Exporting is not an easy, quickly mastered endeavor. In addition to a lot of planning and preparations before the first product can even be exported to a foreign market, the establishment of reliable relationships and the adaptability of strategies to local developments need to be considered. There are seven important practices to follow in order to be successful when exporting:
1. Develop a Long-Term Strategic Plan
The first step for every business looking to export their goods is to develop a long-term and detailed plan. Such business plan should include a strategy on how to get in contact with reliable local partners or agents, and how to establish long-lasting relationships. In addition, the plan should outline a realistic timeline and budget.
2. Focus on Due Diligence
Effective exporters always conduct a thorough analysis while looking at the foreign market from all possible angles. This due diligence analysis does not only include considerations like the number of documents required for exporting, transportation cost and time, custom duties and tariffs, export license and labelling requirements, tax implications or storage costs, but also the country’s political or social stability, infrastructure, quality of work force, language, timelines of custom procedures, and contract enforcement and collection procedures. One important consideration that should always be taken into account is the foreign country’s receptiveness to American products.
3. Think Global, Act Local
Not as obvious of a practice is the concept of adaptability of the exported products and goods to the foreign market. It is immensely important to keep the local needs and preferences in mind. It is easy to focus on the big picture; exporting the product on a global basis but then forget that seemingly minor cultural differences (for example between cities, districts, counties, or states) have a major impact on a business’ success. Strategies that work really well in one part do not necessarily transfer to another area, and always need to be reevaluated and adjusted according to the business climate in that particular location.
4. Pay Attention to Geographic Diversity
Closely tied with the previous statement is the fact that in most foreign markets it is almost impossible for a U.S. business representative to become aware of and act according to cultural differences. Having a local partner that is familiar with the desired area adds credibility, commitment and trustworthiness to a U.S. business appearance. Constant communication and involvement of the local partner is extremely important for successful exporters.
5. Be Patient + Commit Long-Term
Successful exporting takes time and commitment, not just from afar, but locally. It is important to realize that the success of the operation to access a new market cannot be done overnight and smaller setbacks need to be anticipated. In order to establish relationships with local distributors or agents, it will be necessary to send one or more representative(s) to the foreign market to not only show commitment but also create personal relationships between the business partners. Cultural differences always need to be taken into account and consistent follow-up on the exporter’s side will be required to succeed. Behavior that deviates from the American business culture is not necessarily a negative sign, but a cultural nuance that needs to be taken into account by adjusting the business model accordingly.
6. Ensure Compliance
In addition to knowing the general legal and practical requirements for exporting to a specific foreign market, exporters have to be aware of internationally applicable agreements like the Foreign Corrupt Practices Act (FCPA) that provides provisions preventing bribery of (foreign) government officials, but also a duty to keep financial books and records accurate, and can impose significant fines and even jail time for guilty individuals. The FCPA applies to U.S. countries, citizens, foreign subsidiaries, officers, directors, and agents of a U.S. company and its scope are not restricted to U.S. territorial boundaries.
7. Rely on Experienced Global Business Legal Counsel and Advisors
Even with experience in other countries, a successful entry strategy into a new market is almost impossible without sophisticated legal counsel and other advisors that have a deep understanding of the necessary global business requirements in addition to the requisite experience with the desired market. Competent advisors can structure entities in a tax-focused way from the beginning of the operations, and thereby save money and time. Just as important is cooperation with local counsel in order to understand the local labor market and avoid non-compliance with specific local regulations regarding repatriation of funds.