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Size doesn’t matter in exporting
Companies of all sizes have equal chances to succeed in new and emerging markets
Contrary to the belief that mainly large organizations have the resources to manage the complexities of exporting, I can surely say size does not matter when it comes to exporting. You are never too small to export.
Different sources say that these are small to medium-sized companies which form the backbone of export trade of many countries like Germany, France, the UK, etc. The British government has recently identified SMEs as being the best contributors to British exports increase.
Beyond size, success and survival are often closely associated with age of the company. The longer a firm has been in business the more likely that it will continue in business. However, the notion that small businesses cannot become active exporters is nothing more than a misconception. You are never too young to export.
The thing is most entrepreneurs do not necessarily mean the size of the company by naming their companies small enough. When it comes to exporting internationally, they generally associate huge capital outlay that only large companies can afford to spend. This makes many small businesses shy away from exporting their products globally. Mindset like that greatly limits a company’s capacity to grow and benefit from stability if there is an economic downturn in the local region. Companies avoiding exploring international opportunities are ultimately shorting themselves of long-term growth. On the contrary, companies developing sales and contracts around the world have great chances to capture the upturn in international sales development and manage the risk of recession or instability at home. Exporting increases and diversifies customer’s base, allows for risk spreading and reduces per unit cost of manufacturing. It is easy for a firm to use exporting to test new markets before deciding to commit to greater resources through foreign direct investment.
So what defines success of a small business in exports in new and emerging markets?
Experts say it is totally dependent on the quality, competitive pricing and continuous availability of products they are manufacturing or exporting. Here is a checklist of other factors that are believed to affect company’s ability to trade and operate offshore irrespective of how small it is and how long it has been operating:
- Differences between legal systems from country to country
- Question of which laws will apply in disputes
- Rules and subtleties of competition
- Patent registration
- Extra-territoriality of overseas legislation
- Product liability and modification. When exporting companies need to modify their products to meet foreign country safety and security codes and other import restrictions. At a minimum, modification is often necessary to satisfy the importing country labeling or packaging requirement.
- International contracts for the sale of goods that can be very complex. This includes specially prepared contracts. It also includes contracts that have ‘standard terms and conditions’ that are often in small print on a standard order form.
Lastly, a bit of gut feeling and good luck will not hurt either.
People are the very centre of successful companies
Having assisted for the last 15 years numerous international companies with entry into our region I have identified another key factor defining whether a particular business will be successful in the export business. The very heart of your global business is based on what kind of people you hire to represent your product in a chosen country and to be its brand advocate. Experience and understanding cultural and legal differences within the emerging markets are critical to successful exporting. With his knowledge of business environment, a local person will surely do it better. The better he understands new and emerging market complexities, the more enhanced opportunities you get to succeed.
Selling overseas can be easily achieved through partnerships, alliances, and direct sales. If the latter requires your company to be physically present in the foreign market, more cost-effective ways are to either seek out domestic buyers or work through independent sales representatives. The first would purchase a wide variety of goods and handle any risk involved while the second would work on commission basis and under contract, and assume no risk or responsibility.
Regardless of what form of cooperation you choose, your first imperative is to do a thorough market research so that you could enjoy increased turnover and profits later. You might even discover a different and bigger market for your products overseas. What you need is a cost-effective way of testing new markets before deciding to invest greater resources and set up your own legal entities in each separate country. This is where Acumen International comes in. We offer small and medium-sized business customers new markets entry solutions, and in doing so they actually get a partner who guides them through the growing pains onto their path to success.
To sum up, small businesses today can reap the benefits of exporting to our region like the large companies. With fast growth and improvement in standard of living in the former Soviet Union, Eastern and South-Eastern Europe plus Central Asia consumers get higher incomes thus starting to buy better. New and emerging markets offer good long term-term opportunity. To take advantage of these opportunities you only need to choose the right partner and the right people with his help.
If you would like to know more about our solutions for small business in the former Soviet Union, Eastern and South-Eastern Europe plus Central Asia, please see our export companies support or contact Acumen International.