What are the risks of exporting?

Hi Lina, I am Import/Export Specialist for more than 7 years and from my personal work experience, I can tell you that there will always be some risks when we talk about import-export process.One of the most unpredictable risks are the political ones and I remember we had to deal with them not just once. In one of those cases, a revolution started in the country from which we wanted to export goods, and as a result, our products had been damaged. We had to return them and wait another period of time to get them safely shipped.Additionally, our export business was affected by currency risks. This refers to currency fluctuations and is very difficult to predict such risks.Another unpredictable risk for us was the force majeure risk. It came unexpected together with the storm in the country from which we were about to export our already paid goods.Now that you are aware of the risks of exporting, I hope you can get prepared to face the unpredictable ones and hopefully to prevent some.

Any business venture involves certain risks and exporting is no exception. Exporting involves not only the normal risks of a domestic sale but also the risks associated with doing business in a foreign country. Most of the risks from exporting can actually be minimized or even eliminated with careful planning and effort. Simply by knowing what the potential risks are, a potential exporting business will be able to make a better decision. So, as for me, there are some risks of exporting such as: the demand for the product in the export market may dry up before profits are realized; competition from other similar products in the export market; export business usually requires additional financing to fund the export business, which may flop; longer wait for payments and difficulty in collecting export proceeds; possibility of non-payment for products received by importers; expense of developing new promotional materials, which may not improve product awareness; product may not reach the export market due to transit bottlenecks such as pilferage, theft and other non – tariff barriers; company may face litigation if the product is harmful to consumers; political and cultural risks may affect the demand for the product.

Exporting can be a risky business. Operating in an unfamiliar, the foreign market will always throw up new challenges to navigate, however, established business may be in its domestic market. The difference between success and failure when doing business overseas is being prepared. There will always be risks when entering a new market, but identifying those risks ahead of time and putting measures in place to manage those risks can help to minimise their impact on the success of your business overseas. Export risks can be quite different depending on which country your business is exporting to. However, there are four common risks all small business should be aware of when doing business in international markets: Political risks; Legal risks; Operating risks; Currency risks.