Opening up internationally has indisputable advantages for national companies, such as:
• Investing in new developing markets such as emerging countries, booming economically, key places to generate additional turnover;
• Take advantage of weaker competition in certain markets seeking know-how or technologies that they do not have locally;
• Strengthen its competitiveness by reducing its local production costs or by acquiring innovative technologies available only in the host country.
How to choose the right target country?
Depending on the structure and the investment opportunity of the company, the markets to target are not the same. While already mature companies, which show consistent and stable results, can tackle more emerging (and therefore riskier) sectors such as Latin America or Asia, with SMEs making their first international experience prefer to invest in border countries. The latter, thanks to their proximity in terms of culture and regulations, will make it possible to have a first positive experience of exporting and to establish their credibility.
Moreover, target markets can also constitute interesting gateways: a first step in the United Kingdom, for example, facilitates entry into Commonwealth countries, a presence in Portugal can lead to Brazilian markets.
Companies offering innovative products or services will prefer to invest in mature markets such as Japan or the United States.
Motivation is force for action, so don’t dismiss your hunches. They are often good because you know your markets well. However, a little methodology will allow you to set yourself benchmarks and avoid « rookie » mistakes, which will save you unnecessary expense. Here are 9 key points, some principles to keep in mind.
Tip 1 : Define your environment
What is your environment? where are your competitors? What is their positioning?
Abroad, the foreigner is you! This statement should be posted in the export department of each company. The first commercial step is observation. Internationally, even in neighboring or your monther tongue-speaking countries, the difference in cultures, the variety of players and distribution methods require a detailed and methodical analysis of its environment in the country.
The first thing to do is to actively monitor your target markets via the internet. Simply start skillfully using professional directories like Kompass, Europages to know your competitive environment, but also keep up to date with economic news in your sector and the country. Ask Business France or your Chamber of Commerce for market studies or books published in your sector of activity. A study bought a few hundred euros can save you a lot of time in understanding the target market.
Find out about industry fairs held across the country. These events will allow you to identify the main players in the market, observe the international exhibitors present on site as well as the vitality of the market depending on the importance of the event.
You will thus identify many of your active competitors in the market. Do not limit your search to the target country, broaden your watch also to neighboring or linguistically close countries, in order to have an overview.
Note: you will of course not have to do this long and tedious job if you subscribe to Export Class Exporter Toolkit support, because if you do, support will. for you, on request.
Tip 2 – Evaluate the added value of your product
What is the added value of your product / service on the market?
The link between innovation and exporting is very strong. If your business is innovative, it is very likely, if not certain, that you will open up export markets. Moreover, we do not export a product that has no added value, we produce it locally! For a product to be able to make a return on the significant commercial investment that you are about to make in a given country, its added value must be greater than that of local production, because, for an equivalent product, it would be surprising if you be competitive if the product is already manufactured on site!
Identify your competitors in the market and their distributors or subsidiaries. This work will allow you to know the type of products, the level of technology and the price level accepted by the market. Of course, you will support this analysis by visiting the country.
Is the technology used by your product behind, ahead or in line with market expectations?
In the case of technology, this is a sensitive point that will have to be carefully assessed. Too early, it risks not being adapted to the expectations of local actors, because it is too complicated and too expensive! Conversely, if the technological level of your products / services is too late or trivialized, you will have to fight over prices, and therefore inevitably lower your margins.
Take the example of a brick making machine. In many African countries, a hand press corresponds to local demand, while an automatic motorized press will not necessarily have a market (lack of electricity, spare parts, etc.)
If the example is extreme, it is transposable in many fields to varying degrees.
One of the points to be taken into account is also the level of security the country offers in the protection of property rights. It is always less risky to be copied from a technologically obsolete product rather than from its latest invention.
In the case of adaptation to consumer expectations, the most obvious example is that of wine. In countries where consumption is recent, the market first adapts to white wine, which is drunk chilled and has a less pronounced taste, then it changes to light red. There is therefore a degree of maturity in the market …
Tip 3 – Define your Product / Market pair
After having defined the degree of innovation or technology corresponding to the market, it will be necessary to define which product / foreign market pair you are going to start with.
The list of countries of opportunity being long, the prerequisites seen in the previous points should allow much more refined targeting.
Then, several ways to make your final decision:
– Sort the previous information according to the country: degree of maturity, presence of competitors, consumer expectations …
– Linguistic affinity: a country whose language is spoken will be easier to approach. Beware of Native speaking countries, the ease of the language always hides a great cultural difference that should not be underestimated!
– Easy access in terms of transport: business development around low-cost airlines is a reality. When it becomes simple and inexpensive to travel, we travel more often and we are therefore more present with our customers or distributors.
The strategic choice to go to a developing market or to a mature market is more difficult to make. Practice proves that many SMEs succeed in taking market shares in countries that are difficult or considered to have low potential because they are more reactive and more adaptable than large groups which will neglect these markets.
The second school is the opposite: where there are competitors, there are markets and the bigger the market, the more likely I will have « a piece of the pie ».
The truth is of course between the two. Without dispersing yourself, varying your approaches by attacking two or three countries at the same time maximizes its results. The markets will not all react at the same speed, one will start faster than the other. Such an approach will allow you to generate revenue faster.
Tip 4 – Focus your strategy on the customer
Is your strategy sufficiently customer-oriented?
Think back to your maxim: abroad, the foreigner is you! Questioning yourself on this subject is essential.
The first thing to do is to be able to communicate in the language of the country, this is both a token of respect but above all a guarantee that you will be well understood during negotiations and exchanges with your interlocutors. Having a brochure translated into English is a first step, that it is translated into the language of the target country allows the customer not to have to make efforts to discover your offer.
The second point is to understand and adapt to the client’s mentality, to his culture. While the French will tend to flaunt his technology and the technical performance of his service, the American will demonstrate his ability to make money for the potential customer. The product remains the same, but the approach to it will be very different.
All exporters are unanimous on one point: the international is a school of humility and simplicity. Work or usage habits, color of the product, type of packaging, taste for agri-food products … you have to know how to adapt to customer expectations.
A highly technical product that cannot be repaired locally or that will save labor in a low-cost country will not be suitable for the situation. Your technicality will not be the right selling point. Automation will sometimes even be frowned upon locally when manual work within a company sustains an entire village or town.
Tip 5 – Understand the normative and customs environment
The lowering of tariffs in most countries of the world coincides with the rise of non-tariff barriers which are another way for states to protect themselves.
To know what rules (and therefore what constraints) your product will be subject to, it is necessary to know its customs nomenclature.
All the products have been codified in a nomenclature recognized worldwide. Your products therefore have, depending on their nature, a customs codification number that will allow you to know the customs duties that you will incur to sell abroad as well as the associated regulatory obligations.
The good match between your product and its nomenclature must be verified, or even be the subject of a strategy, to avoid being penalized during your export (customs blockage). Validate that your shipments comply with all regulations on arrival. In many cases, the differential in customs taxation between a finished product (high taxation) and components (lower taxation) used in the manufacture of the same product encourages companies to import only these components and have the product manufactured locally. in question.
It is also relevant to ensure that your competitors are subject to the same tariff regime, and for example that they are not part of a free trade agreement that would allow them to be exempt from these obligations, which would distort in fact competition!
Tip 6 – Involve the whole company in the export process
Are your staff suitable for working in an international environment?
There are only successful men and women in the business. The first job consists of making an inventory of the languages spoken in the company as well as of the people who have an international sensitivity and who will therefore be relays for the project. The second is going to be to see who has a solid background in export techniques. Because, little by little, the whole company will have to synchronize with your export project. From the switchboard, to your assistant, from your sales representatives to your logistics and sales administration department, to your after-sales service.
Define who will carry out the business operations and who will assist this person, answer the phone, send the documentation … Draw in the company the outline of the decisions and information flows to be processed.
Translate your technical notices, your website, your sales presentation. The first thing a foreign buyer will do today, when they receive your documentation, is go to your website to find out more.
A good command of the techniques and reflexes of exporting is essential to gain time and efficiency. One of your employees should be trained in Incoterms, international payment methods, etc.
The involvement of the technical service is also essential, you will quickly ask them for checks and adaptations, they must be made to join the project.
Tip 7 – Choose your mode of representation
What method of sales abroad: agent, distributor, local establishment?
The mode of international sales and representation is certainly the strategic element that has evolved the most over the past 10 years under the effect of market globalization. Today, margins are tighter: it is in the company’s interest to shorten and simplify the sales channels as much as possible. You have to be more responsive on the market, anticipate changes in ranges and technical expectations, and for that, have reliable information and direct contact with the customer. You have to give the impression of being national in order to fight against latent protectionism which is the boomerang effect of globalization.
For all these reasons, all strategic plans tend towards commercial or industrial establishment or at least towards a commercial plan having very close proximity to the distributor and his customers.
This radical change affects all sectors, including those where the use of commercial agents was the rule only 10 years ago, such as textiles for example. Agents are disappearing in favor of more elaborate marketing structures or very structured distributors, which changes the balance of power.
At the same time, cost-shared representation solutions enable small SMEs to maintain sales subsidiaries in many countries. French CCIs abroad, Regional Councils and Private Operators now offer very competitive implantation solutions. Some offer V.I.E hosting on behalf of companies, which further optimizes costs.
The key is to know at what phase of its development to take its first marks abroad. In the majority of cases today French SMEs are represented by distributors who have the immense advantage of having functioning sales and after-sales services. At the same time, the company still has the possibility of having a local relay to accelerate commercial performance.
Tip 8 – Web and network strategies
The absolute weapon of international development
Network presence strategies go far beyond the website model of 5 years ago. We are now talking about collaborative work in industry and collaborative consumer information strategies in consumer goods. The objective: to strengthen proximity and reduce barriers while increasing the service provided.
The first stage is of course visibility on the networks: isn’t your first instinct when looking for a supplier to surf the web to see what’s new and what’s happening? Your customers do the same. The Internet breaks down borders. There are only two strategies. The first: you suffer by allowing even low-quality suppliers to be as visible as you on the web. The second strategy is to be more offensive, or even to take advantage yourself of this advantage offered by the networks by multiplying the possibilities of contacts and by optimizing your visibility in all countries of the world. This second option has its limits: of course, the prospecting cost is minimal, which allows you a broad communication but this prospecting is not targeted and can disperse you on irrelevant contacts … Beyond your multilingual website, Today we must work on the presence on search engines, work with international platforms and directories.
The next stage will be to work with collaborative tools: share information with your customers, allow them to partially enter your systems, maintain after-sales service systems through blogs, etc. Make sure that you are always in their work environment, which will make you indispensable. For this, it will be necessary to maintain communicating and multilingual information systems. This is the exporter’s absolute weapon: to create a relationship of dependence with his client or supplier by being in his information system and by breaking down all barriers of geographical or cultural distance.
The third stage is online sales with or without a payment system. The speed of development of direct selling is nothing short of incredible. It is now an obligation to consider it, even if your company does not seem a priori directly concerned by this type of tool.
Tip 9 – Match your financial capacities and your project
Match the financial capacities of the company with the export project
Approaching a new market requires a significant investment. Knowing the market, making oneself known, getting around, participating in trade fairs, building press relations… Training internal employees or distributors…
In short, putting in place a whole battery of actions which, taken end to end, are a real investment which will most often only pay off after 3 to 4 years.
On the other hand, there has never been so much aid to develop internationally: Sidex, Tax credit, PPE, CDI, FASEP, VIE, and of course prospecting insurance… By using wisely the device, you will have a significant leverage effect to mobilize the necessary resources.
The secret to success? Do not see too small in your step. The investment you have made to develop in your mother country has been very important, it will be much less important abroad because you already know the business model but if you can sell 100,000 euros in Germany it is likely that you can do 10 times better!
Thinking about financing internationalization is therefore a necessity: own funds, aid, repayable advances … many systems exist. You have to fit them together to optimize your funding.