FIVE STEPS TO TAKING YOUR PRODUCTS TO FOREIGN MARKETS
Big companies are not the only ones that can benefit from taking their products to foreign markets. Small and medium size companies can also benefit from selling outside of the United States. In fact, the most common reasons for deciding when it is a good time to look for foreign markets to sell your products or services are: 1) when domestic markets are either getting saturated with your products or similar ones; 2) when you are facing an extremely competitive local environment; or 3) when you are facing a declining product life cycle locally.
However, keep in mind that while the growth opportunities that can be accrued by taking your products to markets outside of the United States are considerable, so are the challenges. Cultural and language issues, government regulations, local competition, travel related costs, duties, freight, exchange rates, package/language requirements, and more are just but a few of the hurdles you can expect when trying to sell your products overseas.
The following five steps should help you determine how to move forward and make you international sales efforts a rewarding and profitable experience.
First Step — Decide whether your products or services have a market in other countries. This is not an easy feat to accomplish since in all likelihoods it will require some initial travelling in order to gage the likelihood of your success. You can start out by attending trade shows in foreign venues, during which you can walk around and gain some intelligence regarding who the local and even global players are and the products they offer or buy. Ideally, you should be able to get price lists, catalogs, and have the opportunity to speak directly with companies that could be your customers or your competition.
Very possibly you could come across potential customers or business partners that you can arrange to visit at a later date on their home turf. Once you gain some confidence in the viability of your product offering, you might decide it is worthwhile to not just visit a trade show, but actually get a booth and participate as an exhibitor.
You should be able to find a trade show for every category of business imaginable in many different countries. This website is a great resource for matching business sectors with corresponding trade show venues worldwide. http://www.expodatabase.com/international-trade-shows/
Second Step — Learn about what it takes to do business internationally. Become familiar with International Commercial Terms or Incoterms. Also, ask yourself the following questions: Should I assign one or two senior employees to handle the international effort or should I do all of it myself — at least initially? Should I hire an export sales person? Do our logistic people know how to ship internationally? Do we need to make changes to or do special training for our existing customer service department and personnel? If you are in the consumer packaged goods industry, the probability of having to make language, weights and measures changes to your existing products is high. What are the steps needed to go about making these product and package changes once they become necessary?
Understand that you will be dealing with different cultures, laws, regulations, mind-sets, currencies, safety concerns, and financial institutions. Fortunately, you can research all of these different concerns on-line. From a cultural perspective, it is recommended that you read about Geert Hofstede five cultural dimensions, Trompenaars and Hampden-Turner’s seven cultural dimensions, and Edward T. Hall’s High-Context / Low-Context Intercultural Communication Theory. All of these theories and cultural dimensions sound complicated, but they are really not. Once you read the articles connected to the links provided above, you will have a very good understanding of the difference between our culture and others you are likely to encounter.
Third Step — Once you are ready to dig a little deeper and you feel you are ready to take your first step, don’t overextend yourself. Pick one or two small countries on your first go-round, where mistakes will not be overly costly. It is also recommended that you initially target countries that are not too far away. Finally, don’t choose countries with exotic cultures where one seemingly insignificant misunderstanding can harm any future business transactions.
Good countries to start out with are Puerto Rico (although it is U.S. territory, it does present some challenges due to different rules and regulations than in the continental U.S.), Costa Rica, Panama, selected cities in Mexico, the Dominican Republic, and some of the larger Caribbean islands. Because of the similarities between the U.S. and Canada as well as both countries being NAFTA signatories, a visit to our neighbor to the north could be worthwhile.
After you gain additional experience and are able to modify your products, processes and services to meet the needs of foreign markets, you can begin the process of looking for larger and wealthier countries to penetrate.
Fourth Step — Understand the different ways to enter foreign markets. The following are strategies that companies should consider:
· developing of local manufacturing, assembly, or local sales or service establishment
· licensing or franchising to a company in the host nation
· establishing a joint venture with a local company
· establishing a new wholly owned subsidiary
· acquiring an established enterprise
Most small to medium size companies start by exporting. As they gain more experience and their products or services gain acceptance, they adapt other market entry strategies to fit their growth needs.
Make your decision on which of the above mentioned entry strategies to use based on the following criteria:
· transport costs
· political risks
· economic risks
· firm’s short, medium and long term strategy
Fifth Step — Finally, and most importantly the U.S. DEPARTMENT OF COMMERCE CAN HELP, as they offer various services for fairly nominal fees that can help American companies find overseas distributors, retailers, commission sales representatives as well as conduct market research efforts and overseas promotional events. The following are some of the services the U.S. Dept. of Commerce — Export Assistance Dept. offers American companies:
· Gold Key Service — This is a match making service which uses a network of local commercial trade specialists that work to match American companies with local distributors, wholesalers, retailers or commission sales reps. The service vets and arranges meetings with interested partners.
· International Partner Search — This service helps you find potential agents, distributors or other strategic partners overseas.
· Trade Leads — A service that allows to find the latest export opportunities and government tenders in overseas markets.
· Export Guides — This service provides the most up-to-date global trade information for American companies. It helps you get started with export basics.
· Promote and Expand Service — This service helps your brand awareness and market exposure in countries around the world. Find and establish relationships with potential overseas business partners.
· Single Company Promotion — Get help from product launches to technical seminars. Trade specialists will help you organize a promotional event to reach a target audience of clients and key decision-makers in markets around the world.