Although your business may have an established local market, there’s often no reason why it couldn’t successfully compete overseas too, growing your revenue and profit.
But before you start exporting you need to have sound knowledge of your would-be markets. You also need to consider whether your products are right for each target market and whether you have the necessary resources.
Planning to export?
Before you commit to exporting you need to honestly assess your export potential – both in terms of the readiness of your business and of your product or service.
It’s essential to carry out detailed market research to identify and evaluate the target market. Examine:
- the industry structure
- the predicted demand for your product or service
- competition and how you plan to fit into that marketplace
- any modifications required to make your product or service saleable
After completing your market research, you can draw up an export plan defining how you will enter the new market.
Consider whether you have:
- a marketing strategy that incorporates international trade development â€¢the necessary financial resources
- the right people to develop the new export markets
- adequate knowledge of the requirements of your chosen market – eg modifying packaging to meet local regulations and standards
- an understanding of export payment mechanisms and export finance
Then assess whether your product is suitable for export. Consider product standards and regulations in the overseas market
Selling and distribution in overseas markets
There are a number of elements you need to consider to sell successfully overseas. How you organise your sales presence in export markets is one of the key decisions.
Depending on your product, you may be able to sell directly. For example, you might be able to sell over the Internet or by exhibiting at local trade shows.
Many businesses look for a partner who already understands the local market. For example:
- You can sell to a distributor who then sells your products locally.
- You can use a sales agent who sells products on your behalf, or puts you into contact with potential customers on a commission basis.
- You can enter into a joint venture with a local business. This gives you a share of the management and profits of the joint venture, but is a more complicated and expensive option.
- If you want complete control over sales, you can set up your own local office. This is the most expensive option. The choice you make can have important financial and legal consequences. See our guide on selling and promotion overseas.
When arranging a sales contract with an agent or distributor, you need to ensure that responsibility for delivery and payment is clearly defined.
It’s also important to remember that intellectual property (IP) protection becomes more complicated if you sell goods overseas. Patents and trade marks are only recognised and protected in the country of origin, so you will need to secure IP protection in each country you intend to sell into. For more information, read our guide to intellectual property protection overseas.
Â Marketing your product or service overseas
To succeed, your marketing strategy will need to be tailored to each target market.
You’ll need to appreciate the traditions, culture and legislation of the countries you are trading with to exploit your exporting efforts.
Using local agents
Non-specialist research can be conducted in-house but you will need to be clear about the data you require. You will also need to set a realistic budget to cover the necessary costs.
Â Your legal obligations as an exporter
You’ll need to familiarise yourself with the VAT rules administered by HM Revenue & Customs (HMRC).
In most cases, exports will be zero-rated for VAT although there are exceptions.
Understanding the law
As soon as your goods enter another country they become subject to that country’s laws.
You can get reports and data on specific countries from the UK Trade & Investment website.
Alternatively, you can find your local International Trade Team on the UK Trade & Investment website.
Â Transport considerations
Your responsibility for transport depends on your agreement with your customer or supplier. For example, you might be responsible for delivering the goods to a warehouse in the customer’s country. Your obligations should be clearly set out in a written contract using Incoterms.
The delay between the shipping of goods and your receiving payment for them will affect your cashflow.
It’s worth discussing your cash position with your accountant and bank manager before committing to exporting. It’s also important to insure your business against not being paid in case one of your overseas customers goes out of business.
Working effectively with different cultures
You’ll need to understand the culture of your target markets to establish a successful relationship with your potential customers.
Being able to speak the language of your potential customers can help to establish mutual confidence.
Passport to Export
UK Trade & Investment have produced the Passport to Export programme to assist new and experienced exporters with training, planning and support to help them succeed overseas.
The programme is delivered through local International Trade Teams.