Expanding overseas is an easier process than it used to be, and it’s also a good time for CEOs to tap into emerging markets. According to the International Trade Administration, 70% of the purchasing power of consumers is outside the U.S., and medium and small-sized businesses need to realize their untapped export potential.
However, exporting comes with its own set of challenges, and without the right approach and information, anyone looking to tap the overseas market can face difficulties. Here are some considerations that will aid the process:
1. Language
Language is still a major issue in countries like China. Speaking in good native language leads to better business engagement, so translation plays a huge role. Companies with tight budgets may be tempted to use resources such as an automated translation machine or a translation app, but they often result in errors and can cause harm to the reputation of the company.
However, cost effective and scalable alternatives are available. For example, consultant companies like Ego International have the resources to surpass language issues and ensure proper development of export initiative. Such companies also advise businesses and ensure that their brand doesn’t face rejection.
Likewise, natives that origin from the potential markets can be hired to speak the language of new customers as internees, but it is important to note that it can be a daunting task to find natives of different countries. Their absence can also cause limited communication and loss of business.
2. Connections
It is important to establish connections with buyers in the targeted country. The rise of social media has eased the process of searching for prospective buyers. For example, LinkedIn offers a great way to connect to company CEOs directly through their InMail feature.
Another way to make connections is to attend trade show relevant to the business. A lot of foreign businessmen attend trade shows and exhibitions each year.
However, the best way to make contacts is to travel the export market itself. This is important as it also gives a chance for competitor and customer analysis. Also, nothing beats face to face networking (not even social media).
3. Human capital
Export can be considered as a separate business itself, and companies looking to sell offshore would need additional human capital to streamline the process.
The current staff can only do so much as they have to handle existing operations as well. Therefore, additional employees will be required to handle paperwork such as tariffs, taxes, currency exchanges etc.
Employees may also be needed in the country of export interest. Company CEOs can learn from tech giant Apple in this case because the Cupertino company went on a hiring spree in China before launching iPhone 5c – the handset expected to increase Apple’s market share in the country.
4. Payment and distribution options
It would be wise to explore all payment options before diving into the export business. This is because they can act as barriers to entry in the end.
For instance, there’s no convenience of PayPal payments in China, so a U.S. company looking to sell digital services would have to explore alternative payment options.
The most common way to pay is through Letters of Credit (LC’s). This form of payment removes the risk because banks assure that the goods reach the buyer before the transaction completes.
These tips will help you to prepare for an export business. Feel free to leave comments or queries.