Entering into Global markets is a great way to organically grow your business. However, many small to mid sized businesses have a hard time, if they even venture to go global at all, entering global markets. Here are 5 tips for businesses looking to expand their business by entering global markets:
Revise your pricing strategy to suit local purchasing power. I like using this example: Microsoft is having a difficult time getting Mainland Chinese computer users to use their operating system and Office products. Why? Simply, it costs too much for locals to buy Microsoft products. Linux is popular in China simply because it is open-source and an affordable solution for that market. Mainland Chinese purchasing power is very low compared to those in the US or Europe. So, pricing your products and services according to local purchasing power is a must when entering foreign markets.
Tailor your product or service offering with the local market in mind. Why is Unilever having such success in Asian countries such as India and China? They tailored their products to be affordable for the general consumers who were mostly living in rural areas and were low-income earners. They did this not by offering a super-family size packaging but a smaller or "sachet" size packaging only marketed to these countries and demographics. As a small or medium business you would have more control over whether you can change the way you offer your products simply due to less red tape and top level management to go through thus making it easier to enter global markets.
Find a local partner who is on the frontlines. Having worked at a multinational company in their Asian headquarters, I've seen far too many times where the Directors and CEOs sitting in their offices in the US and UK blindly launch new products in emerging markets (Asia specifically) simply due to media coverage and media hype about the latest and greatest market to be in. Often times than not, not listening to your frontline staff or getting the "real deal" from those on the frontlines in those markets will lead to failure. They know those markets intimately and hear and know about things that may not get reported in international news.
Know your local market and regional competitors. I remember one case where a business owner who ran a relatively successful online retail cosmetic business in North America and wanted to move that business model into China. The reasons why I believed it was not a feasible business model for that market:
- There are literally thousands of physical retail shops selling low-cost to brand name cosmetics.
- ECommerce and credit card usage in China is not popular. Cash still rules commercial transactions.
- Mainland Chinese women go to Hong Kong to buy name brand products because they know that in Hong Kong the products are authentic.
So, it's important to know whether your product, service or business model will be able to compete with local competitors. Ask yourself: "How are locals in these markets presently sourcing these products or services?"
Speaking of Asia as a region, often times you will need to look at regional competitors as well who may be headquartered in Hong Kong or Singapore but also market into the rest of Asia. So, being aware of regional competitors as well as local competitors is important to determining your place in these markets.
Be mindful of the local business culture. When you are developing business partnerships with local companies, be mindful of the way they do business in their country. For instance, the Asian region as a whole, consider the concept of "Face" an important concept. In Asian culture, it is not polite to be too direct or give direct rejection or create confrontations. Having cultural sensitivities will go a long way in developing your business partnerships in global markets.
In this age of the Internet and as more countries are being wired in, it's becoming more feasible for businesses of any size to expand into international markets. So, start growing your business and expanding your reach. If you follow the tips above, you'll have a good start to going global.
Copyright © 2004. Ethan Hathaway.