Deciding to expand your product sales or business services into the international arena is a bold and exciting move. It seems so exotic to think of your products being purchased by locals and tourists alike in places like Brazil, Buenos Aires and Santiago, Chile. Shopping bags filled with your unique items flying back from far away cities such as Tokyo, London, Athens and Cairo is enough to have you running to the bank for additional capital to make this dream a reality. However, before you go betting the farm on your new international strategy I would like to share with you insights I have learned during my extensive career in international business and how you can expand your business globally without putting a huge strain on your capital.
Proper preparation which includes a solid understanding of the different markets available and which ones are right for your product or business is crucial. Below are a couple of facts which can give insight into the global retail world:
- Brazil is the 10th largest economy in the world. Sao Paulo Brazil is the 19th richest city in the world and poised to move up to 13th by 2020. Imagine what type of product or service can be generated in this type of market.
- Buenos Aires is the financial hub of Argentina ann its port is the third busiest in South America.
- Santiago Chile, with its 6 million plus population, generates 45% of the countries GDP.
- Chile has the closest model of the department store concept of anywhere in South America and completely understands the Big Box concept.
- Cairo, Egypt is the largest city in Africa, as well as, the largest Muslim city in the Middle East.
- Local culture & customs: Understanding a countries culture, customs and specific business practices will make the difference between closing the sale and going away empty handed. International business relationships are built over time and based on mutual respect and common interests. The fast paste, multi-tasking approach common in the US will not be as successful in the Middle East or South America. You may walk away empty handed from a business lunch in Saudi Arabia simply because you ate with your left hand. Saudi's only eat with the right hand as the left is considered dirty. Speaking the local language, knowing when to push, when to eat, when to call it a day, when to relax and when to close are all nuances specific to each country and learned over time.
- Packaging: Packaging, product copy, images and displays need to be culturally specific and appropriate to each country. It would be disappointing to build an entire product launch around a female celebrity only to find women on packaging in the Middle East is not accepted as women are held in high regard and are not to expose body parts. Ensuring your packaging is in the correct language and dialect needs to also be a consideration. Packaging in China would not go over well if it were only in Mandarin; it would also need to be in Cantonese. Be sure your graphic designer understands which colors are strong and acceptable for each country and region. In China the color green is associated with "Health, Prosperity and Harmony", however do not market green hats as they are associated with infidelity.
- Logistics: Freight forwarders, lead times, port authorities, peak ship times, reverse logistics due to returns, customs and freight rates are just a few of the issues you will have to be an expert at to ensure your products get to market as promised.
- Regulations & Certifications: Just like UL approval in the US other countries have a multitude of different certifications, approvals, and packaging requirements that need to be planned for and allotted the appropriate amount of time to complete. The loss in revenue caused by the confiscation of an entire shipment by the Saudi government because it didn't have the appropriate SASO approval can be devastating to any company as will finding you shipped your 4th quarter products to Israel without the appropriate ISI certifications.
- In country representation: Using in country representation can be a critical part of your products success. An agency who is dialed into the specific retailers you are targeting can give you an even greater understanding, insight and specifics regarding your product and how it is performing. Having someone on the ground in country at all times can also help with training and product promotions to ensure their success.
- Pricing your products for local retail & wholesale: Pricing your product to be competitive internationally can be tricky. Before committing to any deal you should be aware of the following: What are the sensitive price points in the countries you are selling into? What prices will move your product and get you the sell through you and the dealers are looking for? Have you factored in freight, duty, certifications and import costs into your model? When using an in country Distribution Partner ensure you factor in the different pricing levels knowing each level needs to make a profit. Currency variations: Is the country you are selling into having large currency swings or does it have a level balance? Will you sponsor a currency smoothing program or take your chances with the market?
- Payments & Credits: Once you have mastered the above 6 items and have a deal in the works I am sure you want to get paid. Acceptable credit, terms and payments schedules can vary by country. A "Letter of Credit" with a well known bank is most common; however, this can add expense to your customer who will likely want to recoup it somewhere. International receivable insurance, short shipments, charge backs and credit checks are some other critical areas to consider when looking to get paid in full for your product.