As Brexit approaches, some business owners are looking to spread out the risk by broadening their export horizons.
“We’ve seen huge growth in Asia over the past couple of years. British businesses are trying to work out the paradox that is Brexit, they’re moving their sales targets away from the EU and moving to places like Australia and the US, but mainly into Asia,” said Jeremy Cook, chief economist at WorldFirst, speaking at a roundtable at the recent FD Surgery, an event series for entrepreneurial finance directors.
“We still think that the government positioning around making a truly global Britain probably has a bit of work to do, but the premise of making British business more global as opposed to reliant on the EU is something I think everyone can get behind and could benefit the economy in the long run.”
With that, Cook opened the floor to FDs from across a range of industries from shipping lines to car seat manufacturers, who shared their insights into breaking new markets.
Here are the key takeaways from the roundtable with WorldFirst, focused on growing overseas:
Look at your strategy
One of the most pressing questions for any new exporter is how to decide which countries to export to in the first instance.
“The strategy that’s worked really well for us this year is to look at markets where we have key influencers and advocates in that market,” said one member of the roundtable, whose business specialises in lighting.
The business attracted some renowned photographers, who worked closely with the brand in the new territories and helped them grow in that area using their networks and customer bases. Essentially this was a kind of brand ambassador arrangement that enabled the business to really focus its limited resources.
The lighting company also tried to target Asia, and has considered Japan and India, but there have been bumps in the road.
Tariffs have been prohibitive, as has the competition for lower prices, and local politics and market complications have also contributed.
Another member of the roundtable suggested licensing products for local distribution, as that’s the way his architectural hardware market has found success in exporting to India. Interestingly, the “Made in Britain” label carries a lot of weight, so it might actually even be more effective than simply setting up in an Indian factory.
Of course, not all businesses are created equal, and some products will have trouble entering a market than others.
One FD explained: “We manufacture and retail car booster seats for children, and I think the context of international growth for us is quite difficult.”
“There are lots of regulatory hurdles for us, we are constantly having to test our product.”
This can be frustrating as there are developed countries like Canada and Australia where there are cars everywhere, but it’s difficult to get the regulatory approval to enter the market.
For this business, it then becomes a balancing act from a cash management perspective of knowing which countries to try and prioritise without blowing resources.
The culture and climate
Aside from the different compliance rules and regulations business owners come up against overseas, there are also cultural differences to be factored in.
For example, one participant recounted the time he spent in Saudi Arabia:
“It’s a very unique and a very safe country, but it has a certain way of doing business…penetrating a country like Saudi Arabia is very relationship driven, you have to invest considerable time and effort in building local relationships to a far greater extent to here in the UK,” he explained.
“Getting to know people might involve several months of your time, not several hours, but once you develop the relationship it can last for a lifetime.”
Similarly, you have to consider how your target audience in that market may respond to your product, and whether your sales strategy is in line with that culture.
As one participant of the roundtable, whose business specialised in cycle storage, put it:
“The brand and what your brand represents, whether that be a service or a product, that needs to be appropriate for the market you’re going into. That could be dramatically different in Europe than it could be in Asia.”
Giving her own brand as an example, she explained how in London they may be targeting flat-dwellers, but in the US their product could end up in somebody’s more spacious garage. You have to adapt your marketing messages where appropriate.
You also of course need to consider what to charge in each market, as disposable incomes vary considerably. One FD asked the salient question: “How do you pitch that without devaluing the brand?”
While the answer to this question may depend on the product, it’s something to be mindful of.
Growing in new markets
One participant made a fantastic point as the roundtable drew to a close:
“When you think of growth, you automatically think of new territories. Actually, growth should be really focused in on the territories you’re in as well,” she said.
Businesses should be wary of resting on their laurels. Don’t just start selling to a new country and consider that a box ticked, keep an eye on incomes, provide training and development to sales teams to maximise performance in the new territory, adapt and change so you can keep growing.
An FD of a shipping line gave a great example of this:
“Perhaps one of our bigger markets, the French market, the rates have gone down and down and down,” he said.
“Making the decision to pull out of that when you’ve been doing it for 20-25 years is quite a big step, but it’s keeping an eye on those things and making sure you don’t get sucked in to something just because you’ve been doing it for a long time.”
Don’t do something for the sake of it, and don’t overstretch yourself – expanding overseas is a big deal, and it deserves to be done right.
Jeremy Cook had the last word: “The bottom line is global connectivity has given rise to lots of products and services that make it easier, cheaper and faster to trade internationally.
“Online marketplaces like Amazon and eBay are great examples, making it possible to sell to customers from China to Chile from your own home. These businesses couldn’t have existed 20, or even 15, years ago.
“One way or another, our relationship with Europe is set to change and with a well-thought out strategy and some sage advice from the experienced exporters on our panel, now could be the time for businesses with global ambitions to seize their moment.”