I feel that today everybody is aware of the advantages derived from exporting: spreading risk; increasing turnover; reduction of manufacturing costs; larger pool of business opportunities; keeping up to date with developments in your industry and improving your image and prestige with existing clients.
The pressure we are under to sell may make a lot of people believe that exports are a short term solution. However, the reality is that for it to be a beneficial and profitable strategy, the whole organisation must understand that the ROI will only start in the medium or long term. How long are we talking about? It is not realistic to expect real returns in less than 3 years so a certain financial cushion is absolutely essential.
For novel exporters the “where are they” and “how to approach them” are facets that stump many: choosing the wrong country or channel can be a very expansive mistake. The groundwork in preparing your strategy is of paramount importance. In order to prioritise markets, it is important to remember that, apart from knowing simple import/export statistics and ratios, you also need to study customs tariffs, what countries are importing your product, where it is being exported. Other factors to be weighed up include: distance; cultural affinity, non-tariff barriers; language, etc.
The “how to approach them” can be summarised as: which of the different channels is the most suitable to your product? Selling solar panels, consumer electronics or professional audio, for example, require different channels as much as the local idiosyncrasies in Brazil, Germany or the USA will influence the decision. Local distributors, importers, software integrators, manufacturers’ agents all have a ready-made market which would take you years to build up. They already have a reputation on their local market and the confidence of their clients.
It is, therefore, essential to contact those companies or persons who wish to incorporate your product into their current portfolio. This is, more often than not, easier said than done. Some of these figures are not to be found without difficulty if you do not have the tools nor the know-how to smoke them out of the woodwork. Once you have reached an agreement with your partner, careful and diligent management will lead to the sales that are, after all, the point of the exercise. One cannot place too much emphasis on a rigorous selection, a scrupulous negotiation process, a thorough initial product training and joint visits to clients on a regular basis. This will give your partner confidence in your commitment from the start, persuade him of your proactivity and will make follow-up more productive.
Summing up, success in your international ventures means:
- Do not pile into the first market you hear about on the grapevine. DO your homework!
- Choose your products carefully and make sure they comply with local regulations, standards and tastes.
- Pricing policy: what is the market standard? What prices does the competition apply in that market?
- Make sure you choose the correct partner first time round: Agent or Distributor? Be very rigorous in the selection. Do not take on the first distributor who comes on to your stand at a fair. Find out who else operates in the market.
- Seek legal advice before signing contracts.
- Make follow-up proactive, do not just react to falling sales. How long has it been since you made joint visits with your distributor?