Trade Insights for Importers of Goods from the Philippines by Sarita Jackson

Trump to Visit the Philippines Next Week: Trade Insights for Importers of Goods from the Philippines

On November 13-14th, President Trump will conclude his trip throughout the Asian region with a visit to the
Philippines. He will meet with Philippine President Rodrigo Duterte and attend the U.S.-Association of Southeast
Asian Nations summit. According to a November 8th Inside US Trade report, Trump will “continue his call for ‘fair and reciprocal treatment,’ [a senior administration] official said. That includes, the official added, ‘fully embracing an international trading system, which is rules-based and respects high standards; achieving fair and equitable trade relationships through the removal of unfair trade barriers; and the reduction of chronic trade deficits and adherence to market-based growth.’” Against this backdrop, what opportunities exist for U.S.-based importers purchasing goods from the Philippines? What should exporters from the Philippines know about finding buyers and
competing in the U.S. market?
They should understand tariffs/customs duties, or taxes placed on goods imported from another country. (Tariff and duty are used interchangeably in this piece.) Since the United States and the Philippines do not have a bilateral
trade deal that eliminates duties on the majority of goods traded between the two countries, this piece focuses on
those programs that create opportunities for goods from the Philippines to enter the United States duty-free.
Beyond looking at such programs, it is also important to understand the kind of research data that will help both an
exporter and importer, regardless of industry, to take advantage of such programs.
For this reason, the blog post is organized into the following sections: 1) the types of programs that offer goods from
the Philippines special access to the U.S. market; 2) names of key importers from the Philippines; 3) top goods and
services that the United States imports from the Philippines; and recommendations for developing a competitive
import/export strategy.

U.S.-Philippines Trade Policy (Tariffs and Special Access Programs)
The United States and the Philippines have not signed a bilateral free trade agreement, which would allow for the
easier flow of goods and services between the two countries. Goods, for example, could be traded between the two
countries duty-free. Without such a deal, any good entering the U.S. market from the Philippines will face duties,
which, in turn, adds to the cost of that same good. For instance, as discussed below, electrical machinery and equipment (HS 85) is the number one U.S. import category from the Philippines. Specific commodities, such as wires and cables, face duty rates that can range from 3.5% to 5.3%, with a few duty-free exceptions. However, special access programs provide substantial benefits to goods imported from the Philippines. Unfortunately, these long-standing programs receive little attention and many importers are unaware of their existence. Consequently, these importers miss out on opportunities to save on the cost of importing. One such program is the Generalized System of Preferences (GSP). The GSP provides duty-free treatment to specific products from eligible countries. Since the Philippines is a beneficiary of the GSP, items, such as wires and cables, enter the United States duty-free, thus giving exporters from the Philippines somewhat of a competitive edge. Furthermore, importers from the Philippines can reduce their transaction costs. In July 2017, the United States expanded the program to include travel goods from the Philippines, which originally faced duties ranging from 6 to 20%. 1/6

The next focus is for exporters from the Philippines to gain insight into who is actually buying certain goods from the country and for importers to be able to identify other firms selling similar products in the U.S. market. The following section offers insight into U.S. importers of a specific commodity from the Philippines.
U.S. Importers of Goods from the Philippines (Firm-level)

In December 2016 alone, more than 1,000 shipments ordered by various companies located all throughout the
United States came from the Philippines. Three companies–Sumitomo Electric Wiring Systems, Lear, and Roper
Corporation–account for the top 10 dollar values of the import of electrical machinery and equipment. Sumitomo
represents a 51% share of the top 10 dollar values. (Figure 1).
Figure 1: Companies Representing Top 10 Import Values of Electrical Machinery and Equipment from the
Philippines (December 2016) (US$)
Each company reported a shipment on different days in December 2016. These shipments accounted for the top 10
dollar values of imports, as noted above. Some of the values were represented by the same companies, as in the
cases of Sumitomo Electric Wiring Systems and Lear (Table 1).
Table 1: Top 10 Importers of Electrical Machinery and Equipment from the Philippines (US$)
2/6
U.S. Imports from the Philippines (Country-level)
This section highlights the demand for goods and services from the Philippines. Businesses gain from knowing
which goods and services from the Philippines are growing in the U.S. market.
This year, the United States mainly imported manufactured goods from the Philippines. The top three imports
include electrical machinery and equipment, machinery and mechanical appliances, and knit apparel and clothing
accessories (Fig. 2). The imports have increased in each of these three categories between March and August
2017, which demonstrates the increased demand for these items from the Philippines within a six month period.
More importantly, these figures show growth, although the United States is now under a new administration with a
different approach to international trade than the previous one.
Figure 2: U.S. Top Three Imports from the Philippines (Goods) (March-August 2017) (US$thousand)
3/6
From 2014 to 2016, electrical machinery and equipment showed import growth. Machinery, mechanical appliances,
etc. and apparel and clothing accessories demonstrated a decline in imports (Fig. 3).
Figure 3: U.S. Top Three Imports from the Philippines (Goods) (2014-16) (US$thousand)
Other commodities have demonstrated quicker growth rates reaching a little over 90% growth from 2014 to 2016.
Two examples of the high import growth rate include mineral fuels and footwear (Fig. 4). 4/6
Figure 4: Goods Among U.S. Fastest Growing Imports from the Philippines (2014-2016) (US$thousand)
Services are also a key component of international trade. The United States has seen significant growth in terms of
the import of various types of services, especially commercial services, from the Philippines in recent years (Table
1).
Table 1: U.S. Imports of Services from the Philippines (2012-2016) (US$thousand)
5/6
Although this piece focuses more on goods, it is still useful to speak to the opportunities presented for service
providers. Recommendations
So what then of this information? The early stages of building a competitive strategy requires understanding how to
translate this information into a formula that is strictly applicable to one’s company, product, or service.
Well, here are a few easy next steps for firms looking to import from the Philippines into the United States or export
from the Philippines to the United States:
Gather international trade data highlighting the shifts in U.S. imports of your specific product (agricultural or
manufactured);
Conduct an analysis into how to take advantage of special access programs that offer duty-free treatment
on particular goods from the Philippines entering the U.S. market;
Identify the key importers and exporters of goods (agricultural or manufactured) and analyze their
performance over a period of time;
Collaborate to turn research data into a customized competitive strategy;
Join personalized strategy sessions. GRIIT provides detailed market information, tips, resources, and training information in its free monthly newsletter. Subscribe quickly and easily at www.griit.org.
Sources: All data are based on statistics collected from the World Trade Organization (WTO), United Nations (UN),
and U.S. Customs.
© copyright 2017 – All rights reserved
GRIIT Blog: Internationa

Philippine Coconut Roadshow comes to Los Angeles

An article from the Asian Journal Newspaper. Coconut products are becoming more and more popular in the US Market.

 

Leaders and members of the Philippine coconut industry launched a coconut roadshow on Friday, September 8 at the San Gabriel Hilton Hotel in San Gabriel, Los Angeles.

The show was the first out of four being held throughout the United States meant to share the outlook of the Philippines’ booming coconut oil industry that was recently threatened by a report by the American Heart Association (AHA) report.

Sponsored by the Philippine Coconut Authority (PCA), the United Coconut Association of the Philippines (UCAP), and the Philippine government, around 20 coconut industry companies and organizations came together to promote coconut products for both food and non-food markets.

Key speakers at the lunch panel included Virgin Coconut Oil of the Philippines (VCOP) founding member Marco Reyes, and United Coconut Association of the Philippines (UCAP) President Dean Lao, Jr.  Renowned Filipina chef Cecilia de Castro also made an appearance.

Booming coconut oil industry

Coconuts have been picking up a lot of momentum in the West, most recognizably through coconut water, which has been flaunted by celebrities and influencers boasting its health benefits.

According to the Asian and Pacific Coconut Community (APCC), coconut water exports from the Philippines almost doubled from 647,000 litres to 1.8 million litres between 2008 and 2010.  In 2015, the numbers soared to 61 million litres.

As the popularity of coconut water increases, many have ventured into coconut’s other forms.  Coconut oil, specifically, has become increasingly popular and was the focus of the event.

“Coconut oil is the most versatile oil,” said Reyes, mentioning its use in food, health care, and personal care.

As the world’s largest producer of coconut oil, the Philippines has been seen a positive outlook on the trend with its biggest markets being the United States and Europe who have seen coconut oil consumption in both food and non-food markets.

The UCAP and the VCOP predict Philippine coconut production to be at 2.244 million metric tons (MMT) in copra terms, or 1.29 MMT as coconut oil in 2017 — that would be a 9.3 percent increase from their 2016 estimate of 2.052 MMT.

Key drivers for the coconut oil industry were its health benefits and its ability to cater to the “green and wellness” movements.

Health benefits ranged from improving memory and brain function, improving digestion and reducing stomach problems, and boosting metabolism.

Lao gave the example of coconut oil use in personal care which has been fueled by the trend of using natural products free of synthetic ingredients.

The beverage market saw a move from sodas to fruit juices, but since the latter tend to be high in sugar, the market for different flavored waters has opened up, he added.

“All health and wellness trends point to coconut,” said Lao.

On the issue of fair trade, Reyes said, “Coconut oil allows more participation with farmers.” Many coconut products from the Philippines are acquiring the Fair Trade logo which Reyes explained allowed portions of the product prices to go to farmers.

The internet and demographic shifts were also said to be key drivers.  Google searches for coconut oil specifically have spiked up since 2010 as have the number of coconut health-related searches.  According to Reyes, the trends coincided exactly with export shipments.

Countering AHA claims

Amidst the current industry boom, the American Heart Association (AHA) released a report in June on the linkage between saturated-fat consumption and heart disease based on the analysis of data and studies over many years.  The study startled many who saw coconut oil as being healthy.

Touching on coconut oil’s health reputation, the study mentioned that 72 percent of the American public rated coconut oil as a “healthy food”, while only 37 percent of nutritionists did.

The study stated that coconut oil is 82 percent saturated fat, a percentage much higher than fats and oils like butter, lard, and beef.  It also reported that multiple studies found that coconut oil increased LDL, a cholesterol known to be a cause of heart disease.

At the end of the paragraph on coconut oil read, “We advise against the use of coconut oil.”

This startled many coconut devotees, and advocates immediately began defending coconut oil with counter studies.  Reyes said the AHA report was very selective and missed out on a lot of important information.

For example, while saturated fats do tend to raise LDL cholesterol, many studies point out that variations in their chemical structures can create different cardiovascular effects.  They further point out that coconut oil contains lauric acid which also raises HDL, a “good” cholesterol.

It’s also been noted that the AHA has been recommending a reduction in dietary saturated fat to reduce risks of cardiovascular diseases, yet heart disease continues to be America’s number one leading cause of death.

This isn’t the first time the coconut industry has experienced the backlash.  In the 1980s, a media campaign targeted coconut oils and other tropical oils as being responsible for heart attacks due to their saturated fat content.

“It’s actually a rehash of that same advisory,” said Reyes to the Asian Journal.

The anti-tropical oil campaign encouraged food companies to consequently begin replacing tropical oils with partially hydrogenated oils which contain trans fats, something that is widely avoided today.  As trans fats were found to be bad, they were removed from processed foods and food companies went back to using tropical oils.

“The main difference today, is that we have more information now,” said Reyes, mentioning AHA’s relationship with Big Pharma.

The AHA has been outed before for connections with big pharmaceutical companies, including those that make and market statins which are drugs prescribed to help lower cholesterol.

According to a report by the Huffington Post, AHA received $21,570 from statin maker AstraZeneca in 2010 to run a course on “emerging strategies with statins.”

Reyes also stated the fact that coconut oil has long been used throughout history as a food ingredient in many countries around the Pacific.  His presentation dated coconut usage all the way back to the Ayurvedic period in 5000 B.C.

Coconut consuming countries have had very little incidences of diseases like cancer, diabetes, and heart disease prior to the introduction of the Western diet, he said.

“We’re as passionate now as we were before on our coconuts,” said Reyes.  “But we understand that this is something still new to non-coconut producing countries like America and Europe.”

The roadshow will continue until September 22, and will visit Florida, Colorado, and Baltimore. (Rae Ann Varona/AJPress)

Expanding Our Network To Better Serve Our Clients

To effectively continue serving our clients we have recently expanded our network of international trade professionals. Planet63 is pleased to announce that we have begun collaborating with Excellent Bizness Knowledge Inc. to help our clients source products in the Philippines. Our hopes for this collaboration is to help the Philippine manufacturers become prepared in how to export to the United States of America as well as help find products that can be profitable in the US market. Here is a little background of our new associate in the Philippines.

The Company is headed by Mr. Edgardo T. Tipa who have more than 15 years experience in banking, financing and lending business in different positions.

In addition, he has more than 8 years experience in training, consultancy with the different training centers in Metro Manila and Cebu under the EVT Business Solutions. From time to time they conduct seminars with their partner lecturers in areas like marketing, leadership, taxation and investment and other courses that their clients may request.  The Company is also assisted by Mr. Edgar Eugene Tipa who is an IT graduate. His background is working with the Business Process Outsourcing Company, handling technical support account, provides product and internet technical support, trouble shooting fixing issues via remote access. He has a background in computer hardware and software installation.

We look forward to this collaboration. We will work towards bringing this collaboration to the benefit of our clients. Mr. Tipa will provide his expertise and consultation to the small Philippine manufacturers that need guidance in becoming export ready.

Turnaround Tuesday

Each day of the week can be whatever you want it to be. Most of the time all of us aren’t conscious of the fact that we can do something like that. We all fall into a routine in our daily lives. To some people this can go on and on and on and  by the time you know it, your life has passed and you’re still doing the same thing. I am not saying that this is a bad thing. What I am saying is that life is full of wonderful things that can be experienced on a daily basis. Things to see, people to meet and learning moments. You can only experience these things when you are aware of them. In my daily commute to work I see too many people on the train that looks like something out of a walking dead movie. They have a certain glazed over look on their face. Well, I have a suggestion that can help you be conscious of your day. If this is something that you can relate to-I have a suggestion. 

Every Tuesday, I designate it Turnaround TUESDAY. I don’t have a particular reason why I designate Tuesday Turnaround Tuesday other than the fact that the word Tuesday sounds good with Turnaround. I’m very creative that way. You’re supposed to laugh after I said that. For those people who don’t know me, that’s my attempt at sarcasm. Tuesday is the day that you focus on doing something that you have to do  like eat, go to work , workout, do your work etc, and do it differently. We all have something that we have to do but it does not mean that you have to do it the same every time. Life has a lot to offer and to do  the same thing the same way can be boring.. I know. You can go insane doing that. Some of you are saying that old phrase, variety is the spice of life. Until a few years ago I did not really embrace that thinking. My thought is not so much to change something drastically but just simply understand that there’s a lot things in life that can be done differently. Doing something differently on a task that must be done gives you a different perspective. It gives you an appreciation. Some people may say that why do it differently when something is already working. That’s true. But occasionally doing something different might spark something that would make the process more enjoyable. You might discover that what you have been doing is not necessarily the best way to do it. Whether you do or you don’t, what I am trying to say is that make Tuesday the day that you check yourself. Occasionally take yourself out of your comfort zone. For me, the simple act of commuting to work on the train has made me look at life in general a different way. When I take a seat in a different train cab, I get a different view of the scenery that we pass by. I see different things when I choose to sit on the second level of the train as opposed to the first level. I can sit at the second cab of the train or the very last one. I meet different people and make friends. I also can choose how fast , depending on where I sit, I can get out of the train to go to my next mode of transportation. When I am driving on that day, I would take a different route and discover stores, neighborhood that I would not have known about if I did not take that route. Sometimes you just have to be conscious of living your life with a certain child like fascination. Right now as I write you this letter, I am sitting in a train cab with a passenger who loves talking on his cell phone. Now, there’s nothing wrong with that. I think it’s funny and educational to listen to someone who is not concerned about what people think. I love the boldness. He was talking to a lot of people and very vocal about his recent experience with the police. It seemed liked he was recently detained by the police on an minor outstanding warrant. It sure was an interesting, educational and entertaining train ride to work. I’ve got something to tell the wife over dinner tonight that’s for sure. The day has just begun. I wonder what other interesting things I get to experience today with this Turnaround Tuesday mindset. I guess I’ll find out. Life  can be amusing. It all depends on you.

 

“The Filipino-American. That’s a market, a community & an opportunity. Yes! 3.5 million of them and still growing.


Very glad to have connected with the Filipino-American Chamber of Commerce of Greater Nevada. Please read the newsletter from FACCGN.

Filipino American Chamber of Commerce of Greater Nevada
Source, Ship and Sell Event, June 29, 2017, 9am to 12:30 noon
Asian Culture Center, Las Vegas,NV
Discover how to effectively Source, Ship and Sell Philippine Products to the USA.
This highly informative event was produced by the Pangasinan Brotherhood-usa, in collaboration with the Philippine Consulate Office of Los Angeles, Filipino American Chamber of Commerce of Greater Nevada (FACCGN), EC Ferrer CHB, Inc & APCL, Provenance Holdings Corporation dba Planet63 and Luna Design
International, Ltd.The event was attended by 30 participants from the different sectors of trade and government from retailers, manufacturers, small business owners, e-commerce practitioners, community advocates and trade service professionals.

Gracing the event was the Honorable Adelio Cruz, Consulate General of the Philippine Consulate in Los Angeles who did a presentation of the current and future economic and trade prospects under the Duterte Administration and the exponential benefits of a continually expanding Filipino-American trade. There were key topics coming from expert resources with Ferdinand B. Soriano talking about Product Sourcing in the Philippines, Eddie C. Ferrer on US Customs & Freight Forwarding, and Olive Enriquez discussing Product Packaging & Social Media Marketing Strategies. A keynote was delivered. The Welcome Remarks & Purpose was delivered by Mellie Soriano of PBUSA
and Christian Bato, from the Office of Nevada Senator Catherine C. Masto. These were the key highlights we learned from the presentations:
The Top 10 exported products from the Philippines Up and coming products and services from the Philippines (Products and BPOs) Simple overview of how to efficiently ship your products from the Philippines
You got the product…how do you sell it or market it using design, social media marketing and digital marketing?

“The Filipino-American.

That’s a market. That’s a community. That’s an opportunity. Yes! 3.5 million of them and still growing.” How to create your own eCommerce site. Product sourcing using online directory product portal “www.planet63.com”. In summary, the seminar offered a “nuts and bolts” presentation of how to find those products, sell and ship from the Philippines to the USA with the US exporters who want to market to the Philippines and importers who wants to make it easy to import the right way. In a nutshell, in the age of online retailing and the easing of geographic and cultural barriers, this Seminar fulfills its basic goal to help navigate the growing digital commerce terrain and at the same time, promote Philippine products and develop the Filipino-American entrepreneurs and trade. We thank the sponsors (Philippine Long Distance Telephone), ad cooperators, notably Mr. Ferdinand Soriano of Planet63, Eddie Ferrer, Consul General Adelio Cruz, the Asian Culture Center, FACCGN, presenters and attendees for making this a success.
By:
Olivia Enriquez
Luna Design/FACCGN
Photo credits:
Jose Enriquez
Luna Design Intl

Saves Fuel, Saves Your Engine and Saves The Earth

I have always been fascinated by things that are innovative, “cool” and can possibly benefit a lot of people in their daily life. There is a product that is all that. A company called IC Motoring Technologies Inc. based in Cerritos, Ca came up with such a product that did just that. One of their numerous automotive products is an oil additive. This oil additive significantly improves and maximizes engine efficiency and performance to optimum level and consequently conserve fuel consumption as well as minimize carbon emission. This product could possibly help solve  or answer some of the pressing issues of our time-climate change and rising cost of fuel. This product is currently listed on www.planet63.com. Please click the link. http://planet63.com/directories/ic-motoring-technologies-inc/.

The IC Motoring Technologies oil additive has won awards at the

  • INPEX show in Pittsburgh, PA
  • IENA 2015 (sponsored by IFIA (International Federation of Inventors Association)
  • Filipino Inventors Association

The IC Motoring Technologies oil additive is a

  • Superior lubricating agent that provides a thin film between moving parts to create a sealing effect that allows increase in power performance and efficiency
  • Protectant for corrosion of engine components, oxidation of the oil and contamination through condensation and combustion by products
  • Cleaner for the engine.
  • Product that maintains cooler operating temperature because it helps reduce the friction of the engine parts

The IC Motoring Technologies oil additive will

  • Help reduce carbon emission
  • Cut maintenance costs of your automobile
  • Create fuel efficiency in the operation of your vehicle

This certainly in the eyes of many can be seen as a unique product and can possibly disrupt the status quo. The true secret is in the natural ingredient. The company is currently looking for distributors to market the product worldwide. It’s a product with a strong potential market growth.

  • Do you love maintaining your car and having it perform at its best? Or
  • Do you just like saving money by reducing maintenance cost of your vehicle? or
  • Generate income by helping others maintain their cars and helping the environment

Please visit their listing on www.planet63.com .

(please this link http://planet63.com/directories/ic-motoring-technologies-inc/)

“Marvelous Monday”

“I can’t believe it’s already Monday”. “Where did the weekend go?” Can’t wait until Friday again! Most of us with a reality of this type of work week has to have said one of these statements one time or another. Each one being said, most of the time, with a certain disdain or frustration or annoyance or all of the above. If your typical work schedule is  Monday thru Friday, Monday is most likely your least favorite day. People show that dislike by walking into work grumbling. They would drag their feet, sort of, throughout their workday. Sometimes they would show the disdain by dealing with people in a rude sort of way. To most of us who have that Monday thru Friday work schedule, there has to be a better way to deal or embrace the “Monday Morning Blues”.

Well, I wish I can say that I have discovered the universal secret to loving Mondays or just dealing with it without any emotional casualties. I have discovered what works for me and hopefully people can take the idea and derive from it a method that would work for them.  Here it is.  I call my Mondays “Marvelous Monday”. Why? I like using word that flows and easy to remember. I like positive descriptions. It’s better than describing it as Mundane Monday. The method to my madness is that  I just try to focus on something that I can control. As you know, unless you have some sort of mystical powers, Monday is going to be here regardless of whether you’re ready for it or not. In recent years I’ve learned to appreciate my time- spending it wisely.

I prepare for my Monday’s by simply wearing something new or something that I have not worn in awhile. It could be any article of clothing, jewelry, shoes or hat. It could also be something that you own that you would be proud to show off. I’m not about the showing off but that works for some people. I am after that feeling of newness, pride and appreciating something that you have or have forgotten that you have. Do you remember that time when you were in  elementary school and you could not wait to get to school because you wanted to show your friends something that you were proud of. It made you feel special. It made you feel proud. Why not take that same feeling and use it for Monday’s. Most people try to have the best weekend they have and why not just extend that feeling by just doing something as simple but effective mindset such as this. When I go to work with that activity, I feel alert. I move about with a certain confidence and pride. Whatever  comes my way that day, I feel like I can handle it. This exercise in setting up your mind to tackle the day is nothing new but it’s just a reminder that you can control your day. You don’t let the day control you and with some people it can control their week. Be engaged with your day and appreciate the day. Monday is the gateway to the rest of the week. When I told that analogy to my wife, she jokingly said to me “shut the gate !”. I laughed my you know what off when she said that. Funny enough some will do that. Regardless of what you do with your Mondays, it’s precious and embrace the notion that that moment won’t come again. Why would you waste time in feeling disdain or annoyance for it? You could just treat it like any other day and say to yourself that it’s an important day like all of the others.

Weekend here I come…………wohooooooo!

BE WELL , BE THANKFUL AND BE GREAT!

Ferdinand “Bong” Soriano

Things To Consider When Entering A New Market

Here is an article that I found useful for anyone who is interested in importing products from the Philippines or exporters who want to market their products to the Philippines. The article is based on the perspective of U.S. manufacturers wanting to market their products outside of the United States.  I hope you enjoy it and find it useful.

What Are Some Challenges That Firms Face for International Marketing?

by Brian Hill

 

Identifying a True Market Need

A key to success in business is offering products and services for which customers have a compelling need. The customer has a problem that needs to be solved, and the product or service provides the solution in such an effective way that its benefits are not difficult to communicate. Identifying the true needs of large numbers of people in a foreign country is not easy. Not having lived in their culture experiencing their day-to-day lives, American marketing executives can err by assuming that what people in other countries want or need exactly matches the wants and needs of American consumers.

Dilution of Brand-Name Power

Due to the Internet, movies and other forms of entertainment, American culture and the corporate symbols of that culture–brand names–are well known across the globe. This does not mean the American companies’ products will be popular when introduced in other countries. Being aware of a brand name isn’t the same as preferring it. It can be a long and expensive process to gain the trust of consumers who have used their own local companies’ products for years or even generations. The American companies can be perceived as attempting to take over the position long held by local companies, causing resentment.

Cultural Nuance

Consumers are influenced to purchase products by marketing messages delivered through the media, including print media such as magazines. Humor is often used in commercial messages to get the consumer to pay attention. But what is considered extremely funny in one culture can be perceived as confusing or insulting in another. To produce effective advertising requires more than accurate translation of the message from one language to another. It requires a deep understanding of the culture, customs, morals and even religious views that predominate in that country. What motivates consumers to buy products varies from country to country.

Communication Style

Business executives from different countries can encounter several barriers to effective communication besides obvious language differences. The traditional pace of business negotiations can be different. Americans sometimes want to hurry negotiations along, whereas in some other countries emphasis is placed on building relationships before a business deal is seriously considered. Executives from other countries may place a higher value on things such as facial expression instead of just the words that are being said.

Distance and Time

Even with technologies such as video conferencing, executives in other countries may prefer to establish relationships on a personal level. For a smaller American company, this can mean a significant investment in travel costs and having key executives out of the office for extended periods. Time zone differences can make it difficult to coordinate projects where collaboration is required. Executives on the West Coast of the U.S. are just getting to work in the morning when their European counterparts are winding down for the day.

Finding Reliable Partners

American firms often establish relationships with distributors located in the countries whose markets they are seeking to enter. They hire sales reps based in those countries. They may engage local marketing and public relations firms to assist them. Because the American firm might have no prior experience in that country, finding people who are trustworthy and competent can be a challenge.