Today’s interconnected world requires and values international trade. There are many opportunities abroad but being able to take advantage of these opportunities takes preparation and forethought, not only from a logistical standpoint but an economic one as well.
In this article, you will find a list of questions that will help you better understand the challenges of international trade today, how to respond to them, and above all: how to carry out your expansion business with as little risk as possible.
Cultural differences
How important is it to master a common language when setting up abroad?
Despite plenty of translation tools like Google Translate, not speaking the same language as your customers can be a big deal. You must have at least one person in your team who speaks the language of the market you want to enter or consider calling a translator.
This is easier to implement in some places rather than others because some countries share languages. Nevertheless, countries that share a common language may still find themselves with cultural barriers to overcome; if an Australian company wants to sell “thongs” (Australian term for flip flops) to the UK, it will be preferable for the firm to use “flip flops” words rather than thongs because of the different meaning in British English.
Obstacles like these may seem minute but can have a large impact on how well your business is able to integrate into a new market.
To illustrate this, we can look at Mercedes-Benz’s launch in the Chinese market. The luxury car firm had initially chosen the word “Bēnsǐ”, which translated to “rush to death” in Mandarin Chinese. Because of the negative connotations this gave the brand, it had to quickly review its choice and replaced “Bēnsǐ” with “Bēnchí” which in Chinese was “run quickly, speed, or gallop.”
Now, you can understand the type and amount of planning needed to seamlessly integrate into a whole new culture and language.
Why is learning about the culture of the country we are targeting crucial?
When you invest in a new country, you need to understand that it is a place different from your own. Each country has its own tempo, evolves at its own pace. Your organisation needs to be aware of the customs and traditions to best meet the demands of the target market.
A country’s culture can be defined as its traditions, social norms, rules followed by individuals, holidays, history…
When managing teams in offices abroad, selling products to an international retailer/potential client, or running an overseas production facility, showing that you’ve taken the time to understand their cultures can project the respect and emotional intelligence necessary to conduct business smoothly.
Understanding a country’s culture allows you to stand out from the crowd, no matter what you are doing there (managing a team, searching an industrial area, selling products to a wholesaler etc). Your counterpart to these transactions can pick up and appreciate the fact that you have taken an interest in their country.
As well as attracting the attention of foreign investors, you will simply be more able to understand certain ways of working.
For example, an American company will be likely to define the workday as the following hours: from 9 a.m. to 5 p.m. Whereas in Spain, the schedules will be sequenced as follows: 9 a.m. to 1:30 p.m. and 4:30p.m. to 8 p.m. The reason for these times, which appear in many Mediterranean countries, is for the siesta after lunch.
A good strategy to deal with cultural differences is to make sure you carry out a market study. This study will enable you to see the potential of your business in a given market. You will then already be able to assess and resolve certain problems without investing too much.
Organizational issues
Why should you need to recruit new staff in your expansion project?
If you decide to launch your product in a new market, you will most likely need to hire people who can help you towards this new goal; people who know and understand the way business is conducted in that country and can help your business in that regard.
Perhaps people from the country in question, or perhaps people who have experience in that country. Even though hiring more staff is risky as you’ll potentially never meet these people face to face and you have to trust them while increasing your salary costs, this may be a worthy investment when considering the stakes at play.
To know if you are ready to expand, you need to be able to answer “yes” to the following questions:
- Have you recruited the people needed for your international development?
- Do you have the necessary tools to export?
- Are the administrative documents, whether logistical or financial, valid?
You should make sure that everything is 100% ready before you start. It’s also crucial to employ the right people to draw on their expertise, experience and know-how to make a success of your internal development. Launch the right service(s) or product(s) in the right place at the right time and your integration can do nothing but well.
Why is it important to know how to manage your global teams?
In addition to recruiting new employees, you need to know how to manage them. As a consequence of language barriers, cultural differences, time zones, and varying levels of technology access and reliance, it may be very difficult to coordinate a team around the world.
To maintain team spirit and commitment from your employees, you must schedule regular weekly meetings via video conferencing tools such as Microsoft Teams, Skype, or Zoom. When a team is separated, communication is the most important step in achieving your goals, as was highlighted by the recent COVID-19 pandemic.
A vision of local business
How and why should you prepare for financial rules?
Adapting to a country’s laws is a challenge. It is even more so with the everchanging taxes, fees, and tariffs for international trade. You should familiarise yourself with these laws to avoid exposing yourself to great risks.
Tracking and understanding these elements helps determine the value of your business over time.
Again, to be prepared for the best, you need to study in advance, and understand them. The legal processes, although complex, can be delegated to a third-party company to help you move forward with your project.
Why shouldn’t you underestimate the supply chain in your international development?
If companies devote so many resources to logistics, it is because managing a supply chain requires a lot of effort and money. Especially if it spans over several countries, significant costs are to be expected.
Aside from the time it takes to cross large distances, there are other factors that weigh into shipping products across the globe. What should you do if you experience a loss of goods? If customs block your products, how do you proceed to recover them? These are all problems that need to be dealt with well in advance if you hope to avoid them.
So, as is often the case, preparation involves a detailed study of the market; the country, the product, and a set of parameters that will determine your efficiency in cases like the ones mentioned above.
You must not rush into anything. If you do not assess the market properly, you may end up with understock/overstock problems, so having a solid plan will prevent your supply chain from being mismanaged.
What is the use of having a local partner when you want to set up abroad?
Being present in one market does not guarantee success in another. All markets are different depending on trends, maturity, and consumer behaviours. On top of that, there are other obstacles you may face when penetrating a new market (tariffs, import fees, slower turnaround times, low market share. etc)
Exporting will bring you into contact with new competitors. And in order to deal with them you need support: you need to surround yourself with trusted local partners. These local partners will open up doors and allow you to form relationships in various sectors (shipping, storage, logistics), making it easier to compete with the local businesses.
There are many benefits to expect from a network of local partners: having common clients, getting referrals from your partners etc…
Lastly, learning about the strategy adopted by your competitors is always a good solution. To do this, you need to carry out market research.
Final thoughts
Developing internationally is a big challenge for most companies. You have to address many issues, namely in regard to culture, organisation, and local business vision and need to have put a lot of planning and forethought into it. That being said, it would be nearly impossible to do it alone. At Source of Asia, our corporate service experts can help you with your development projects through:
- Building your local team
- Relocating foreign employees
- Hosting your team
- Establishing local presence
- Outsourcing administrative tasks
- Operating locally
- Process Management
Let one of our experts accompany you and handle all the administrative tasks while you stay focused on the business.
