Tackling a new market and mastering export skills can be daunting. There is no cutting corners, but there are resources for exporters. You can avail yourself of other people’s expertise to avoid some of the worst mistakes.
First Step: Research
When you go on vacation, do you prepare? Look up the best sights, restaurants, beaches? Or do you just jump on a plane and go? Someone told me he traveled to Venezuela a few years ago simply because the flight was cheap. He had no clue about the economic and political situation in the country and (literally) struggled to obtain cash and food. Not the best trip ever.
With a commercial venture, you will want to be even more careful. When you develop an interest in a specific market, do some research first. Is this market right for you? Learn as much about the country as you can – do a Google search, check your own government’s commercial information on the country; visit the country’s Embassy website.
It’s important to dream, but don’t just rely on hearsay. I had quite a few clients tell me that a friend or relative had travelled to Berlin and said what a great store KaDeWe was, and that they too should sell there. This constituted their Germany strategy: selling in KaDeWe. Never mind that KaDeWe might not be interested in their brand, that their products might not meet regulatory requirements, that they didn’t not know how to even bring their goods into Germany.
Where and How to Do Research?
Once you have confirmed that the market in question really is of interest, research your industry in the country. International trade shows can be a great resource in this context. (Incidentally, Germany hosts a large number of leading international trade shows every year.) You don’t have to participate as an exhibitor right away, but visit, walk the show, and try to talk to as many people as possible. You will be able to learn about other market players and market conditions. See my article on How to Do Business at a German Trade Show for further details.
Try and do some research on the ground as well. You might be able to lay some important groundwork at a trade show – perhaps you have made some contacts whom you can visit. This will allow you to learn more about them and their real-life operations, and to build a relationship.
For (initial) information about regulatory issues in Germany and other countries of the EU, you might also want to visit the website of the European Commission.
Check whether your government is offering information and other hands-on support for exporters. This might include information about your target country, its economic and legal/ regulatory situation and other important topics.
Most people I have met seemed to think that working in an Embassy or Consulate meant an endless stream of glamorous visitors and champagne receptions. Not so. Most Embassies dedicate significant resources to supporting business, for instance through Canada’s Trade Commissioner Service or the US Commercial Service. Contact your Embassy to find out what they offer.
Your Embassy might be able to help you refine your strategy, provide insights into the local market situation, alert you to business practices, introduce you to relevant contacts, highlight issues you need to work on before entering the market, and so on. They will also be able to refer you to additional resources at home such as export financing etc. Just don’t expect them to do your business development for you.
Keep in Mind…
Please note: Embassies do not provide legal and/ or tax advice. These are highly complex subjects for which you will need specialist knowledge. A common enquiry I received was „Can you explain VAT to me real quick?“ … Absolutely not, especially not „real quick“, sorry! Your Embassy should, however, be able to suggest professional service providers who operate locally.
Embassies are staffed by diplomats (from your country) and local staff. You may be tempted to think the diplomats will understand and help you better than the locals. It is completely legitimate to feel more comfortable talking to a person from your own country. Just remember that diplomats move from posting to posting and from country to country every few years. Depending on their own background, they may not have a very deep understanding of the market, of your industry, or local business practices. The local staff may be speaking to you in a funny accent, but they may have more relevant information for you.
Can the Embassy REALLY Help?
This depends on your industry and your expectations.
The Embassy can definitely advise you regarding local market conditions, business culture, suitable sales channels, local service providers etc.
Speaking from my own experience – I often felt my clients expected me to be able to instantly connect them with relevant buyers for their exact product. My portfolio was consumer goods, made up of numerous subsectors, such as apparel, shoes, cosmetics, baby and kids‘ products, toys, jewellery, pet accessories, and sporting goods. Think about it – there is no way I would be able to know every buyer in every major retailer in each of these subsectors. A trade officer working in a less fragmented industry will probably find it much easier to build contacts.
Can the Embassy open doors for you? My clients usually wanted warm introductions to buyers. In my personal opinion, there is limited scope for that in Germany. Most of the people I talked to at business events, trade shows, etc., were very impressed to meet someone who works at an Embassy or a Consulate, mainly because they thought our work was very glamorous. It did not translate into an eagerness to sell my clients‘ products.
When it comes to actual business, it is much more helpful to be introduced by someone from within the industry. So focus on building a network there.
The information and support that your Embassy can provide will be limited. Should you use a paid market-entry consultant?
A great consultant can work wonders. Just remember that in many countries anyone can call themselves a consultant – so shop around carefully. Define exactly what you need and find someone who can help you with exactly those needs.
A Few Points to Consider
Does the consultant have industry experience? Do they have commercial experience? Do they have relevant contacts? Do they have expertise in issues that are a concern for you? Do they have reference clients? Have they worked with comparable companies?
A Bad Example
My colleague and I once spoke with a client who was using a consultant. They were about halfway through a multiple-module program and seemed happy. The consultant, they told me, did not have particular expertise regarding their product category, but saw market potential for their product. He did not have relevant industry or sales contacts, but was taking their product to potential customers. They felt they were on the right path.
In all honesty, we had severe doubts. The client certainly had a very good and very effective product, but it was a niche product. The problem it solved wasn’t necessarily highly relevant for Germany. From what the client told us, we wondered whether the consultant was trying to squeeze as much money out of them as possible (by moving them from module to module, charging them for yet another report) before telling them in the end that regrettably he wasn’t able to find them any customers.
As a friend of mine once put it, „I don’t want another memo, I want some action.“ Is your consultant just selling you a bunch of memos?
A Jack of All Trades?
German is well-known für its many long words. One of my favourites is „eierlegende Wollmilchsau“. This literally translates into „a sow with a woolly fleece that lays eggs and gives milk“. One creature solves all your problems.
Are you going to find such a creature in just one consultant? Someone who can handle tax, regulation, operations, marketing? Probably not.
Depending on the issues for which you need support, you will have to get help from various sources. For instance, someone with sales experience in automotive might have some knowledge of regulatory issues – this may nudge you in the right direction, but you should probably get a regulatory specialist to be on the safe side.
This can all seem very overwhelming. And yes, you should take it seriously. Decide which issues can have the most impact on your business and look at them first.