Across the globe, “trade flows have generally grown faster than income since the Second World War, [and] countries’ openness and their exposure to external developments have increased.”
Despite gloomy news predicting that British politician George Osborne will fail to meet his ambitious target of doubling British exports by 2020, export levels have risen since 2010 and are set to top £600 billion ($938 billion) by the end of the decade. The U.S. international trade deficit in goods and services decreased to $43.4 billion in October from $43.6 billion in September (revised), as exports increased more than imports.
As a result, coupled with the inevitable entry of new businesses into the marketplace, it’s reasonable to expect that many British companies will become first-time exporters.
Expanding into new markets while creating strong partnerships with local distributors can be pivotal to success; ensuring the right products are marketed to the right people in the right way. Creating the right relationships can stop businesses from making costly mistakes that could threaten their stability and cash flow.
Before you expand into a new market it’s vital to gain a thorough understanding to avoid pouring resources into an area that’s either uninterested or unsuitable. At the extreme end of the scale this could mean avoiding areas in a country or region that are prone to civil unrest or extreme weather conditions, both of which could seriously disrupt supply chains or result in damage to stock or equipment.
Local partners can help you gain an understanding of taxes, customs regulations and labor laws. Having a local partner from the start can ensure that you have a realistic idea of the cost of doing business in a country. This avoids unsustainable operations that don’t turn sufficient profit and grossly underestimated operating expenses, which can negatively impact cash flow.
On a more product-focused level a local partner can help you see if your product integrates with local demand. If exporters get this right at the beginning it saves them headaches associated with long, and possibly costly, processes of refining and adapting their offerings. Although companies can do desk-based research beforehand, in some areas of the world, such as China, a major target for Western exporters, it can be notoriously difficult to obtain accurate information this way.
When companies are reshoring production they can attest to supply chain reliability as a major motivating factor driving these decisions. Choosing a local partner who can oversee the regional supply chain makes solid business sense. Companies should also ensure they have a comprehensive insurance in place for every stage of the supply chain.
Beyond the mechanics of establishing an overseas supply chain and distribution base, successful exporting requires a marketing campaign, which can become a trap for the unsuspecting entrepreneur. Even large brands make blunders when marketing and advertising in new regions, which can range from severely embarrassing to destroying a product’s viability.
When KFC first launched in China they translated their ‘Finger lickin’ good’ slogan as the rather less appetizing ‘Eat your fingers off’. Schweppes didn’t do any better when they started selling their tonic water in Italy, mistakenly calling it toilet water.
A local partner can easily spot dramatic mistakes like these; as well more subtle ones in terms of tone and nuance, as they better understand which qualities and features are desirable and how to present them.
Finding the right partner is essential. They need to be trustworthy, reputable, understand the product, appreciate the local market and have excellent communication and language skills. Every country offers resources and events dealing with exporting and trade nuances. For instance, The British Business UK Trade & Investment (UKTI) runs regular events around the country, while World Expos are opportunities to meet with several potential local partners at once. Local embassies and trade missions can also provide useful contacts.
This article has been edited and condensed.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.