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Frank Lavin: The power of global trade

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Despite fears of increased protectionism Frank Lavin insists it remains clear that international trade will deliver global economic empowerment

Despite all the pessimistic chatter of late, international trade is moving ahead and powering growth in the global economy. Trade barriers continue to be lowered and new market entry is on the rise. 

The global economy is truly interconnected – in August, the Federal Reserve Bank of San Francisco released a study showing that for every dollar spent on a Chinese-made item, 55 cents goes to American businesses, largely for sales and marketing services. Companies are increasingly serious about taking their goods and services abroad to find new customers and new avenues for growth. Free trade is alive and well, but this shift towards exporting presents challenges as well.

Companies that have never done business abroad are eager to take advantage of the vast swathe of opportunities that lie outside their home markets, but may falter when it comes to the practicalities of implementing an international exporting strategy. There are a few things that these companies, along with those who help guide and advise them, must know about what it takes to break into a foreign market.

Assess the opportunity

In order to be successful in exporting, a company must assess what it hopes to gain by taking its operations abroad and analyse its business model to find the strengths that will translate into the new market. It must be honest about what aspects of the model will need to be improved upon. Crucial to this endeavor is a management team that understands the market terrain and is willing to do its homework.

In defining a strategy, it is vital for a company to pick the right country for its export goals. It’s important to start simple and build up. Most companies choose to sell their current product or services in a country that is culturally similar to their own, has a large potential market for their product and low barriers to market entry.

Many manufacturers make the mistake of assuming their competitive advantages at home will also mean a competitive advantages abroad. A company must do thorough market research to understand the needs of its new customers, then set about filling the niche in which it is best suited to succeed.

It is important for a company to understand how their competitors operate and to find a way to differentiate by showing how its product helps meet a need previously unmet.

Innovation he assure success in exporting. A company must get feedback from stakeholders on the ground, most importantly, customers and distributers.

Once a company has identified where its business needs to improve, it might be time to think about forming partnerships that will make its life easier. This can be the most daunting part of international exporting, which is one of the reasons why I started ExportNow.com to help companies ship cheaply to China and distribute their products directly to customers on TMall.com. It’s important to remember that there can be strength in numbers, so companies must remember to do due diligence when looking for distributers on the ground and other players that will factor into their overall export strategy.

In the early stages of planning, it might be helpful for companies to reach out to government export advisors and to attend international trade shows specific to their industry. When helping to advise a company considering an export strategy, it’s important to emphasise the dividends that will pay off in the long run from relationships with people in the know.

Public affairs professionals working with companies looking to formulate and implement export strategies must have an understanding of what it takes for businesses to make it in a foreign market. An emphasis on building strong relationships with stakeholders abroad can be a great boon, and encouraging clients to do so is some of the best advice a company can get. Along with a willingness to adapt and tailor products and services to a new market, an agile management team and advisors willing to speak honestly about strengths and weaknesses will pay off in the long term.

Exporting is the answer to sustaining a healthy business and overall economy and uderstanding the process can be the first step of a fruitful endeavour.

Frank Lavin is former US ambassador to Singapore, founder of ExportNow.com and chairman of Edelman’s PA practice in Asia Pacific 

business China economy empowerment Government Management Public affairs Singapore

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