Ten Speed Bumps on the Export Superhighway

Posted on 06. Apr, 2011 by Administrator in Economy

There are more consultants claiming to be experts in export marketing than in any other sub-specialty of marketing. Unfortunately, many of them have never lived or worked overseas or even speak another language. Their wisdom comes from college textbooks and courses on marketing theory. Many have never met a payroll or owned a small business. With all this second-hand wisdom, it’s easy to understand the old saying, “A man who borrows his opinions can seldom repay his debts.” That aside, why export? Isn’t it better to be satisfied with expanding your sales in the U.S.? The short answer may be yes, but the smart money says no. If you’re not convinced that exporting will help you (or you don’t have the capability to export) than you probably shouldn’t. However, if you want to grow your business with export sales and create another revenue stream, then you should most definitely consider it.

Speed bump # 1. Get over your fear of exporting

This is easier said than done, but it can be – and must be – done before you go any further. Ignoring the opportunities inherent in exporting is the same as not doing anything at all. Fear cannot live in an environment of knowledge. That’s why you must become familiar with the world’s markets and seek the company of experienced exporters and professional consultants.

Speed bump #2. How do I morph into an exporting company?

One of the big secrets of building a successful exporting company is first building a successful company. If you are not successful selling domestically, you will probably not be successful selling overseas. Start by doing an assessment of your company’s strengths. Where are you strongest and weakest? How can you shore up the weak spots? Call your key people together from all departments: production, transportation, accounting and marketing. Tell them you’re considering producing for export markets and that you want their input. Then listen, carefully.

Speed bump #3. Should I engage a foreign agent or sell directly to the end-user?

This decision must be based on an evaluation of which foreign market(s) you’ve chosen, prevailing practices for competing products, regulations concerning foreign representatives and your own preferences. Some companies are capable of selling directly to end-users in faraway countries (Dell Computers, for example), but most small companies need a solution that is less resource-intensive. The choice is yours, but you will need to get good market intelligence before you make it.

Speed bump #4. How do I choose the right market?

The operative word here is, right. Anybody can help you choose a market, but choosing the absolute right one is a task best left to someone who knows international markets, intimately. A good way to narrow your search is through good research. Find the part of the world where your competition is located or where competitive products are being sold. Get the sales statistics by countries of origin, tariff rates, typical markups, pricing (wholesale and retail), agents’ commissions, and any/all government regulations concerning product certification and testing before you make up your mind to pursue that market.

Speed bump #5. No plan is a bad plan.

If you don’t know where you’re going, any road will take you there, just like a company without a good plan is a surefire recipe for disaster. Do yourself a favor and make a plan by combining your research with information on a few, likely, target markets and figure out your overseas costs for sales & marketing (new labeling, sales literature and advertising), shipping, distribution, dealer support, commissions and fees. Add in your desired net profit margin, and see if your price matches your competitors’. If it doesn’t, you better have a superior product with an obvious competitive advantage or you’ll need to rethink your costs.

Speed bump #6. A banker in time saves nine.

Before you go any further with your export plan, do something everyone should do and show it to your banker. Get his/her opinion on your intentions. This will do three things:

1.) It will show that you are a serious business customer;
2.) It will reveal how astute your banker is to the ways of exporting, and
3.) It will legitimize your efforts with your stakeholders.

Be ready for some good questions, however, especially if your banker is interested in your plan. Banks can also be helpful with letters of credit and with other alternative financing opportunities, so it is wise to include them in your thinking early on.

Speed bump #7. Take a deep breath at home and exhale overseas.

If you have the money and the time, try to schedule a visit to your chosen market, but before you go, gather your product information (and samples, if possible) and take them with you. Know why you’re going (to gather additional market research; to scout retail or distribution centers; to meet with U.S. Embassy Commercial Officers or to interview potential agents, just to name a few).

Speed bump #8. A contract is a contract, or is it?

You’ve made your trip and checked out the market. You’ve observed how business is done, and you’ve chosen a likely agent. Now is the time to formalize the relationship. Your potential agent has suggested that he prepare a sample agreement, and you agree. Three weeks later, you get an envelope with a thick sheaf of papers. On the last page, the agent has neatly noted where you can sign. Do you? Of course not, not before your lawyer sees it. Fortunately, you obtained a sample agent’s agreement from the local American Chamber of Commerce and one from the host country’s Agents’ Association, so you are prepared. You pack them up along with the agent’s suggested contract and send them off to your lawyer. Good thing, too, because two weeks later, you get it back, filled with red lines and suggestions in the margins. You have just been saved from making a big (but common) mistake, trusting too much too soon.

Speed bump #9. Cultural sensitivity isn’t born; it’s bred.

Cultural sensitivity is necessary for all exporters, whether you want to walk the overseas corridors of power, sit in their boardrooms or occupy space on their retail shelves. Cultural sensitivity is an art and a science, and while it’s not learned overnight, anyone can master the basics after a few lessons from a professional. Once you’ve learned how to be culturally sensitive in your market (this is more than just ‘political correctness’ as we know it in the U.S.), you will have prepared yourself to take the next important steps on the export superhighway!

Speed bump #10. Communication, communication, communication

Nothing can replace good communication except more of the same. Successful exporters must not only know what to say, but how to say it to a wide variety of audiences: sales representatives, agents, distributors, store owners, customers, government officials, consumer groups, the media, etc. Sometimes your messages can be crafted in English.

That’s the good news. The bad news is that their English is not always our English. It can be the Australians’, the British’, the Canadians’, the Indians’ or others who have English as one of their principal languages. Often, our messages will need to be translated into foreign languages. This is where the services of a truly bi-lingual professional marketing person with experience in the country are invaluable. While we’re on the subject of communication, please remember to respond to all foreign inquiries that cross your desk. In my 25 years of working with foreign companies, the most common complaint about American businesses was, “They never respond to my inquiries. Finally, after two or three tries, we gave up.” That, my friends, is one of the reasons we have a trade deficit.

A final thought

Remember, speed bumps are there for a reason. They give us time to look around. By slowing down, we become more observant, and these observations help us form new opinions of the neighborhood and the people who live there. And that’s something that’s good for all of us whether the street is in New Delhi or New Mexico.

Stephan Helgesen spent 20 years as an American diplomat working overseas helping American companies become successful in foreign markets. He is Honorary Consul for Germany and CEO of his own Albuquerque-based high-tech consultancy company, 2nd Opinion Marketing & Communications.

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