Why should Zimbabwean Companies participate in Trade Fairs?

Is it really worthy the effort to participate in international trade shows/fairs? Many SMEs would be forced to believe that participation is just an unjustifiable trip which has no predictable return. For business companies, it is different from consumers who go to trade fairs to ask, “How much it this and that?” as business companies have to participate in trade fairs to establish relationships which corporate buyers and distributors of own products. Its more of looking for opportunities to partner with business counterparts who assist in selling own products. There are many good reasons why SMEs should participate in trade shows - both domestic and international rather than relying on reputation and e-marketing like websites and emails.

1. Build Relationships with Corporate Buyers at the Trade Fairs.
   
   The best way to make lasting business contacts is to talk to the customer face-to-face, as it gives one the chance to make the right impression. Zimbabwean SMEs should participate in international trade fairs in order to establish new trade contacts for their exports. For this to happen, they have to make good presentations (not of false promises), exchanging business cards and even visiting some foreign business premises and representative trade attachés of Zimbabwean embassies. This can go a long way toward promoting own product overseas. If the market is really good, the SME representative might even make a sale right at the show.
   
   
2. Find out Distributors for Export Market.
   
   International distributors come to trade shows to find the best the world has to offer in terms of price and quality relationships. The SMEs should also build relationships with these international distributors, in order to reach out to some international buyers who may not have made it to the trade fair.. Smes representative should strive to talk with these distributors to find out what they need. It is a great way to get your product to customers in many countries worldwide. The SMEs representatives should not waste time moving from one stand to another admiring other products which are not in any way related to their own – this is not a tourist venture, its business search.
   
   
3. Trade Fairs are One-stop shop for Export Market.
   
   When A Zimbabwean SME goes to an international trade fair, one meets potential clients from, not only the country hosting the trade fair, but all over the world. Not even the wealthiest companies could afford to meet with so many potential clients from so many regions in a few days. If your company is targeting a particular region, there are several trade shows designed for regional markets, such as SADC or COMESA or Europe. This means that not every trade fair suits own requirement, so choices should be made on which one/s to take part in.
   
   
4. Trade Shows Provide a Platform for Market Research.
   
   This is one kind of market research which the Zimbabwean SME would do in-house and interface with real customers. By having a chance to talk to potential clients, the SME finds out what international distributors are looking for - and what their customers want. One may still find out that some of the preconceived notions about export markets are wrong, by learning from the market participants the special requirements and opportunities by region. Or, luckily one may find a niche market for a very specialized product that one happens to be uniquely qualified to produce.
   
   
5. Test your Product at Trade Fairs.
   
   Zimbabwean SMEs should always take their trade samples to the trade fairs- its imperative! When such same products are presented, overseas buyers can give their opinion on the spot. Such immediate feedback will create a chance to get reactions to sizes, colours, design, price, flavors and ingredients. Remember products may need to be customised to suit the target market, due to different tastes. Trade shows give Zimbabwean exhibitors the chance to observe their competition for their products and whether their products appeal to buyers.
   

It is therefore imperative for any serious new or old Zimbabwean exporter to consider participating in some international trade fairs. The participation should however be punctuated by good negotiating skills and good presentations, considering different cultural background, language, political and geographical differences. For a successful participation the right team has to be assembled for each trade fair. For the calendar of trade fairs which Zimbabwe exporters can participate in, kindly get in touch with ZimTrade or search their website http://www.zimtrade.co.zw/ for such opportunities.

How some Zimbabwean firms have lost ground in export markets - failure to cope with technology

Zimbabwean manufacturers used to be competing fairly in the international markets. Distortions in the Zimbabwean economy have resulted in many companies fast losing their competitiveness in the past 3 years. The basic reason for losing such competitiveness is the failure to keep pace with changes in production process technology, for whatever reason. Those firms who failed to make optimal investments in technology lost their markets because they could not meet the product quality demands of export markets.

Symptoms of Failure to Cope with Technology

The following are the symptoms among Zimbabwean companies who have since fallen behind in technology: -

• Uncompetitive costs of production relative to what foreign competitors
• Deficiencies in product quality

Why did the Zimbabwean Companies fail to upgrade their technology?

Some firms had made initial capital investments in labour-intensive production processes to take advantage of the relatively low labour costs which prevailed in the country. However, the change in the state of technology rendered such methods ineffective to meet the required quality and precision in finished products. In some cases, investment in more automated production methods has become necessary. There are several factors which inhibited investments by Zimbabweans in improved technologies. Some of the reasons are as follows: -

• Some firms do not have search mechanisms for information on changing technological and market conditions and do not keep abreast of the technological trends in their industries. Such companies see no reasons for attending international trade fairs or technology exhibitions.
• The information gap had not been filled by any institutional arrangements initiated by ZimTrade, Government or industry associations for various reasons.
• Some firms had not made any investments in improved technology for lack of foreign exchange needed for importation on vital cogs of driving technology.
• Other firms could not make any investments in improved technology for lack of accumulated profits which could be ploughed back into the enterprises. Such firms had either accumulated losses or had failed to generate profits for a long time.
• Some firms had suffered from the effects of rigid price controls which prevailed in the country.

Zimbabwean firms had been in financial problems for a long time which eroded their capacity to make any significant investments in capital equipment, training and innovations. Investment in general had been low or stagnant.

What Should Be Done by Zimbabwean Companies

The following are methods which are relatively easy to implement but do have amazing results: -

• Some firms must put considerable efforts into improving their competitiveness by way of making serious investments in technology. Why ‘effort’? For some companies it is a matter of efforts - some companies’ management think they can do with highly skilled labour only to beat competition but I feel it is short lived. In some cases, investments in more radical changes in technology are needed to include changing to the use of microelectronic controls. Management have to prioritise the modernisation production process technology in order to keep afloat in the export market
• Top management has to develop appreciation of the pace and trends of technology development elsewhere, as a guide to the kinds of investment that must be made to create and develop new technological capabilities.
• Attend international exhibitions to keep abreast with changes in technology.
• Enter into partnerships with foreign companies or attract foreign shareholders who bring in new technology.

Suspension of Duty and VAT through Mid Year Fiscal Policy Review July 2009

Reduced Customs Duty on Raw Materials, Intermediate and Gapital goods

The Ministry of Finance has reduced customs duty rates on raw materials, intermediate and capital goods, with effect from the 1st August 2009, as follows:

Reduced Customs Duty on Finished Input Goods

With effect from the 1st of August 2009, Customs Duty on finished goods has been as follows:

Reduced Customs Duty on Basic Consumer Goods

Duty-free importation og defined basic commodities has been further extended to the 31st of December 2009. The basic commodities to enjoy duty free importation are as follows: cooking oil, margarine, rice, flour, salt, mealie meal, bath and laundry soap, washing powder, toothpaste and petroleum jelly.

This development comes with opportunities to import the said items for SMEs.

‘Landmines’ in Exporting - The Don'ts of Exporting in Zimbabwe

International trade business has extra dimensions of legislations and controls over domestic trade business. Because of those extra dimensions, any new or existing exporter should tailor-make own operations to avoid committing the "don'ts" of exporting, as the effects of ‘stepping’ on those ‘landmines’ might be fatal. Therefore the purpose of this post is to advise on how to quality control own export operations by reviewing some of the "don'ts" which Zimbabwean exporters commit.

Don’t #One:

Exporters should not forget that they are responsible for maintaining full compliance with all Zimbabwean Exchange Control laws and Customs and Excise Laws (hereinafter collectively termed export laws) that are relevant to their products at the time of export. Such responsibility makes the exporter liable for the export control violations that one might knowingly or unknowingly commit while engaging in an export transaction and for the export control violations that one’s agents (such as freight forwarders) commit while carrying out export operations on the exporter’s behalf. These include carrying out illegal transshipment or illegal export of own products without permits etc.

Don't #Two:

Exporters should not neglect to investigate whether the foreign markets into which they are exporting their products have any Import Controls related to the sale of such product. Such foreign destination’s import controls may be in the form of import prohibitions, import restrictions (quotas) and import licensing requirements. Such controls may be based on country of origin, product type, or product characteristics, such as products produced by convicts and counterfeit products. Imported products, which contravene an importing country's import controls, are generally refused entry at the importing country's border, thereby resulting in unnecessary loses or costs.

Don't #Three:

Exporters should not neglect to evaluate country risk in addition to buyer risk in selecting the proper payment method for their export transactions. Countries frequently experience political and economic problems so severe that buyers in such countries are precluded from obtaining the necessary foreign currency to pay for their imports. Exporters that ship to such countries without having investigated the country's political and economic situation and without having selected a payment method appropriate in light of such political and economic situation run the risk of not receiving payment for their export sale, regardless of the good intentions evidenced and financial responsibility exercised by their foreign buyers. Such non payments by foreign buyers may end up degenerating into violations of repatriation laws of Zimbabwe.Exporters should not neglect to evaluate country risk in addition to buyer risk in selecting the proper payment method for their export transactions. Countries frequently experience political and economic problems so severe that buyers in such countries are precluded from obtaining the necessary foreign currency to pay for their imports. Exporters that ship to such countries without having investigated the country's political and economic situation and without having selected a payment method appropriate in light of such political and economic situation run the risk of not receiving payment for their export sale, regardless of the good intentions evidenced and financial responsibility exercised by their foreign buyers. Such non payments by foreign buyers may end up degenerating into violations of repatriation laws of Zimbabwe.

Don't #Four:

Exporter should not confuse INCOTERMS when submitting the customs documentation. It is important to ensure that the exporter does not misuse any INCOTERM for any purpose and that the exporter fully understands the costs, responsibilities, rights and obligations that accompany the use of a specific INCOTERM. The misuse of a selected INCOTERM can lead to over or underpayment of costs and to over or under assumption of responsibilities, rights and obligations. Zimbabwean transporter of exported goods under which INCOTERM has been misuses might end up being forced by Customs authorities to complete Forms CD3 at the Border Posts in foreign currency simply because the exporter quoted incorrect INCOTERM on the respective Form CD1.

Don't #Five:

Exporters should not ignore their responsibility to comply with the Zimbabwe Exchange Control Laws as they relate to required export documents. Exporters are required to prepare and submit a Form CD1 for each export, unless where an exemption applies. The Form CD1 must list the contents of each shipment, values of shipment, cite the appropriate export license, and identify the final destination, end recipient. Failure to provide a Form CD1 exposes an exporter to criminal penalties under the Zimbabwean laws.

Don't #Six:

Exporters should not make any misrepresentations on their Forms CD1. Exporters are responsible for accurate Forms CD1. The following specific areas require attention: Don't under-invoice or over-invoice your products on your Form to help an importing customer avoid tariffs or taxes.Don't misrepresent the place of origin on your Form CD1 in order to assist your foreign buyer to gain access to a preferential duty program to which your foreign buyer is not legitimately entitled.Don't incorrectly identify the contents of your shipment in an effort to evade the Zimbabwe export controls that apply to your product. These activities violate Zimbabwe export laws and expose a Zimbabwe exporter to civil and/or criminal penalties. In addition, they expose the Zimbabwe exporter to a potential violation of the importing country's tax law under the theory that the exporter aided and abetted the importer in committing tax fraud.

Don't #Seven:

Zimbabwean exporters should not be greedy - if an export opportunity looks too good to be true, it often isn't true! Just think of all the Zimbabwean exporters who have so far been trapped in export scams and don't get lured into participation by thoughts of the scarce foreign currency in Zimbabwe which may become available to you for little or nothing in return. Some have been duped after being convinced by foreign conmen that their product will fetch unbelievably high price, only to lose track of the ‘too-good-to-be-true’ foreign customer soon after shipment and before getting payment. Don't lose your good business sense in the face of an export opportunity and give export sales opportunities the same level of scrutiny that you would give any business deal.

Exporting from Zimbabwe - The Passports to Export

Any person ordinarily resident in Zimbabwe, whether individual or corporate, can export any of the uncontrolled goods from Zimbabwe without any need of a special authority. The potential exporter does not necessarily need to be a manufacturer of the product – all the entities throughout the chain of distribution can move the identified goods to international markets, provided the person has all the ‘passports to export’ from Zimbabwe. The following are the passports for exporting goods from Zimbabwe.

Registration of an Exporter
One has to register his/her name with one of the Zimbabwean registered Commercial Bank or Merchant Bank. The registration is a once off exercise which does not take hours to complete. It is a simple procedure which calls for submission of documents

• Copies of National Identification Card of an Individual Exporter
• Proof of Residence for Individual Exporter
• Copy of CR14 for corporate exporters
• Copy of Certification of Incorporation in Zimbabwe for corporates
• Duly completed Registration Form for both individual and corporate exporters

Relevant Export Licenses and Certificates of Origin
Export licences are only applicable to goods which are not of Zimbabwe origin but being exported form the country. The licences are obtainable from Ministry of Industry and International Trade. If goods are of Zimbabwean origin as defined by Rules of Origin under specific Bilateral agreements with target export market, it is wise for an exporter to complete a certificate of origin, to qualify for preferential treatment when goods enter the destination country.

Getting a Form CD1 for Specific Shipment
Once registered, the exporter can submit the Commercial Invoice to any registered Commercial Bank or Merchant Bank for creation of a Form CD1. This process should ideally not take an hour to complete per each Form CD1. 

For the exporters who wish to raise their Forms CD1 from own premises can register their staff members for access to the system called CEPECS. Raising Forms CD1 from own premises has many conveniences including ability to create a Form CD1 outside business hours, reports which track maturities of Forms CD1 and use of own corporate stamps on Form CD1 instead of visiting Bank branch for stamping.

A Form CD1 is a declaration form on which an exporter attests to the Exchange Control authority, Reserve Bank of Zimbabwe, the value and quantity of goods to be exported. This form should be completed with acquittal in mind. A standard acquittal period (the period within which the payment for the exported has to be received in Zimbabwe is 90 days).

Completion of Customs Procedure
Once the exporter has obtained the Form CD1 from the aforementioned sources, s/he should proceed to any Inland ZIMRA export processing office for a Bill of Entry, as pre-clearance exercise. The exporter simply gives his Form CD1 to a registered Customs Clearing agent for this formality, who completes the Bill of Entry in the ASYCUDA World system. Bearing in mind that the Bill of Entry needs assessment (which normally takes at most 6 hours, registering a Bill of Entry while at the ZIMRA Port of Exit is not ideal. 

Consignment Notes
For every export, there is a consignment note submitted to Customs office, which is filled in a standard format. These notes act a proof of export to Customs; they are very important for making claims under drawback of duty and cancellation of exports. The type of consignments notes are as follows:

• Rail Advice Notes – issued by National Railways of Zimbabwe after being handed over the goods export. It should be accompanied by a notify party of instruction
• Airway Bills – issued by the airline after being handed over the goods export. They should be accompanied by shippers instructions
• Road Consignment Notes – issued by the road carrier after being handed over the goods export.

Documentation for Controlled Exports
In Zimbabwe, the exporter should look for speciliased permits/ authority for the controlled exports. The controlled exports are:

1. Wildlife and Wildlife Products
2. Agricultural Products
   - Grain
   - Dairy products
   - Seed
   - Fresh farm products
3. Livestock (pedigree, for shows or competition etc)
4. Live Horses
5. Used agricultural equipment
6. Second hand industrial equipment including scrap metal.