Expanding Internationally: How to Avoid Pitfalls
12 June 2014
Read by 3053 persons
Expanding your opportunities by adding foreign markets to a mature national market, optimizing your production capacity or filling the seasonality of your sales, there are many reasons to decide to go international. However, before embarking on this operation, it is imperative to take into account certain aspects that will allow you to avoid pitfalls and to transform this experience into a real success.
Identify the right market
Before you start, make sure your project is viable. Cultural or even climatic differences can make selling a product problematic, so you need to identify the consumption habits of your target countries.
Once the demand is validated, identify and find out about the state of the competition to see if you have a card to play and thus avoid ultra-competitive markets.
Also find out about external factors to the market that could positively or negatively influence your activity. Political interventionism, the sometimes arbitrary application of laws, calls for tenders that systematically favor local companies are all obstacles, sometimes difficult to identify, to an implantation.
Budget your project
By developing your company internationally, you expose it to a market it does not know and to regulations it ignores. It is therefore essential to budget your project, taking into account the hidden costs that could be added (exchange and customs costs for example).
Be as proactive as possible, especially if you want to set up a production unit or a subsidiary, in which case the financial risks are even greater. Beyond the necessary investments, sometimes heavy, it can sometimes be difficult and costly to train local staff, product or service quality defects are more frequent and working conditions are often poor. Protect yourself against these potential unpleasant surprises that could quickly jeopardize your project.
Choose your partner well
Whether it is your distributor, your subcontractor or helps you to settle down, having a business partner who knows the customs and traditions of the country you are targeting is an invaluable asset. They will be your guarantor with local partners and your intermediary during negotiations, which will facilitate your implementation.
However, be careful to ensure their reliability and seriousness in order to avoid the risk of being disappointed or even being scammed. In addition to the financial damage you may experience, it is the degradation of your product's brand image that you may put into question.
Therefore, be vigilant when choosing your partner or associate and do not hesitate to ask for references, to contact former clients and, as a precaution, to file your product patents.
Do not neglect cultural specificities
So that a misplaced word or attitude does not sometimes spoil the conclusion of an agreement, you must imperatively find out about the specificities of each country where you do business. If these cultural differences are the spice of each business relationship and prove to be very enriching, you must nevertheless pay attention to how you behave with your interlocutor so as not to shock them.
In some countries, tutoiement and hugs are natural, while elsewhere it is customary to keep your distance and not encroach on your interlocutor's personal space. In China, in particular, custom ensures that the guest brings a small gift to their host. If the latter initially refuses energetically, they end up accepting by thanking you warmly. Once the cultural formalities are established, all you have to do is talk business.
In conclusion, it is very important to take all these criteria into account in order to succeed in the development of your company internationally and thus avoid bad experiences. In short, targeting the market, identifying the real costs while respecting local differences will be the key to the success of your project and its sustainability.
Philippe Montant
General Manager of ReKrute
Identify the right market
Before you start, make sure your project is viable. Cultural or even climatic differences can make selling a product problematic, so you need to identify the consumption habits of your target countries.
Once the demand is validated, identify and find out about the state of the competition to see if you have a card to play and thus avoid ultra-competitive markets.
Also find out about external factors to the market that could positively or negatively influence your activity. Political interventionism, the sometimes arbitrary application of laws, calls for tenders that systematically favor local companies are all obstacles, sometimes difficult to identify, to an implantation.
Budget your project
By developing your company internationally, you expose it to a market it does not know and to regulations it ignores. It is therefore essential to budget your project, taking into account the hidden costs that could be added (exchange and customs costs for example).
Be as proactive as possible, especially if you want to set up a production unit or a subsidiary, in which case the financial risks are even greater. Beyond the necessary investments, sometimes heavy, it can sometimes be difficult and costly to train local staff, product or service quality defects are more frequent and working conditions are often poor. Protect yourself against these potential unpleasant surprises that could quickly jeopardize your project.
Choose your partner well
Whether it is your distributor, your subcontractor or helps you to settle down, having a business partner who knows the customs and traditions of the country you are targeting is an invaluable asset. They will be your guarantor with local partners and your intermediary during negotiations, which will facilitate your implementation.
However, be careful to ensure their reliability and seriousness in order to avoid the risk of being disappointed or even being scammed. In addition to the financial damage you may experience, it is the degradation of your product's brand image that you may put into question.
Therefore, be vigilant when choosing your partner or associate and do not hesitate to ask for references, to contact former clients and, as a precaution, to file your product patents.
Do not neglect cultural specificities
So that a misplaced word or attitude does not sometimes spoil the conclusion of an agreement, you must imperatively find out about the specificities of each country where you do business. If these cultural differences are the spice of each business relationship and prove to be very enriching, you must nevertheless pay attention to how you behave with your interlocutor so as not to shock them.
In some countries, tutoiement and hugs are natural, while elsewhere it is customary to keep your distance and not encroach on your interlocutor's personal space. In China, in particular, custom ensures that the guest brings a small gift to their host. If the latter initially refuses energetically, they end up accepting by thanking you warmly. Once the cultural formalities are established, all you have to do is talk business.
In conclusion, it is very important to take all these criteria into account in order to succeed in the development of your company internationally and thus avoid bad experiences. In short, targeting the market, identifying the real costs while respecting local differences will be the key to the success of your project and its sustainability.
Philippe Montant
General Manager of ReKrute
