Whether you like it or not, export comes with a risk or two. Or three.
Honestly, you will definitely have to face export risks in a very early stage. Companies who are planning to export are subject to different types and ranges of risk rather than they would experience in the domestic market.
International trade is affected by, but not limited to, a range of risks such as:
- Credit and/or financial risk.
- The possibility that a customer will default on payment.
- The customers business declares bankruptcy.
- Transport and/or insurance fees fluctuate or suddenly increase due to external influences.
- Import taxes and duties may change without much notice.
- Currency exchange risk, heavily depending on the stability of the local market currency.
- Legal risk, which may have an impact to areas such as local import procedures, taxation, employment practices, (inter)national laws and regulations, property rights, the protection of intellectual property, agency/distributorship agreements and other related subjects.
- Shipping risk. Whether you are shipping goods abroad or locally, you may face issues such as contamination, seizure, vandalism, theft, loss, and breakage.
Got a bit depressed? Terrified? Don’t! There’s no need to.
There is a lot you can do to protect corporate interests. This is why it is essential to be aware of the various types of potential commercial risks and to understand the strategies that can help the company to protect its business against these risks. Curious? Have a look at the Chase case; its Head of Export will share some of his experiences with you.