As we start to re-build the UK economy, many businesses in our Region have been spending the last few months re-assessing their current business model and looking at opportunities for growing their business as we come out of the Covid-19 lockdown.
Trading internationally may not be the first thought and yet for some local businesses, it could in fact be one way of securing a long term future. But only if done properly.
As we’ve said before, planning is the key to success. Being proactive and hunting down business rather than waiting for it to find a path to your door, is unquestionably, the way forward in these uncertain times.
Although Brexit and Covid-19 might encourage businesses to batten down the hatches, this short term solution means we will simply continue to do what we’ve always done and then be surprised to find that we get the results we always got.
What if we can use this current trading lull to our advantage and look further and wider than our present customer base? There are, after all, 195 UN recognised countries in the world – all open for business.
We’ve been working with local businesses for many years, establishing systems that enable them to successfully export their goods or services around the world, or import goods or raw material. In that time, we have developed a good nose for what works and how to do it.
You want to get into exporting, but where do you start?
Here, we take a more in depth look at 6 key points to help define if there is an overseas market for your business.
1. Is there a potential overseas demand for your product?
The first thing to consider is have you got a product or service that has a potential demand overseas? Just because you have indigenous customers does not necessarily mean this will translate into global customers.
Do your research. Unlike the days when the British Overseas Trade Board (exp. 1988) would take days, sometimes weeks, to supply territory information, today the Internet enables us to undertake secondary market research in minutes.
It’s also understandable that most businesses would tend to look first at countries that speak English. We believe, however, that looking at countries that have a potential high consumption / need for your product or service is much more appropriate.
For example, if you are involved in cutting edge technology, or have a specialist knowledge that could be welcomed by developing nations, then targeting your research will save time and money.
2. Is there a definite overseas demand for your product?
And we don’t mean, ‘yes, they use what we make over there’. Rather, can your product compete with locally produced items or cheap imported ones? Are there trade barriers such as tariffs or commercial restrictions in place? Is there an established distribution channel you can tap into?
3. Make sure you have a clear understanding of the overseas market
Every country is different. Even the EU, a seemingly homogeneous entity, has different rules and taxes. For example, VAT can range from 17% in Luxembourg to 27% in Hungary. This means that should the UK end up with a ‘no deal’ Brexit then we will not be part of the EU VAT customs union – resulting in different paperwork and other admin changes.
On the other hand, we believe that the move from free trade to full customs application with the EU, is another incentive for us to consider global markets. For example, Southeast Asia – an area we know well, has a combined population of around 645m people. It’s a massively untapped market for most British businesses and yet has the potential to be a major and profitable route to market for many UK Firms.
It’s the third fastest growing region in the world, attracts more foreign inward investment than China, and ASAEN(Association of Southeast Asian Nations) is the World’s fourth largest single market after the EU, US, and China. It’s also an area where ‘Made in Britain’ is highly valued.
Despite the impact of Covid-19, the message is clearly ‘we’re open for business’. A great example of this is Malaysia. With a growing population of over 30m consumers, the country offers UK exporters an opportunity to trade with a largely English speaking community, especially in the fields of education, technology, and healthcare.
However, despite the apparent demand for UK products and services, as with all business dealings, it’s all about relationships. This is especially important in regions where religion and culture play a major role. For example, in the UK, Europe and USA our culture is more transactional, with an individualistic approach to the person, whereas in Asia, South America and the Middle East, it’s all about relationships.
4. Get help!
Although there is a plethora of advice and information that can be found, nothing is better than engaging someone who knows the local rules of engagement in the target market. You don’t visit a car showroom to buy a bike.
This could be a local agent or representative, or a consultant / partner (like Mosaic International) who has a wide knowledge of local laws, taxes, copyright and IP, and accountancy. It’s also worth remembering that, in some countries, such as China, you can only trade through a local partner.
As each country has its own culture, a UK based consultant can help tailor your product and message to that territory. It’s a global market and that means increased competition, so the more ‘local’ you can make your product or service the more you will resonate with the customer.
What’s red and white and sold all over?
Coca-Cola is a good example of what’s known as chameleon marketing. The core product may look standard, but the localisation of the product can be seen in its packaging, advertising, and content. This is why Coke is entrenched in the psyche of the most countries.
You may not be a behemoth soft drinks company, but the point is that localising your product or service in terms of language, laws and payment terms can make the difference between success and failure.
5. Know your distribution channels
Today, there are a myriad of ways to get your product or service to market – and quickly. Knowledge transfer can now easily be undertaken via inexpensive video conferencing, and with a well-established global distribution network, products can be shipped around the world in days.
It is important, however, to determine what best suits your business model. As we said, it’s a global market and competition in most non-niche sectors will be fierce.
If you are considering exporting, you are not alone. According to the UK government , around 10% of all SME’s now export, with large business exports increasing by 6% to 3,500 Firms (41.7% of all large businesses)
6. Plan, plan, plan
If you feel you have a strong product or service that can compete overseas, now is a good time to consider exporting. Do your research and use some of your down time to discover more about the culture and market of specific targeted countries.
Get to know how the market works in your chosen territory. Is it based on price, quality, availability, reputation? Identify your most appropriate product or service and start with that rather than overwhelming and possibly confusing the market. Understand your direct and indirect competition and the speed at which they can adapt and enter the market.
Plan a marketing strategy. Will it be a different message in each territory? For example, Proctor & Gamble use 20 different names for their detergent products. ‘Tide’ in Russia is completely different to that sold in the UK.
Decide your distribution channel. Will it be available from local sources, direct to end user, via your ecommerce website, using a 3rd party fulfilment house or by a franchise operation?
Produce a strategic plan. Analysing the market(s) and creating an action plan is something we strongly recommend. This should always include a PEST (Political / Economic / Social / Technological) and SWOT (Strengths / Weaknesses / Opportunities / Threats) analysis.
We don’t underestimate that expanding overseas can be a challenge (no-one said it was easy), however, it can and does open opportunities that are just waiting to be explored.
Still not sure if international business is for you?
We can help you with a free opportunity evaluation. Just drop us a line on 07885 784783 or firstname.lastname@example.org and we can help get you moving in the right direction.