In our previous installment of this three-part series from Export Development Canada, we touched on capacity and how to ensure you are equipped to meet the demand placed on your business from a new international customer. In this next blog in the series, we’ll review some of the practical nuts and bolts of doing business in a different country: regulations, tariffs, intellectual property (IP), and contracts.
Understand what you need to do differently in order to sell to that country
Each country has its own set of regulatory requirements and standards. Getting the documentation you need or modifying your product and/or packaging to comply with these regulations takes time and money, so factor that in when you’re quoting a price or agreeing to a delivery date.
- What are the customs requirements for my destination country? You may have to pay customs duties or taxes when your products enter the foreign market. If it’s a country with which we have a free trade agreement, you may have to prove your products are made in Canada in order to benefit from preferential tariff treatment. Even if your importer is taking care of customs (which is usually the case – learn about Incoterms), you should still be aware of any potential costs or delays, and you’ll likely have to help out your customer by providing necessary documentation. Global Affairs Canada has a helpful landing page for tariff information by country.
- How about regulatory requirements? Depending on the type of product you’re selling, you may have to get an export permit (e.g. if you’re selling to the defense sector), apply for standard certification (such as the CE Mark in Europe, which is necessary for 25 product categories), or get food safety or phytosanitary certificates from the Canadian government. Do your homework on these early, since it can take time to comply with all requirements – for the most complex and tightly regulated products (think medical devices or organic food products), it could even take years.
- How do I protect my IP? Just because your trademark, copyright, or patent is registered in Canada doesn’t mean you’re protected abroad. In most cases you need to protect your IP by working with the relevant government body in each country you’re selling to. If your product or service’s value is heavily dependent on the IP you’ve put into it, you cannot afford to skip this step. Some of these processes can be long, but it’s worth the effort to protect yourself from IP theft. In some cases it is better to turn down an order rather than go into the market with your IP unprotected.
- What about packaging and translation needs? Each country has different labeling and packaging requirements, so you will have to do your research on these to ensure your products comply. Whether you’re providing a product or a service, hiring a translator or interpreter will be necessary in cases where you need to provide your services, your labels, software or instruction manuals in the language of your customer.
- Can I use the same contract I use with my Canadian clients? Short answer: NO! One of the most complex aspects of exporting is understanding legal implications, whether it’s investigating differences in consumer protection laws or knowing which country’s court you’ll go to in case of a dispute (which you hope won’t happen, but you ALWAYS need to account for in your contract). Speaking to a lawyer is advisable, but to get started, read about The ABCs of International Trade Contracts.
Sometimes your foreign client will be willing to work with you to help you navigate these elements, but chances are you’ll have to do most of your own homework.
Tanita Kouzev is a Senior Associate on EDC’s Advisory Services team. Her job is to connect Canadian companies with experts and resources on trade-related issues like country intelligence, market entry strategies, export/import compliance, and any other topic they might need advice on.