Exporting – Which country first?

Which Country - Beacon InitiativeAs we mentioned in an earlier post about exporting, an issue that crops up for a company looking at exporting for the first time is which territories to research for your first export target market.

Sometimes the choice of territory is a “no-brainer” but what if it’s not so obvious?

In this case, here are just a few suggestions to help you decide which countries to research to sell into:

Which are the easiest?

When you’re starting out in exporting, easiest means “low risk”.

From Ireland, in many cases the UK would be at the top of the list, given its ease of access from here, no language issues, market size, and broadly similar ways of doing business.

It’s usually the first one for market research unless you already have clear reasons why the country isn’t viable for your product or service.  Alternatively you might want to consider the Netherlands and Belgium which, except for being smaller markets, generally tick the same boxes in most industries.

Where are your competitors operating?

Do you know where your local or regional competition is selling?  You have a choice of what to do.  You could join in and compete in the territory.  To do this, do you have adequate differentials to stand apart or will you be just a “me-too” follower?

If your competition’s been established in the country a long time, you could for ever be seen as the number 2 or 3 or more.  In which case to help make a decision, key market information is needed such as the overall size of the market (is there enough for a number of players?), sustainable growth rates and trends, and for example niche sector opportunities appropriate for your goods.

The alternative is to avoid the region like to plague because life with all this competition might be too difficult.

One company, an Irish leader in its field, did exactly this.  They were dismayed by what they’d seen of competitive activity and low margins in mainland Europe.  Instead they started researching other territories and found good opportunities in specific parts of Africa. 

The territories are more difficult to get around, but competition is minimal, payment terms have been sorted, and better margins are enjoyed.  This might be a risk too far for new exporters, in which case it might be a tactic worth looking at for future territories to target.

Where are the biggest opportunities?

Where are your biggest market opportunities?  Would they be established developed countries such as the US, or one of the rapidly developing BRIC countries?  Are the markets there big enough to take another competitor and do you have sufficient differentials in your product to stand out above the others?

Remember that this would be a much higher risk initial strategy and you’d need to have good commercial reasons to proceed with it – and ensure you’re going to get paid.  The costs of doing business would be much higher and you’d need to visit the market at some time and meet potential business partners.

An engineering company with a state-of-the-art new product is doing this in China.  The risks are high but they have very sound strategic reasons why they want to capture some of the Chinese market.

Their approach to researching and developing the market is simple, step-by-step and with caution all the way!

Can your product or service solve region specific problems?

Even if it’s not seen as the main feature of your product or service, does it have the ability to solve unique problems experienced in certain regions?

This is another way of looking at niche market sectors in some countries where your company could command a prominent place.

One Irish company has a product usually used in large capacity power generating plants.  In India, they found that the product worked well in a different application in tea plantations where they went on to gain good market share.

Fit with strategy

Opportunities can sometimes appear well off-strategy at first.  In a technology start-up with which I’m involved, our plan was to establish ourselves in Europe first before expanding further.

Some time ago, I got an email from a Japanese reseller interested in marketing our analytical equipment.  After very carefully checking them out, we agreed for them to assess the market on our behalf. After all, the reseller had already perceived an opportunity.  A few visits later, we are establishing a good relationship with the distributor partner and the sizeable market.

When starting out in exporting, the perceived range of choices of countries to target is often wide.

Only after carefully checking out the choices can you decide on the best to target for returns vs acceptable timescales vs minimised risks.

Happy exporting!

Stuart Allcock - Beacon InitiativeStuart Allcock – Owner of Applied Business Support

Stuart is part of the Beacon Initiative Virtual Management Team, which can assist qualifying SME’s in areas of specific expertise including exporting 

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