Avoid the fear of entering new markets
from becoming a nightmare
There is no doubt that the fear of foreign markets impedes many small to mid-sized companies to enter global markets. “Many are told that it’s risky and expensive to launch internationally,” says Simon Prevost of the Exporters and Manufacturers of Quebec, “But when planning a development properly, these prejudices are unfounded.”
Base jumping in Shanghai, China
Too risky! Too expensive! My company isn’t big enough! It’s the same story heard everywhere from SMEs. However, it can be riskier to stay inactive, cross your fingers, and rely on the limited local, national markets. Including our friends down there in the USA. Like other markets, any SMEs slice of their customary market can diminish as foreign competition grows and economic conditions change. Elaine Lamontagne, trade specialist for Europe, at the HEC Montreal business school adds that, “Inevitably, companies must try to regain market share that they lost, and this requires the development of new markets.”
So, how can we avoid the fear of going after new global markets? And, from it becoming a nightmare? Focus Asia along with insights cited from trade experts Simon Prevost, Elaine Lamontagne and Dominic Deneault, senior partner at Montreal-based TREBORA Conseil, have identified six strategic tips that will increase the chance of your success. And, to help overcome the fears of pursuing global opportunities.
Questions and Reflections
Jumping into international markets and not asking key questions and reflecting on them is like leaping from a plane without your parachute packed properly. Start by answering basic questions, such as: what is driving you to go international? Is it a new product, declining or limited sales in your customary markets, perhaps the desire for company growth in the future? Which markets best suit your company, capabilities, products, or services? How soon do you want to get going and get results? What impact will success have on your organization and your finances going forward?
“We cannot stress enough, the first and most important step can be summarized in one word: planning,” says Prevost to which I would add, asking yourself key questions and reflecting on your answers.
TARGET THE MARKET
Face it, some of you will sell product or services that logically could be sold to everyone, everywhere. But as a SME everywhere is just too big. The old term target market is precisely that – a target. For smaller, indie companies zeroing in on a specific market segment can be the better strategy to employ. “Market research is essential,” says Lamontagne, trade specialist from HEC Montreal, especially since it’s now affordable, especially for North American and Asia markets.”
At a Calgary Export Development conference, I attended a few years back, a senior Bank of Montreal executive for international investments gave us this crucial piece of advice. “Do your homework” He went on to say how few companies do the homework and then seemed surprised when things did not go as hoped. His first question to these companies was always, “Did you do your homework – did you research the market?” It’s just that important. If you don’t have the time to do the homework yourself or staff on hand who has business experience in that country market or region, find some one who can help. By the way, a two-week vacation at an all-in Thai resort doesn’t count.
If you are interested in exploring sales opportunities in the fastest growing economic region in the world, NE, and SE Asia. Drop me a line at firstname.lastname@example.org
CHOOSE YOUR INPUT MODE
Your company must then develop an entry strategy that meets both your needs and means. For SMEs three strategies are recommended at first: the simple export of products, joint ventures and the franchising or licensing agreement. The choice of entry mode is critical as it defines the business model that the company should adopt and what adjustments need to be made. Each avenue has its advantages and disadvantages. The choice of entry mode can ensure the success or failure of international development.
BE PREPARED TO ADAPT
Your company must take the pulse of the market it serves. Success in your existing market does not necessarily guarantee success abroad. “We must be prepared to adapt our products/services particularly when dealing with a consumer product that caters to particular [overseas] populations,” says Lamontagne. The way business is conducted varies from region to region. Doing business in Asia is different than in Western societies; doing business in China is different from doing business in Japan.
A good example is Aldo the Quebec based shoe company. It offers shoes adapted to the different marketing strategies depending on the country where they sell. “It opened shops in Anglo-Saxon countries—a culture it knows well. It has also established links with partners that enable it to, among other things, keep abreast of trends.” Aldo has over 3,000 points of sale in 100 countries offering shoes styles suited to each market.
DIVERSIFY YOUR MARKETS
Focusing on a single market is risky. If it dives, so will your company. “It’s a common mistake made by many companies,” says Lamontagne. For example, the economic and political uncertainty in the U.S. causes much concern among SMEs throughout Canada. This is understandable since in 2019 the USA accounted for 75.4% of Canada’s total exports. Canadian exports to China in 2019, were only 3.9%, followed by UK 3.3%, Japan 2.1%, and South Korea 0.9%.
“That doesn’t mean you should pursue two goals at once,” says Lamontagne. “It’s perilous to embark on conquering two markets simultaneously, especially when you have little experience, because the unexpected can quickly multiply.” Prevost agrees. He says it is better to concentrate your energies on the development of one market at a time. Companies can dramatically reduce their levels of stress and fear of the unexpected by taking courses in the cross-cultural aspects of doing business in Asia.
“It’s good to covet international markets, even when they’re out of your comfort zone”, says Deneault. And I could not agree more. A common mistake that companies make in Canada is to think like North Americans rather than imagine and then learn about what doing business is like in other cultures. The development of attractive websites, attending trade shows, distribution of pamphlets and other approaches have seduced North American business, but they are not necessarily effective in Asia.
“Leaders must understand that in these markets, human relationships are preferred,” says Deneault. In Asia, doing business is based on good relationships. That requires a personal investment. Leaders often must increase business travel and zoom meetings, to demonstrate an openness to the culture of the country where they wish to do business. “I know businesspeople interested in China not only taking Mandarin classes, but cooking classes,” says Dominic. These leaders must be patient and realize that these small gestures will be profitable in the long run.
I hope you have learned and enjoyed these six strategic tips. Going international doesn’t have to turn into a nightmare. There is no boogie man in the closet and just like when we were kids, all have to do is turn on the light. Until next time, all the best.