Trading Thoughts Blog
Permanent link for Three Key Considerations for Successful International Expansion on May 18, 2023
It seems like all over the internet there are guides giving advice on specific locations or countries. Some of their advice can range from very specific to extremely broad, making it all the more confusing as to what advice might carry over into a different country. But what advice do all these guides have in common?
Here are some general rules to apply when expanding your business to any country:
1. Understand the Market
Market research is absolutely vital when trying to reach a certain segment. When expanding internationally, this step is crucial. Markets vary widely by country and region, market research for a specific area/region is highly recommended.
Some things to consider while putting together market research:
- Local currencies
- Potential client base in your market segment
- Number of local competitors currently in your target segment
- Foreign competitors in the desired market segment
If performing business from your home country and shipping to a foreign country, ask yourself: Do they take my currency? Could I take their local currency? What kind of people am I trying to sell my product to? What type of people need my product? Which companies in that market are already selling a product similar to what I am trying to sell? Is that market oversaturated?
Asking and answering these types of questions can help verify that your business can become successful in your next venture.
2. Know the Regional Politics
On the outside, a venture might seem extremely viable, but if the political climate is not advantageous then everything can stop in its tracks. If governmental entities are unwelcoming to foreigners or certain types of businesses, then adjustments should be made accordingly.
Things to look out for regarding regional politics include:
- Recently passed legislation regarding the business sector your company is attempting to enter
- Any tariffs or exceptional high duties
- Past and present tensions between the country of origin and the country your business is attempting to expand to
Has the country you’re operating from been at odds with the country you are trying to perform business with recently? Have the respective governments responded by putting tariffs and other restrictions on each other? Such actions would make trying to get your product within that country extremely expensive and could potentially ruin the competitive advantage you once held over your foreign competitors.
Additionally, if the country residents are highly involved in these politics, they might boycott your product anyway. It is important to consider this a highly relevant factor when attempting to expand internationally.
3. Study the Culture
The culture difference can be a make-or-break point when introducing a new business within a foreign culture. Certain topics might be considered more taboo, other countries may hold more conservative values, and different countries might have almost no boundaries at all.
Here are some techniques to get an accurate grasp of a country’s culture:
- Analyze Their Media - If a country’s media broadcasts highly controversial or offensive content, business in this country may not be good for business. Media analysis can also often give you an idea of what’s popular with your demographic and help you advertise abroad.
- Look at Their Laws - Some countries might ban certain demographics from certain activities by the letter of their law. In that case, it would not be wise to release a product that would make those demographics legally vulnerable or unsafe.
- Know Their History - Countries historically go through phases, yet many aspects of their culture remain constant over time. It’s important to understand major historical movements that have happened within your target country, how they affected or changed the culture, and whether are not some of those impacts are still lasting today. Additionally, it is vital to identify ongoing movements and build that into your brand identity for marketing within that country.
Also, understand that cultures within countries can also vary by region as well, so the more specific an analysis is to the target area the better. It is vital to know if your product or service would transition well within a country’s culture to gauge how successful it has the potential to be. For example, avoid selling products that go against a religious belief held by the majority or confront a cultural taboo in the country you are looking to do business in. It is vital to identify whether your product has a “fit” within the culture you are trying to sell to.
With all three of these major factors in mind, you are now ready to successfully expand your business abroad and find yourself a market with the perfect fit for your product or service and the Van Andel Global Trade Center (VAGTC) can help! Whether you are a company just starting to consider global expansion or have been at it for a few years, VAGTC can help you go global or expand into new markets. With funding opportunities available for small and medium-sized businesses from the Michigan Economic Development Corporation (MEDC) through the Michigan State Trade Expansion Program (STEP), there is no better time than now to start or expand your export operations!
For more specialized information on expanding your business internationally and getting connected to the MEDC and STEP, schedule a consultation with the Van Andel Global Trade Center to answer any questions and get connected.
ABOUT THE CONTRIBUTOR
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Senior currently pursuing an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Edited by Parker Mackey, a student assistant at the Van Andel Global Trade Center.
Posted on Permanent link for Three Key Considerations for Successful International Expansion on May 18, 2023.
Permanent link for Gains & Guidance in Germany on May 8, 2023
Germany has one of the most successful economies in the world, ranking fourth globally in GDP. This is largely due to its reliable infrastructure and workforce, as well as its positive social and legal climate. Germany has a wealth of scientific and technological research with firm practical applications.
Efficient transportation networks and high nationwide competence in English make Germany an accessible location to foster business partnerships. In addition, impressive import-export statistics state that Germany is “the second largest importer and third largest exporter of consumer oriented agricultural products worldwide, and by far the most important European market for foreign producers.”
However, there are a few hurdles foreign companies may face. Because Germany has such a successful economy and leads most of Europe in trade, it reserves the right to be choosy with whom forms meaningful partnerships. This means that companies must go through long bureaucratic processes when setting up shop in the country. However, these “drawbacks” simply mean that the chance to trade with German companies should be regarded as a high accomplishment.
German business etiquette is more formal than other trade relationships may be. Success in the business world of Germany relies on these key components:
- Punctuality: German partners expect punctuality, including setting meetings well ahead and arriving on time and prepared.
- Formality: Foreign partners are expected to maintain a high level of formality, including using titles and steering clear of controversial or personal topics. Partners should allow the German party to initiate more casual conversations. Additionally, while many German people are proficient in English, it’s considered a thoughtful gesture to translate documents into German.
- Detail: German business partners appreciate organization. According to Wolters Kluwer, “The German mindset values detail, order, and structure. Expect to examine each aspect of a project in detail with your contacts.”
Interested in learning more? Join us on May 24th for a virtual Business Travelers Series session on Navigating Germany! We will cover how-tos and best practices for doing business in the German market, as well as, how to maneuver through cultural nuances business professionals often face while working with or traveling to Germany. This event is generously sponsored by The Gerald R.Ford International Airport and Michigan Economic Development Corporation (MEDC).
About the Contributor
Parker Mackey is a Student Assistant at GVSU’s Van Andel Global Trade Center . They are a 2nd-year junior pursuing a Bachelor of Fine Arts in Studio Arts, emphasis painting. They also work for GVSU’s History Department, transcribing for the Library of Congress’s Veterans History Project . They enjoy painting, hiking, and listening to folk punk.
Posted on Permanent link for Gains & Guidance in Germany on May 8, 2023.
Permanent link for Updates on Forced Labor Provisions in 2023 on April 17, 2023
Forced labor has been a huge issue that U.S. Customs and other government agencies have been attempting to crack down on as of late 2021, the majority of 2022, and continued efforts going into 2023.
By the Congressional Research Service definition, forced labor is considered to be “all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily.”
Introduction to Section 307
Section 307 under the Tariff Act of 1930 prohibits the importation of any products that were created using forced labor.
Here is how Section 307 was put into effect:
- Receipt of allegation or self-initiation
- CBP Commissioner initiated CBP an investigation.
- CBP Commissioner issues a Withhold Release Order (WRO)
- Importer may export merchandise or contest the WRO
- Any final readings are published in the Federal Register
- CBP seizes non exported merchandise and commences forfeiture proceedings
With these actions in mind, reports that are made to the Commissioner of U.S. Customs and Border Protection (CBP) cannot be unwarranted; there are certain standards for reporting that must be met.
These standards include “any individual that has reason to believe that any class of merchandise that is being, or is likely to be, imported into the United States is being produced by Forced Labor” have a valid argument to file a claim. In accordance with 19 CFR 12.42, Port Directors and other Principal Customs Officers are mandated reporters and if someone not in this role has concerns, they may share with the Port Director or online.
Investigations regarding these reports under Section 307 also have a set of standards laid out.
These include statements regarding how an investigation is initiated “as appears warranted by the amount and reliability of the submitted information” and a Commissioner of CBP must find that the information “reasonably but not conclusively indicates that imports may be the product of forced labor” to release a WRO to the related items.
Contesting a WRO
If a company has the unfortunate luck of receiving a WRO, not all is lost– it is possible to contest a WRO with a set of procedures that were posted by the Congressional Research Service.
Here are the general guidelines for contesting a WRO:
- Importer has three months to contest the WRO
- The importer must demonstrate that “every reasonable effort” was made to show the source and type of labor used to produce an item and its parts.
- If WRO is not successfully contested or is not exported from the US, CBP will seize and destroy the afflicted items
- CBP will then publish the date, type of merchandise, manufacturer,
and status of WRO
- However, CBP will not post specific detentions, re-exportations, exclusions, or seizures
Forced Labor Enforcement Advancements
Though Section 307 has been around for a number of years now, advancements in the area of forced labor enforcement have increased as of recently.
During January 2022, U.S. Trade Representative (USTR) announced the development of “first-ever focused trade strategy to combat forced labor.”
This plan entails a series of partnerships of government organizations with non-government organizations (NGO’s) and civil society organizations (CSO’s).
More specifically, the Department of Homeland Security (DCS), with the aid of the NGO’s and CSO’s, will also launch supply chain criminal investigations– the first ever of its kind. The main purpose of these criminal investigations is to help identify and shut down human trafficking efforts, charge those who are directly responsible, and protect the victims of these acts.
External Applications - Combating Illegal Fishing
Surprisingly, a big sector with ongoing forced labor issues has been the live fishing industry.
A new presidential directive has led to search and investigation of fishery supply chains that are suspected of using forced labor and contributing to human trafficking in response to this growing issue.
As permitted by the new directive U.S. Customs & Border Protection are instructed to:
- Investigate fishing vessels and operators suspected to be harvesting seafood with forced labor and issue a withhold release orders (WRO)
- Share evidence with allies and partners to encourage parallel customs enforcement actions.
- Investigate prospective civil penalties cases against importers connected to previously issued fishing vessel WROs.
This is quite a daunting task for the CBP to do alone, so they have enlisted the help of external agencies to leverage existing and emerging technologies to detect IUU fishing and prevent or deter illegal seafood imports from entering the U.S. market as well as consider the use of countervailing duties, Section 301 tariffs, import declarations, Pelly Amendment certifications, and due diligence requirements to counter forced labor in the sea food supply chain.
The Office of the U.S. Trade Representative (USTR) has also been tasked with combating this specific issue. According to ST&R, it has been requested that USTR “engage with free trade agreement partners, preference program beneficiaries, and others to address forced labor and other abusive labor practices in fishing.” In addition, they have also been asked to “collaborate with Canada and Mexico to prohibit imports of goods, including seafood, produced in whole or in part by forced labor.”
External Applications - Uyghur Forced Labor Prevention Act
The Uyghur Forced Labor Prevention Act (UFLPA) was signed into law on December 23, 2021 by President Biden after a major issue of mass amounts of forced labor had become prevalent in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China.
Under this act, the importation of any items, mined, manufactured, etc. fully or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China is prohibited under Section 307 of the Tariff Act of 1930 and said goods are not allowed entry into the U.S.
Even with this Act, there are some very slim exceptions. If a manufacturer is attempting to import items from this region, those goods can only enter the United States if the Commissioner of U.S. Customs and Border Protection (CBP) concludes that the importer complied with specific conditions and had clear evidence that the imported items were not created in part or fully by forced labor.
The UFLPA also required the integration of the Forced Labor Enforcement Task Force. It is currently headed by the Secretary of Homeland Security and works in conjunction with Secretary of Commerce and Director of National Intelligence where they send a report to Congress regarding their strategy to support the CBP’s enforcement of Section 307 of the Tariff Act of 1930 regarding items, produced with forced labor, imported from People’s Republic of China.
This Act created a lot of significant changes, so the CBP has created an importer guidance resource for assistance with the implementation of the UFLPA rebuttable presumption that went into effect June 21, 2022.
To learn more about forced labor provisions and how these new processes might affect your company, contact the Van Andel Global Trade Center today !
ABOUT THE CONTRIBUTOR
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Junior currently pursuing a Bachelors in Business Administration undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Forced Labor Provisions
Posted on Permanent link for Updates on Forced Labor Provisions in 2023 on April 17, 2023.
Permanent link for Doing Business in Australia: Culture, Mentality, and Etiquette on January 5, 2023
Original post from August 2019
Updated January 2023
The Commonwealth of Australia, the world’s smallest continent and largest island, is a diverse country with vast iconic natural wonders like the Great Barrier Reef and the Outback, and heavily concentrated cities such as Sydney and Melbourne. Being a newly established country in 1901, it was easy for the country to develop its own cultural personality. Although the culture can be described as Western with indigenous influences, foreigners may be surprised by the quirks and personal touches that Australians have made over time to the standards of their Western lifestyle.
A significant contributor to Western culture is the multinational and famed sport of rugby. Although Australia is well-known for being very much involved in competing internationally in rugby, they are famous for playing their own version as well, Australian football. Australian football can be described as a mixture of rugby, soccer, and American football, with an oval-shaped field and goalposts that resemble those of American football. To score points, players kick the ball through the set of goalposts that are on either end of the field. One of the most intriguing differences in this sport is that the players can pass to their teammates by kicking the ball or punching it with their palms, but they cannot throw it. Additionally, although Australian football is a contact sport, they do not wear any padding, only a jersey uniform. Australian football is a very entertaining and popular sport to watch. For this reason, it is a notable contributor to the country’s economy. The Australian Football League (AFL) reported revenue of AUD$480 million in 2015.
Economically, Australia is revered as the wealthiest (per adult) country in the world, with a decently low poverty rate of 13.2% as of 2018. The United States plays a particularly important role in the economy of Australia, being that it remains their largest two-way trading partner in goods and services. This is a result of the Australian-United States Free Trade Agreement (AUSFTA) that was established in 2005. The passing of this agreement has since increased the trade flow by 91%.
As a result of AUSFTA, there is no surprise that American businesses seek to further strengthen the trade relationship between the two countries. Business opportunities in Australia are of wide variety and significance. However, the quirky culture can often be intimidating for business persons from other countries. There are three key aspects to understand that will enhance a business trip to Australia by providing a deeper appreciation of the country: the business culture, mentality, and etiquette.
Australian Business Culture
Meetings in Australia can seem different from those typically held in the United States. To start, they are considerably more laid back. It is typical for Australian business persons to use colorful language (curse words) in meetings, as well as, crack jokes to lighten the mood. Additionally, it is common to be addressed by only your first name, and it is expected that you do the same. Even though it may not seem like it, Australians do take these business affairs seriously. Therefore, it is important to dress the part and be prepared for your meeting. If you are presenting a proposition or sitting as a chairman, it is expected that you be punctual and show up to the meeting a few minutes early. Also, be sure to chat about things like the weather or sports to relax the atmosphere.
Modesty and Understanding
A key factor in the business culture of Australia is modesty. Australians are very modest about their job position; it is very unattractive to them when a foreigner emphasizes their title and the greatness of their business. For this reason, it is recommended to not use an aggressive sales technique to persuade a potential partner, as most of the time it will not work. Avoid overselling your company, or coming off as self-important. It is more persuasive if the facts are laid out for them with a friendly attitude. But even if you do execute your sale in this way, they still may clearly express that they are not interested; Australian business persons are known to be very blunt and honest when considering a business contract. It is important to prepare for a straightforward rejection. Of course, this response will not be rude, but rather, more diplomatic. Nevertheless, it may take longer than expected to receive this response. This is because businesses in Australia value a team environment. The top management of a corporation will most likely consult their subordinates before deciding. No matter your position in the company, Australian businesses are very considerate of everyone’s opinion and expect that it be shared. Patience and understanding are key in these situations.
Business Etiquette in Australia
Gifts are not expected at business interactions but are greatly appreciated when given at the correct time. In Australia, it is commonly understood as bribing when a person brings a gift to a meeting before the close of a deal. If you decide to give a gift, simply have one prepared if a close or agreement arises. This will come off as congratulations and will be admired. Additionally, if invited out to dinner or drinks, do not begin to discuss business unless the counterpart does so. It can be seen as rude, or pushy if a business person attempts to bring a pitch to the table because it can cause stress and create a serious atmosphere.
If you are planning a trip to Australia for business purposes, it is recommended to understand the unique business culture, mentality, and etiquette of the country. A comprehensive education of these elements of their lifestyle will allow more of a relationship and connection to develop between two business persons of different backgrounds. And, if you have some free time in Australia, attempt to catch an Australian football game - you will not be disappointed.
Learn more about the country, trade, and culture of Australia by registering for the Business Travelers Series: Navigating Australia on February 15, 2023 from 9am - 10am EST. This virtual event is generously sponsored by The Gerald R. Ford International Airport and Michigan Economic Development Corporation
Interested in Traveling to Australia?
Contact the Michigan Economic Development Corporation today to learn about the Michigan and Pennsylvania co-hosted trade mission to Sydney and Melbourne, Australia with an option to visit New Zealand.
MI-STEP Funding From MEDC
Did you know that qualifying Michigan companies have the opportunity to receive STEP funds for International Trade Missions and Trade Shows like this one?
To find out if your company is eligible new companies must complete and submit an online intake form here. Existing clients can contact your regional international trade manager. Funds will be approved for specific and measurable export initiatives. Funds for the MI-STEP program are subject to availability. Learn more about the MI-STEP program here.
About the Contributor
Mackenzie was an undergraduate student at Grand Valley State University and a student assistant at the Grand Valley State University’s Van Andel Global Trade Center. She majored in International Business and Finance while minoring in Spanish.
Posted on Permanent link for Doing Business in Australia: Culture, Mentality, and Etiquette on January 5, 2023.
Permanent link for Holiday Celebrations Around the World on December 19, 2022
By Benjamin David
Originally posted December 19, 2018
The holiday season is here again! GVSU’s Van Andel Global Trade Center would like to celebrate with you by sharing some of the holidays and festivals you can find around the world this month.
Every year, millions of people celebrate the birth of Jesus on December 25th. The celebration of Christmas began in the Roman Empire, though methods of celebration vary greatly around the world. In the West, for example, Christmas trees are popular; the tradition started in Strasbourg, Germany (now part of France) where fir trees were decorated with apples. In Eritrea, neighborhoods will purchase cows and have a community feast together. It is popular for Japanese families to enjoy their Christmas meal at Kentucky Fried Chicken, following an ad campaign in the 1970s. The Icelandic Yuletide Lads, mischievous little elves who climb down the mountains into towns, play tricks and leave children presents; while, it is a popular tradition to roller-skate to church for the weeks leading up to the 25th in Venezuela. There are many more weird and wonderful international traditions like these.
St. Nicholas Day
Celebrated every year on either December 5th or 6th, St. Nicholas day celebrates…St. Nick! St. Nicholas was the bishop of the city of Myra during the 4th century who was renowned for his generosity. Popular during the Middle Ages, St. Nicholas fell somewhat into obscurity after the Protestant Reformation. The Dutch, however, continued to celebrate “Sinterklaas”, as they refer to St. Nick. Every year on his feast day, Sinterklaas would give candy to all the good children of the Netherlands, and provide the bad ones with coal, as well as potatoes and sticks.
From the Netherlands, Sinterklaas was celebrated in the Dutch colony of New Amsterdam, where the tradition remained after the British acquired the port city and renamed it New York. There, “Sinterklaas” became “Santa Claus” and was merged into Christmas celebrations. Back in Europe, St. Nicholas Day remains popular in Belgium, Luxembourg, and the Netherlands, as well as parts of Germany France, and Italy. Typically, on the night before St. Nicholas Day, children place a shoe or a boot in front of the fireplace. In the morning, they wake up and discover that St. Nicholas has left them a shoe full of candy and cookies (or potatoes). In Bari, Italy, where St. Nicholas is buried, the day is accompanied by gift-giving and a parade.
On Christmas Eve, families of Polish descent will hold Wigilia, a large feast celebrating the birth of Jesus. Typically, families will spend the days prior to preparing for the feast, comprised of either seven, nine, or eleven courses. Before sitting down, everyone breaks a piece of bread from a traditional wafer and wishes for health, wealth, and happiness. It’s a tradition that an odd number of people cannot be sitting at the table at any point during the meal, and that an extra place at the table is set for Jesus. Meals are meatless except for fish, and traditional Polish dishes such as pierogi and babka are served.
Every December 26th, Boxing Day comes around. Although, if the 26th falls on a weekend, the following Monday will be the day of celebration. Boxing Day is popular in the United Kingdom, as well as in Commonwealth nations such as Canada, Australia, and New Zealand. Originally, Boxing Day was the day that the wealthy and the royals would give gifts to their servants and tradespeople, as well as a general day of charity to the poor. Today, Boxing Day is marked by bonuses given to employees and sporting events such as horse races and rugby matches. It is also common to enjoy a second dinner of leftovers made from the big Christmas meal.
For eight days starting on the 25th day of the Jewish month of Kislev (which began on December 2nd in 2018), Jewish communities celebrate Hanukkah. This is the celebration of the rededication of a Jewish temple in 165 BCE after it was desecrated by an invading army. The most well-known Hanukkah tradition is the lighting of the Menorah, which represents the story of “the Oil in the Temple”. As the story goes, on the first night after the desecration of the temple, there was only enough oil left to light the sacred menorah for a single day. This small amount of oil, however, lasted for eight days, the perfect amount of time for more consecrated oil to be brought to the temple and keep the Menorah lit.
In Israel, Hanukkah is celebrated with parties and songs, as well as a few particularly unique traditions. Every Hanukkah, the relay from Modi’in takes place, in which runners carrying torches run from Modi’in to the Western Wall, the only part of the original temple that still stands. Many different foods are eaten during Hanukkah such as Latkes and sufganiyot. Children are also given gifts and chocolate coins and spin the dreidel.
Searching for ways to bring the African American community together after the Walt Riots in Los Angeles in 1966, Dr. Maulana Karenga created Kwanzaa. Kwanzaa is a celebration of African heritage and culture, primarily recognized in the United States, but does have observers around the world. Celebrated from December 26th until January 1st, Kwanzaa focuses on African tradition and values known as the seven principals. These are unity, self-determination, collective responsibility, cooperative economics, purpose, creativity, and faith. The kinara is a traditional candleholder with seven candles, colored red, green, and black, which represent the seven principals. The candles are lit, and the family joins in a discussion over the theme for that day. On December 31st, families hold a feast called a karamu, and often wear traditional African clothing.
St. Lucia Day
St. Lucia Day is a Scandinavian holiday celebrated in Norway and Sweden, as well as in Norwegian and Swedish speaking communities abroad. Honoring St. Lucia, a Christian martyr, the day is intended to usher in light in a time of the year where, depending on how far north you are, the sun may never rise. During the celebration, a family will dress one of their daughters in white, and she will serve coffee and baked goods to her family and guests.
The Jonkonnu Festival is a Caribbean festival celebrated on December 26th. Jonkonnu is a specific kind of dance created to blend traditional African and English dance that originated among slaves in the Bahamas, Belize, Bermuda, Guyana, Jamaica, and St. Kitts & Nevis. Dancers and musicians wearing homemade costumes with traditional African and English imagery parade to public areas and hold community dances. Today, it’s also more common for communities to hold dance and costume competitions on that day.
No matter how you celebrate, GVSU’s Van Andel Global Trade Center hopes that your holiday season is filled with cheer!
About the Contributor
Benjamin David was an undergraduate student at Grand Valley State University and a Student Assistant at Van Andel Global Trade Center. He was an International Relations and Economics major and a German minor. He plans to go to law school after graduation and hopes he may eventually work at the U.S. State Department. Ben loves discussing cars, airplanes, and languages.
Posted on Permanent link for Holiday Celebrations Around the World on December 19, 2022.
Permanent link for Reaching Global Markets: A Small Business Guide to Funding Exports on December 14, 2022
How can small businesses grow their customer base and increase profitability? Export!
When local markets are facing tough times or simply not bringing in enough revenue, the next step in expanding a small business and increasing revenue is to start exporting goods to access new global markets.
Common Concerns about Exporting
Exporting, however, may seem quite daunting and expensive to the inexperienced individual. Fortunately, there are several financial resources, mentors, and consultants available for small businesses to utilize to create an export strategy and set up export operations unique to their business needs.
Setting up and maintaining export operations does require an investment of both time and money, but with 95% of the world’s consumers outside of the U.S., it has the potential to turn into a profitable investment. If traditional bank financing doesn’t fit your business needs, there are different types of loan programs that help in setting up and/or maintaining export plans and provide alternatives to traditional loan options to fund export endeavors.
Programs funded through the U.S. Small Business Association (SBA) that small businesses should be aware of include:
- SBA State Trade Expansion Program (STEP)
- SBA International Trade Loan Program
- SBA Export Working Capital Program
- SBA Export Express Loan Program
SBA loans are provided through banks, but SBA guarantees a substantial portion of the loan – up to 90% – making it more likely to get accepted than a traditional, non-SBA-backed loan.
State Trade Expansion Program (STEP)
One of the most easily accessible financial assistance options available for exporting is the STEP program.
The State Trade Expansion Program (STEP) is a completely different category than the other loan program since technically it’s not a loan at all. Though the money given to the state government is awarded by SBA, it is ultimately the individual state’s economic development department that distributes these funds– no repayment is required.
State-level STEP assistance helps small businesses:
- Learn how to export
- Participate in foreign trade missions and trade shows
- Obtain services to support foreign market entry
- Develop websites to attract foreign buyers
- Design international marketing products or campaigns
Roughly 46 of the 50 states were awarded STEP funds, including Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgie, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Michigan’s STEP program, MI-STEP, administered by the Michigan Economic Development Corporation, offers up to $15,000 in export assistance that covers up to 75% of export eligible expenses. For more information on MI-STEP, check out our blog article Michigan Small Businesses Are Missing Out on Free Money: Why You Should Take Advantage of MI-STEP .
Coverage rates and total assistance varies by state, check your state’s STEPpolicy for exact export assistance information.
International Trade Loan Program
The most expansive of these would be the International Trade Loan Program. Companies can be approved to borrow a maximum of $5 million through this program with a processing time of roughly 5 - 10 business days.
These loans are available to help small businesses enter international markets and compete with businesses already present in the market. It works by combining fixed assets, working capital financing, and debt refinancing for the maximum amount of assistance.
Export Working Capital Program
The Export Working Capital Program is similar to the International Trade Loan Program in that there is a $5 million maximum borrowing limit and 5 - 10 day processing time, but the purpose is slightly different.
People applying for this loan already have a finalized sale or export contract in hand and just need the extra funds to seal the deal. This venture is ultimately a bit less risky than going into a market blind – like the prior program – which makes the approval process easier.
Export Express Loan Program
The Export Express Loan Program allows small businesses to get loans accepted within 36 hours with the trade-off of only being able to borrow $500,000 or less.
The reason turnaround time is so quick is that Export Express lenders can directly underwrite a loan without SBA prior approval.
Meet Your Export Mentors
For businesses interested in learning how to export their goods and explore funding opportunities and resources available for this endeavor, GVSU’s Van Andel Global Trade Center along with state and federal partners from the Michigan Economic Development Corporation (MEDC), Michigan West Coast Chamber of Commerce, U.S. Department of Commerce - Grand Rapids, Michigan Small Business Development Center, Export-Import Bank of the United States, Networks Northwest, U.S. Small Business Association (SBA), and more, are offering four opportunities to join us for our New to Export Workshops throughout the state of Michigan in 2023, visit our event page for dates and details !
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Junior currently pursuing a Bachelor in Business Administration degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Posted on Permanent link for Reaching Global Markets: A Small Business Guide to Funding Exports on December 14, 2022.
Permanent link for A Summer of Sanctions: Things to Consider Before doing Business with Russia in 2022 on July 14, 2022
By: Natalie Bremmer
United States relations with Russia have never been the best, but Russian threats and advancements into Ukrainian territory have put extreme tensions on the minor singular ounce of stability that was once present.
In the following months, pre-to-current invasion, the U.S. worked tirelessly amongst themselves and in collaboration with other countries to impose a variety of sanctions on Russia in an effort to slow this ruthless attack.
Check out the timeline of events below to get up-to-date on what has been going on with Russia.
The first, most notable event in this timeline of sanctions started on February 21, 2022, where, within pro-Russian Donetskaya Narodnaya Respublika (DNR) and Luhanskaya Narodnaya Respublika (LNR) regions of Ukraine, new investments, trade, and financing from U.S. personnel to this region had been stopped; the reason being that there were Russian forces already in these areas and the Russian government kept spreading false information of Ukrainian aggression towards them.
Not even three days later, on February 24, 2022, Russia publicly invaded Ukraine. Within this same day, the U.S. passed a series of sanctions including:
- Freezing several Russian banks and rejecting any future transactions; VTB Banks and Public Joint Stock Company Sberbank of Russia to name a few
- Putting financial limitations on several Russian elites, oligarchs, and private entities
- Limitations or complete bans on roughly 24 Belarusian people and entities; most banks, defense, and security suppliers, and defense officials
- Restrictions on the export of semiconductors, computers, lasers, and other technologies to Russia
Two days later, on February 26, 2022, the United States, European Union, United Kingdom, Japan, Canada, France, Italy, and Germany all imposed a sanction removing select Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) program to limit their access to reserves. In addition to this, they also aimed to stop key Russian entities from getting citizenship in other countries to avoid already imposed sanctions.
March consisted of a flurry of several more sanctions. One of the most notable ones was banning the importation of Russian oil, coal, and liquified natural gas which was announced on March 8, 2022.
Other relevant sanctions included travel bans going into Russia, banning transactions between the different businesses within the defense, marine, aerospace, and electronics sectors in Russia and Belarus to United States entities, restricting more than 300 high-class and powerful Russian figures, and solidifying financial sanctions against Russia that were already put in place in addition to some new ones.
During this same month, the United States, European Union, United Kingdom, Japan, Canada, France, Italy, and Germany reconvened in two separate meetings to announce increased import tariffs on Russia, eliminating their World Trade Organization membership benefits, and denying them access to World Bank and International Monetary Fund (IMF) to eliminate their borrowing capabilities.
Sanctions introduced in April further separated Russia from the most profitable sectors within the U.S., including:
- Russian darknet and ransomware entities; Hydra and Garantex
- Alrosa, the largest Russian diamond mining company
- Banning Russian and Russian-affiliated vessels from entering U.S. waters
- Russian virtual currency mining companies; Transkapitalbank, Bitriver, Tsargrad, and more
- Temporary denial orders towards Russian aircraft carriers Aeroflot, Azur Air, and UTair for evading previous sanctions
However, one of the most notable events during this month was the two laws President Biden passed on April 8, 2022.
The first, named “Ending Importation of Russian Oil Act”, bans the importation of any energy-related products classified under Chapter 27 of the Harmonized Tariff Schedule from the Russian Federation. This law also strictly prohibits investments in anything that would aid Russia in the takeover of Ukraine.
It is, however, written into this law that the acting president would be able to lift this ban after 90 days of submitting a certification to Congress.
The second law, titled “Suspending Normal Trade Relations with Russia and Belarus Act”, removed both Russia and Belarus from the ‘Normal Trade Relations’ – Column 1 – of the Harmonized Trade Schedule and placed them in Column 2 with much higher rates than Normal Trade Relation countries.
The majority of the written portion of this law was explaining their reasoning for the column shift; essentially how the United States and Ukraine are both members of the World Trade Organization (WTO), how Russia was also part of the World Trade Organization at the beginning of the invasion, and then how not only did Russia’s invasion into Ukraine, denied Ukrainians of their right to independence and sovereignty but also continues to threaten international relations and hampers Ukraine’s ability to participate in the World Trade Organization. Since Belarus has been providing very public support to Russia during this time, they were also moved to Column 2.
On January 1, 2024, Russia and Belarus are scheduled to be reclassified under Column 1 and once again receive Normal Trade Relations treatment.
Similar to the first law, the president can submit a proclamation to move both Russia and Belarus back to Column 1 rates which would take place 90 days after the submission date and would last no longer than one year.
The passing of sanctions in May slowed significantly compared to March and April, but a few notable events took place regardless.
On May 8, 2022, the Leaders of The Group of Seven – United States, United Kingdom, Japan, Canada, France, Italy, and Germany – gathered in Berlin with the president of Ukraine and agreed on five more key elements to put into effect as new or improved sanctions to cripple the Russian war effort.
The biggest driving point was a permanent phasing out of dependence on Russian energy, including oil.
The other decrees included:
- continuing with sanctions against Russian banks
- banning the export of key services to Russia that could help with war efforts
- fight Russian propaganda by limiting the revenue private companies can transfer to Russia and their affiliates, and
- continue with sanctions against the extremely wealthy and all of their family members that support President Putin in this conflict
On May 9, 2022, more strict restrictions were added to existing sanctions (enacted on March 3, 2022) on American exported goods – mostly wood products and construction machinery – that were originally meant to slow down Russia’s oil production but were slightly repurposed to stop the replenishment of war materials.
On the same day, the tariffs on Ukrainian steel that were put in place by ex-President Trump were temporarily lifted for one year.
Closer to the end of the month, May 24, 2022, the U.S. Treasury blocks Russian entities from paying debts back to bondholders or, in more generous cases, increased interest by as much as 50% from their original totals.
June consisted mostly of fine-tuning sanctions that were already imposed in prior months.
June 2, 2022, was quite an eventful day– including adding 71 more entities to the sanction list which included mostly ‘military end-users,’ freezing more assets stored around the globe of wealthy and influential Russian individuals, and adding more export controls to limit items used for Russian military purposes, and further explaining U.S. export controls to allies with a readout by Deputy Secretary Don Graves in Belgium.
Later on June 15, 2022, the U.S. government targeted a Russian extremist group self-titled the Russian Imperial Movement (RIM), formerly classified as a terrorist group in April of 2020, and significantly limited their ability to move funds by sanctioning their two most prominent leaders.
The rest of that month consisted of more Temporary Denial Orders on airlines that continued to violate travel sanctions, addressing evasion attempts on Russian and Belarusian fronts to skirt around financial sanctions, and creating even stricter access to companies attempting to export military supplies and other technologies to Russia.
To learn more about the sanctions imposed on Russia and how that could affect your business, contact GVSU's Van Andel Global Trade Center and sign up for our 5th Annual Summer Summit taking place on August 3, 2022, at the GVSU Alumni House.
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Junior currently pursuing undergraduate degrees in Finance and Human Resource Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Posted on Permanent link for A Summer of Sanctions: Things to Consider Before doing Business with Russia in 2022 on July 14, 2022.
Permanent link for Big Changes Are Coming: Huge Drop in the Monthly U.S. Trade Deficit on June 15, 2022
by Natalie Bremmer
Big news rocked the trading world recently with the announcement of the monthly goods and services trading deficit dropping a staggering 19.1% for the United States.
April 2022’s numbers were just released on June 7th, 2022 stating that the $107.7 billion trade deficit from March 2022 had dropped by $20.6 billion down to $87.1 billion in April 2022.
More specifically, U.S. April exports were $252.6 billion, roughly $8.5 billion more than March, and about a 3.5% increase between those two months. U.S. April imports were $339.7 billion, which is a $12.1 billion or 3.4% decrease from the previous month of March.
Though April was a great month, in the big picture the United States is still feeling the effects of the Covid-19 pandemic. Between April 2021 and April 2022, the goods and services deficit increased by 41.1% totaling $107.9 billion. This is essentially due to exports increasing by 18.8%, coming in at $151.3 billion, and imports simultaneously increasing by 24.3%, totaling $259.2 billion within this timeframe.
Three Month Trends
On a more positive note, the U.S. three-month trade deficit average is starting to look a lot more promising. Between February 2022 and April 2022, the average goods and services deficit fell by $0.3 billion, down to a total of $94.3 billion. During this time period, U.S. exports increased by $8.3 billion for a total of $242.2 billion, and imports increased by a marginal $8.0 billion totaling $337.4 billion.
Monthly Export Trends
In April 2022, the U.S. export of goods increased by a substantial $6.1 billion to a total of $176.1 billion. The largest portions of this increase came from industrial supplies as well as food and animal feed, accounting for about $4.5 billion combined. Another large portion of the increase was due to the export of capital goods– namely civilian aircraft.
During the same month, the U.S. export of goods also increased by roughly $2.4 billion, totaling at $76.5 billion. The main categories that caused this increase were travel and transport which increased by $1.5 and $0.3 billion respectively.
Monthly Import Trends
In April 2022, U.S. imports of goods actually decreased in comparison to the prior month by $13.0 billion, with a sum of $283.8 billion for the month.
Some of the largest contributors to this decrease were consumer goods, industrial supplies, and capital goods which all decreased by $6.3, $5.4, and $2.6 billion respectively. However, U.S. imports of automotive vehicles rose by roughly $1.4 billion.
Alternatively, the import of services during the same month increased by $0.9 billion compared to the month prior, capping out at $55.9 billion. The largest contributors to this increase were travel, with a $0.6 billion dollar increase, and other business services at $0.2 billion.
For the full report, you can find the U.S. Census post here.
Keep up with VAGTC’s Trading Thoughts Blog for additional updates covering the trade deficit information released in July.
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Junior currently pursuing undergraduate degrees in Finance and Human Resource Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Posted on Permanent link for Big Changes Are Coming: Huge Drop in the Monthly U.S. Trade Deficit on June 15, 2022.
Permanent link for Michigan Small Businesses are Missing Out on Free Money: Why You Should Take Advantage of MI-STEP on April 20, 2022
by Natalie Bremmer
Michigan Economic Development Corporation's MI-STEP
The Michigan Economic Development Corporation (MEDC) oversees Michigan’s State Trade Expansion Program (MI-STEP) to give financial assistance to small businesses to pursue exporting their products and gain access to larger global markets.
They have roughly $2.667 million worth of aid to give out to small businesses across the state. Up to 75% of pre-approved exporting expenses can be covered with a $15,000 maximum per business in a fiscal year when the Michigan company follows the MI-STEP eligibility criteria.
This program makes entering or expanding in new global markets viable for small or medium-sized businesses eager to expand while accommodating a more limited budget.
MI-STEP may seem confusing at first glance, so here are its three main objectives:
- Increase amount of small and medium-sized businesses in Michigan that participate in exporting
- Grow the dollar value of Michigan exports
- Provide an avenue for Michigan small businesses to explore new trade opportunities
The eligibility criteria to secure aid from this program include:
- Being in accordance with SBA standards
- Demonstrate understanding of export costs and business with foreign markets; including freight forwarding, packing, shipping, and customs brokers
- Show potential for successful exporting as well as a positive impact on the regional economy
- Provide an EIN number that is linked to a Michigan address
- Must be in good standing with the Michigan Department of Treasury as well as any other regulatory agencies
- Must be a U.S. company that is prepared to export goods of U.S. origin with a minimum of 51% U.S. content
Once a business gets this aid, there are particular transactions that will be covered by MI-STEP funds. These include but are not limited to:
- Participating in foreign-trade missions
- E-commerce fees for advertisement and website design
- Participation in international trade shows
- Foreign sales trips (up to two people on an economy flight)
- EXIM export credit insurance premiums
- Participation in export training workshops
One company that benefitted greatly from an MI-STEP award was Armor Protective Packaging: a rust removal company that specializes in making clean, safe, and easily used vapor corrosion inhibitor packaging. Through MI-STEP, they were able to expand to provide to 90% of the Fortune 500’s industrial companies as well as several other countries across the world. More specifically, MI-STEP helped this company with having the funds to create a local website translated and customized for the different languages and cultures of the specific countries they were selling to– effectively expanding their digital footprint. They were also able to travel to some of these countries to network and secure international business partners which was another huge step for them to reach their global markets.
GVSU's Van Andel Global Trade Center
The Van Andel Global Trade Center is an easily accessible resource with various export training programs and workshops that are eligible for MI-STEP coverage that teaches small businesses how to find success similar to how Armor Protective Packaging did. VAGTC’s incredibly knowledgeable team has been working with businesses across Michigan for over two decades in both one-on-one and group settings– entirely depending on their clients' needs. Throughout their time at GVSU they’ve worked with over 10,000 companies and have assisted more than 31,000 business professionals. Not only do they have a wealth of experience with exporting, but they also assist companies of all sizes with importing concerns.
VAGTC consults with companies in the following areas:
- Export & Import Procedure Manuals
- Compliance (export and import)
- Free Trade Agreements such as USMCA
- Global Supply Chain Logistics
- Export Controls Training: ITAR & EAR
- Cultural Training
- Market Research
- Foreign-Trade Zones
- Global Risk Factors
- Harmonized Schedule/Classifications, Export Control Classification Numbers
- and more!
Their website has a variety of helpful resources like guidebooks, available programs, trade zones, and Worldwide Credit Reports. VAGTC memberships are also available for discounts on workshops and more individualized assistance.
With an ever-expanding global market, there has been no better time to enter it than right now. Check out MEDC's MI-STEP website with full details on the program and begin taking full advantage of all that MEDC has to offer! Companies can also learn more about VAGTC’s services and how we can get you connected to the MI-STEP program by contacting us today! Now is the time to grow your small business through increased export sales, let us help!!
About the Author
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a sophomore currently pursuing an undergraduate degree in Finance and Human Resource Management at Grand Valley State University. She enjoys lifting weights, playing video games, spending time with friends, and going on long hikes.
Posted on Permanent link for Michigan Small Businesses are Missing Out on Free Money: Why You Should Take Advantage of MI-STEP on April 20, 2022.
Permanent link for What is the Harmonized System and Why is it Important? on April 8, 2022
What is the Harmonized System (HS) and the HS Classification?
The Harmonized System (HS) is a globally recognized way to identify goods being imported and exported by assigning a standardized classification. The HS classification is used for declaring goods at the time of export in export declarations and for the purpose of filing customs entries at the time of import in the country of destination. The HS classification is used to determine duty rates and collect duties, taxes, and fees for the imported products.
The Harmonized System (HS) is something every importing and export company will need to understand so proper HS classifications can be assigned to their products. Companies need to take great care in assigning HS classification and understand the compliance risks associated with their HS classification decisions. Exporters and importers alike have a legal responsibility to properly claim and classify goods/products.
The Harmonized System (HS) Breakdown
The Harmonized System (HS) is a very structured classification system made up of sections, chapters, notes, headings, and subheadings.
The United States has two published versions of the Harmonized System (HS). For imports, the U.S. publishes the Harmonized Tariff Schedule (HTS) of the U.S. for the HS classification of imported products and the assignment of duty rates. For exports, the U.S. publishes the Schedule B for export HS classifications and the collection of statistical data.
The Harmonized System (HS) is broken down into 22 sections which act as groupings of similar chapters.
There are 97 chapters of products that are organized from least manufactured to more manufactured and logically group classifications by make or by use. The first two digits of each HS classification are the chapter number. Within each chapter, the Harmonized System (HS) provides a four-digit heading with the primary legal definition of what is to be included in that heading. Those headings are further broken down into six-digit subheadings. The heading and subheading legal definitions are universal and all countries agree to use the same legal definitions.
While the globally recognized headings and subheadings remain
constant, each country can further break down the subheadings with
country-specific suffixes. In the U.S. two digits (digit 7 and 8) are
added as the duty rate suffix and two digits (digit 9 and 10) are
added as a statistical suffix – making the U.S. classification a
See the photo above for an example using Coffee.
Why is HS Classification Important for your Business?
First of all, for importers, the HTS classification determines the duty rates and the duties paid at the time of import so it has immediate revenue implications. Non-compliance can result in fines, penalties, and the back payment of additional duties owed.
Paying duties is a non-negotiable, so proper classification can reduce your compliance risk in the short and long run. The result will never be good when using the wrong classification. If your misclassification caused you to overpay in duties, you won’t receive a refund. If you are underpaid in duties, you are required to pay the difference, and customs will decide if you will need to pay interest, and whether or not fines and penalties will be imposed.
For exporting, HS classification is used in:
- Export documentation (ex. Commercial Invoice)
- Export Declaration
- Import customs entry in a country of destination
For importing, HS classification is used in:
- Customs and Border Protection (CBP) for customs clearance and entry
All in all, use the HS classification to your advantage. Generate proper classifications and importing and exporting will be smooth sailing.
Are You Interested in Learning More?
GVSU's Van Andel Global Trade Center offers a yearly Fundamentals of Harmonized System (HS) Classification Training. Check out our Events page to register for this upcoming event!
About the Contributor
Jenna Hoover is working as a student assistant for GVSU’s Van Andel Global Trade Center. She is a junior at GVSU currently studying Finance and Supply Chain Management within the Seidman College of Business. You can find her visiting local coffee shops as she studies for classes or checks in on her Roth IRA. In her free time, she enjoys walking her dog, Gertrude, and hanging out with friends along the beautiful beaches of West Michigan.
Harmonized Tariff Classification
Posted on Permanent link for What is the Harmonized System and Why is it Important? on April 8, 2022.