Top Ten Tips Every Business Should Consider When Planning To Enter International Markets
TIP #1 – FIND SOMEONE WHO HAS DONE IT BEFORE
There is nothing worse than learning through trial and error. Especially, when you are talking about international markets where you probably know little about the culture, customs and language. Find someone to point out the roadblocks and the opportunities. Someone who can make introductions, has resources and a network to assist you. Someone who knows how to approach the market with your products.
It will cost you something. But, the money and time you will save will be far less than what you would have wasted doing it on your own.
TIP #2 – DON’T TAKE THE EASY ANSWER WITHOUT THINKING LONG TERM
So you agree you need to find someone who has done it before – now the caveat: select your partners carefully! You might be ‘partnering’ with them a long time, and they will be critical to your success. So how do you select someone when you know little about the international market? Look for referrals – international trade organizations in your state, or industry groups are a good place to start.
Don’t stop there though: create a list of criteria and a profile that is most important to your company. Then interview, check references, and do a local visit for those on your short list. Assessing the strengths and weaknesses of potential partners against your company’s needs and wants can help you make an informed decision while still allowing you to make a timely decision.
TIP #3 – IT IS NOT THE SAME AS SELLING IN THE US
Not so fast: approaching new markets with the same best practices that make you successful in your home market might work – but most likely not, and you risk a negative perception of your brand at launch.
This doesn’t mean you do all the work. After all, that’s why you have partners. However, you will want to manage the process, and work with your partners to understand which parts of the selling process are the most critical to localize, versus what’s nice to have. Yes, it’s more cost-effective, but more than that it allows you to focus on what will have the greatest positive impact on sales right out of the chute.
Language, culture, humor can be key (English is not the same!). Also consider infrastructure – how does advertising get done, how many people or businesses are online, etc. Look at motivation and influencers of your end customers; they may be different then those in your home market. What works “here” does not work everywhere; plan up front for the key differences.
TIP #4 – BUILD RELATIONSHIPS NOT MERCENARIES
“Sell! Sell! Sell!” There are a lot of reasons to expand into another market, and of course increasing revenue is usually at the top of the list. If you are currently based in a culture where sales professionals are primarily motivated by money, it might seem counter-intuitive to spend time building relationships with your new sales channel. So why do it? It will pay off in both the short-term and the long-term, over and over!
I recently heard a story about a guy who worked at a company that had a huge banner hanging in the foyer where employees entered the building. The message: “You are working here to make money.” The company survived; the employee turnover was high. That single focus resulted in an employer/employee relationship that lacked trust, respect and communication. It worked OK in good times. It was a disaster in bad times.
Building good relationships with your representatives in new markets will allow you both to build understanding and knowledge of each other and your respective businesses; your values, expectations, and objectives will become clearly known and understood. Trust, respect and mutual support will grow as you partner over time to build market share, grow revenue, and enjoy sustainable profitability. Find what your partners are good at and leverage it. Fill in the blanks and support them where they are weak. Good relationships result in a good customer experience. Everyone is happy.
Focus only on the money, and you are likely to go to the bottom of the list in terms of attention given to your products. Others may look for opportunities to jump ship – maybe to your competitors. It’s just not worth it. Take the time – build the relationship.
TIP #5 – DON’T IGNORE THE LANGUAGE
Sure, many people around the world speak English – it has become the language of business. Does that make doing business across borders easy? Simple things can be difficult. Even native English speakers across the globe can have misunderstandings due to language! Be diligent about product naming, translation of instructions, advertising and more.
History provides many examples on this topic:
• The American introduction of the ‘Nova’ car in South America did not “go” very well
• ‘Snapshot’ is slang for ‘butt’ in German and Dutch
• Japanese hotel notice to guests ‘You are invited to take advantage of the chambermaid’
• A Hong Kong dentist claims to extract teeth ‘by the latest Methodists’
• In Copenhagen, an airline once promised to ‘take your bags and send them in all directions’
A personal example: I was attending a conference in a large hotel in a country where I didn’t speak the language. After a full day of meetings a large group of people rented a small bus to visit a local science and technology museum. I decided to join them at the museum later, and asked the Porter to get me a taxi to take me to the museum to meet the bus. Imagine my surprise when my taxi driver sped down narrow streets, informing me that “we will catch the bus”. I tried to explain, but he drove on, forcing the bus to pull over so I could join the group, and calmly announced to me “Madame, your bus”. What could I do? I paid the driver and got on the bus.
TIP # 6 – CULTURE, CULTURE, CULTURE
Business language, greetings, titles, business cards, conversational topics, negotiation, introductions, business meals, public behavior… need I go on? All these and more need to be handled within the culture where you are doing business. Tips and guidelines are available for many cultures.
But what about colors, pricing standards, truth in advertising, humor, product naming, packaging? Culture drives attitudes and behaviors in business partners and would-be customers, and new market entrants need to be ready to adjust – to “localize” where it’s important.
Look at how people buy and sell: trying to export channels strategies that work in one country may feel more like a square peg in a round hole:
• Japan has many layers of small players
• Brazil has many small shops
• Argentina mall was like being in the US
Cultural differences can trip you up if you don’t pay attention – little things mean more, so do your homework and pay attention to detail right from the beginning! Bonus: you’ll have more fun and build stronger relationships!
TIP # 7 – DON’T IGNORE THE POLITICAL SITUATION
Ownership, operating, and funds transfer risks are key areas to pay attention to when assessing the political situation in a new target market. You already know that knowledge and appreciation of a country’s history, language and culture is critical – review the political background to round out the picture before making a long-term investment. Monitor political developments, and factors outside of government control such as strikes, and create country-specific approaches to your business model, including contingency plans.
Be careful to consider laws or regulations that may impact marketing your products, such as
• Entry of goods
• Anti-dumping/below-cost sales of products
• Recycling fees and CE Mark issues
• Health and safety standards
• Membership requirements (e.g. chamber, trade union)
• Nationalistic buyers or suppliers
• Currency and remittance restrictions
• Value-added and export performance requirements
There’s a lot to consider, but the good news is there are many resources available to tap both in the U.S. and in the target market.
TIP # 8 – DISTANCE MAKES EVERYTHING MORE DIFFICULT
In market entry decisions, it’s critical to look beyond the “math equation” – sales potential may be great, but is it really the best, next opportunity? Distance can make a difference, and “distance” is more than geographic.
Pankaj Ghemewat, in his Harvard Business Review 2004 article Distance Still Matters, suggests a framework of evaluating markets that looks at “distance” through a number of lenses:
• Geographic (share a border, adequate transportation or communication systems, physical remoteness, climate differences, time zones)
• Cultural (religion, race, social norms, language)
• Administrative (currency, trading arrangements)
• Economic (income, distribution/channel quality)
• Where do you manufacture?
• How do you manage customer service or working with vendors?
• Does the distribution system support your product?
• Will the buying criteria still be the same?
• How about localization needs?
• Is sharing a language more important than geographic proximity?
The answers to these questions may be different depending on your product, and where your company is in its life cycle of international business. Understanding what is most relevant, and acting on it, will be a key driver to your successful international expansion.
TIP # 9 – DON’T HIRE IF YOU WANT TO FIRE
Local laws and regulations differ, but often are much more stringent than employment laws in the U.S. especially when it comes to letting someone go, whether due to business reasons, or for cause.
You might say it’s the classic question of “control” versus “risk”. While many more companies are ‘born international’ in today’s economy, most companies still work through the life cycle of ‘going international’. On average annually, 15% of exporters will stop exporting, while 10% of non-exporters will begin. Companies more or less advance along stages until they reach a level right for their capabilities or product (or stop), with the most critical junctures: beginning or stopping exporting.
As noted above, you need to be careful choosing any partner, whether distributor or employee. It may be tempting to hire right away, with the thought that you will have more ‘control’ than you might with a distributor relationship (for example). However, the risks can be similar, and severing the relationship can be even more costly, so be sure it’s really what you need before taking that step. There are four key factors to consider in making your decision:
• Degree of standardization in product offerings
• Marketing program beyond the product
• Location and extent of value added activities
• Competitive scenarios
Finding a balance will be critical to your success.
TIP # 10 – IT’S NOT JUST THE PRODUCT
• Marketing materials
• Sales and channel tools
• Customer service and support
It’s all there, and ready to go, now the question is how much ‘localization’ do you really need to do to achieve the sales? Language, culture, and buying patterns are just a few factors that can impact the effectiveness of your product support structure and materials.
Ideally, you would build adaptability up front, but typically companies are figuring out how to adapt products and services that are already successful in the home market. You may or may not need to adapt the product itself to local markets, but you will likely need some adaptation of materials, packaging, training and more – at minimum, translation of marketing and sales materials into the local language – to be successful.
Key takeaway: don’t skimp on what it takes to support your international markets.