Mike Josypenko, Director of Special Projects for the Institute of Export shares his tips for assessing international demand for your products and services.
Am I ready to export?
When looking to start exporting your business, the ideal situation is that there is demand for your product or service in its current format, meaning you only have to make minor adjustments – tailoring packaging, for example. However, more serious adaptations may be needed, either in terms of style or regulatory restrictions. It’s harder when you have to create a new market for a completely unknown product or service. This frequently leads to high marketing costs and a lower chance of success.
One way to access the potential initially is to look at your competitors. Are you surrounded by competitors that trade their products or services internationally while you’re left trading at home?
Planning to export
It’s important to go in with your eyes open when selecting overseas markets so perform a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis at the outset to look at the various factors which will affect your decision. You may have a demand in principle for your product but that could be undermined by a number of factors. For example:
- If you have a low cost product with high transport costs, you’re going to be at a disadvantage compared to local players
- There may be high levels of import duty which again will put you at a competitive disadvantage
- There could be issues around compatibility with local markets such as size measurement; for example, the USA largely still works in imperial measurements and such issues need to be highlighted early on
- There may be regulatory issues around product standards or testing requirements
- There may be restrictions due to import licensing and controls on the amount of products that can be imported into a country (you can read more about this in our article about controlled or licensed products).
All of the above need to be considered as part of the overall picture.
Researching your market properly is a key step in the exporting process – Lesley’s article on the five things to research when selecting a market will also be useful for this.
Resources you need to export
Some basic things need to be in place before you begin to export. These include:
- The physical capability and finances to scale up productivity in response to new orders
- Administrative and sales infrastructure
- A sales channel, either direct or through partners (our article on international sales channels explains the different options you have)
- The time and energy to visit new markets several times before exporting
- A website that is optimised for international trade – don’t just use Google language translation. (Our webinar on taking your website and digital marketing global provides plenty of practical advice for this.)
When considering new markets, my advice is not to spread yourself too thinly. It is often best to choose just one or two markets and concentrate on them.
The next key decision factors to look at are pricing, (incorporating exchange rate fluctuations), business culture, language and protecting your intellectual property. These vary according to market, so there’s no generic advice. However, many questions about these areas are already answered on the Open to Export discussion boards by people who have been there and lived to tell the tale!
Trade and exporting experts have also written articles on Open to Export about getting paid, understanding cultural differences between markets, the role of translation in new markets and some of the dos and don’ts of managing IP overseas, so read these for further guidance.