PRACTICAL BUSINESS RECOMMENDATIONS TO ESTABLISH SUCCESSFUL - - PowerPoint PPT Presentation

PRACTICAL BUSINESS RECOMMENDATIONS TO ESTABLISH SUCCESSFUL BUSINESS RELATIONSHIPS WITH CANADIAN BUYERS APPAREL SECTOR

Prepared by Maria F. Guzman

❖ The Export Process 8:00 AM-8:15 AM ❖ The three stages of export preparation 8:15AM – 8:30AM ❖ Market research 8:30 AM – 8:45AM ❖ Developing a Canadian marketing strategy 8:45AM – 9:05AM ❖ Labeling requirements and Packaging 9:05AM – 9:20AM ❖ Export Price list calculation 9:20AM -9:35AM ❖ Market trends 9:35AM – 9:50AM ❖ Product Presentation ( Digital Presence, Line Sheet) 9:50AM – 10:15AM ❖ Questions and Answers 10:15AM – 10:45AM

AGE GENDA – APRIL 28, 2020 020 8:00 00AM- 10:45 45AM

Develop Marketing Strategy Quote a Price Receive an Inquiry Find and Contact Potential Buyers Warehousing Make an Agreement Shipping and Insurance Importing & Canadian Requirements Final Payment Production and Quality Check Packaging & Labelling Exporting & Ukrainian Requirements Research Canadian Market Develop an Export Plan Export License, Commercial Invoice, Certificate of Origin, Packing List, Required Permits, Proof of Tariff Payments, Bill of Lading

• r Air Waybill

Purchase Order or Contract Quote or Pro Forma Invoice Export Plan

THE EXPORT PRO ROCE CESS

There are many steps in the export process. Some of them happen at the same time as other steps. For example, companies should be conducting market research throughout the entire export process

EXPO PORT PRE REPA PARATION

Normally a successful Ukrainian exporter is going through three stages of export preparation process. Within these three stages, there are ten important steps that are highlighted below:

THE THREE STAGES S OF OF EXPO PORT PRE REPA PARATION

STAGE GE TWO WO – MARKET DEVELOPMENT

Ukrainian companies must take the time to examine the Canadian culture and find out how things are done in Canada in order to adapt. Part of the process includes finding the right partners. Having a good understanding of the Canadian market is essential for Ukrainian companies that want to be successful in exporting their products or services to Canada. Market research is the key to understanding the opportunities in Canada and the possible challenges that may be encountered. It can confirm that an opportunity actually exists, give insight into how a product or service may need to be changed to meet Canadian legal and

• ther requirements, or help an Ukrainian company discovers what’s important to Canadian

customers.

CON ONDUCT CTING G MARKET RE RESE SEARCH MARKET RE RESE SEARCH

Primary research: After completing the secondary research, market information is collected through direct contact with potential customers or other sources. Primary research usually demands direct, personal involvement through interviews, consultations and visits. Interviews can be done either face-to-face, on the phone, or using Skype and other electronic means.

SECO CONDARY Y RE RESE SEARCH CH:

Secondary research is done in Ukraine by using reference materials and data such as studies, market reports, surveys and statistical analyses. Many of these are available online, as well as through chambers of commerce, economic development organizations, industry and trade associations.

Possible Sources of Market Information

• Competitors’ websites
• Potential buyers websites
• Commercial banks
• Internet search engines
• Online and offline commercial databases and

subscription services

• Conference Board of Canada and TFO Canada

websites and Market Information Papers (MIPs)

• Trade and business associations
• Canadian embassy in Ukraine
• Exploratory mission to Canada
• Attending or participating in trade shows

DEVELOPING A CANADIAN MARKETING STRATEGY

While a garment may work well for the Ukrainian domestic market, it may not be suitable for the Canadian market without modifying it somehow. An Ukrainian company may need to change the design, packaging, labelling, materials used, manufacturing process, product attributes, or a number of other things before it can sell to the Canadian market. Product modifications may be very minor and easy to make, but they can also be very costly and time-consuming. An Ukrainian exporter should be clear on what will be involved to make their product ready for the Canadian market in terms of additional cost (investing in new equipment, for example), time, and human resources, and they should make sure their company is able to undertake the additional expense. Translating labels into French and English is usually a relatively easy, cheap and quick

• modification. On the other hand, changing the composition, construction or design in a garment

to reflect Canadian consumer tastes, might not be feasible for some companies.

MATERIAL AND ND COM OMPOSI SITION – PRO RODUCT CT ADAPTATION/ / SOU OURCI CING MATERIAL

The Ukrainian companies have to import their fabrics from Italy, Germany, Hong Kong, India etc to produce their garments. Most of the SMEs produce for the local and the European market. The quality of the garments is considering “hight” compare to the quality the Canadian market is looking for. In order to succeed in the North American market, the companies have to make a product adaptation. Since the material represents 80% of the price of the garment, the Ukrainian companies faced a very difficult situation when they have to make a quotation for the Canadian buyers importing the raw material.

EXAMPLE OF OF PRO RODUCT CT ADAPTATION

Product development: This SME has been able to adapt their product according to the Canadian market specification.

PRO RODUCT CT ADAPTATION

PACK CKAGI GING TRE RENDS

Offering an attractive design or innovative packaging is one way to increase the interest

• f potential buyers in carrying a product. One of the major trends in recent years is eco-

friendly packaging, including materials that are renewably sourced, biodegradable and recyclable.

Everyone knows the traditional maxim for setting prices in the fashion industry: double the cost for the wholesale price, and multiply the wholesale price by 2.0 to 2.5 for the retail price. However, for new brands, this exercise can be frustrating because its difficult to get good cost estimates early in the process. That’s why for new brands we recommend working backwards. Instead

• f starting with target cost, start with target retail price. It’s easier,

faster, and will help you make better decisions. Let’s say you wanted start a line of casual button-up shirts, similar to a $125 BOSS shirt from Nordstrom’s. To get the estimated cost, we divide $125 by 2.5 (retail mark-up) for the estimated wholesale price

• f $50, and then divide $50 by 2 (wholesale mark-up) to arrive at the

estimated target cost of $25, inclusive of import duties and logistics costs.

EXPO PORT PRI RICE CE LIST ST PRE REPA PARATION

PRI RICE CES

One of the biggest challenges the SMEs have to face entering the Canadian Market, is price.

MARKUP MULTIPLIER EXPORT TO CANADA REVISED Sales through a broker to retail Item Calc. $ Retail Price $50.00 Retailers markup 3.03 $33.50 = Price to retailer $16.50 Trader markup 1 $0.00 = Price to Trader $16.50 Minimum Producers markup 1.2 $2.75 = Maximum cost $13.75

https://www.thebay.com/c/women/new-arrivals/en-thread

PRO RODUCT CT PRE RESE SENTATION ( DIGI GITAL PRE RESE SENCE CE, LINE NE SHEET)

Ref Picture Composition Size range MOQ Lead time 300-1000 pairs 1000-5000 pairs ˃5000 pairs 1 75% cotton, 15% polyamide, 5% lycra double and triple 300 pairs 1,5 week xxx xxx xxx 2 70% cotton, 10% bamboo, 15% polyamide, 5% lycra double and triple 300 pairs 1,5 week xxx xxx xxx 3 75% cotton/polyester, 15% polyamide, 5% lycra double and triple 300 pairs 1,5 week xxx xxx xxx 4 terry socks 75% cotton/polyester, 15% polyamide, 5% lycra double and triple 300 pairs 1,5 week xxx xxx xxx PRICE FOB Ukraine, USD (without packaging and labeling) LINE SHEET (COMPANY NAME) DATE:

MARKET TRE RENDS

Source: State of affairs according to the data analysis performed by Absolunet from March 11th to 29th, 2020.

Source: State of affairs according to the data analysis performed by Absolunet from March 11th to 29th, 2020.

❖ Entering the Canadian market 8:00 AM-8:15 AM ❖ Tool Box 8:15AM – 8:30AM ❖ How to find Canadian Buyers 8:30 AM – 8:45AM ❖ Cultural Differences and Challenges 8:45AM – 9:30AM ❖ Final Tips- Practical Recommendations 9:40AM – 10:00AM ❖ Recommendations Summary- Market Research Links 10:00AM-10:15AM ❖ Questions and Answers 10:15AM – 10:45AM

AGEN GENDA – APRIL 29, 2020 020 8:00 00AM- 10:45 45AM

STAGE GE THREE - MAR ARKET T ENTRY

At this stage, exporters must find the best methods of delivering and distributing their goods

• r services. This is referred to as developing a market entry strategy.

There are four main ways for Ukrainian Apparel products to enter into the Canadian market:

ENTE NTERING G THE CANADIAN MARKET

What Influences a Retailer? Rating out

• f 10

Excellent profit margin 8.6 Exclusivity in my area 8.2 Previous sales success 8.1 Availability 8.1 Cost 8.0 Design 7.9 Supplier's reputation 7.9 Good suggested retail price point 7.8

• Direct exports: Manufacturer or

service provider exports directly to a buyer in Canada

• Indirect exports: Manufacturer or

service provider sells to an intermediary in Ukraine who handles the export transaction

• Incorporating the business in Canada
• Setting up a subsidiary in Canada

• English Website
• Business cards
• Presentation booklets
• Exports price list with pricing acceptable for the market FOB
• Line sheets

HOW OW TO O FIND CANAD ADIAN AN BUYE YERS

Finding a Canadian buyer requires a serious commitment of time, effort, and cost, and is often one of the most challenging steps for Ukrainian exporters. Finding a good agent

• r representative for the Canadian market is crucial and Ukrainian exporters should

note that different agents might be required to cover separate regional areas of Canada.

TOO OOL BOX OX

CULTURAL DIFFERENCE CES

It is vital to understand that cultural differences can affect how business are perform in the markets we are targeting.

https://prezi.com/oqoiktyyghap/ukraini an-business

There are two different cultures in terms of business protocol: In English-speaking Canada, communication should be straight to the point. In French-speaking Canada, you will spend several minutes on informal conversation.

CULTURAL DIFFERENCE CES CANADIAN COM OMMUNICA CATION PRO ROCE CESS

ENGL NGLISH LANG NGUAGE

One of the first things to consider is the different language, it is crucial for business relationships between the two companies to be able to communicate in English.

EXPE PECT CTATIONS

The more we know the behavior of the new market we want to enter, the more realistic our expectations can be: BUSINESS TAKES TIME: One Canadian buyer can receive more than 120 emails per day from new suppliers around the world offering their products. If the buyers are interested, they will take their time to evaluate new products, prices, samples etc before the move forward. They tend to “cool down” the process and then after some time (months) they will expedite and they will ask you to move “fast” PATIENCE IS A KEY ELEMENT. No business happens fast. The goal is to stablish a long lasting business relationship, not a one time sale only.

EXPE PECT CTATIONS

ORDER SIZES: The first orders are going to be small. Between 100 – 300 units then they will increase depending on the size of the potential buyer. Remember the size of the Canadian Market is relatively small compared to other markets like USA, however if you achieve Canadian price and market needs you can develop the USA market as well. You can find buyers who buy for different countries at the same time. Some of the companies have already their production compromise, 75% is for the local market 25% for international markets. At this moment Europe is the biggest export market, leaving no production capacity for the Canadian market. BUILDING BUSINESS RELATION SHIPS: Like everything in life, relationships are very important . To build trust takes time. Canadian buyers like to create business relationships built in mutual trust and respect. They will commit to you as long as you commit to them.

LON ONG G TERM COM OMMITMENT

When expectations are not realistic and we think that making business will take just days, the companies tend to “give up” in short time period. Previously the Ukrainian companies had their own way to conduct business; during one meeting the business deals were closed. Canadian business practices have their own gradual business process.

OV OVERCO COMING THE CHALLANGES

• Coaching, Training with commitment. Participating in North American

Trade shows. Not giving up. Diversify sourcing

RE RECOMMENDATIONS S SUMMERY Y

Before jumping into a swimming pool, make sure the pool has water take time to study Canada as a new market. Learn about the consumer’s behavior, the styles colours, seasons, garment composition etc. before starting any export business plan. DO RESEARCH SPEEECIFIC TO THE TARGET MARKET. I do advise foreign companies to start their business journey in Canada from market familiarization – companies need to know how a typical Canadian clothing store looks like, what is the product mix, what the prices are. They need to come to Canada and look around and take notes. What are the features

• f a typical Canadian man and woman that will affect the

product offering? Companies need to merge into the market and learn the local mentality and idiosyncrasies. Understand the Canadian consumer mentality

For Ukrainian apparel SMEs, price and minimum quantities are challenges which are hard to overcome. First, Ukrainian companies are too big or too small for the Canadian market. Even though some people think that Canada a big market, it is not. In Canada, you just cannot find so many buyers, as in the US. The quantity Canadian buyers want to purchase is considerably small in comparison with large US buyers specially on first orders. Consider small first orders as an investment Second, Ukrainian companies just cannot compete with such countries as China, Vietnam, or Bangladesh in prices. Therefore, they should not market their products competing with China. What should Ukrainian companies do in that context? Find your niche. Ukrainian production has very good quality and a good reputation from the past. Approximately 20 years ago, many Canadian buyers cooperated with Ukrainian companies. Nowadays this business connection is rather small. However, the Canada-Ukraine free trade agreement is a good reason to "press the reset button" in business relations between the two countries, especially in these challenging times.

Define the market positioning of your products and identify the international brands with similar positioning on your local market or on the markets of other countries where you sell your

• products. Understand the price range of the products similar to yours. Identify your

competition. Identify the correct potential Buyer for you. Not only because you like the company you contact the buyer, please consider the size of the company, your production capacity, the time and team you will assign for this venture etc. Identify the potential buyer for your company. Once you have the “appropriate” buyer make sure that you email the buyer with your complete company profile, line sheets of products, information about your company experience and name of the international buyers you deal with. Be concise and to the point in your communication. REMEMBER, a buyer receives hundreds of emails form new potential suppliers around the world constantly; the difference that you will make will be based on how your product offering reflects the knowledge of the buyer needs. If you have done the homework studying his company this should be reflected in your communication. DO NOT MISS THE WINDOW OPPORTUNITY

BE RE READY FOR OR EXPORT ACT CTIVITIES

Be ready to invest resources; time and money. Participate in International Trade shows. Traditionally the “Magic” show in Las Vegas was the largest and the most important apparel trade show in the world. Currently there are around 20 different shows under the “Magic” brand. The majority of the large Canadian buyers are still visiting the “Magic” show in their search for suppliers. However, there is an ongoing shift on the global apparel trade show market. Now the Shanghai show is becoming increasingly popular. Many Canadian buyers prefer visiting the Shanghai show rather than the “Magic” show. “Apparel Textile Sourcing Trade Show Canada” was launched in Toronto. However, it is still a relatively young show and buyers from Quebec don’t know much about it.

MARKET RE RESE SEARCH LINK NKS

https://www.retail-insider.com/retail-insider/2019/11/luxury-apparel-market-in- canada-to-see-continuous-gains-into-2023-report-trendex https://www.apparel.ca/ https://www.ic.gc.ca/app/scr/ic/sbms/cid/searchProduct.html?lang=eng https://cucc.ca/ https://cutisproject.org/en/

FINAL NAL TIPS PS

THANK YOU!

Maria F. Guzman