With seven current Free Trade Agreements, and several more in the pipeline, the time is certainly right for Australian businesses to break into foreign markets. However, the decision to enter a new market is certainly not one to be taken lightly.
A detailed plan of action where you will always be in control is imperative for long-term export success. Additionally, you need significant investment of both time and money, and stakeholders who are fully committed to the idea.
Are you ready?
Simply having a product or service that you think will succeed in foreign markets is not sufficient for being export ready. There are several additional considerations:
• Are your domestic sales stable? In addition to providing the necessary capital and cash flow, having a successful domestic sales base tells the buyers that your processes are tried and tested.
• Do you have the time, resources and management willingness to invest into a new market? Breaking into a foreign market often requires more effort than starting a new business. Do you have the required infrastructure, staff and management required for the process?
• Do you have the sufficient knowledge and skills? Are you familiar with foreign currency management and the documentation and legal requirements that an export business requires?
The International Readiness Indicator, a new online tool offered by Austrade, can be useful to help you determine whether your business is export-ready.
Once you have determined that the time is right, and that your business is ready, the next thing is to research the market. Big businesses might choose to outsource this completely by hiring a consultant who specialises in the industry and region where you want to do business.
Small businesses on tighter budgets often do the market research themselves. Even a well thought-out internet search can give you the preliminary information about the market structure in various countries. Some of the things to focus on are: market regulations, competition, import duties, distribution channels, size and growth of the market and so on.
Attending trade shows in different countries can be very helpful for meeting distributers and buyers and also for getting an actual feel for the market. Once you have gathered some information on how various markets work, you can decide which country is the most suitable for your business.
Specific research: Country-specific research is necessary to understand if the market is ready for your product (or service). It is then time to do some market testing. Doing surveys, sending product information or samples directly to buyers or meeting overseas buyers in Australia are some ways of doing this.
At this stage, you can prepare a formal Export Plan that will help you understand the logistics involved and be prepared in case of an unexpected setback.
Overseas marketing varies greatly from domestic marketing, especially if the culture of the country is very different from ours. Your website is often the first point of contact for your buyers, so make sure it is professional and up to date.
Follow the country’s etiquette in all dealings, especially during face-to-face meetings. If it is not an English-speaking country, it is very important that you have an agent or representative who speaks the language during your market visits.
Business cards, product brochures (with a local language insert) and samples are extremely important for a good first impression. It is also recommended to use a more formal manner in communication, especially in emails and telephone conversations.
In order to avoid getting involved in a legal nightmare, it is important that you study the differences in the legal systems of your target market. Before entering into any sort of contract, make sure that it will be enforceable and legally binding. Liability laws, patent laws, taxation laws and restrictions on legal litigation are some other considerations.
Always remember that any incidence of bribery, even if undertaken by a third party on your behalf, will be punishable under Australian law.
Increased opportunity inevitably means increased risks. Other than the legal risks discussed above, you have to consider non-payment issues, exchange rate fluctuations and even political disturbances leading to a market collapse. If you choose to work through an agent, there is additional risk of losing your market share due to poor performance.
Identifying all the potential risks, and developing strategies to mitigate them is the only possible solution.
The process of readying your business for export requires external assistance – financial and legal assistance, market consultations and others. There are agencies that could help:
• The CCIWA is one such agency in Western Australia that helps businesses through all the steps involved including assessment, identification of markets, training, advice on legal and financial matters, market research and more.
• Austrade (Australian Trade Commission) is a national agency that provides information and assistance for businesses looking to enter the international market. The trade services offered include market selection, help with identifying contacts and assistance (including financial) for market entry and expansion.
Preparing your business for export is an exciting, but stressful time. Taking the time to identify all the aspects ensures that your venture is fully successful.