International trade, or more importantly exporting, is the one discipline that all governments around the world agree will help them rebalance their economies and bring much needed jobs. Today’s business environment appears to be in a state of shock from the pandemic and lockdowns. And in the UK we have the realisation that Brexit opportunities in the current economic climate are very hard to see. Searching for answers in a crowded space is even harder, but here is a simple step-by-step guide to what you need to know to get to take advantage of a new overseas market.
- Where to go first: Check your website analytics and see who’s looking at your products, look at what your competitors are doing, check trade journals and the press. Use this to develop a list (not too long) to start your basic online research. If you can, ask for help, but if you can’t afford that don’t worry.
- Use this list to think of the following:
- Legal stuff – Do they have the same laws as we do? (around 30% of countries do) Will they respect intellectual property? (if you’re worried, now is the time to research this) Does your protection, i.e. patent, trademark or copyright, cover you for this new market? Best find out now before you start spending too much money.
- Selling – How do the buy in the new market? Sounds odd, but in the UK we’re used to distributors, wholesalers, and dealers, but some markets use agents and no distributors. Countries have various routes to market so, for the sake of your market research, you need to understand how your potential customers expect to buy – and pay.
- Language – Do you have any native language speakers in your business? Even the USA has some strange usage of the English language. If you don’t, you may need to include translation or interpretation costs in your budget.
- Currency – The main currencies traded are US dollars, Euros, Yen and Pounds Sterling. Some countries have restrictive or controlled currencies which might mean you need to check with your bank before negotiating the final deal you agree. There is a cost to dealing in different currencies but there are ways of mitigating the costs, or certainly reducing the risks, but you need to know when you agree your price what those costs may be.
- Packaging – Your current method of packing your product may work perfectly well when it’s delivered within the UK but once it starts travelling further, being loaded on to ships or aircraft, (having watched a cargo handler meticulously hurl cartons on to an aircraft in Prague! you may need to take advice on how to protect your goods. Making a one-off export sale may not be too bad, but to sustain a good relationship in a new market the goods must arrive in good order.
- Pricing – Think about all the above and then remember that everything takes three times longer than anticipated and that always adds to the cost.
- Service – If you sell a product that needs support in anyway it’s best to think about how that might be achieved. No one likes to ring a Customer Service number in another country. Consider if you can negotiate a service element to your distribution agreement to help tide you over until you can establish a presence in the market as a support for your new customers?
- Promotion – Messaging in the home market is hard enough but even more difficulty when dealing with an overseas customer. How does your new market likes to be spoken to? You can have the best social media campaign in the world but it will be totally wasted if your customer mainly reads magazines, so use the media they are most comfortable with. Also, the British like quirky, humorous campaigns that don’t always translate into a new market. Play it safe unless you have researched the efficacy of a given message. It takes a long time to build a reputation and starting badly is not good for your new market at all.
- People – The people you chose to work for you are, by extension, part of your brand messaging. Selecting the right people is hard, but they are the front line in your new market, so it’s important to recruit ones who project the right image and approach. e.g. if you are a young dynamic company, you know who you need, just as a traditional country sports brand understands who represents them best. Image is everything
- Delivery – Finally, ensuring that the delivery choices you make satisfy your customers’ needs and that final mile to their door. Never over-promise and under-deliver, but work and build strong relationships with good quality delivery companies and freight forwarders. They will look after those details that you need covered to ensure the right paperwork travels with the goods, that any border crossings are fast and that your customer in your new market will order again.
Once you’ve carefully considered your business, and the possible markets in the context of this list, you will have a short list of those to be explored more thoroughly.
So, now you have the basics of what’s needed to enter a new export market -it’s easy when you know how! For more advice, or to attend one of our Export Boot Camps and work through the processes with experts who hold over 75 years of experience. Find out more at www.exportbootcamps.com – specialist workshops for busy people.
So, what are they doing? Looking at alternative markets and trying to assess the potential to engage with our Commonwealth or South America? No, we appear to be in the early stages of working out where to source raw materials and how to understand the rules of origin that impact on all imports and exports alike. Imports, as it dictated how much duty will be levied and Exports, as it makes it difficult to compete if your product attracts a higher tariff. HMRC are calling for training to fill the 50k customs clearance clerks needed but are not coming up with new ideas as to how to get these up and running. We do need more people to understand customs, but we also need more businesses to understand how trade works in context not the silos that we tend to operate in. The silos Legal compliance, Finance, Marketing, Sales, Production and logistics.
Financing of exports or imports demands an understanding of the contractual commitment as well as the way in which the money should be collected. For example, the International Chamber of Commerce has launched its latest version of Incoterms® 2020 but the take up is low in comparison with other markets and, when you look at why this happens, it seems that our businesses are not working with contracts to cover the arrangements they make. This is further obfuscated by the lack of any terms and conditions, highlighted neatly by the Brexit Ferry incident but, a worrying trend as businesses are encouraged to operate into new exotic markets. Those being encouraged to trade internationally need to look at how they trade and on what terms as part of their research to ensure that they are not compromised by a loophole or due diligence issues that could have been mitigated.
With the government message of ‘If I can, you can,’ we need to be sure that the ease of trading this infers isn’t similar to the assertion that Free Trade Agreements would be the ‘easiest in history’. Businesses need to understand that international trade is a discipline that is complex and needs training linked with solid experience to bring us up to the standard of the other great exporting countries. We may also need to start looking at what others do, Germany, Italy, Japan or even France to see how they succeed and what we can learn from them. Recently, I visited Germany and saw the way in which the Chamber of Commerce there supported businesses in terms of exports and most importantly, promoted *Apprenticeship schemes helping local companies to match with a speed dating style event held at the local university. If these are the people we no longer trade with that’s fine but, one of the first things we do in terms of international marketing is analyse what the competition is doing.
Waiting for something to happen is no longer an option – we need to take time to find out what we don’t know and make sure we understand how to fill these knowledge gaps, now. Experts have a value and having a stab at something as important as international trade to your company and to the economic welfare of the country is not an option.
Talk to us ………..
*(Despite years of pushing from the IOE there is no apprenticeship in international trade.)