Extract taken from http://bestsaexporters.com/faqs/
See below for some of the most crucial questions and answers to consider by any potential South Africa exporter.
Q&A’s been provided courtesy of South African export-ready FMCG manufacturers and export service provider members and associates of Best SA Exporters www.bestsaexporters.com
Q: How can Sovereign Trust be of assistance to export-ready manufacturers based in South Africa?
A: Sovereign Trust’s core business is setting up and managing companies, trusts and other structures to meet the specific personal or business needs of our clients. Many of our past and existing clients are South Africa-based entrepreneurs or successful local companies that are seeking to take their offering to a global level.
We assist our clients in establishing compliant international structures, typically involving offshore companies, to facilitate cross-border business. Such offshore companies would usually be set up in jurisdictions that are tax neutral and not subject to exchange control restrictions, giving clients the ability to transact in a tax-free environment and enabling funds to flow more easily between countries.
The offshore company would typically have a bank account overseas, which we can assist in opening, where funds can be denominated in hard currencies (USD, GBP and EUR) that are highly liquid and expected to remain relatively stable.
For those exporters that are looking to establish satellite offices or factories overseas, we can assist with the registration of corporate vehicles that will provide access to the benefits available under double tax treaties. Such structuring can be highly effective in limiting the extent of withholding taxes on dividends, interest and royalties.
Setting up an offshore company may also offer further tax planning opportunities to the export-ready manufacturer. In many of the jurisdictions in which the Sovereign Group operates (over 25 offices internationally), the tax rates are low or zero in respect of corporate income, interest and capital gains. By routing international transactions through an offshore company, export-ready manufacturers may be able to retain profits with tax deferred until such time as they are taken out in one form or another.
Q: At what point should an export-ready manufacturer consider setting up an offshore structure for their international business?
A: There are no hard and fast rules but the best guidance is to get advice sooner rather than later. It is far better to have a structure in place before any significant value is realised. Knowing that a structure is properly set up and legally compliant will provide certainty, both to the exporter and their customers, in respect of payments – as well as the potential Profitability. The export-ready manufacturer should consult with a specialist firm, such as Sovereign Trust, to consider their best options for transacting international business at the earliest opportunity.
Q: In which country should export-ready manufacturer incorporate their offshore company?
A: We are often asked this question. The answer depends largely on where the customer is based, the commodity being traded, the volume of trade and the expectations for expansion or a physical presence in the overseas market. Many of our clients export to African countries. In such cases we typically suggest a corporate structure in Mauritius or Seychelles. If the target market was in the Far East, however, it may be that a BVI company would be more suitable because of its familiarity there. Some offshore jurisdictions now permit companies to have an additional name expressed in foreign characters, which can be of particular use in the Far East and Middle East. Through its global office network, Sovereign can form companies on a worldwide basis and is therefore able to recommend and provide the most appropriate jurisdiction and type of company to meet the commercial needs of any client.
Contributor: Richard Neal
Position: Business Development
Company: Sovereign Group
Q: Is there a demand for your service / products in the export markets?
A: Our company first worked at ensuring that we create a captive market, and demand locally through a sizeable market share which certainly exposed the products to export markets, who then wanted to know more about the company and its products offering, in relation to local (export) markets.
Q: What compliance measures have to be in place, in order to ascertain / be confident that your products are export ready?
A: Our Company ensured that we comply to most of the stringent and international quality management accreditation’s, and food safety standards in order to ensure that quality and product value is by no chance undermined by the export markets.
Q: How do I get exposed to export markets without spending a sizeable budget on marketing?
A: Department of Trade and Industry (DTI) through their Export Marketing Investment Assistance (EMIA) has a programme of supporting SMME’s (especially that are black owned) in certain competitive industries like manufacturing, agro-processing, aero space and others where they invite companies to international trade missions and exhibitions, and cover travel costs, accommodation and allowances to qualifying companies, and we are one of the programme beneficiaries, with 2 pending trade missions during the month of March to Russia and the other to Ethiopia and South Sudan.
Contributor: Mfundo Thango
Company: Mpilo-Ende Fortified Foods (Pty) Ltd
Q: What does export readiness mean to a new entrant into the export market?
A: Although it may sound daunting and may refer to a lot of considerations. The very basic tests of export readiness include, 1) in the case of manufacturers, ensuring that there is sufficient production capacity to handle large volumes within reasonable time lines; 2) ensuring that as a manufacturer, your product complies with product specific and general international standards, i.e. ISO; 3) ensuring that necessary packaging and labeling requirements are considered for the targeted market(s); 4) importantly, price plays a significant role in order to remain competitive in your target market(s) as an exporter; 5) the knowledge to manage currency fluctuations especially in the South African context.
Q: What are the most important considerations to compete successfully in the export market?
A: The most fundamental consideration is the management capability and commitment to develop export competencies, allocate financial resources for export promotion and build and maintain relationships. Management need to familiarize themselves with other regulatory requirements pertaining to tariff and non-tariff barriers within their chosen target markets. Together with this, it is important to have a clear and well defined export strategy. Having a well-developed International Market Entry process and a marketing plan is essential to ensure success.
Q: What is the biggest pitfall for new entrants in the export market?
A: Firstly, as an exporter, the full comprehension of export processes, procedures and most importantly, documentation is pivotal. In exports, getting paid hassle free is vital; therefore, knowing the required documentation and how to complete it cannot be over emphasized. The entire process is governed meticulously through flawless documentation. Lastly, it is important not to do it all by yourself, partnerships with experienced and reputable export promoters and freight forwarding agencies/companies with experience in your target markets will enable you as a manufacturer to focus on your core and be more efficient.
Contributor: Martin Moralo
Position: Director of Business Development (Local & International Markets)
Company: Marple Skin Care (Pty) Ltd
Q: When can a SADC certificate be used for exporting and what is the benefit?
A: A SADC certificate affords the importer preferential tariff treatment. The SADC certificate confirms proof of origin and may only be used for trade between SADC member States and serves to prevent goods originating from non-member States from receiving preferential tariff treatment. To qualify for SADC rules of origin, the product traded must be wholly manufactured, grown or mined in the member State. Worked, value added or processed goods may also qualify provided that the customs value of the “non origin” material content of the finished product does not exceed 60% of the ex factory price or that the value add should be no less than 35% of the ex factory price.
Q: What documentation is required for road exports to Mozambique?
A: Original TAX Invoice, Packing List, SAD500 the Carrier can process this document on behalf of the exporter, SADC certificate if applicable and Contra-Marca which is arranged by the importers Customs Clearing Agent. Goods imported into Mozambique are bonded from the entry border post up until final point of clearance, Frigo / Matola Cargo Terminal. The issued Contra-Marca number is proof that the Bond is in place.
Q: Is Road Transport a viable option for larger export volume shipments (20ft/40ft container equivalent) to Angola?
A: In terms of the congestion and delayed customs clearance process at the port of Luanda (average delays of 1 month), road transport is certainly the faster mode with transit times averaging 15 days from Gauteng or Cape Town. This is inclusive of the 3 – 5 days for customs clearance at the border post.
Contributor: Gregory Bathurst Tighe
Company: Concargo / TSI Central Station
Q: How can we safeguard ourselves against adverse movements in currency exchange rates which would directly affect our bottom line and company profitability?
A: You can secure your exchange rates (forward cover) based on the expected date of your foreign funds prior to exporting your goods or providing services. This will safeguard yourself against losses due to the strengthening of the Rand as well as to give you peace of mind that your profitability margins remains in check. Foreign exchange specialists are available to assist you with documentary requirements; engaging with your bankers on your behalf and by offering you preferential/wholesale exchange rates not accessible by clients direct.
Q: Who can provide me with personalised and professional foreign exchange advice/recommendations to ensure I understand the forex aspect on for exported goods and services?
A: Speak to a financial services board approved company whose core business is to manage your foreign exchange exposures and who has the expertise on and in-house bank experience to answer and take care of all your forex requirements. Strong relationships exists with all major banks hence preferential treatment are available to clients of this company
Q: How can I ensure I keep my foreign exchange costs to a minimum without any additional costs being incurred to other service providers?
A: A foreign exchange intermediary company can allow you to receive additional ZAR into your bank account when converting your currency received from abroad by way of wholesale exchange rates. This not only covers the costs for professional forex services rendered, but also allows you to keep 70% of the Rand savings to yourselves. Banks provide us with these rates due to the professional services we provide their clients.
Contributor: Jacky Gounden
Position: Managing Director
Company: Pro-Global Forex
Q: Will you need to adapt your product offer to suit overseas markets?
A: You should expect to adapt your product to some degree for sale outside your domestic markets before you make your first sale. Packaging plays a vital role in enabling international connections. Make sure that your packaging appeals to the market you are aiming at. Different languages and culture will affect your ways of working and marketing. You may need to offer your product in a smaller pack size, for example, if selling into Africa where the average consumer has $1 a day to spend, and will want to purchase for their daily needs only. At Snappi we have created an option for our stores to purchase in private label, in the appropriate language – and offer less durable but cheaper packaging for the African market. Our European clients have the option to purchase their packaging printed in various languages, in their branding. In this way we benefit from the consumer’s brand loyalty to strong, established brands.
Q: Will you be able to find customers directly or will you need to have other channels or routes to market, using agents or distributors for example?
A: It may be important to have ready availability of stock in the country you are exporting to in order to satisfy demand. You will need to have ready resources on the ground to provide after sales service. It may therefore be necessary to partner with agents / distributors. Make sure that these companies have the same ethics as your company, and that they will be as committed to your product as you are – offering the same customer service and backup to your clients that you would.
Q: How will you protect your intellectual property?
A: It is of vital importance that you work with legal counsel to develop an overall IPR protection strategy before exporting your product. Don’t skimp on the budget here – and make sure that your patents and trademarks are covered in the specific countries that you are marketing to.
Contributor: Louise Freeman
Company: Snappi Exports (Pty) Ltd
Q: What is the nature of KWENA Products and your market demand?
A: KWENA Crocodile Oil Balm is a multi-purpose healing and beauty cream that is suitable for all skin types, and can be used to treat a number of common skin problems, including eczema, acne, wounds & bruises. Made up of pure Nile crocodile oil and blended with only the finest essential oils and real beeswax, our product is unique in that it is the only one of its â€ª.â€¬kind in South Africa that is 100% natural. There are no added chemicals, and no side effects.
Crocodiles have survived for centuries without the threat of extinction, and this despite living in bacteria-infested environments.
Crocodile oil comes from crocodile fat cells. In South Africa, crocodiles (much like cattle) are bred for the meat & leather industry. Crocodile fat is an animal by-product of this industry, which until now, was discarded during meat preparation. We process the fat with heat and add pressure in a centrifuge to get pure crocodile oil.
All materials used for KWENA Products are sourced and processed in South Africa. We are a uniquely South African product.
We serve a niche market of consumers looking for 100% natural beauty & healing skincare products.
Q: What are some of the legal considerations KWENA has had to consider as an international exporter?
A: As KWENA Crocodile Oil contains an animal by-product, we’ve had to be especially careful about choosing a supplier that fits in with our ethos of sustainability, which is why we only use a CITES certified breeding farm in the Western Cape. The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is an international convention in control of the sustainable trade of wild animals and plants. While CITES lists the Nile crocodile as not threatened by extinction, it strictly regulates and controls the processing, domestic trading and exporting of all crocodile products.
Furthermore, the crocodile farm we use is permanently monitored and controlled throughout the procedure (from breeding conditions through the final stage of crocodile oil extraction) by the Department of Agriculture of South Africa, ensuring the final product is absolutely pure and cruelty-free. Our extraction and processing facility meets the highest technological and hygiene standards.
KWENA products are registered on the European Cosmetic Product Notification Portal (CPNP) and meet all the required safety evaluations in compliance with the new EU Cosmetics Regulations (EC 1223/2009).
Q: Who is KWENA and how can interested buyers order from you?
A: We are a young company based in Cape Town, headed up by Albanian expatriate Ina Katsani. Ina’s search for an all-in-one natural beauty & healing product led her to the ancient properties of the Nile crocodile and its use over the centuries.
We handle international orders from as little 1 jar up to 10 000 per month. We can double this amount if buyers order between 1 and 2 months in advance. Shipping costs are excluded from the retail prices, but agreements can be made depending on the size of the order.
Contributor: Ina Katsani
Company: Kwena Products