Investor's Business Daily, September 26th, 2007
A number of small to midsize firms expand into foreign markets without doing the due diligence. Big mistake, notes legal expert Andrew Sherman, author of the new book "Build Fast, Build Right."
Doing business overseas is a learning process. To master the essentials:
Obtain qualified advice. Before expanding into foreign markets, outline your goals and potential problems, Sherman says. "Unless the company already has resources on staff with considerable global expertise, it's advisable to bring on consultants who can help," he said.
Choose distributors carefully. "The complications involved in overseas communications and transportation require international distributors to act with greater independence than their domestic counterparts," said Sherman.
"Also, since your company's history, trademarks and reputation are usually unknown" in foreign markets, customers there "may buy on the strength of a distributor's reputation."
For these and other reasons, it's essential to thoroughly research potential reps, he says.
Monitor performance. If you expect distributors or partners to actively promote products overseas, make sure they're properly trained and their follow-through checked. This means allocating enough staff in foreign markets to be a support system.
Never assume. "What works in one market may not work in others," he noted. "Each market has to be treated separately to ensure maximum success."
Research carefully to ensure that ad campaigns, discount offers and other incentives produce the desired results. This means having a working knowledge of the culture you're penetrating, says foreign-relations expert Lydia Ramsey.
Tailor them. "Foreign distributors and market partners can't ignore local safety and security codes (or) import restrictions," said Sherman. "If necessary modifications aren't made at the factory, the market partner or distributor must do them -- usually at greater cost and perhaps not as well. The resulting smaller profit margin makes the account less attractive."
Get them onboard. Ensure that top management commits to globalization for the long haul. "It may take more time and effort to establish a presence in an overseas market than in domestic ones," Sherman said. "Although the early delays and costs involved in going abroad may seem difficult to justify," take the long view and "carefully shepherd international marketing efforts" to gain a foothold.
Small to midsize businesses sometimes turn to exporting when domestic business falls off. When the U.S. economy rebounds, they ignore exporting or "relegate it to a secondary place," Sherman said.
This hurts relations with overseas reps and could leave your firm "without recourse when domestic business falls off again."
Act fast. On your Web site and elsewhere, "you must have policies and procedures to address consumer problems quickly and fairly, and without excessive cost or inconvenience," Sherman emphasized.
