Expanding overseas is a way to ensure your business can weather a downturn in
your local market. Yet it can be risky - so how do you ensure you get
overseas expansion right?
Andrew Cahn, chief executive of UK Trade & Investment: You have to
know your market: you can’t sell to export markets in the same way you sell
to the domestic one. Exporting is not for the smash-and-grab merchants - you
have to be in it for the long term, find the right partners, establish the
right brand and be in a strong niche. Register with UKTI for access to
tailored market research and 1,300 staff all over the world looking for
business opportunities for you.
Tim Murphy, head of strategic relationships at Bank of Scotland Corporate:
You need a clear strategic reason for overseas expansion. Start by hiring
local people and then transfer people from the home business. That’s the
best way to get a feel for the local culture while incubating the culture of
your own business.
Introduce strong financial controls over your overseas operations and make
sure you understand your currency exposures as well as the local tax and
legal regimes. If you expand through distributors, insert a break clause
early in the contract to insure against the risk that they don’t do their
job properly.
Graham Cartledge, chairman, Benoy architects: Emerging markets will pay
for an international brand. You can’t arrive in an export market with an
indistinct product. Don’t risk the financial security you’ve established by
overreaching into new export markets - concentrate on trading profitably.
Peter Wakefield, managing director, Delfield Precision Engineering: We
spent a lot of time developing new products with our customers and we’ve had
to do a lot of travelling to keep in touch. If you don’t keep in close
contact with your customers, it’s amazing what happens in your absence. It
helps to have a good relationship with your bank. When we started out we
were paying 2.5 cents in the dollar over spot exchange rates but by asking
we got it down to 0.5 cents. That probably saves us £30,000-£40,000 a year.
We also started forward trading to avoid some of the day-to-day currency
volatility.
Ralph Rogers, China business adviser at the China-Britain Business Council:
Don’t think about China as one market; it is a mosaic of provinces,
principalities and autonomous regions. Do your research before you go and
have your marketing material translated into Chinese but also adapted for
the local markets you’re targeting. ICT and environmental technologies are
in huge demand. If you’re a small business, focus on smaller regional cities
where there is likely to be more demand for your products. We’ve just
published a report on 35 regional Chinese cities available to download for
free at www.cbbc.org/emails/regionalcities.htm
Steve Smith, chairman of consultant Quest Worldwide: Focus on the
fast-growing “hot” cities such as Dubai, Abu Dhabi, São Paulo and Shanghai.
Their growth will help to pull your growth with them. But focus on one of
these at a time.
Local agents or partners, and ultimately your own local employees, will be
invaluable in allowing a true flow of two-way communication and for giving a
deeper insight into your new market.
