Kim Daniels, CEO of Mercantile Logistics & International Trade, has years of experience translating the complex regulations, classification requirements, and intricacies of the best way to move your products around the world.
If you took marketing in college, you learned about the 4 P’s of marketing – product, price, promotion, and place. This episode of the Global Marketing Show covers Place – how to get your product from place A to place B.
We asked Kim to explain, why would consumer product companies bother exporting bins of products rather than just selling through ecommerce. She gave a great example of a swim wear company that she worked with – by sending their products to the Caribbean and Mexico, they increased their sales by 30%. It made sense because when people travel, they may forget their bathing suits, they spend more time shopping, and are willing to spend money.
For the companies that she works with, she suggests that they look for the following criteria in a market.
- Look for free trade zones to avoid heavy taxes and duties.
- Find markets where clients want your goods (Mexico was a better choice than Canada for bathing suits!)
- Avoid markets where the products are in an industry that the country wants to protect.
- Start small, figure out the process, and then grow.
- Look for a market close to you to minimize shipping costs.
- Expand!
One key component is to get the classification of your products right to avoid hold ups at the border, fines, or getting a bad reputation and having problems forever more.
There are thousands of classifications – for example, if you manufacture footwear, there are type classifications such as boots, sneakers, flip flops, AND there are further sub-classifications for the materials the products contain. It’s worth talking to an experienced customs broker to get the classification code accurate. Once you know the code, you can have the customs broker do the paperwork, or you can spend the hour on the government site filling out the paperwork. Kim says she’s willing to spend an hour on the phone consulting for free to help companies with their exporting journey.
One warning – if you sell any good that are controlled, you need an additional ECCN# and if you have products that could be used for military or parts of military products, you are regulated by ITAR (International Traffic Arms Regulations). Violating any export regulations could lead to HUGE fines. To protect the safety of the US, these regulations are strict and people who violate them are considered guilty unless proven innocent. Step #1 is to make sure your products are not under ITAR regulations.
One opportunity – Craft beers are highly regarded in the UK. If you create craft beers in the US and want to increase your sales, reach out to Kim fast! She can help you make connections to send vats of your beer to the UK, where they can bottle and sell it.
As for “Made in America” versus “international trade”? Kim is a fan of trade. She cites research that shows that the more a company trades, the better their economy. (In an upcoming episode, we’ll talk about the “container graveyard” that contains all the empty containers that brought goods into the US. US companies that fill those containers and send goods out, perform better than those that just sell in the US. Since the graveyard is so big, we need to start exporting more.)
Kim’s final recommendations –
- Trade works best when it’s a holistic process. For example, the US exports textiles to be made into shirts that we import back in. This benefits both countries.
- Foreign trade zones can be used to your advantage – Mercedes, Honda, and Toyota import parts to build the cars in foreign trade zones. By manufacturing the final products here, they lower their import taxes while creating jobs here.
- Do a feasibility study to find the best place to export your goods.
Her favorite foreign word? Schadenfreude – as she says it’s got a frenemy feel to it. This German word has no English equivalent, it translates into that feeling of pleasure derived from another person’s misfortune.
Links:
Connect with Wendy - https://www.linkedin.com/in/wendypease/
Connect with Kim - https://www.linkedin.com/in/kim-daniels-a5b9268/
Music: Fiddle-De-Dee by Shane Ivers - https://www.silvermansound.com
ATTENTION: Below is a machine generated transcription of the podcast. Yes, at Rapport International, we talk a lot about how machine translation is not good quality. Here you see an example of what a machine can do in your own your language. This transcription is provided as a gist and to give time indicators to find a topic of interest.
[00:00:34] wendy: Welcome to The Global Marketing Show. I am so glad to have you here, we're gonna talk with somebody today who is really an expert on importing and exporting, and she works with a specific type of client. So we're gonna get to that, but before we do I just wanna remind you that The Global Marketing Show is sponsored by Rapport International, who connects you to anyone anywhere in the world in over 200 languages by providing high quality written translation and spoken interpretation services.
[00:01:11] They're known for their tidbits on social media and they're putting all sorts of information about languages and cultures out. So I have a tidbit to share for you, and it's about Spanish and saying, horita. Horita in Mexico means right now like we're gonna do it right now, it's in a little bit of time, but, let's do it right now. But in the Caribbean, when you're speaking Spanish and you say it, it means we're gonna do it in a little bit, so not at this immediate moment. So when, an expert from Rapport International is doing translation, they need to understand different cultures and how they use the language. So, but, horita, we'll do it right now, the Mexican way of jump into introducing Kim Daniels. So first off, Kim, welcome and thank you for being here.
[00:02:02] kim: Oh, thank you so much for having me.
[00:02:04] wendy: Yeah, you've got an impressive background. You're CEO, and you're an international trade specialist that focuses on the needs of, businesses when it comes to their import and export actions. You've got a master's in business. And a master's in law and you've got years of experience in the industry. You've been a customs broker since 2013 and you handle all the government paperwork that is required, god bless you for doing that. You also provide candid consultings diving into the regulations that are changing all the time to ensure that clients are compliance as the laws continue to change. It's your focus to be aware of everything happening in the government, in trade activities and keep your clients informed? Well, that is absolutely fantastic. That's a lot of details to keep track of.
[00:02:59] kim: Yeah, we don't memorize anything in this feild.
[00:02:59] wendy: You don't memorize it, how come?
[00:03:00] kim: Don't It changes, it'll change tomorrow. As soon as I memorize it'll change.
[00:03:12] right. So you've got books and books and books to look up, but we'll get to that first off in your company, you specialize in working with. Other companies that have less than 50 employees and about 5 million in revenue or under, tell me why are you focusing on companies this size?
[00:03:32] So those companies we've defined as the micro business and micro businesses tend to have fewer resources and less I guess less gum show when it comes to exporting and, and getting their goods out in the rest of the world. A lot of people need to remember that only 4% of the global populations in the United States.
[00:03:53] So 96% of the buying public is actually outside of these borders. So depending on your product, It might look really good to go ahead and look at exporting that product. It'll help your bottom line. It's much more market share. You can sell to nearshore areas such as the Caribbean, like Turks and CAOs, The Bahamas.
[00:04:13] You could try to go a little further offshore. So Europe, Africa, depending on what your product is, there's a, there's a market for it outside of the United States. All you have to do is explore.
[00:04:27] wendy: If you're a company that size there's still so much of a market in the United States, why would you recommend that?
[00:04:33] They. And exporting so early in their, their
[00:04:37] kim: life. So it kind of depends, like I said, on, on the product you know, sometimes their product could be saturated in the United States. So one of the things to look at is, you know, what other products are very similar to yours that other people are buying, especially if they're not buying yours.
[00:04:51] So it's not just about improvement, it's also market share. So if your market is, you know, only in the United States, Then you're actually cutting yourself off from the rest of the market that you could be accessing. So for example, let's say you make swimsuits in the United States and you're, you're focused in, let's say California.
[00:05:12] You could expand that market to other places such as The Bahamas or Turks and CAOs. So another Caribbean areas where you could actually gain some market share by being in other places where swimsuits would be you. Highly valued. And especially depending on the design and the style and you know, what the current mode is when it comes to swimsuits.
[00:05:31] If you're selling only in, you know, a few states in the us, or even all the states in the us, you can still expand your market by looking offshore and, and sending your stuff to other location. Really
[00:05:45] wendy: good point. Cause if you're selling swimsuits in California, if you go to North Dakota or Michigan or other places in the United States, the demand for swimsuits is gonna be way less than going to a smaller country, right.
[00:05:59] That lives the beach
[00:06:01] kim: year round. Or vacation. Yeah, there's a logistical issue. I know everybody likes to purchase their stuff on Amazon these days or, or other, you know, fulfillment areas online. But those, those services don't necessarily get to the Caribbean islands or at least not as timely as they would within the mainland.
[00:06:18] So if you can send a growth of your product to Turks and CAOs, you can sell them faster than someone would be able to receive it from, you know, trying to use an online sales method. Interesting. Now
[00:06:34] wendy: a lot of consumer goods are going to eCommerce. Like I, it's a big thing to do. eCommerce eCommerce, eCommerce, cuz you do could do it everywhere, but you're actually saying you could, you might be able to sell more by selling a bolt down to a place.
[00:06:51] Talk me through more of that is how somebody would decide to do eCommerce versus what you're
[00:06:58] kim: exporting. Well, it doesn't have to be an either or you can absolutely do a diversification of your market, you know, and exactly how you send your goods out. So if you are sending to another country and you're working within the, the, I mean, there's, there's of course some struggle when you're working within confines of their laws and how, you know, what their tariffs are and those sort of things.
[00:07:21] Typically, especially with tourist type goods, they're not difficult to get into those areas because those areas that are, you know, developed based on tourism. But if you diversify and you say, okay, I'm gonna sell, you know, to this segment of the market via eCommerce. And then I'm also gonna go direct to market.
[00:07:38] You know, through the retail chains in, you know, those other countries, then you are looking at being able to kind of see what works and test different methods. So if you're testing out your e-commerce, like you said, you know, somebody in North Dakota may not want to, you know, purchase that teeny tiny bikini.
[00:07:56] Unless going to, you know, a Caribbean island because you know, there's gotta be that place to wear it. Right. So wherever it's cold, they may not want it as, as readily, but once they get there, If they've forgotten it or they forgot to order it or it didn't come in time, they're gonna get on vacation.
[00:08:13] They're not gonna have that teeny tiny bikini that they wanted, so they can go to the store and obviously buy it. But you wanna make sure that they're seeing your product. So if they saw it, you know, online and they know that they can buy it when they get there, that helps you as well. So it's diversifying your, your market.
[00:08:30] Okay. That
[00:08:31] wendy: makes a lot of sense, plus. So it's not only the need if they forgot, but people have more time and they're spending money on vacation. So maybe they need that other one. Can you give us an example of a company that you've worked with? That's
[00:08:43] kim: done this well. There was a company a while ago. I wanna say gosh, several years ago.
[00:08:48] That was making swimsuits in the United States. And I had them look into exporting that swimsuit to other places and especially with some of the free trade agreements that we have. And I, I focus a lot on the Caribbean and Mexico when it comes to that sort of market. because we do have free trade agreements.
[00:09:07] So by use of that free trade agreement, the receiving country has to break down some of the barriers of you know, the, the sending country, when that free trade agreement is in and say it works both directions, right? So for example, in The Bahamas, we have a free trade agreement. So when The Bahamas is receiving, you know, retail goods, they have less stringent requirements than somebody who's importing say from.
[00:09:33] So this can be very helpful both directions, but the company that I helped before yeah, they looked into that and they end up actually quite expanding about 30% of their sales just because they started looking in those markets where they could sell their goods directly and still keep their e-commerce re store open as well.
[00:09:52] wendy: So the swimsuit example was a real live example. It wasn't a hypothetical, this is why, why it's important to do. That's fantastic. Okay. So it certainly can opens markets, but what are some of the challenges that people face or fears that they have when they first come to
[00:10:12] kim: you? Well, it depends on what they're coming to me for.
[00:10:15] . So I am not an attorney. And I tell people that all the time, but if I feel like you need one, I have one who helps me out from time to time. So I'm happy to send you over. But for the most part, most of my clienteles comes over and they say, Hey. You know, I wanna start importing. I wanna bring in, let's say tobacco from south America.
[00:10:32] What do I need to do? And so I walk them through this process of what it is to import for those who are looking to export. I kind of more offer an one hour session general discussion for free that lets them know, okay, here's some links that you can go to to kind of analyze your market and figure out where is the best place for your specific product.
[00:10:53] Flip flops, swimsuits, those kinds of things. Obviously you wanna go towards more warm places that are very tourist centric. But if you're, you know, if you're selling, you know, big, heavy coats, maybe we go towards like Canada or places that are colder that we also have, you know, some free trade agreements and you can start expanding and you can expand small.
[00:11:13] And what I try to do is, you know, if you're. You know, fail, fail forward, right? Fail forward, fail fast. Figure out that, that small market that's going to work for your specific product that is close to you. This will keep your cost down. It'll allow you to prove your concept and then you can expand from there.
[00:11:29] So for example, if your goods do really well in The Bahamas, Maybe you expand out to Turks and CAOs. If you're, if they do really well there, maybe you go to Aruba, you know, those kinds of things that you could say, okay, it did really well here. I can start island hopping. Right. So that's why I, I, I talk to my clients, they come to me and they're like, I wanna expand, not really sure how to get my stuff out.
[00:11:51] I walk them through the process of what that looks like. You do not need a customs broker. To export your goods. There is a way to do it online. And as long as you can devote the time to it, it's completely free. If you hire a customers broker to do it, they're gonna charge you a service fee. That's how we keep our lights on and make, you know, keep our dogs fed and that sort of thing.
[00:12:11] Right. So it's the same sort of thing is that if you want the help, I give a one hour session, I let you know, okay, here's how you do this. Here's how you expand your market. And then if you're wanting to explore those markets even more, I introduce you to people I know at the commerce department and they help you with that export process and they help get you the, the Information that you need within that destination country.
[00:12:35] So if you are working with the trade department and they say, okay we have a trade mission in the Caribbean. Like for example, they do have one coming up at the end of October. They have a Caribbean trade mission. You can go there. It's in, it's being held in Miami this year and you can say, okay, and meet with different Let some government officials, but some companies who get signed up for it as well, and then find out, okay, who can I work with there so that my goods get accepted so that I don't have any delays so that I can take advantage of the free trade agreement, cuz I make these goods in the us.
[00:13:07] That sort of thing. So I kind of help guide people towards the direction they need to go. And then when it starts building and building, that's when they tend to hire someone to just do it for them, because it's more work than they have time for. And that's when they outsource the, the actual export paperwork part of it.
[00:13:28] Paperwork. How is that done? It's actually done through a government website called the ACE portal. And so you sign up, you get, you know, you go through all the parameters of signing up which can take about an hour depending on, you know, the, the. Background of your business. And then you basically every single time that you have an export that needs to go out, you you get a code assigned to it.
[00:13:51] That's something I also provide. You assign that code. And then it, you fill out the paperwork and then you print it out and you send it with your freight forwarder. And it just goes, if it's going as freight, if it's going as parcel, like FedEx ups, DHL size products then you can. Basically send it so you can send a whole box of teeny tiny bikinis through the FedEx process and they'll take care of all of that for you.
[00:14:16] So it really kind of depends on what the, the scope and size of your target market is. If you're sending big bulky items, it's better to use a freight forwarder, use a customs broker to get that paperwork done correctly. So you don't have a lot of delays or lags. Okay. And.
[00:14:34] wendy: You go to do the paperwork and you go to ACE and it takes an hour,
[00:14:39] kim: but just for the first, just for the first setup, once you're set up, then it takes about 10 to 15 minutes, approximately.
[00:14:46] You can build a template in it, which is really nice. So you can just build a template. And if you're selling the same product to the same location, every single time, you can just use that template over and over again and make the slight modifications for, for that day and, you know, size of shipment.
[00:15:02] wendy: So, is it real, really fairly easy to do
[00:15:05] kim: the paperwork? Yeah. Yeah. Once you get used to it, I mean, it's a learning curve, but once you learn it yeah, it can be pretty easy
[00:15:13] wendy: bunch of different classifications and you'd need to pick out the right classification for your
[00:15:17] kim: product. And that's where you come to somebody like me and you get that, you know, get that hour consulting and you know, say, Hey, you know, I'm, I'm sending out teeny tiny bikinis. They're made of cotton.
[00:15:27] It's you know, knitted cotton, where does you know, where do we look at? And so we, we assign what's called a schedule B or an HTS code, and then we also assign an ECCN number, which in the case of bikinis would just be EER 99, cuz it's not controlled. So anything that's controlled. So think like drones, for example, Mini drones are controlled.
[00:15:47] So they go under an ECCN number. But there are some things that are like just toys and those would go under E R 99. So it takes someone that's an expert in the field who can understand what your product is and then can assign the right code for it. Cause you don't wanna, you definitely don't wanna violate anything.
[00:16:07] Cause export laws are, are cranky. If you do it wrong, .
[00:16:12] wendy: Cranky. That's a way to say it so what happens if you do it? Okay. And so what I understand is is that the book of codes is humongous mm-hmm . And so the rest of the paperwork is easy, but that's the one thing you have to get accurate. So you talk to, you know, you call you up Kim and you say, okay, help me pick out the code.
[00:16:29] Mm-hmm .
[00:16:30] kim: What ha
[00:16:31] wendy: and what, how many codes are there and what happens if you get it wrong?
[00:16:35] kim: There are a lot of codes. I don't know the exact number, but it's thousands and thousands and thousands. There are you know, there's a lot of ECCN codes as well. So again, depending on your product, that's where we kind of go through and use our expertise to know kind of where to find the information, as opposed to where to just, you know, picking one out of the air.
[00:16:55] You can't do that. You have to know how the codes work. There's some very specific guidance at the beginning of each chapter. And each section that tells you, like, for example, electric blankets do not fall in the electrics chapter. They fall in the blankets chapter so it's those kinds of things. But the if you get it wrong, It just depends on a lot.
[00:17:17] So if you get caught and you did it wrong and you did it wrong without malice or trying to get away with something, usually you'll get a fine, maybe a slap on the wrist. Don't do that again. You know, that kind of thing. If your product. Is controlled. You will get a much larger, fine. There is a case that happened and I'm not gonna name any company names.
[00:17:39] But the company was exporting military grade products and their ITAR department was not exactly up to the level. It should have been. And that company got fined over 30 million. So yeah, it's, it can be very, very problematic if you don't do. It. Right. And especially if it, if it's an egregious oversight and, and, and consistent culture within your company to basically snug your nose to the government, you're gonna get caught and you're gonna get fined and you could get shut down to where you're no longer allowed to export anymore.
[00:18:16] wendy: Wow. Okay. So you gotta get it right. And how do you, how can you show the government that you're working on getting it right when, I mean, Your codes could be just slightly off or it could be finding something in, you know, the electronics and not the blanket.
[00:18:37] kim: well, that's where you, you talk to somebody like me, like, you know, someone who knows that electric blankets don't fall in the electrics chapter.
[00:18:43] Right? Because it says specifically at the very beginning, section one, a. This does not cover electric blankets. Right. so we know, we know we're not to look right, but mostly it's, you know, if you get it slightly wrong or you're off by a couple of digits, cuz it's a 10 digit code. As long as it was just a, an honest mistake and you can prove that you didn't know any better.
[00:19:05] But, or your, your broker did it wrong or something typically you can mitigate any kind of problems away from that. And, and you learn from it. And as long as you go forward doing things correctly, The government will be like, okay, you, you didn't know you fixed it, you fixed the problem. You're fine. But if you continuously do it, if you have years where you haven't made sure your I, a R program is on and I a R is the international trade and arms regulations.
[00:19:34] And, or I'm sorry, international traffic and our regulations. There's a lot of acronyms in what I do. Keeping 'em strictly complicated. Yes. And so you know, if you don't do right by those particular laws and, and it's constant and consistent, and, you know, Like inherent to your business. Yeah. You're getting shut down and you're getting fined and it's possible someone can go to jail.
[00:19:58] So because basically you violated, you know, military laws as well. So there's military grade products that have to be scrutinized before you can send them to places and you have to make sure that those places that you're sending them to, aren't sending them on to other places that we are not friendly with.
[00:20:15] Right. So there's, there's this whole kind of a web. Where everybody looks into what you are doing. Swimsuits consumer products, not a big deal, big military drones problem.
[00:20:31] wendy: okay. Okay. Right. So there's a pretty clear line there, you know, consumer products versus military and that, that we could probably all pretty much.
[00:20:41] kim: Or understand. Sometimes the complications usually come down to electronics, like the, the mother boards and, you know, those kinds of things where it's processing boards that can lead to other problems. So if you, if you're on the cusp and you're like, well, I mean, we use this in cameras. But the cameras could be attached to aircraft.
[00:21:03] Then you need to say, let's just have someone look at it. It doesn't cost a lot, you know, just have a broker look at it, their consulting fees. Aren't usually like gonna break the bank and they can look at it. They can analyze it. They can tell you if it's controlled or not, and it's worth the money to just let someone look at it.
[00:21:21] If you don't have an expert on staff. Okay.
[00:21:24] wendy: That makes a lot of sense. Now, what kind of industries do you work across?
[00:21:27] kim: Well, since I represent mostly micro businesses everything , I have importers of meal worms. I have importers of t-shirts. I have importers of auto parts. So just a myriad of different things.
[00:21:41] Like I said, tobacco, actually I have importers of cigars and you know, there's a lot of different laws when it comes to tobacco. The only thing I don't touch on. Is anything to do with alcohol because it's a very, very specialized, nuanced focus. And for that, I always tell, 'em go to an alcohol importer.
[00:22:00] Like you have to go to somebody that focuses on that and. There there's this whole gambit of things that have to happen when you're importing alcohol, including wine. And it, it breaks my heart that I can't do it.
[00:22:18] yes, we love that wine. Right. But there's, you know, most of the time, you know, it's, it's mostly consumer goods that I, I help to import. And I, I handle the paperwork for for exporting There's there's the, the craft beer is one of those exports that I've been working to try to break into.
[00:22:37] So exporting alcohol is not nearly as complicated as importing alcohol, so , so if you can get the, the conduit set up between say here and England, England is. Huge huge fan of craft beer. They absolutely love American craft beer. And so whenever they can receive it, they sell out just as quickly as they get it.
[00:22:59] And there are companies that can help you. If you do have a craft beer put it in a VA and then you basically send the whole that over and then they do bottling there. So what this does is it reduces the weight so you can send more product and then when it gets there, You can, can it and bottle it within England and then they sell it that way.
[00:23:19] And I work with a customs broker in England who helps to facilitate this kind of trade. Okay.
[00:23:24] wendy: So if you have a craft beer company, you should definitely reach out to Kim Daniels right now because she's got market for you,
[00:23:33] kim: right? Okay.
[00:23:35] wendy: I'm trying to wrap my head around something we were talking about.
[00:23:38] Like, if you wanna do the export paper, you go online and you have to know your number and the rest of it, you should be able to do. So that's the one side of it. Now you're talking about importers. So is there more paperwork to do when you export or what is it? The paper, the work that you're doing for the importers, when they're bringing goods into
[00:23:56] kim: the.
[00:23:58] So when you export you have an ITN number that you get, so you basically get this confirmation sheet from ACE that tells you the ITN number. So it's basically saying it's cleared through the exporting system. And then you're you give that to whoever's moving the freight, right? For importing, we have to go through.
[00:24:15] Kind of a myriad of, of different things. It's not as complicated as it sounds, but there are a couple of forms that have to be filed. One is a 75 0 1. So that is basically your entry summary that says how much taxes or duties you owe to the us government based on what you're importing. Right. And a lot of people are like, let's do complete free trade.
[00:24:36] And, and I am a free trade advocate except for one thing a full free trade means that all. Us citizens taxes increase. So when I first got my custom broker license which was a while ago about 60% of federal expenses were covered by duties for goods coming in the court. And when we added the section 3 0 1 that increased substantially , but.
[00:25:04] It because of COVID section 3 0 1 was a 25% duties on, you know, on Chinese goods. And so all of that money goes into the general fund, which funded the COVID packages. So when importers were importing products that 25% extra that they were paying for Chinese based goods or Chinese originating goods, went into the general fund and then it got redistributed into COVID relief package.
[00:25:33] Yep. Well, free distribution. That's exactly what it's
[00:25:38] wendy: well, we distribute. Wait a minute. So, so why are you in favor of free trade agreements? If the duties on goods coming into the us
[00:25:53] kim: cover. That's why I say I'm in favor, except for that. There, there are some there's, there's a lot of studies that say that the more open trade you have, the better your economy is.
[00:26:08] So the world trade organization, I believe put out a study some years ago and actually different countries, their own governments have put out studies that show the more open your trade, the better your economy. And so that's where I'm kind of in favor of it. But I think that there's a nice little medium area where yes, you can still protect your your industries.
[00:26:33] Right? So we have a pretty high duty on cotton goods. Cotton t-shirts I think are 17.6% in duty. And so that's a pretty high duty. Some overcoats are 32%, so it kind of depends on, on the, from what I've been able to gather, cuz some of it's really no rhyme or reason, but some of it is we're trying to protect our own industry.
[00:26:55] But some of it is it's just cost that much because it always has, and no one bothered to look at it and say, what are we protecting? If there's nothing. Right. So that's some of the duties. I think that there can be a happy medium. I do not agree with section 3 0 1. I never have, it was never going to work and it was going to cost those micro businesses disproportionately.
[00:27:16] And that's where I, I was pushing against the us government at the time saying, look, These don't work. And the reason being is because you're trying to fix a culture by being a bully and it doesn't work that way. And in fact, there have been plenty of studies that show, and I just read it in foreign affairs last week that punitive damages such as you know, The the section three oh ones trying to force a country to change doesn't work, trying to force a country to stop such as the sanctions against ch Russia does, does work or has been shown to work in the past.
[00:27:52] So you have to be really careful with how you use sanctions and how you use section 3 0 1, because who are you really harming? And when the case of section 3 0 1, you're really harming American businesses and American consumers. In the case of sanctions against Russia, you're harming Russia and some collateral damage to the buying public.
[00:28:14] Okay.
[00:28:15] wendy: So take that down to a next level. Which part works? Cuz you said that the sanctions don't like if we have sanctions against Russia right now you're hurting the Russians. Right?
[00:28:29] kim: So you don't agree with that or you? No, I do. Do I do. Okay. Because I do think it's a, it should work depending. I mean, again, you're dealing with personalities and you're dealing with culture, so, and be, but because a lot of other countries got together, right.
[00:28:44] So you got European countries who got together and applied these same sanctions that the United States did. Right. So that actually has a curbing effect. According to the study I read as for. The the section 3 0 1 sanctions against China, where they added the 25% duty on list one, two, and three, and then 15 or seven and a half percent on four, a those don't work and they're not able to work because you can't change a culture that doesn't, doesn't understand what you're asking for.
[00:29:20] And when you're saying, Hey, I need you to recognize intellectual property. Well, you're talking about culture that doesn't understand what that means to recognize it. Right. So, and, and they just, it just doesn't their head doesn't wrap around it. So you're trying to force them by bullying them on money that they're not even paying
[00:29:42] wendy: Okay. I see. So Russian sanctions, you're doing something we don't like. It's very clear. Whereas, if you try to sanction something that the culture just doesn't get right. Then it's not gonna work. Right. Because it's
[00:29:58] kim: just so unfair. Yeah. In fact, our trade deficit with China today is worse than it was in 2018.
[00:30:04] When these section 3 0 1 S came into place. Yeah. Opposite effect, opposite
[00:30:11] wendy: effect. And you look at companies that are exporting to China when they did the, you know, the. Trade taxes on our companies then the, the, our exports
[00:30:23] kim: dropped. So absolutely it just hurt both countries. Yeah. And it, it does. And that's, that's the, the fallout that you're looking at.
[00:30:30] So, you know, whenever they use 2 32, they use 3 0 1, they need to re remember, who are we harming? Because if there there's, I can tell you as a customer's broker, there's no mechanism in place for any country to pay duties on behalf of an import. At least not in our system, so the importer has to pay it. Oh, and by the way, you also have to sign an affidavit that says you're not being reimbursed for this, especially with anti-dumping and countervailing.
[00:30:59] So who are you hurting? right. And the whole idea is to get them to, to move away from that particular market. That's the idea, but when your landed costs are still less than trying to source domestically, They're still less. Yeah, they're still there.
[00:31:19] wendy: Yeah. Right. So landed costs would be all the costs, the taxes, the duties, the shipment mm-hmm and the, the product costs are less.
[00:31:30] For importing right. Than if you had it produced here in the United States. So then it's worth. Yeah.
[00:31:36] kim: Yeah. In case in point, I actually, when they first came into play, I had a very small startup. They had, you know, they had just had this very strict budget on what they were doing because they got just a little bit of money to be able to do it.
[00:31:47] And they ended up with a $2,000 duty. They weren't expecting because the. It came into effect as their stuff was on the water go figure. And so they end up paying landed and delivery $11,000, but the same product. Cause we were looking to see if we could get them in exception, found the same product in the us.
[00:32:09] It was 15 not delivered. Wait, what
[00:32:14] wendy: was the
[00:32:14] kim: difference in price? $4,000 was the difference in. So if they bought, so even with this additional
[00:32:21] wendy: cost that hit them while they were on the ocean mm-hmm they still were saving money by importing the products. Yes. Yeah,
[00:32:32] kim: yeah. Yeah. So that's American market has to become more competitive if we're going to, you know, be a, a resource for anybody and we're just not.
[00:32:43] And we, you know, I mean, we have demands for high wages and I get it. I, I totally would love a high wage too. I run this company. So. They don't pay me the big bucks.
[00:32:56] but you have potential, but it's their potential. It's the hope, but we have you know, but it's, it's, you know, we have this, this, this talent pool that is, you know, demanding very high wages and I get it and I totally, you know, respect what the ask is, but there has to be some kind of mediation here. If we're so expensive, no one buys from us.
[00:33:21] We're shooting ourselves in the foot.
[00:33:23] wendy: Right, right. Yeah. It's a continual balancing thing, especially right now when we're having trouble hiring people in the United States. Yeah. So what we're coming to the end of our time, what recommendations would you give to companies on exporting from the us or importing into the.
[00:33:41] kim: First I would say, remember that it's a holistic process. So the whole thing kind of works in congruence with each other. So we have a very large textile industry. We export a lot of cotton and we export it to Asia and then Asia turns it into, let's say t-shirts and then they come back to the United states' imports.
[00:33:59] This is holistic. You want this? Because without the imports, you don't have the export. Right. The other thing I would say is look into foreign trade zones. So in some ways depending on your product and where it comes from, you can set up a foreign trade zone and you can finalize production of certain goods into the final product.
[00:34:17] And it can go out of the foreign trade zone as a us built. Good, depending on the percentage of value in in the build, right. A company I'm sure you've all heard of it. Mercedes. Toyota. a lot of car companies take advantage Honda, I think too take advantage of the foreign trade zone and they can bring in the goods from all over the world, into the FTZ, build the car and the car goes out at 2.4% as the whole value, not as the value of individual pieces.
[00:34:46] right. So it, it builds jobs. It creates more jobs here, which is very good and it lowers their tax burden. When it goes into the us commerce in some respects, this can work really well until section 3 0 1 is, you know, finished and they decide to go ahead and cancel it. It doesn't really work with Chinese originating goods.
[00:35:06] They there's a whole complicated web that has to be done that I'm not gonna get into, cuz it'll take a lot longer. But just suffice it to say that in the past, it's been really good to have a foreign trade zone, if you're a small business and you wanna, you know, you wanna look at the foreign trade zone, look at you know, get a feasibility study.
[00:35:23] I work with somebody who does those and we actually can do a feasibility study for you. Assess your products. Decide what the duties are gonna be if you import them into the FTZ, which means that you're suspending having to pay those duties until they go into commerce. That can be very, very helpful for your cash flow.
[00:35:41] But if just suspending it isn't enough, but it looks like we might be able to do what's called a duty inversion. And your goods, like the car goes out at 2.4%. That can be helpful too. So we always recommend if it leans towards it, if you have the wherewithal to at least do a feasibility study, definitely get that done and look into your operations and how we can make things a little more efficient and save you some money.
[00:36:06] Wow.
[00:36:06] wendy: Okay. So if anybody's listening to this, that's interested in importing and exporting and the paperwork and the governments have got you confused then definitely reach out to Kim or Kimberly Daniels as you'll find her on while you're Kim Daniels on LinkedIn. Yeah. Okay. So we end every episode with what's your favorite foreign
[00:36:24] kim: word?
[00:36:25] Shouted Freud. I never say it right. Shouted Freud.
[00:36:31] wendy: yes. Tell us what it means and why it's your favorite word?
[00:36:34] kim: So it's likemy
[00:36:40] and it's my word, because a lot of times, especially in, in trade you can, you can find some very good friends, but you can also find some frenemies . And
[00:36:51] wendy: Sean and Friday is like a fr me. Yeah. Yeah. Yeah. Cause I've also heard. Explained as like laughing at somebody else's MIS mistakes or misfortune. Yes.
[00:37:04] kim: A friend of mine and I go running and she trips. I'm gonna point and laugh at her.
[00:37:15] wendy: There you go. Your nice
[00:37:17] kim: German word. Yeah.
[00:37:20] wendy: well, Kim, where can people reach you?
[00:37:22] kim: They can always reach out to my website, www.mlitinc.com. And then they can email me directly at kdaniels@mlitinc.com as well. And of course, LinkedIn. Okay. So M I
[00:37:39] wendy: L say a little bit slower.
[00:37:41] M
[00:37:42] kim: M L I T I N C.com.
[00:37:47] wendy: Okay. So did you get that, that stands for Meile logistics and international trade.
[00:37:52] So M L I T I N C.com. And so if you have questions, take her up on that hour for free. She's a wealth of information. My brain was having trouble keeping up here. So I really appreciate you being here, Kim and talking
[00:38:06] kim: this throw. I love when people ask me questions, it gives me a chance to just get it outta my head.
[00:38:13] wendy: Good. We'll share it around. All right, listeners, if you like this, or you have questions, reach out to Kim directly, Kim Daniels, you can find her on LinkedIn. Or you can go to the Facebook group called global marketing and growth and post your questions there to see who else. Might be able to give their personal experience on, on doing importing and exporting.
[00:38:35] If you know somebody that would be a good guest, you can certainly send them to Rapport, translations.com and just go to the search bar and type in podcast. And there's an application on there. So thank you so much for listening and we'll be back at you next time with the next episode.
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