The article I am publishing today is about the most common mistakes exporters make and it is the result of years of experience with exporters that managed to be successful on new markets as well as exporters who failed before even properly beginning. To a certain degree, the difference between success and failure lies in attitude, and I will develop this idea further by drawing on my own good and bad experiences with exporters.
1. Be prepared to do more than initially envisaged!
One of the most common attitudes among bad exporters is to look only for easy markets that promise a good quick turnover and substantial guarantees. The trouble is…these kinds of markets are very rare if they exist at all. A good exporter needs to be flexible and recognise that a better option, which implies a bit more work, might emerge from researching a particular market. For example, if you sell paper cups and are interested to find online shops in other countries to sell your stuff, as one of my former clients wanted, you might have to adapt your strategy or be pleased with a low return. In his case, the best option would have been to partner with a local producer and develop properly in the initial market (Romania) and then establish channels to get into the neighbouring markets (together with its neighbouring countries the exporter would have had access from Romania to a 100 million consumer market). The exporter would have cut costs substantially and developed new sale channels. But this would have entailed much more work and a little bit of investment. A partner was available, as I found out after detailed research, and a very good proposal went begging. So here is the second rule:
2. Be flexible!
Markets are different: they have their own particularities. It might be easy for you to sell your products online from the UK to your neighbour, Germany for example, but you might make more money by selling them in not so developed markets, such as those in South-Eastern Europe. In this case, partnering with a local producer of food packaging who doesn`t produce paper cups but has a national distribution network and a few developing international sales channels and can put space at your disposal in their factory and help you set up there, might be a very good business opportunity.
This leads to the third rule:
3. Research the market properly and know your figures!
What you read on the internet is never ever enough. You need to know the exact figures; you need to know how those figures were reached; you need to understand what is happening on that market; you need to be sure what is the right time for you to go ahead with your plans on that market. For example, one successful exporter I worked with wanted to export tofu and vegetable spreads to Romania. All his products were organic, top quality. He monitored the Romanian market for three years until he was sure the right moment had arrived. You see, the market research gave him very sensitive information such as the fact that the organic market in Romania was passing through a difficult stage due to the bad legislation in the field which allowed non-organic products to be sold as organic. Everything ended in disaster as a crisis wiped out all those retailers who didn`t stick to the high quality standards. You do not want your precious products to be sold by such a retailer. So he kept an eye on the market and acted after the crisis was over, and he had the guarantee that the buyers for his products were the best.
This leads me to the fourth rule:
4. Properly research your business partners!
Don`t rush to contact the first name you find on the internet. Don`t rush to sign immediately contracts with potential partners you meet at trade fairs. This is a no, no, no! Instead focus on the kind of distributor or agent you are looking for on the new market. Maybe you want your products to be sold by companies that have a national distribution network; maybe it would be better for you that the distributor should have a bit of a network on other markets as well; maybe it would be better to go for the biggest ten retailers as one of my clients successfully did.
Find out as much as you can about your local partner. Is his company really sound or will it be wiped out in the near future due to “unforeseen” economic conditions. Yes, it happened to a Romanian producer of honey. He only knew one British company that would sell his honey. After two years, when he was starting to feel comfortable and sure of the orders coming from the UK, the British buyer went bankrupt.
Go and meet your potential partner. Understand if he/she is really committed to growing the distribution company he is working for or is he detached and potentially on the hunt for a better job. You want to deal with top quality, dedicated buyers, who would not drop your deal in the middle due to a better job offer.
5. Make sure you put the right pricing in place!
There is no point in trying to sell a very pricy product on a market which can`t bear it. Nor is it fair to skip doing your market research and local partner identification and desperately look for an agent which you hire before telling him or her that the biggest contract you have ever had selling you products on a new market was of just £3,000.00. A successful exporter properly researches all these aspects, and if the demand and the price match on the new market, then they can go and look for a distributor or hire an agent to do the negotiations. Win-win, isn`t it?
6. Be ready to support your product on the new market!
The most successful exporters I worked with have a budget for marketing on the new market. You might find the right distribution channel, the power of purchase might be there ( and for good quality products the demand is always there, trust me!) but your clients need to know you are there and for this to happen you might have to think about your distributor as your partner in developing your product on that market.
7. Be aware of the cultural differences!
This can help you in many ways. I shall give you just two. First, you will know if your product has a very good chance to be sold on that market. For example, Romanians like eating pork meatballs with garlic. Brits eat meatballs as well but not as much as in Romania and for sure they are not as crazy as Romanians about garlic in them. So better stay away from the idea of bringing such product in the UK. Or, let’s take the example of arancini (fried, stuffed rice balls). These are a very popular product in Italy but Romanians and most Brits have never heard of them. If you think about selling a machine which makes arancini, you might have to create the market first in these two countries before having any demand.
Second, understanding the cultural differences is tremendously helpful during negotiations. This is why I always recommend my clients to have a Romanian on board. Expressions which for you might take literally could actually signify something completely different. This also applies to gestures and generally to the background of the entire negotiation.
8. Have patience and don`t give up!
It takes time to get established on a new market. Some exporters go on a trial and error endeavour. I know exporters who tried ten markets, failed on seven but got consistent and growing revenue from the three successful ones.
9. Change your mindset according to which it has to happen quick and easy and garnished with many guarantees!
It is a common attitude which I have met particularly with many British exporters. Many ask for guarantees. No one can offer them any guarantees. The best you can do is to do the market research to the best end of professionalism and to recommend them a very serious business partner. Going international is risky, but the risk can be controlled provided you did your homework and you properly know your new market and your partners there.
10. Take it step by step and understand what potential lies in the new market and how you can access it!
Don`t rush into the apparently easiest solution. It might not bring you the most that market could do for you and your product. Take for example the Romanian market, which I know very well. It is a market which lacks know-how on value added products. If you have a smart technology which helps you produce a cracking product, then maybe you should consider investing in opening a little production and sale point there. The costs of setting up are nowhere as high as they would be in the UK for example, and you would benefit as well by a hard working human resource which doesn`t cost as much as in the UK and which is willing to learn and progress. Provided there is indeed a demand you could become the national leader on your niche (Romania, for example, still doesn`t have a big producer of paper cups) and aim at expanding in the neighbouring markets.
To find out more about exporting to Romania, please get in touch with us. We provide a range of market entry services comprising: business opportunity identification, market research and business partner introduction.
Topics: Business Development, Export Planning, Export Process, Getting Started, Market Research, and Sales & Marketing