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So you have a great product that you and your customers love, and you think everybody all over the world would love it too. What next?
Business owners looking to expand their businesses overseas might target a foreign market where people speak their native language or where they have family. “Identify places you have a natural affinity for or experience in, or where there is a proven demand for their products and services,” says Leila Aridi Afas, director for export promotion, U.S. Trade and Development Agency, headquartered in Arlington, Va.
Afas says that in addition to choosing a place that is a personal fit, it is also important to take a look at the market conditions in that country because they could have a significant impact on people’s ability and desire to purchase the product. “There’s a tremendous amount of research available through the federal government,” Afas says. She points to the U.S. Census Bureau’s Foreign Trade data as a little known but very helpful resource that potential exporters can use to understand what products might be successful in certain countries.
— Mark V. Brimelow, president and chief executive, International Business Marketing
In addition, the U.S. Department of Commerce’s Foreign Commercial Service provides country guides that business owners can use to research helpful specifics, such as a country’s long-term energy plans or its infrastructure development plans. “By understanding a country’s infrastructure development plans, a company can determine what investments that country intends to make over the near and long term,” Afas says. “With this market intelligence, companies can position themselves to benefit from the procurement opportunities that will result from implementation of those development plans.”
There’s also the Department of Commerce’s Gold Key Matching Service, which helps exporters locate and screen prospective trade partners, among other services.
Mark V. Brimelow, president and chief executive, International Business Marketing, a trade consultancy based in Vancouver, Wash., says that the U.S. Department of Commerce and U.S. Department of Agriculture also offer good programs that can assist small business owners who want to expand into international markets.
He says the U.S. government is great for helping export businesses get started. However, he cautions that it is less helpful in aiding business growth over the long run. “It’s a nice starting-off process,” Brimelow says. “But they won’t manage the sales process or logistics.” He suggests dealing with a trade professional — such as a local branding expert, a sales growth specialist or even an export management company — who will help provide a long-term spectrum of services.
For smaller companies on a tight budget, Brimelow recommends conducting research to learn about the culture, buying habits, growth opportunities, customer preferences and other factors that will impact sales in a foreign market. In particular, he says university libraries are good places to conduct research. “For example, if you’re going to sell honey into a region, you need to know if people eat a lot of honey,” he says. “Also, does it need to be Kosher or Halal certified? You need to understand the market before you enter into it for sure.”
It’s also important to understand a country’s local and national politics, which can affect a product’s future success. Local newspapers accessed online are a great resource, Brimelow says.
Business owners should look at countries not only as a whole, but also regionally. “For example, in Mexico, if a distributor says, ‘We cover all of Mexico,’ I don’t believe that for one second that they would be truly effective due to the transportation issues and pure diversity of regions,” Brimelow says. “The same is true in relation to distributing into the China market — not one distributor covers the whole country. A company needs to do its due diligence, choose their product selection wisely, take the steps to make products regulatory compliant to specific laws and finally launch effectively.”
It’s important, as well, for companies to first ensure their products and services will be a good fit by identifying local tastes and preferences. For example, Brimelow says the business shouldn’t choose bread or some other generic product to sell into a market like Cambodia. Instead, he recommends picking a specialized, culturally relevant item. “Try rice wafers, perhaps,” he says. “They would love it.”
Other criteria companies should look at include pricing and competitiveness. Before going into a foreign market, Afas recommends that companies “look at the pricing in the host country and make sure they’re competitive.”
An international business owner will also need to be mindful of how domestic and foreign currency value will impact their costs in the present and future. By working with a trusted online foreign exchange provider that offers helpful resources, expertise and insights, it’s possible to develop strategies that can maximize opportunities when currency value is favorable and minimize risks when currency value works against a business.
When a business branches out into other countries, it’s possible to tap into a multitude of opportunities to grow revenue, and ultimately, profits. By conducting research at the outset, business owners can position themselves to reap more of the benefits while keeping many of the risks at bay.
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