November 15, 2010
8 Rules for Doing Business Overseas
Over $1 trillion in U.S. goods and services were sold overseas in 2009, and with President Obama’s National Export Initiative looking to double that number within five years, the U.S. government promises greater resources for entrepreneurs looking to generate sales overseas.
A company doesn’t have to be a multibillion entity to go overseas. In fact, most of the exporting done is by way of small businesses. Jim Paul, director of the U.S. Commercial Service‘s Boston office, and James E. Wallace Sr., an African American entrepreneur who has done business in Asia for 25 years, offer their advice on how to tap the global markets.
Know the market. Understanding your export markets will give you vital information about how to manage your efforts. Find countries with the largest and fastest growing markets for your product. Determine the best distribution method for your product or service. Understand in-country regulations and licenses that apply to your products. Consider how you might have to adapt your products and/or services for the target market.
Know your customer. Determine product modifications based on consumer preferences, market environment, trade barriers, etc. Calculate the optimal pricing for your product or service, making sure to factor in the local and foreign competition. Create a sales and promotional action plan that considers the local culture as well as the business environment.
Know your competitive advantage. Research the activities of in-country and foreign competitors. Innovation is an important factor in creating advantages for competing in the global economy. To create a competitive advantage in the global economy, companies must recognize that it is not only their products or services competing against one another in the marketplace but their supply-chain networks.
Know the best way to reach prospective customers. Really adapt to the local environment. This can be as simple as translating your marketing materials, for example, “or having a local representative who speaks the language and will know the best practices in terms of the cultural differences there might be within that particular country, and being in tune with the local environment.”
Build and maintain relationships. “A big component is being able to visit the market, meet the individual or the company, see their facility first-hand, and then really get to know that person. It helps to have a good relationship and trust,â€ Paul advises.
Be prepared to travel regularly. “Face-to-face meetings work better than e-mail and online meetings and all that,â€ Wallace recommends. “If the contact or representative is sincere in establishing an honest business relationship, they too will be willing to come to the U.S. and continue discussions.”
Make sure the business is fully certified. “Get your minority certification and, if possible, even the federal certification,â€ Wallace says, adding that not having those certifications is one of the quickest ways to miss out on an opportunity.
Find a solid partner. “I was fortunate to have a partner from Asia with established ties and connections, therefore my entry into the international market was not a difficult journey,â€ says Wallace. Establish solid contacts/representatives with a proven background and expertise in the country you plan to do business in as well as your industry.
Read more on expanding your business into global markets in the December 2010 issue of Black Enterprise magazine, on sale now!