Tori, that's a fantastic question and many thanks for the warm welcome. People are often surprised that I am able to conduct business in the Middle East, as an American and especially as a woman. I admit to being hesitant initially as well, but it's much easier than one might think. I have grown to have a tremendous respect for the Arabian culture, though it can be quite different than the environment I was raised in. Two resources that I love are the forums at http://www.tripadvisor.com/ and http://www.lovelyplanet.com/. Both sites are a tremendous resource, brimming with helpful locals. No matter what country you're preparing to do business in, I highly recommend spending a few hours on those websites reading relevant information. Nothing could be more disappointing for a small business than traveling around the world for an important business deal and losing that deal on a point of etiquette. Luckily, a little preparation usually heads that off at the pass.

 

Specific to the Middle East, I am not required to wear traditional Muslim clothing in my business dealings. The hijab (head scarf), abaya (robe) and burqa (facial veil) are optional for travelers in the countries I visit. If I was to do business in Iran or Saudi, for instance, they would be requirements. I must, however, be conservative in my dress. Whereas a business suit with a silky camisole beneath may be acceptable in meetings here in the US, it is not well received in traditional Muslim countries. Don't bare your shoulders, skirts of an adequate length, absolutely no midriffs and be mindful of the necklines on all attire. Simple missteps will generally result in the discomfort of males in a mixed setting, avoidance of eye contact and could put negotiations at risk. It can be difficult to dress modestly in the desert in 120 degree heat, but it's a necessity of doing business in this part of the world.

 

It's paramount that you understand local custom. For instance, in the Arab world, women greet one another with kisses on each cheek. Don't even dream of approaching a man in that manner- he'll accept a casual handshake and nothing more. In the Arab world, it's rude to not accept what is offered. That means drinking a few cups of dangerously strong Turkish coffee and enjoying a few dates, even if you have an aversion to coffee and dates. Never show the shoes of your feet and avoid political discussions. And I am making a note to myself to remember that last one- I am often roped into them; but, thankfully, they have always ended well.

 

No matter what country you are visiting, I highly recommend learning a few greetings in the native tongue. Nothing melts cultural barriers faster than an American face with a genuine, warm smile, greeting an Arabic woman in her native tongue. That study time is time well spent...

Hi there haywire! Always good to see you here. Let's tackle these one-by-one:

 

1. When I am approached by a distributor, I test the waters with a blend of optimism and necessary caution. Here are the questions I ask:

 

● Please provide a full listing of current brands you are importing, along with their country of origin.

 

● I'd appreciate the contact information for any principles affiliated with those brands so that I may secure a recommendation.

 

● Please outline your distribution model- what types of establishments you sell to, what type of sales force you have employed, a full listing of any office/warehouse facilities you have secured, etc.

 

● A brief outline of your background and the history of this distribution company would be greatly appreciated.

 

● Any details/statistics you can provide with regards to the (insert country here) personal care/beauty market that you can provide would be helpful.

 

● Finally, any details or information you can provide detailing the process of clearing US-manufactured personal care products through the (insert country here) authorities would be appreciated.

 

That's what I use as a "first pass" response, but it's a good beginning.

 

2. I am utterly convinced that you can successfully google damn near anything! Give it a whirl and see what you come up with. There are also websites such as http://www.alibaba.com/ that are designed to connect importers and exporters. You can also browse the websites of companies that sell related goods and see if they list their distributors. But please, whatever you do, don't go to your competitor's websites and approach their distributors. Look for complimentary, rather than competitive brands. If I had a dollar for every time my Arabian distributor was approached by a competitor telling her they can "run circles around Bella Luccè"...well, I'd be so wealthy I wouldn't need Bella Luccè. It's poor form!

 

3. I never, ever enter a distribution arrangement without a contract. I have a general contract that I work off of and then tailor specific details to the region I'm working with. Essentially, I only work with exclusive distributors, which means I am giving you the rights to Bella Luccè within region X for period of time Y. With that understanding, I require annual minimum purchases in order to maintain exclusivity. So my contract covers details such as:

 

• Region covered
• Minimum purchase requirements
• Acceptable methods of payment
• Anticipated lead times
• Acceptable selling venues
• Freight arrangements
• Confidentiality clause
• Explanation of any marketing support provided
• Pricing: is tiered pricing available? How often can pricing be adjusted? Etc.
• Termination terms

 

4. I touched on this on my above answer to nvalue. Essentially, 15-50% off wholesale, which is a mind-boggling percentage off retail. Those margins are tough and require an understanding that you're dealing in volume to make money. I find it especially tricky to manage export costs with handmade products, so I think those of us in the indie beauty industry have to be especially vigilant, but it's certainly possible.

Hola tweetbuddy!

 

1. The European Cosmetics Directive is mid-bogglingly complex, but you can read more about EU labeling requirements here:# http://www.colipa.eu/labelling.html# and here:# http://europa.eu/scadplus/leg/en/lvb/l21191.htm

 

One important thing I believe is worth mentioning: that hip little recycling symbol (known as the Green Dot or Der Grüne Punkt) that you see featured on the links above is actually a protected symbol that must be licensed. I often see it on Indie American products that I am pretty sure aren't of a size to justify all those licensing fees, and unlicensed use is rampant in this country. Essentially, you pay a licensing fee and that fee goes to assist in building recycling efforts inside the EU. That particular recycling logo isn't essential to distribute products in the EU and woe be to those who use it un-licensed.

 

Scroll to the bottom and read more here: http://www.earthodyssey.com/symbols.html

 

The official Der Grüne Punkt website:

 

http://www.gruener-punkt.de/?L=1

 

 

2. Absolutely. The simple fact of the matter is that collecting a bad debt in a foreign country requires significantly greater exertion of resources and energy than collecting on a bad debt domestically. And I really do not have the time to plod around the planet for payment. Therefore, I ask for payment before shipment and accept only bank wires. Wires are more secure (no worries about stolen credit cards routing through Nigeria) and cost $10-20, rather than the 2-3% of the total. When you're talking about a single transaction running tens of thousands of dollars, those savings add up quickly.

 

3. International accounts are responsible for arranging their own shipment. Our Scandinavian distributor works through simple UPS Freight, while our Arabian distributor works through a freight forwarder and brings things in via air and our South Korean agent goes by sea. The options are endless, but I leave the ball in their court when it comes to that decision. We carefully pack and palletize the shipment and provide them with pickup details. They're then responsible for arranging (and paying for) their chosen method of shipment. Knowing a thing or two about shipping internationally helps tremendously, as we are often consulted about what method we think is safest/ most cost efficient/ quickest, but the decision is ultimately theirs.

 

4. I believe this varies, too, according to the nature of the travel and who requests your attendance. I can only speak form personal experience, but I have both paid my own expenses and had my expenses paid. If you're requesting that I come over for a promotional event for your hotel (who is launching our products at your property), I expect you to pick up the tab or at least share expenses. If I am jockey'ing for a big contract, I have to pony up the cash. I attempt to weigh the benefits of such travel (i.e. building my brand and keeping my sanity) vs. the expense of such a trip and go with my gut. As an example, we just finished a Middle Eastern hotel deal that involves opening 17 properties over the next few years throughout the Middle East, India and Africa. I had it written into my contract that the hotel we're working with must put me up for X days and pay all on-property meals, and my agent pays for air travel, so that will be 17 trips at virtually no cost to me, save for my red wine bill. However, the 5 international trips it took to land that deal and bring it to fruition were largely at my expense...such is life. Whatever you do, agree beforehand and get it in writing. That's just smart business...

 

5. This is part of the "marketing support" I touched on this in haywire's Point #3 above. There is where you can get some bargaining power in...when I reach what seems to be an impasse on pricing with a potential distributor, I generally offer to throw in additional samples, catalogues, aprons, POPs, etc. at no cost to them. Whatever you ultimately decide, it should be clearly spelled out in the contract and is up for debate until such time that contract is signed. Good luck!

Sorry I just had to chime in. When setting up a new product or supplier, the motto is "Assume Nothing!" There are many ways to skin a cat, and when it comes to supply chain one's "ship it" may mean "overnight air it". It's okay, act dumb but do your due diligence. Clarifying this up front will avoid deal breakers or a hefty bill later...

nv

DomainDiva,

 

Hi there. I regret to here that your agent in AbuDhabi is aggressive. In my experience, the Arabian culture can be a bit complex and tragically slow-moving in regards to business matters, but is generally friendly in nature. Forgive me, for I don't know the specifics of your particular company or the proposed partnership and I feel like I'd need those in order to provide an answer which would be fruitful for you. I'll give some general advice and then invite you to contact me directly at lela @ bellalucce.com (please remove the spaces) and I'll be happy to assist if possible.

 

I have been to AbuDhabi and find the culture not radically different than in other parts of the Arab world. They may be slow to trust Westerners, but I can personally forgive them that given our troubled political history. You say you've met one of the partners, yet you still feel apprehensive. My guess is that the partner came to you. If so, is this deal large enough to justify your traveling to them? If so, I'd seriously consider it. The quickest and most efficient way to appraise new partnerships is to see them "on their own turf", so to speak. If not, and you'd still like more clarity as to their intentions, I'd politely state as much. Explain why you need the information you seek and respectfully request that they provide it, so that you can work cooperatively towards a productive outcome for all. If they still weren't forthcoming, I'd question whether or not the potential business was worth the risk.

 

Again, it's difficult to adequately answer your query without more details, but I invite you to contact me if I can assist.

Hi David,

 

I'm going to plagiarize myself and copy some text here from my last teleseminar that I did back with Bank of America last October. I believe it's applicable to your query:

 

"I think it's crucial that you be leery of third-party information posted on the internet. I've heard horror stories of small companies who built their entire product base and distribution strategy on faulty regulatory information, which was a tremendous blow that left them at an unfair disadvantage. If you can afford it (but who can in the beginning?), hire an attorney who specializes in this industry- they are out there and are worth their weight in gold. If that's not in budget, look to government sources and reputable trade organizations who can help. For domestic beauty distribution, the Indie Beauty Network (http://smallbusinessonlinecommunity.bankofamerica.com/interstitial-page.jspa?businessUrl=http%3A%2F%2Fwww.indiebeauty.com%2F&referrerUrl=http%3A%2F%2Fsmallbusinessonlinecommunity.bankofamerica.com) has great information, along with a regular call-in show where labeling and legal experts are featured. Membership fees are very manageable and my initial investment at IBN has paid me back in spades. Industry conferences can also be a great source of information...I previously mentioned the HMSG conference will take place in May 2009 and will feature industry experts speaking on this very subject. You can also go direct to the source at http://smallbusinessonlinecommunity.bankofamerica.com/interstitial-page.jspa?businessUrl=http%3A%2F%2Fwww.cfsan.fda.gov%2F~dms%2Fcos-lab1.html&referrerUrl=http%3A%2F%2Fsmallbusinessonlinecommunity.bankofamerica.com or pick up Marie Gale's book on the subject: http://smallbusinessonlinecommunity.bankofamerica.com/interstitial-page.jspa?businessUrl=http%3A%2F%2Fwww.mariegale.com%2Fcosmetic-labeling-book.html&referrerUrl=http%3A%2F%2Fsmallbusinessonlinecommunity.bankofamerica.com .

 

When you start to look internationally, I highly recommend several sources:

 

a) Rethink hiring the attorney mentioned in the above paragraph.
b) Call the embassies of the countries you're interested in exporting to- they can often be quite helpful.
c) Consider membership in trade organizations designed for larger companies. Yes, they have larger price tags, but they very often have databases designed to help their members understand import regulations by country. I am thinking specifically of the IRDB by the Personal Care Products Council. (* http://smallbusinessonlinecommunity.bankofamerica.com/interstitial-page.jspa?businessUrl=http%3A%2F%2Firdb.personalcarecouncil.org%2F&referrerUrl=http%3A%2F%2Fsmallbusinessonlinecommunity.bankofamerica.com* ). Yes, it's spendy but you may well need it if you're serious about export."

 

Some of that information is applicable to the beauty world, but much of it is not industry-specific. Those embassies, in particular, can be a valuable source of complimentary information- reach out to them.

 

Ads far as currencies are concerned, I ask for our wires to be made in US dollars, because I like to keep it simple like that. :)

Hi there Atlas. Thanks for the welcome back- it's always a sure sign that you didn't blow it the first time around and I am forever grateful. :)

 

With regard to country-by-country formulation, we generally aren't faced with reformulation for new distributors. Thank heavens, because I am certain that would be a truly maddening endeavor. More often, we must repackage our original formulations to meet the criteria of each country's specific labeling requirements and that is headache enough. Some countries (The EU, especially) do ban specific ingredients, so it's wise to consider where you'd like to distribute when designing the products initially- saves time and money down the line. As an example, the EU does not allow ANY of these ingredients in cosmetics distributed in any member country: http://ec.europa.eu/enterprise/cosmetics/cosing/index.cfm?fuseaction=search.results&annex=II&search and these ingredients can only be used in specific instances: http://ec.europa.eu/enterprise/cosmetics/cosing/index.cfm?fuseaction=search.results&annex=III&search

 

Bella Luccè does, indeed sell a great many products in the Middle East. It's our second-largest market to date, though we have burgeoning distributorships in Scandinavia, South Korea and Europe. There wasn't any rhyme or reason to our "decision" to run amuck in the Arab world...it's just that our Middle East distributor was our first and is our largest and she's a take-the-ball-and-run-with-it kind of gal, so we got our foot in that region early, just by happenstance.

Hi there OrganicMix,

 

Sometimes I travel to the region and score new finds for raw materials. That's my absolute favorite part of this job. Realistically, though, I work with a network of US-based companies that bring many of these materials in. They often visit our facility to present new materials that have been recently introduced and provide us samples for testing. Also, my distributors have been fabulously helpful in helping me identify and understand local beauty culture and the resources within their region.

Hi Devaney,

 

We manufacture our products domestically. That's my strong preference and I don't foresee Bella Luccè outsourcing production overseas anytime in the near future. A couple of years back, we were engaged in serious talks with a major investor and a deal was put on the table. I ultimately walked away from the deal entirely, because it was contingent on manufacturing our products in China. I had my own control issues and political issues which made that a hurtle I didn't want to jump, but I do know that it can be a successful arrangement. I saw the cost specs on manufacture in China and my jaw dropped- it certainly would have saved us quite a few pennies.

 

Understanding that, for my particular industry, I chose not to go that route and freely admit my bias. However, consider this: when we were in the throes of that deal, I asked if I could travel to China and see the manufacturing plant myself. I was told I'd be welcomed there and it was a good idea, in order to show that we'd done our due diligence in case of a "Kathie Lee Gifford" incident (their words, not mine). However, I was warned that the factory we see may not actually be the factory making our product and that the people I see likely wouldn't be the actual workers. Apparently, they can put on quite a show for American principles making a visit. When I resisted, my potential investors said that, if I go, I've covered my bases and can't control the rest. Unfortunately, that's not how I play ball and I had visions of girls the same ages as my children in backroom at 3am making sugar scrub. I passed and have not regretted that decision one bit...

 

I think outsourcing overseas is a very personal decision, with many pros and cons. At the heart of it, you have to scrutinize what you're personally comfortable accepting in the name of your business. Ultimately, I did what was right for me, but I understand that someone else may make a very different decision. Best of luck in whatever you decide!

Generation,

I don’t travel anywhere without my Laptop and trusty Blackberry. With the Blackberry, I have an international data plan, which is worth every penny. Essentially, I can conduct business from the comfort of a cabana on the Arabian Gulf. There are worse fates in the world…

I have used Skype (www.skype.com) in Europe to minimize telecommunications costs. Essentially the call is routed through the computer and you speak using a headset, all for just pennies a minute. Unfortunately, its banned in parts of the Arab world, so I don’t get to use it as much as I like.

That’s pretty much it. We like to keep things low-tech at Bella Luccè!

Cheryl,

 

Thanks for your question. The regulatory market overseas truly varies by region. A select few countries require jumping through no more hoops than what is needed for beauty products distributed within the US. Others require all sorts of notarized statements, free sale certificates, registered formulas, embassy endorsements, bi-lingual packaging, etc. As noted in my response to David (above), there are organizations out there who can help, but the bulk of the work is on your shoulders, not the distributors. The EU, in my experience, has been the trickiest. In my opinion, global regulations are tightening around the world, and the GCC (Arab countries), in particular, have new rules in the making. No matter where we export, I always assume 6-9 months after signing the contracts until our first shipment is ready and we NEVER ship until we have all the government clearances. The good news is that you generally only have to jump through those hoops once for any given region. Good luck!