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Challenges in Exporting

Published on Business stage: Scaling, Starting, Unlocking

Most businesses can enjoy greater economies of scale when they export. Export brings new pastures, new markets for their products and services that have served a domestic market. However, the different markets around the world also have different characteristics that may require these companies to adapt not only their offering but also their business strategies. Here are three challenges that exporters may face and how to deal with them:

1. Different timescales

Throughout Western Europe, the concept of time value of money is well established. However, in different regions of the world, especially such as the Middle East, the concept of time value of money differs. There are various reasons for this – firstly the businesses tend to be rich in capital but conservative in approach to spending. There is also a dislike for paying interest, which devalues the time value of money. Manufacturers and service providers from Western Europe therefore have to be prepared to be flexible with timescales and deadlines. Sales cycles are likely to fluctuate more depending on the factors on the ground. The time limited discounts may not result in the conversion into sale that you want. The unpredictability of time scales can also impact on exchange rates. Businesses need to be forewarned about these sometimes implicit assumptions in transactions, so that they may better anticipate and estimate costs.

2. Different Value Propositions

In different countries, the factors that influence decision making, and the factors that make a particular product or service attractive differ. In some places it may be only an issue of cost, affordability, return on investment, and/or profit. In some places other issues such as loyalty to existing suppliers, fear of disrupting existing supply chains for other products and services, etc. may become a deciding factor. Other issues that have been seen include add-ons that are not immediately apparent, such as a particular type of packing (waterproof, if the delivery is left outside), unpacking and disposal of packaging materials provided free, installation guidance provided the way the customer likes it, etc. These simple factors that make a particular proposition more attractive to the customer can be subtle and difficult to find out, but quite useful to know.

3. Logistics

Levels of red tape vary, of course, and different countries have different import requirements. It is also worth noting that the law, convention and what happens in practise can all be different. Experience definitely matters when it comes to having smooth logistics, however, in most cases a little bit of attention early in the process can help to prevent many problems. Obtaining samples of the documents used by previous suppliers (with confidential information removed) is one way to make sure that all the documents for a new order are acceptable.
4. Linguistic Barriers – English may be the lingua franca of a large portion of international trade, but English as she is spoken can vary so much that understanding what is being said can be a challenge. Some words are imbued with meaning that is lost across different contexts and cultures, resulting in unhappy entities in the relationship. It may be worth spending a few extra seconds digesting what was said, when speaking with your international customers.

Have you faced any of these when dealing with customers outside your domestic market?

This blog was contribute by Sujita at Earth Digital. Services Earth Digital offer include: export strategies, market introductions and lifecycle management

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