Exporting can be a great option for tapping into bigger markets. It can be an exciting endeavour and incredibly rewarding – but it can also be frustrating and financially risky. Financial risk and uncertainty can be reduced by adequate market research and pre-planning before leaping in.
If you’re thinking of tackling the international market, you’ll need to have some experience growing your business in the domestic market. This means having refined business practices that deliver your products or services to market as efficiently as possible.
Ideally, you’ll also have a good grasp of your target market and what marketing strategies work best for your business type. You should also have a healthy cash flow, which you’ll need to rely on for as long as it takes until your overseas venture becomes profitable.
Before you start devising your export plan, you should do as much research as possible. The Internet is a great first resource. New Zealand Trade and Enterprise (NZTE) has an excellent website for information on exporting and importing, as well as country-specific information. Foreign government or country-specific business sites could also be valuable.
Your local Chamber of Commerce is another useful source of information. Not only do they provide information and seminars to members at little or no cost, but their networking with Chambers of Commerce all around the world makes them a useful source of contacts.
To better understand the market, investigate the competition in your targeted foreign market. Visit the sites of competitors to ascertain any adaptations you might need to make to your product or service, how they market and the level at which they price.
There are also a large number of regulations in foreign markets that must be adhered to; Customs and freight forwarders can inform you of the requirements for different countries. Your local Chamber of Commerce can also help you with export documentation.
Cultural research and sensitivity to local customs can make the difference between winning a contract or not. Before you begin exporting, it is vital that you have devised strategies to overcome any cultural or language barriers. For example, in some cultures, taking a business card without first studying it is considered disrespectful. Educate yourself on both the everyday cultural dos and don’ts as well as the business dos and don’ts in your target country.
On the basis of your industry knowledge, you’re likely to know where your core markets are, be aware of trends in the market likely to shape demand, and have a gut feeling about which markets hold the greatest potential for you.
Personal considerations will also play a part in making the decision; after all, you will be required to visit the country frequently. But this should not be the main driver behind your decision. Thorough market research should tell you where your best exporting opportunities lay.
Australia is the logical first choice for many New Zealand exporters because it’s close, English-speaking, politically stable, easy to reach and culturally similar. For many, Australia offers a test market before heading further abroad. Additionally, under Closer Economic Relations (CER), New Zealand-made goods are duty-free and highly competitive.
Distribution in the foreign market is greatly influenced by market size, the type of good or service, the desired amount of control and the wider export strategy.
Also worth considering:
Have a fresh look at the export potential of your business. If you’d like to explore the possibilities, remember these key points apply to most businesses.
Importing and exporting laws has information on becoming an importer or exporter.
If you export goods and services, you may face hurdles doing business with overseas customers, eg cancelling contracts or defaulting on payments and day-to-day issues, eg managing working capital, securing bank guarantees or funding growth.
The New Zealand Export Credit Office (NZECO) provides a range of trade credit insurance and financial guarantees backed by the New Zealand Government to help businesses secure export sales, manage payment risk and access finance via your bank.
Find out more about available products on the NZECO website.