International markets will continue to offer American companies growth opportunities in 2019. According to a 2018 Brookings Export Monitor report, 85 percent of global economic growth over the next five years will happen outside of the United States.
While the world really can be your company's export oyster, you need to develop a growth strategy for exporting. Five best practices for companies that want to make exporting part of their core sales strategy include identifying growth sectors, finding markets with growing demand for your products, taking advantage of free trade agreements, attending international trade shows, and meeting with distributors in new markets.
1. Identify Growth Sectors
One of the most important steps for expanding your exporting horizons is to identify growth sectors for your products within specific international markets. Companies that are new to exporting should consider a familiar environment for starters.
What that means, says international trade expert Leroy Lowe, is looking at countries that are nearby and culturally similar to the United States. For example, proximity and familiarity explain why Canada is often the first export market for many U.S. companies.
“If you are creating a list of target markets to explore, it makes sense to consider the low-hanging fruit first," says Lowe, president of NASBITE International, a U.S.-based nonprofit organization focused on global business, education and training.
Lowe recommends that both new exporters and more seasoned companies considering expanding into new markets start by reviewing the U.S. government's country commercial guides, which are available free on the export.gov website. The guides provide detailed information about more than 125 countries, including market conditions, opportunities, regulations and business customs.
Another good resource is The CIA World Factbook, which includes information on every country in the world, including details on everything from population demographics and economic drivers to utility infrastructure and transnational issues.
2. Understand the Demand for Your Product
Identifying markets in which your industry sector is growing is just the beginning. You also need to determine whether there is growing demand for the specific products you hope to export, and who your competitors are.
New-to-market exporters need to understand how their product will fare in each new country they are considering. Most companies will benefit from a consultation with their local office of the U.S. Commerce Department, which can help exporters establish priorities and refine export plans. These offices are part of the federal government's worldwide network of trade specialists.
For less experienced exporters, the U.S. Small Business Development Centers are often a good starting point. They can provide free assistance, including market research and analysis. Other potentially useful resources include the Centers for International Business Education and Research, and your state's international trade office.
3. Take Advantage of Free Trade Agreements
One of the ways to potentially reduce some of the friction and cost of entering a new market is to work with a country that has a free trade agreement (FTA) with the United States. The United States has free trade agreements in force with 20 countries. The Office of the United States Trade Representative (USTR) maintains a list of FTAs, and provides market intelligence on more than 75 countries and regions around the world.
Trade agreements can help U.S. companies enter and compete more easily in new markets. Reduced tariffs and the elimination of other non-tariff barriers can often make a difference on whether a particular market has the potential to be profitable for your products. “The free full text of the free trade agreements are online," says Lowe. “Of course, some of those agreements aren't the easiest to read."
If you are creating a list of target markets to explore, it makes sense to consider the low-hanging fruit first.
—Leroy Lowe, president, NASBITE International
If you'd prefer not to wade through the text of an FTA, Lowe suggests contacting a bilateral chamber of commerce or trade association. These groups focus on specific regions and industry sectors. So, for example, if Canada is a potential export market you're interested in, you might want to contact the Canadian American Business Council.
4. Use Trade Fairs as a Starting Point
International trade fairs and U.S. trade shows that attract international buyers can be a good way for American exporters to connect with potential buyers or distributors. You can search for trade events by industry or country on the export.gov website.
Trade shows enable you to immerse yourself in a new market and generate leads for potential partners. But, Lowe cautions, the connections made at trade events require careful scrutiny and due diligence. “Trade shows are very popular because they bring a lot of buyers and sellers to one space," he says. “But I know of companies that have been approached by potential partners whose sole intention was to block them from the market. They sign representation agreements with partners, who are actually working for their competitors, and who have no real intention of doing any business with them."
Hurrying into a partnership with an unknown company you meet at a trade show can be a real setback when you are trying to expand into a new market. Lowe's advice is to be cautious, and to carefully vet potential partners.
5. Find the Right Partner
Due diligence is a business fundamental, and it's an especially important growth strategy when deciding who to partner with in another country. The U.S. Commerce Department has fee-based programs in which experienced trade specialists will help you locate and screen potential partners. In addition, one of the best ways to learn about the credibility of a potential partner is to contact a commercial officer at the embassy in the country you are interested in exporting to.
Take the time to know who you are doing business with, says Lowe. “You have to meet potential partners on the ground, at their place of business," he says. “You'll learn a lot by having that context, by being at their facility, and by learning more about who you're dealing with."
Choosing trusted partners in overseas markets, and having confidence in their ability to represent you, will help with both your international business growth, and your peace of mind.
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