International Exporting can open a business up to a wealth of new opportunities, but the obstacles to entry can seem great. The potential rewards of exporting are huge, yet many businesses come across many barriers to export. Here are some of the most common obstacles and how to tackle them head on.
Experience
It is often a companies lack of previous International experience that stops the opportunity to export or trade before it even begins. Partnering with a company or individual that has this experience will help new companies learn quickly how to navigate the maze. Shipping freight forwarders are capable of delivering your materials to the door of any company, pretty much anywhere in the world.
Resource Costs
Entering an overseas market can result in both additional financial investment and an extra commitment in terms of time and human resources. Taking the first few steps into a new market can be a lengthy process, with no returns until well after the initial outlays have been made.
To deal with the gap between investment and reward, make sure stakeholders are fully invested in the idea of exporting. Make sure any projections take into account the long term process. If you are investing in a high-growth market, your future customers and partners will be focused on building relationships at the beginning and there is no guarantee of a return for the first year.
Legal, regulatory and intellectual property issues
Some of the most commonly talked about barriers to exporting are regulatory and legal issues, while intellectual property protection is another, slightly less common hurdle.
How to go about dealing with legal, regulatory or IP issues is dependent on the processes in the territory you want to export to. It’s crucial to get a good grasp of how the procedures work in your chosen country before you start. There are plenty of resources which can help with this; it’s just a question of doing your homework. It has often been said that if you are concerned with IP control then don’t enter certain markets such as China, I have found nothing in my experience that would challenge this perception, it’s certainly a risky business.
Managing overseas risk
Risks such as unpredictable economic and political systems, corruption, online security and bribery, can put business owners off expanding into a new market.
Like legal issues, keeping up to speed with what is happening in your chosen market can help you avoid these issues. Government Offices provide comprehensive online resources on economic, political and security risks in-country. These can help you circumvent problems which may befall some exporters.
Language and cultural barriers
When entering a new market you will also be dealing with a new culture. Business culture can even vary between regions of the same country so local knowledge is vital to building valuable working relationships.
Language is also a key issue in helping to build mutual confidence and respect between parties doing business. Consider investing in language training for you and your staff will help to bring down barriers, nobody would expect you to be fluent but it is really helpful to understand customs and be able to pass somme pleasantries in their language. If you’re comfortable speaking the local language but do not have fluent written skills and local knowledge, think about hiring a translator for promotional material and business documentation. This can help with clarity and to avoid any embarrassing errors.
Think about local customs in relation to your product as well as your behaviour. Packaging or even aspects of your product itself may need to be altered or developed for your new customers.
Logistics
The secret to simplifying international transport lies in the contract you have with your supplier. Make sure you are clear on who is responsible for each part of the process including transporting goods, insuring the goods during transportation, paying duties and customs clearance. Use Incoterms (International Commercial terms) – a universal system of contract language – to avoid any confusion and who is responsbile for what.
Getting paid
You can avoid late or non-payment by agreeing acceptable payment terms, assessing any risk and thinking about appropriate insurance. Banks can offer help on this subject and can provide financial options.
To minimise the risks of non-payment, you should research the market conditions in your target country and the credit worthiness of potential customers before you start trading. You should not reply on either trust or reputation, start your exporting on a reliable platform.
There are also currency issues you need to consider. In some countries where there are restrictions on access to foreign currency, your customers may face problems getting currency to pay you. In this case, it’s worth insisting on a (confirmed) irrevocable letter of credit that secures payments according to the terms of the credit and often at an agreed rate. Alternatively, think about using a factoring company that can collect money from overseas on your behalf, for a fee.
Thanks for reading. I hope you found the article interesting. I’d really welcome your feedback on this article or let me know if there is a new topic that you would like to discuss.
To Greater Success,
Chris Bartholomew
Founder & CEO
4X Inc
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