes saturated and oversupplied, and the uniqueness of the products gets
lost. As they can be bought in many places, they become more ordinary and are perceived to be
less valuable. However, depending on the actual situation, you can consider offering the same
products for different markets.
DEVELOP UNIQUE PRODUCTS
You should learn the product trends by observing the market but do not copy from them. Try to
develop your own products based on your analysis of new market trends. Eco‐art, luxury
furnishings, designers often collect magazines, and catalogues and make a “catalogue” of
finishing patterns to develop their own products, and that is also what you can do to develop
your unique products.
DEVELOP A COLLECTION
The Caribbean Design Network has developed a collection based on innovative and au courant
new Caribbean design, positioning itself as unique regional hybrids.
http://www.newcaribbeandesign.com
ADD VALUE TO YOUR PRODUCTS
Make your products functional in addition to being decorative. Improve the design and
desirability, making useful things fashionable too. A pillowcase is functional and decorative. A
pretty box is also useful, it can hold things. Multi‐use and reusable things have a higher
perceived value. Quality and finishing are most important, even for inexpensive items; you can
use several materials or patterns, more than one production technique, or moving parts, in one
product.
USE PROFESSIONAL PRODUCT DEVELOPMENT DESIGNERS
Fashionable product development is a key pre‐requisite for success, and professional designers
are the ones who differentiate your products. And it would even be better if you developed new
collections in cooperation with your customers. In addition, your customers know what they can
17
Page 17

sell, and will be happy to give you design and colour information when you have established a
trust‐based working relationship. Try to combine design advice from your customers with
further development possible through local BSO´s, hiring a private product development
designer, or through the Onsite Caribbean Project. http://www.newcaribbeandesign.com
ADAPT YOUR PRODUCTS TO THE TARGET MARKET
It is quite important for your company to adapt products to the geographic and climate
conditions that prevail in your target market, and to take the availability of resources into
account. Factors such as topography, humidity, and energy costs can affect the performance of a
product or even determine its usage.
5. DISTRIBUTION CHANNELS
Before the 2008 recession in the US, where houses tend to be larger than elsewhere, consumers
were purchasing more and more home accessories. These market developments translated into
increased competitive pressures on producers to improve quality and delivery while cutting
costs through cheaper labor and more efficient production. Such shifts in consumer purchasing
patterns are reflected in the changes taking place in distribution channels.
Discount chains are growing while many mid‐level department stores and independent retailers
are struggling to maintain revenues. At the high end, such stores as Neiman Marcus and Saks
Fifth Avenue were among the fastest growing retail chains.
5.1 IMPORTING STRUCTURE
The diagram below depicts the various players along the distribution channels that connect
handicrafts producers in foreign countries with end consumers in the US and UK. It is critical that
Caribbean producers understand this importing structure when considering their options for
entering the US and UK market. In particular, the strategy producers choose to enter the market
should take into account the type of retail outlets they wish to reach.
18
Page 18

5.1.1 IMPORTING STRUCTURE IN THE US AND UK
FIGURE 4.1.2
There are two primary methods that connect handicrafts producers to retailers and, in turn, to
end consumers. The first, represented in green, is through trade shows and
importer/wholesalers. This is the method by which most Caribbean handicrafts that are sold in
the US and UK currently enter the market.
5.2 METHOD 1: TRADE SHOWS & IMPORTERS/WHOLESALERS (REPRESENTED IN GREEN
ON THE CHART)
The quickest way to get an introduction to the US and UK market is by exhibiting at US and UK
Trade Shows to meet and establish relationships with:
• Distributors/Importers/Wholesalers
• Manufacturers Representatives
• Mass Market / Dept. Store Merchants
• Specialty Retailers
• Trade Press
Importing Structure Characteristics Benefits
Trade Shows for Producers US and UK
� Excellent opportunity for foreign
importer/wholesaler who producers to connect with potential
wish to source new products
from foreign countries.
importing partners.
19
Page 19

Importer/Wholesaler
Trade Shows for Importers
Retailers: Theme-related
shops
Retailers: Boutiques
Importer/wholesalers source
products from foreign
countries, import them into
the US and UK, and sell them
at wholesale prices to
retailers.
Retailers from all over the US
and UK who operate small
stores and wish to purchase
products that have already
been imported into the US
&UK.
Cultural and/or recreational
venues, such as museums
and zoos.
Tradition, cultural heritage or
natural environment
important to this type of
retailer.
Small, single‐standing shops
that are often owned and
operated by one person or a
family.
� Sell directly from a catalog, Web site,
or physical retail store. Reduce
shipping costs and complications.
� They receive large orders at one US
or UK location and then distribute.
� Opportunity to secure orders for
products from many dispersed
retailers at once.
� Trade shows for importers tend to be
organized along product categories.
� http://www.accessoriestheshow.com
and the New York International Gift
Fair, http://www.nyigf.com both
held in New York City.
� Retail prices are generally high in
theme‐related shops because the
products serve as a distinctive
souvenir to visitors. E.g. Bronx Zoo
and the Museum of African Art,
London Zoo.
� Product offerings can be quite
specific according to lifestyle, such as
fair‐trade or all‐natural, or product
category.
� Retail prices tend to be high in
boutiques because products are
thought to be unique and higher‐
quality, and the shopping experience
is more personal.
� Boutiques import from
Wholesalers/retailers.
In the US there are approximately 50,000 independent specialty retailers which include museum,
hospitals, airport gift shops, gift boutiques in restaurants, hotels and resorts. They accounted for
$45 billion in sales in 2008 (even though the US economy was facing a financial crisis) which was
an increase of 4% from approximately $43 billion in sales in 2006.
5.3 METHOD 2: AGENTS (REPRESENTED IN BLUE ON THE CHART)
The second, represented in blue, is through agents, either hired by producers or representing
retailers. Both methods of entering the US and UK market are described in detail below.
Importing Structure Characteristics Benefits
Agents - hired by retailers Most large, well‐branded
retailers have agents in
geographic regions which locate
factories and facilitate the
� Purchase large quantities
� Strict factory selection with
which to do business.
� Strict vendor code of
20
Page 20

Import Agents - hired by
producers
Retailers: Specialty stores
Retailers: Mass retailers
sourcing, product development,
and manufacturing processes.
Act as sales representatives for a
foreign producer, often on an
exclusive basis.
Agent promotes the goods to
local buyers and receives a
commission on an agreed
percentage of the sales, or a
basic monthly retainer fee.
Single‐unit or chain stores that
carry product lines representing a
single product category or
related product categories.
Largest and most price‐
competitive stores in the US and
UK market. They offer a broad
range of goods both sourced
through their own agents and
purchased from other brands.
conduct and use third‐
party auditors to evaluate
the working conditions in
their factories on a regular
basis.
� Import agents can improve
a producer’s margins by
eliminating the
importer/wholesaler as a
middleman.
� Producers can bear more
risk by using a sales agent,
as a sale is not guaranteed
until a retailer places an
order
� They receive large orders at
one US or UK location and
then distribute.
� Private label generally
sourced through agents
� Priced lower than
boutiques, but higher than
mass retailers.
� Still very price‐competitive.
E.g. Crate and Barrel,
Pottery Barn, IKEA, Bath &
Beyond.
Enormous quantities at
extremely low prices and make
money by selling low‐margin
goods in high volume.
Examples of mass retailers
include Target, Kohl’s and Wal‐
Mart in the US and Superdru in
the UK.
In 2008, even though it was the beginning of the recession period Department stores in
the US reached annual sales of $199.6 billion which was a 6% decrease from
approximately $213 billion in 2006 (US Census Bureau).
5.4 DIRECT-TO-CONSUMER RETAILERS (REPRESENTED IN YELLOW ON CHART)
Direct‐to‐consumer retailers can fall under both Method 1 and Method 2. Direct‐to‐consumer
retailers operate exclusively through paper catalogs and/or online sites that reach consumers
without the presence of physical stores. They represent a variety of prices and products. With
the advance of internet technology and the convenience of online shopping, more US
consumers make purchases online each year. Because direct‐to‐consumer retailers ship orders
anywhere in the country, they are particularly popular for gift purchases. Examples of consumer
retailers that specialise in imported accessories and gifts include eziba.com and novica.com
21
Page 21

5.5 HOW GIFTS & DECORATIVE ARTICLES ARE DISTRIBUTED IN THE EU
Source: CBI, EU Market Survey 2005, Gifts and Decorative Articles
Dependant on the niche of the market you choose as a business whether high end, middle
income, or mass products; it is important to choose an entry strategy that is most suited to your
niche. Some noted market entry strategies entry for Caribbean handicrafts:
� Supply specialised importers very often, they are specialised in different retail channels,
depending on the respective retail channels they operate in, and they have different
needs for product groups, price levels, and design specifications. Understanding these
needs is important for exporters in order to be able to offer them appropriate products.
� Importers can be very reliable partners for exporters, allowing them to enter into long‐
term partnerships and to ensure stable growth, and to work with reliable trade partners
and secure repeat orders. Most of the larger importers from the EU, US or other
markets visit international trade shows in supplier countries (CGCS), or specialised trade
shows looking to source goods.
� Other opportunities exist for producers in target markets to act as contract
manufacturers. In order to reduce production costs, some international manufacturers
source part of their collections from abroad and produce only some of their collections
themselves.
� Concentrate on products that allow both private shops and chain stores to express their
individuality. Items that are new and innovative, possess quality, and have a reasonable
amount of practicality and functionality will be viable. Also, those which are highly
22
Page 22

original are promising because they allow the store to differentiate itself from other
retailers.
6. ONLINE SALES/SOCIAL MEDIA AND CARIBBEAN ARTISANS
With the emergence of Social Media Networks such as Facebook, Twitter, Blogs, etc., there has
been a wide opening for Caribbean handicraft producers to market their products to overseas
buyers/consumers at little or no cost. Setting up any of these accounts is virtually free and
requires very little computer training or expertise. However, one must be careful that these
accounts are used and maintained in a professional manner so that they attract serious
enquiries and leads for the user.
Simultaneously network opportunities between Caribbean producers and UK and US buyers can
be facilitated via social networks such as LinkedIn and Xing. Similarly, setting up either of these
accounts requires minimal computer training yet the benefits that can be derived from having
this exposure can be insurmountable.
For further information about setting up any of these accounts you can check out some of the
tutorial packages offered on www.lauraroeder.com/resources/
7 INTERNATIONAL REGULATORY REQUIREMENTS
7.1 LABELLING & PACKAGING
Packaging and labeling are important parameters when dealing with gifts and handicrafts. The
packaging of products has two functions: A functional purpose when the products are
transported from one country to another and a presentational purpose directed at the end
consumer.
As products from developing countries often have a long distance to travel, great care should be
given to the packaging of products in the country of origin before the items are shipped. The
means of transporting handicraft and gift articles depend on the size of the order, the
commodities in question, and how quickly the importer needs the articles; however gift articles
and handicrafts are usually transported by sea. For more information you can visit
www.artisanwork.org/book/export/html/377
Shipment per container is usually the safest means of transport, especially for fragile articles
such as ceramics. The articles should be packed in such a way that they would not be affected by
transport, rough handling or damaged by varying weather conditions. For example, the articles
can be packed in solid boxes of smaller size and with cushioning for protection, and thereafter
placed on pallets to minimize the risk of damage during the transportation.
Consumer packing could also be an issue for the foreign exporter to take into consideration, as
attractive consumer packaging is a good sales argument. The quality of the product can be
underlined by the way the gift or handicraft article is displayed, meaning that the packing should
match the design, image, quality and price of the product.
23
Page 23

Marking and labeling requirements applying to products sold in the UK are numerous and vary
from item to item, and both UK and EU laws and regulations influence requirements. The
correct labeling of the product is important as the information is to be used upon importation to
UK. A customs declaration always has to be filled out containing information such as the TARIC
code (Integrated Tariff of the European Communities) 5 , country of origin, name of the consignor,
the value of the products etc.
7.2 RESTRICTIONS ON WOOD PACKING MATERIAL
Wood is widely used as a packaging material in international trade. Due to the risks of
introducing and spreading tree pests, strict controls on wood packaging, both for imports and
exports, are enforced. If you don't conform to these requirements, your entire consignment
could be rejected or even destroyed.
Wood packaging means any kind of wood used anywhere in packing, such as packing cases,
boxes, crates, drums and similar packing, pallets, box pallets and other load boards, pallet collars
and dunnage.
Around the globe, countries are adopting and implementing the provisions of the United
Nations resolution IPPS ISPN 15: Guidelines for Regulating Wood Packaging Material in
International Trade. In 2001, the European Union (which includes the UK) implemented these
standards and began enforcing the standards in 2003. In 2003, the US Department of Agriculture
approved the standard and sent it to USC&BP for approval and implementation. They did a soft
roll out over a two year period and on March 9, 2007, U.S. Customs and Border Protection
began issuing fines or requiring re‐export of noncompliant cargo to the origin country. In
summary, all solid wood packing materials must be heat treated and properly marked with
the burned brand showing the heat treatment symbol with the lumber production facility
code.
Below are some examples of stamps used on pallets to indicate ISPM 15 compliance.
5 TARIC (Integrated Tariff of the European Communities) is designed to show the various rules applying to specific
products when imported into the EU of which the UK belongs. This includes the provisions of the harmonised system
and the combined nomenclature (that is, a combination of Common Customs Tariff and external trade statistics of the
European Union) but also additional provisions specified in Community legislation such as tariff suspensions, tariff
quotas and tariff preferences, which exist for the majority of the Community’s trading partners. In trade with third
countries, the 10‐digit Taric code must be used in customs and statistical declarations. TARIC builds upon the
international harmonised system
24
Page 24

Solid wood packing materials include lumber used to build crates, lift vans, pallets, blocking and
bracing and bulkheads. The International Customs Association states that the lumber must
display the heat treatment marking on at least two sides (directions) visible to the inspector. For
lift vans, it is strongly recommended that the plywood sides each be marked. Though it is known
that manufactured wood products (plywood, chip board, pressed board etc) is heat treated
through the manufacturing process, lift vans contain solid lumber in the pallet and corners
supporting the construction of the crate. Therefore, the participating countries require lift vans
to be marked correctly.
UK REQUIREMENTS FOR WOOD PACKAGING
There are specific environmental and other requirements for wood packaging, in addition to any
standard requirements for importing packaged goods or packing materials into the UK.
If the goods being exported are to be packed in wooden packaging, UK regulations request that
the packaging is compliant with International Standards for Phytosanitary Measures 15
(ISPM15).
There are no tests that show whether wood has been properly treated. The presence of any
living insects in the wood can be taken to mean that it wasn't treated and any wood packaging
material with living insects must not be re‐used but should be destroyed (or treated by an
approved facility and re‐marked).
Inspection failures
Imported goods using wood packaging may be inspected by the Forestry Commission. Should a
consignment fail the inspection, the importer will have to bear the cost of the one or more of
the following steps, any of which the Forestry Commission may require the importer to:
• arrange return of the shipment
• arrange treatment and marking of the wood packaging to meet ISPM15 requirements
• arrange destruction of the non‐compliant wood packaging
• arrange return of the non‐compliant wood packaging and, if deemed necessary, the
goods associated with it
Should the importer be given the option to choose treatment, a company authorised to carry
out treatment to ISPM15 on the Timber Packaging and Pallet Confederation (TIMCON) can be
found on the following website ‐ http://www.timcon.org/FindASupplier/Default.asp
25
Page 25

Essential requirements for packaging
In order to ensure that a shipment of goods satisfy the essential requirements for packaging for
the UK, visit http://www.environment‐agency.gov.uk/netregs/63268.aspx.
US REQUIREMENTS FOR WOOD PACKAGING 6
Under a United States Department of Agriculture (USDA) Animal and Plant Health Inspection
Service (APHIS) regulation, the importation of many types of untreated wood articles, including
wooden packaging materials such as pallets, crates, boxes, and pieces of wood used to support
or brace cargo are restricted. The regulations currently refer to these types of wood packaging
materials as solid wood packing materials, defined as ‘‘wood packing material other than loose
wood packing material, used or for use with cargo to prevent damage, including, but not limited
to, dunnage, crating, pallets, packing blocks, drums, cases, and skids.’’ Any WPM not meeting
the treatment specifications of this rule will be immediately reported.
Additional information on this subject can be found on the USDA Website: www.aphis.usda.gov
Generally, it is recommended that the requirements regarding packaging and labelling should
always be agreed upon and specified in the contract between the exporter and the UK or US
importer in order to meet expectations and to comply with EU and US regulations. The
responsibility for compliance with UK and US labelling and marking regulations rests with the
importer and consequently, the UK and US importer usually informs the foreign supplier of his
requirements to packaging and labelling.
Note: Shipping products to foreign destinations can be costly, time consuming, and risky. It is
important to familiarize yourself with all of the procedures involved, but even more important to
hire competent experts to properly advise and assist you in this process. This starts with correctly
packaging your products to withstand the multitude of handlers, carriers and inspectors who
may be physically moving or even opening your packages.
More information can be found at:
www.agoatoolkit.com/agoa/toolkit_english/II.%20EXPORT%20GUIDES/Exporting%20to
%20the%20United%20States.pdf
Points to consider when getting your goods to the final customer:
� A pick up at your warehouse by a domestic freight company’s truck.
� A delivery to a freight consolidation warehouse.
� A shipment from that warehouse to an ocean vessel consolidator or air transport
company.
� Transfer to an ocean container or airplane.
� A waiting period prior to shipment on an airplane or ocean vessel.
� A long trip on a ship.
� Removal of a container at a port of entry.
6 Tradewatch • The Official E‐Newsletter of the Caribbean Export Development Agency • Vol. 3 No. 6 June, 2010,
Doing Business with USA
26
Page 26

� Inspection by a customs official.
� Transfer to a truck for shipment to another consolidation warehouse.
� Movement to another truck bound for your customer.
� Even if goods are being shipped by air, it is easy to see why packaging your products in
secure, strong, weather‐resistant cartons and/or containers are critical to their safe
delivery.
IMPORT REGULATIONS, DUTIES/RESTRICTIONS EXPORTING TO THE US
� Exporters to the US must ensure that documents are in order. Particular care must be
taken in preparing the pro forma invoice since it is used by US Customs when the goods
enter the United States.
� The US duties regime is complicated and exporters need to know what duties their
goods are liable to pay.
� Depending on the exporter’s arrangement with the US importer of their goods, it may
be advisable to use the services of a customs broker.
7.3 SHIPPING TO THE US
7.3.1 COMMERCIAL INVOICE
A commercial invoice should be done in the manner customary for a commercial transaction
involving goods covered by the invoice. It should be signed by the seller or shipper or his agent.
The document needs to indicate the following information:
� Port of entry where the merchandise is destined
� If merchandise is sold or sale has been agreed on, the time, place and names of buyer
and seller need to be indicated.
� If the merchandise is consigned, the time and origin of shipment, and names of shipper
and receiver, must be provided.
� A detailed description of the merchandise must be provided. This must include:
− Name of each item as it is known.
− Grade or quality.
− Marks, numbers and symbols under which it is sold.
− Marks, numbers of the packages in which the merchandise is packaged.
� Quantities, both in weights and measures.
� Purchase price of each item
� Kind of currency
� All additional charges on the merchandise, such as freight, insurance, commission,
cases, containers, and cost of packing (in general, all charges and expenses incurred in
bringing the merchandise to the carrier at the port of exportation up to placing it in the
first US port of entry).
� Rebates, drawbacks and bounties, itemized accordingly.
� Country of Origin.
27
Page 27

� All goods and services furnished for the production of the merchandise which are not
included in the invoice price. The invoice and all accompanying documents must be in
English or accompanied by an accurate English translation. If the invoice does not
indicate weights or measures of the merchandise, the importer must incur in the
expense of obtaining this information prior to the release of the shipment.
If more than one invoice is included in the same entry, each document with its attachments can
be numbered consecutively by the importer. No more than one distinct shipment from one
consignor to one consignee by one commercial carrier can be included on the same invoice.
7.3.2 PRO FORMA INVOICE
This type of document is required whenever the invoice is not filed at the time of entry. If this is
the case, a bond is given for production of the required invoice no later than 120 days from the
date of the entry summary (or entry). If the invoice is required for statistical reasons, it should
be produced within 50 days of the date of entry.
A pro forma invoice indicates information that the importer may consider necessary to furnish
Customs Officers at the time of the formal entry. It must contain enough information for
examination, classification and appraisal of the merchandise.
7.3.3 FREQUENT ERRORS IN INVOICING
Exporters must exercise extreme care when preparing the documentation to enter goods into
the United States. Any mistakes or omission in the document, inaccurate information or
misleading statement presented to Customs in connection to an entry, may result in delays in
the entry process or even detention of the goods. Even if the inaccuracy or omission was
unintentional, the exporter is responsible for this and must prove it was not negligence on his
part.
It is important that absolutely all the information pertaining to the import transaction is true
and accurate. This information is essential for Customs to establish the tariff status of the goods.
Some of the most common inaccuracies to be avoided are:
� Commissions, royalties or other charges are not included in the invoice because it is
believed these are non‐dutiable.
� An exporter, who purchases goods to export to the US, shows the cost of the goods in
the invoice instead of the delivered price.
� A foreign manufacturer produces goods with materials supplied by the US importer, and
invoices at the actual cost to the manufacturer instead of including the value of the
materials supplied by the importer.
� Foreign manufacturer ships replacement goods to the importer in the US and invoices
the goods at the net price instead of showing the full price less the allowance for
defective goods previously shipped and returned.
� An exporter who sells the goods at a list price, less a discount, but invoices them at the
net price omitting to indicate the discount.
28
Page 28

� An exporter sells goods at a delivered price but invoices them at a Free On Board (FOB)
price omitting the subsequent charges.
� A foreign shipper indicates in the invoice that the importer is the purchaser, whereas he
is and agent or third party receiving a commission for the transaction.
� Providing vague descriptions, no descriptions (only part numbers), and coded
descriptions or grouping several items together as one when they are different.
7.3.4 FREIGHT FORWARDERS
Freight forwarders can be very useful, especially to small exporters with limited international
experience or infrastructure for shipping. A freight forwarder generally acts as the exporter’s
agent for shipping goods.
The freight forwarder is familiar with the paperwork and other requirements of both the
country of export and import, and can help negotiate the rates for shipping and insurance
companies. Your Ministry of Trade or Chamber of Commerce should be able to provide you with
a list of registered freight forwarders in your country.
7.3.5 AIRBILL OR BILL OF LADING
The Air Waybill or Ocean Bill of Lading serves as the receipt for the foods and as temporary title
to the goods being exported. The form is both required by and supplied by the shipping
company. In the case of a Bill of Lading, there are both long and short forms, the use of which
depends on the method and terms of the payment.
COUNTRY OF ORIGIN MARKING
The origin of merchandise that is imported into the US can affect the rate of duty, entitlements
for special programs, quota, anti‐dumping or countervailing duties and marking requirements.
Customs law require that the origin of the merchandise be indicated in a conspicuous place, in
English, in a legibly form, indelibly and permanently.
If the article (or the container if not possible to mark individual articles) is not properly marked,
there will be an assessment of duty equal to 10 percent of the customs value of the article,
unless the article is exported, destroyed or properly marked (under Customs supervision) before
the liquidation of the entry.
If an article is imported empty to be filled in the US this article (usually a container) must bear
the markings indicating the country of origin. If marked articles are to be repacked in the United
States, the importer needs to certify Customs that the marking on the articles will not be
obscured or they will remark the repacked containers. Failure to comply with these
requirements may result in penalties and or duties applied to importers.
29
Page 29

MARKING NOT REQUIRED
There are some articles that do not require marking. However, the ultimate container in which
these articles reach the ultimate purchaser in the United States must be marked in English to
indicate the country of origin.
For a full explanation of this rule, see:
http://www.itds.treas.gov/marking.html
There are some exceptions to this rule. For example, excluded articles include those imported
for use by the importer and not intended for sale, as well as articles incapable of being marked.
Nevertheless, the outermost containers in which the articles will reach the ultimate purchaser in
the US must be marked with the country of origin.
For a full description of exceptions, see:
http://www4.law.cornell.edu/uscode/19/1304.html
For regulations regarding carton markings for North America Free Trade Agreement (NAFTA)
countries see:
http://www.natlaw.com/pubs/spmxcu2.htm#i5
SPECIAL MARKING REQUIREMENTS
The country of origin marking is applicable to almost all imports and is separate from any special
marking or labeling requirements for specific products.
There are certain articles that are subject to special country of origin marking requirements such
as steel pipe and pipe fittings, knives, clippers, shears, watch movements, clock movements, and
watch cases.
For a complete list, see:
http://hotdocs.usitc.gov/tariff_chapters_current/0400C91.pdf
The marking must be conspicuously and indelibly marked by cutting, dye‐sinking, engraving,
stamping or mold‐marking. Merchandise not complying with this measure will be denied entry.
FALSE IMPRESSION MARKING
No article bearing a name or mark that may mislead the public to believe that the article was
produced in a country other than the original country of manufacture will be allowed to enter
the US An imported article bearing a name or mark prohibited by Section 42 of the US
Trademark Law is subject to seizure and forfeiture. In addition, deliberate removal or altering of
required country of origin marking after release of Customs custody is a crime punishable by
law. To review the US Trademark Law, see:
http://www.uspto.gov/web/offices/tac/tmlaw2.html
30
Page 30

7.3.6 US CUSTOMS FEES AND VAT
The US Customs Service charges a merchandise processing fee (MPF) of 0.21 percent ad valorem
on formally entered imported merchandise (i.e., merchandise valued at $2,000 or more). There
is a minimum fee of $25 and a maximum fee of $485 per entry.
For informal entries (i.e., merchandise valued at less than $2,000) the MPFs are $2 for
automated entries, $6 for manual entries not prepared by Customs, and $9 for manual entries
prepared by Customs.
It is important to note, however, that these charges differ for NAFTA participating countries.
For updated information about these fees and others that may apply see:
http://www.lawdog.com/transport/export/custom27.htm
For a complete list of U.S. Customs forms required, see:
http://www.itds.treas.gov/entry_process.html
There is no national VAT in the US. Each State stipulates the amount of VAT that should be paid
on final goods and this may range from 0‐13%. Furthermore, most municipalities often add an
additional tax in the form of a local sales tax. In many states, a used tax is imposed on items
ordered online or purchased in a state with lower or no sales tax, and brought into the
taxpayer's home state. This is a key difference between most sales taxes levied throughout the
United States and the value added tax system in many other countries.
8. UK MARKET, CUSTOMS DUTY AND IMPORT REGULATIONS
As a member of the EU, UK follows the rules and regulations and applies the Common Customs
tariff of the EU. An extended set of trade agreements between the EU and the non‐EU countries
represent a complex set of exceptions to the general rules.
The EU grants a non‐reciprocal trade preference to all developing countries. Under the General
System of Preference (GSP) Least Developed Countries (LDC)* are granted duty free imports into
the EU of all goods except from arms and ammunition as well as rice, sugar and bananas.
Countries under the special program to fight narcotics also enjoy duty free access to the EU
markets for most goods.
Moreover, the EU has also entered into separate agreements with different groups of countries
in order for them to enjoy duty‐free access for selected products into the EU, for example the
ACP (African, Caribbean and Pacific) countries and the OCT (Overseas Countries and Territories).
In order to obtain preferential customs treatment when exporting to the EU, it has to be
documented that the product originates in a country, which has a preferential agreement with
the EU. In order to claim GSP status, a GSP certificate of origin (Form A), signed and stamped by
the authorities in the exporting country, must accompany the products. The certificate is valid
for 10 months. For ACP countries the certificate is the movement Certificate EUR 1. The
competent authorities in the exporting country, usually the customs authorities, issue these
certificates once they have ensured that the products fulfill the rules of origin requirements.
31
Page 31

A handicraft certificate is required for importation of a range of handmade goods into the EU if
the products are to be given preferential treatment. This type of certificate is also issued by the
appropriate authorities in the exporting country. It is the responsibility of the exporter to ensure
that these requirements are met. It is very important to have settled all documents, as prior to
importation of the product; the Community Customs administration will verify that the goods
satisfy the rules of origin. If the goods are not entitled to preferential treatment, the importer
becomes liable for duty at full rate.
For full customs clearance, a customs declaration form must also be filled out with information
about the importer, the customs value, the tariff position number etc.
Regulations‐No specific regulations exist for gift and handicraft articles as this term covers a
broad variety of very different products. However, some gift and handicraft articles could be
subject to the EU product legislation concerning the content of hazardous substances, especially
if the products are to be used in connection with provisions. According to the CBI market survey
(2003) on gift and decorative articles, the most important dangerous substances that an
exporter of gift and handicraft articles should be aware of are:
� Azo dyes
� Benzene used as stabilizers in plastic
� Formaldehyde used as glazing or bonding agent
� Pentachlorophenol (PCP) used to prevent fungal growth in wooden toys
� Polychlorinated biphenyl (PCB) and terphenyl (PCT) used as softeners in plastic products
� Phthalates added to PVC
� Asbestos used as filling material in plastics
� Cadmium used as pigment or stabilizer in paints, plastics, ceramics and glassware
� Nickel
� Mercury
� CFCs and halons used as foaming agents
IMPORTANT: In normal circumstances you are required to declare any goods that you import to
Her Majesty Revenue and Customs (HMRC) and pay any duty and VAT that is due. You have to
pay 20% VAT as of January 2010 on any imports that have a value above £18. Goods will not be
released by the HMRC until import VAT and duty is paid. For more information about this, it is a
good idea to contact the HMRC VAT helpline on 0845 010 9000 or checking their website
http://customs.hmrc.gov.uk
9. FREQUENTLY USED EXPORT AND IMPORT TERMS
WHAT ARE EXPORT PRICING TERMS AND COSTS?
Establishing export pricing requires an understanding of standard export pricing terms and the
costs that they include. The most common export pricing term is FOB. CIF and Landed are other
terms regularly requested by export customers.
9.1 Ex-Factory: Price of the product as it leaves the artisans workshop and the pricing frequently
quoted by an artisan. This price includes cost of raw materials, labor cost, packing materials,
overhead, and profit for the artisan.
32
Page 32

9.2 FOB (Free On Board): The ex‐factory price plus internal transportation from artisan's
workshop to the port of exit, export documentation, arrangement of international
transportation, related payment fees and bank charges or Export Agent Fees. An FOB price also
includes the overhead calculation for export marketing and customer service activities, if it was
not already calculated in the ex‐factory price. All of these costs may add 10% ‐ 40% to the Ex‐
Factory price and result in the FOB price.
OR
9.3 CIF: (Cost, Insurance, Freight) Instead of FOB pricing, an importer/buyer may request that
the exporter/artisan producer quote a CIF price. CIF is used for sea or inland waterway
transportation that is usually reserved for large exporter/artisan producers who can negotiate
more cost effective in‐country rates for shipping, insurance, and currency due to their large
volume. These costs may add 20% to the FOB price.
9.4 Landed: CIF price plus import duties, customs brokerage fees and internal transportation
costs from the point of entry to the customer’s warehouse. These costs can add anywhere from
5‐25% to the CIF price with the biggest variable being the import duties.
9.5 Bill of Lading: A bill of lading (sometimes referred to as a BOL,or B/L) is a document issued
by a carrier to a shipper, acknowledging that specified goods have been received on board as
cargo for conveyance to a named place for delivery to the consignee who is usually identified. A
through bill of lading involves the use of at least two different modes of transport from road,
rail, air, and sea.
A bill of lading can be used as a traded object. The standard short form bill of lading is evidence
of the contract of carriage of goods and it serves a number of purposes:
� It is evidence that a valid contract of carriage, or a chartering contract, exists, and it
may incorporate the full terms of the contract between the consignor and the
carrier by reference
� It is a receipt signed by the carrier confirming whether goods matching the contract
description have been received in good condition (a bill will be described as clean if
the goods have been received on board in apparent good condition and stowed
ready for transport); and
� It is also a document of transfer, being freely transferable but not a negotiable
instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage,
and, like a cheque or other negotiable instrument, it may be endorsed affecting
ownership of the goods actually being carried. This matches everyday experience in
that the contract a person might make with a commercial carrier like FedEx for
mostly airway parcels, is separate from any contract for the sale of the goods to be
carried; however, it binds the carrier to its terms, irrespectively of who the actual
holder of the B/L, and owner of the goods, may be at a specific moment.
The BL must contain the following information:
� Name of the shipping company;
� Flag of nationality;
33
Page 33

� Shipper's name ;
� Order and notify party;
� Description of Goods;
� Gross/net/tare weight; and
� Freight rate/Measurements and weight of goods/Total freight
9.6 Packing List
Shipping list, packing list, packing slip (also known as a bill of parcel, unpacking note, packaging
slip, (delivery) docket, delivery list, or customer receipt). This is a shipping document that
accompanies delivery packages, usually inside an attached shipping pouch or inside the package
itself. It commonly includes an itemized detail of the package contents and does not include
customer pricing. It serves to inform all parties, including transport agencies, government
authorities, and customers, about the contents of the package. It helps them deal with the
package accordingly.
9.7 Airway Bill: Air Waybill (AWB) or air consignment note refers to a receipt issued by an
international airline for goods and an evidence of the contract of carriage, but it is not a
document of title to the goods. Hence, the AWB is non‐negotiable. There are several purposes
that an air waybill serves, but its main functions are:
� Contract of Carriage. Behind every original of the AWB are conditions of contract for
carriage
� Evidence of Receipt of Goods
When the shipper delivers goods to be forwarded, he will get a receipt. The receipt is proof that
the shipment was handed over in good order and condition and also that the shipping
instructions, as contained in the Shipper's Letter of Instructions, are acceptable. After
completion, an original copy of the air waybill is given to the shipper as evidence of the
acceptance of goods and as proof of contract of carriage
10. COSTING & PRICING FOR EXPORT– PRACTICAL EXAMPLE
Wholesale: The price that the importer/wholesalers sell to a retail customer. This price includes
the importer/wholesalers cost of doing business (warehouse, customer service, bad inventory,
marketing, sales). The Wholesale price begins at 100‐150% of Landed.
Retail: The price that a retail store sells to the customer. Includes retailer’s mark‐up for shipping
to the store, cost of business and profit (starting at 120% of Wholesale and higher for U.S.
market, 150% of Wholesale for European market.)
Export Pricing Structure
The following export pricing structure reflects the costs of the logistics and responsibilities
involved in all links of the export marketing channel.
Ex-Factory: $8.35
34
Page 34

+ transportation to port of exit, export documentation, packing & labeling for export, arranging
shipping, export taxes, wire transfer fees/payment to artisans (responsibilities of exporter
and/or export buying office) =
FOB: $10.00
+ International shipping & insurance =
CIF: $11.50
+ import duties, customs broker fees, transportation to importer’s warehouse =
Landed: $13.80
+ Wholesaler’s marketing, sales, promotion, shipping, packaging, product development and
inventory costs =
Wholesale: $30.00
+ Retailer’s marketing and promotion costs and dead inventory costs =
Retail $60.00? $70.00?
35
Page 35

Appendix 1
Common objectives, different perspectives: A glossary of fair trade companies
The fair trade movement in the UK covers a spectrum of views and approaches which are united
by a common goal: to bring positive social benefits to producers in developing countries through
providing an opportunity to trade.
Some of the Fair Trade Companies that operate in the UK are listed below:
• Cafédirect was established specifically to gain entry into supermarkets. It is a marketing
organisation created from a consortium of Equal Exchange, Oxfam. Traidcraft and TWIN
Trading.
• The Day Chocolate Company was set up in 1998 to supply Divine chocolate to mainstream
retailers. Company shareholders include the producers in Ghana as well as the marketing
engine in London and partners, the Body Shop.
• Equal Exchange is a fair trade organisation based in Edinburgh which specialises in organic fair
trade products and wholesale supply to the independent health food market. They are also
part of the Cafédirect consortium.
• Oxfam Fair Trade Company is the only ATO in the UK which operates a chain of retail stores as
well as their mail order catalogue. They operate in 30 countries with the support of field
personnel from the Oxfam development charity to provide assistance to artisans and food
producers to access export markets. They are one of the four Cafédirect shareholders.
• Tearcraft is run by the Tear Fund and sells a small selection of fair trade products through
church stalls.
• Trade Plus Aid is a fair trade wholesaler which specifically sells to the designer and collectable
segment of the mainstream market. They have pioneered fair trade sourcing from China.
• Traidcraft is the UK’s biggest multi‐sector fair trade organisation, and it sells through a
network of volunteer co‐ordinators and small shopkeepers known as ‘fair traders’, as well as
general distribution through the mail order catalogue. Traidcraft is also part of Cafédirect
and source all the tea for Teadirect.
• Tropical Forest Products is a Ugandan fair trade organisation supplying dried tropical fruits
and other products. It is a sister company of Tropical Wholefoods.
• Tropical Wholefoods is a health food importer of African produce for the UK health market.
Their products include
• TWIN Trading is a fair trade supply company based in London. They specialise in commodity
products and are a partner in Cafédirect, for whom they source all coffee products.
US Fair Trade companies are listed below:
• A Different Approach, (http://www.adifferentapproach.com) 5829 Lovers Lane, Shreveport,
LA 71105; phone: (318) 868‐6816; fax: (318) 868‐6817, email:
brenda@adifferentapproach.com. Contact: Brenda Nims. Following fair trade principles, A
Different Approach provides a market for Latin American artisans, offering traditional as
well as contemporary designed pottery, baskets, nativities, musical instruments, and more.
36
Page 36

• A Greater Gift (http://www.agreatergift.com),(formerly SERRV International), 122 State St.,
Ste. 600, Madison , WI 53711, phone: (800)423‐0071, fax: (888)294‐6376, email:
orders@agreatergift.org. A Greater Gift is the handcraft program of SERRV International, a
55‐year old non‐profit alternative trade organization. Promotes the social and economic
progress of people in developing regions by marketing their handicrafts, including home
decor, pottery, baskets, musical instruments, jewelry, food, and more from artisans
worldwide.
• Alsadu (http://www.alsadu.com), 13056 Euclid Ave., Apple Valley, MN 55124; phone: 952‐
431‐2514; fax: 952‐431‐9902; alsadu@ties2.net; Items from projects in Mexico, Thailand,
Laos, Afghanistan, Nepal, Burkina Faso, and Kuwait, including masks, rugs, silk and wool
shawls, purses, jewelry, furniture, baskets, fine art, and stonework.
• Alternative Development Center for Indigenous Groups A.C. (http://www.cedain.com.mx),
Calle 21, No. 713, Col. Santo Nino 31200, Chihuahua, Chih. Mexico, +011‐52‐614‐426‐7564;
email: cedain@prodigy.net.mx, Non‐profit organization promoting self‐development of
Chihuahuas’ indigenous groups, canalizing their handicrafts such as basketry, wooden
objects, weaving, ceramics, and employing collaboration nets to guarantee sustainability.
For the complete list please visit
http://www.cynthialawson.com/teaching/guatemala/blog/?p=13
37
Page 37

BIBLIOGRAPHY
Global Market Assessment for Handicrafts, Volume 1, USAID, July 2006.
Development Report, Planning Commission, Government of India, Uttar Pradash.
Tradecraft Policy Unit Report Series No. 1, Liz Humphrey, April 2000.
Crafts News, The Craft Center at CHF International, Vol. 15 Iss.57
Made in Madagascar: Exporting Handicrafts to the US Market, Final Report, A Project with the
UN Public‐‐Private Alliance for Rural Development.
E-commerce options for Third World craft producers, Final technical report, DFID Knowledge and
Research Project R7792, March 2002.
Handicrafts Export Guide, USAID, Jan 2006.
Hester, Dr. Susan and Canedo, Tim, Handicraft Marketing Seminar Materials, Regional Center
for southern Africa, US Agency for International Development, Botswana, March 2004.
World Trade Organization. 2003. Trade Policy Review: Haiti. Report by the Government
Qattan, Alaa, Handicrafts Analysis Demand Analysis, USAID, March 2009.
Batchelor, SJ. Promoting Handicrafts through e-Commerce, February 2006
“Viewpoints—What are the Major Challenges Facing the Home Accents Industry in the Next
Five Years?” Home Accents Today, October 2005. Homeaccentstoday.com.
Wesely‐Clough, Marita. 2004. “2004 and Beyond: Emerging and Evolving Consumer Trends.”
http://retailindustry.about.com/cs/retailtrends/a/bl_trends2004/htm.
2005. “Trends for ’06.” Home Accents Today, January.
2006a. “Lamps, Wall Décor and Accent Furniture Selling Best.” Home Accents Today, January.
Tradewatch ,The Official E‐Newsletter of the Caribbean Export Development Agency , Vol. 3 No.
6 June, 2010, Doing Business with USA
ADDITIONAL RESOURCES
LIST OF WHOLESALERS IN THE UK
Major wholesalers in the United Kingdom:
� Mastrading, ceramic and glass gifts and decorative articles,
http://www.mastrading.co.uk/
� Malini, textile decorative articles, http://www.malini.com/
38
Page 38

� Life Style Collection, wooden and ceramic home and garden decorations,
http://www.life‐style.co.uk/
� Ganesha, textile and leather gifts and decorative articles http://www.ganesha.co.uk/
� Lemon Tree Wholesale, ceramic and wooden gifts, candles,
http://www.lemontreewholesale.com/
� Something Different Wholesale, wholesalers of wooden gifts and decorative articles,
http://www.somethingdifferentwholesale.co.uk/
� Parlane International, wholesalers of wooden gifts and decorative articles,
http://www.parlaneinternational.co.uk/
� Ochre, home furniture and textile decoration, http://www.ochre.net/
Some of the major importers of gifts and decorative articles in the United Kingdom:
� Rex international, textile and ceramic gifts and decorative articles,
http://www.rexinter.com/
� Puckator gift wholesalers, wooden gifts wholesalers, http://www.puckator.co.uk/
� Elgate Products Limited, importers of gifts and decorative articles,
http://www.elgate.co.uk/
� Transomnia Ltd, textile gifts, http://www.transomnia.com/
� Bombay duck Ltd, candles, flowers, wooden home and garden decorations and gifts,
http://www.bombayduck.co.uk/
LIST OF RETAILERS
Major retailers in the UK:
� Allders Department Stores Ltd. http://www.allders.co.uk/
� Debenhams PLC, beauty gifts http://www.debenhams.com/
� Harrods Ltd., textile and home gifts and decorations http://www.harrods.com/
� John Lewis plc, retail furniture and home textile decorations
http://www.johnlewis.co.uk/
� Selfridges Co. Ltd., retail chains, offering many types of gifts
� http://www.selfridges.co.uk/
� Woolworths, retail chains, offering many types of gifts http://www.woolworth.co.uk/
� The Garden hop, retail trade of gifts and decorative articles
http://www.thegadgetshop.com/
� Conran, retail trade of gifts and decorative articles http://www.conran.com/
� Pier, retail trade of gifts and decorative articles http://www.pier.co.uk/
� Next, retail trade of gifts and decorative articles (http://www.next.co.uk/
� Cargo Home Shop, retail trade of gifts and decorative articles
http://www.cargohomeshop.com/
� The Holding Company, retail trade of gifts and decorative articles
http://www.theholdingcompany.com/
� White Company, retail trade of gifts and decorative articles
http://www.thewhitecompany.com/
� OKA, retail trade of gifts and decorative articles http://www.okadirect.com/
� Argos, retail trade of gifts and decorative articles www.argos.co.uk/
For the United States, a list of handicraft wholesale suppliers can be found at the following link
http://www.wholesale‐world.us/wholesale_craft_supplies.php
39
Page 39