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As told by Keith Jackson, Professor of Enterprise and Entrepreneurship at the University of Sheffield.
As businesses mature and look for ways to expand, exporting may become a viable option. Introducing new or existing products to other locations seems like an obvious step for many companies seeking to increase their customer base. Though some challenges and complexities surround the entrance into foreign markets, several advantages support doing so.
Three Top Benefits of Exporting
The most apparent benefit is to increase revenue, because you suddenly have more customers to access. Your home market is just a small part of the world. Wherever you are, there’s much more opportunity outside the borders of your country and your home market than there are within it.
Another, always timely, reason to export is its potential to spread risk. Your risk profile changes when you export. If you’re already dependent on your home market, that might have advantages, but it may also carry risk. Markets have different drivers and different cycles. If you can be active in a few markets rather than just one, that perhaps spreads your risk so that as one market becomes volatile or slow, another picks up the slack.
There’s also a deeper purpose to exporting, which is to learn. If you’re serving different groups of customers in different markets that have different requirements with different competitors, the organization learns a considerable amount.
Considerations to Explore
Step one in deciding to export is coming up with a targeted list of markets into which you’d like to expand. It may be a combination of seeing what opportunities present themselves, and making a more deliberate list based on relationships that you have and market demand. Identifying the right market is important because if you light too many fires and try to do too many things at once, it can be very resource hungry.
Evaluating Market Viability
Being deliberate, and perhaps doing things in phases, can help with resource allocation. That sometimes starts with considering adjacent markets. You might think about the neighboring countries — or you may want to leapfrog some of those because maybe the competitive intensity is too strong. Perhaps there’s a strong preference for domestic brands, like there is in France and Germany. Or maybe there’s a big opportunity in developing economies where perhaps the competition is less intense, and maybe the regulatory approval process is less problematic. Doing your due diligence to determine which markets are most viable will help focus your efforts.
Pricing Appropriately
You also need to determine whether you can sell the product at the right price to remain profitable in the new market. Different markets have different price points and requirements. In your home market, it’s reasonably straightforward to manage costs, expenditure and your margin. When you’re going into other markets, you may be going through a few layers in the customer sales channel and you need to be careful of margin stack.
There’s a transfer price, what you’re willing to sell your product to a dealer for. They may in turn have a sub-dealer. Pricing the product needs to make sense from a profitability perspective as well as a customer appetite perspective. It also needs to be ‘interesting’ for all parties to ensure that effort is applied to grow sales and for this to be sustainable. Introducing a new brand may require attractive introductory pricing to establish a presence in the new market.
What Product Makes Sense for the Customer?
The next question a company’s leadership should ask itself is whether the identified product is the right one for the new market under consideration. What works well in your home market may not work in other markets. Perhaps you need to be selective about which products from your portfolio you might take into different export markets, and may need to modify the product or the product range.
It may be that you need to develop your product a bit more to serve new markets. You’ve got quite a broad spectrum of different cultures and preferences in different markets. Listening to those markets and working out the right product, rather than assuming that you can take your existing product offer and hoping for success, is key.
The customer base may also be different when you export. Think about your target customers in that particular market. Let’s say in your home market you’re selling products to primary care. That won’t work in a market like China, where they’re based in a hospital setting, which might have a different procurement and approval pathway.
Regulatory Compliance
For orthopedics, the critical hurdle is meeting regulatory requirements. There’s a certain pathway, depending on which market you’re in. You have a route to revenue, whether you’re going to go through a dealer network, a partner, or do it yourself and set up a presence on location.
Clearly, some territories have very stringent regulatory requirements. It comes back to thinking about getting your ticket to the game. Quite often in the orthopedic arena, it’s regulatory approval, and that can take a lot of work and time.
To be successful when exporting, it needs to be a mix of the right timing, the availability of human and financial resources, and the right product for the market.
Nurturing and Leveraging Relationships
Identifying your channel and route into the market comes next. Usually, it comes through a partnership or relationships with people on location. Selecting and working with the right partner or partners will provide inside market information and lead to an effective two-way communication style.
To find these partners, utilize your network, spend time in the market and go to trade shows and conferences. Discover who’s operating in your field and who has a good reputation. Certainly, it may take a bit of serendipity. Maybe there’s a company dealing with a competitor’s product, but things haven’t worked out and they’re looking for a different product to add to their portfolio. That’s often a trigger.
Spending time in the market will help you see how people present themselves to customers in the location you’re considering. You can also utilize support from government agencies, which can make introductions through the local consulate office or embassy, who might have specialists working in their healthcare team that can make introductions. At a minimum, do a bit of market research to identify a list of potential target partners that you can talk with.
Wherever you are in the world, it comes back to relationships. You’ve got to invest time to get to know people, to know whether they’re right for you and your business and your products and equally, whether you’re right for them. Because if you’re not, you won’t be able to do a good job.
For this reason, you may consider a presence in the region. Establishing a facility in the new market is a logical part of the journey, and for some companies, it may happen quicker than others. When you’re building momentum and see a positive trajectory, it may be time to consider whether you should build a physical presence.
A physical presence brings with it some of the cultural nuances and understanding that comes with employing local staff, and it’s a signal to the market that you are legitimate. You’re indicating to both internal and external stakeholders that you’re committed, viable and serious about your business as an international entity.
Navigating New Cultures
Success is dependent on understanding the cultural differences in the market you’re exporting into. Misunderstanding or not considering strongly enough the cultural differences can devastate efforts. It takes a lot of adjusting and if you don’t adjust, you can come across as arrogant, and you will likely be unsuccessful.
The learning aspect of exporting into new markets is often overlooked. If we actually get ourselves out of our comfort zones, that’s when the real learning begins. Often, our comfort zone is a geography or a business culture that’s very familiar to us.
For those in the U.S. and many parts of Europe, there is a Western approach to things that can be described as low-context cultures. People say how it is; they’re fairly straightforward, without much nuance and subtlety. The farther east you go, and often the farther south you go, that tends to change. There are high-context cultures where you may be expected to “read the air.” Some people in Western cultures struggle with that. What may be considered arrogant in one culture can be considered polite in another, and vice versa.
The more exposure you have to the markets you’re considering, the more you’ll learn. It takes spending time in the market, not assuming things, listening a lot, observing a lot, and doing a bit of reading around culture in general. That is particularly important for senior leadership.
In many cultures, conversations start at the very top, CEO to CEO, usually face-to-face, to determine if they can trust one another and if there’s chemistry. You can’t do remote control from the mothership; you’ve actually got to get on a plane, spend time in the market and nurture the relationships at the top level.
Western business culture tends to be very results-oriented and focuses on seeing tangible progress. If you’re a Western business looking to partner with an Eastern business, it may seem as though you’re circling round and round and nothing is getting done. But a lot is happening — you are being assessed. Is this a viable proposition? Are you a trustworthy partner? Are you going to invest long term in this relationship? All of those observations are taken place, and you can damage the relationship if you charge to the outcome. If you’re an Eastern business, the Western business may seem as though they’re rushing the process and are fixated on return on investment more than nurturing a relationship.
Understanding and adapting to the local culture into which you seek to export will help smooth business dealings and improve relationships and outcomes. That adaptation also plays into your marketing and communications, which must be localized. The way products are presented in East Asia is very different from how they’re presented in the West, based on how customers engage. There are various marketing channels, marketing messages and strategies. Because at the end of the day, your job is to sell your product in that market, and you aren’t going to do that if you try to go about it precisely the same way you do in your home market.
Professor Keith Jackson has 30 years of experience in Medtech, leading change as a CEO, Director and Advisor. He has worked with, visited and learned from some of the most innovative organizations, from San Francisco to Shanghai. He has spearheaded international business expansion, developing his cultural fluency, including winning multi-million dollar contracts in China and Japan. He studied disruptive strategy with Harvard Business School and helps organizations create value across borders, enhancing competitive advantage.
As told by Keith Jackson, Professor of Enterprise and Entrepreneurship at the University of Sheffield.
As businesses mature and look for ways to expand, exporting may become a viable option. Introducing new or existing products to other locations seems like an obvious step for many companies seeking to increase their customer base. Though...
As told by Keith Jackson, Professor of Enterprise and Entrepreneurship at the University of Sheffield.
As businesses mature and look for ways to expand, exporting may become a viable option. Introducing new or existing products to other locations seems like an obvious step for many companies seeking to increase their customer base. Though some challenges and complexities surround the entrance into foreign markets, several advantages support doing so.
Three Top Benefits of Exporting
The most apparent benefit is to increase revenue, because you suddenly have more customers to access. Your home market is just a small part of the world. Wherever you are, there’s much more opportunity outside the borders of your country and your home market than there are within it.
Another, always timely, reason to export is its potential to spread risk. Your risk profile changes when you export. If you’re already dependent on your home market, that might have advantages, but it may also carry risk. Markets have different drivers and different cycles. If you can be active in a few markets rather than just one, that perhaps spreads your risk so that as one market becomes volatile or slow, another picks up the slack.
There’s also a deeper purpose to exporting, which is to learn. If you’re serving different groups of customers in different markets that have different requirements with different competitors, the organization learns a considerable amount.
Considerations to Explore
Step one in deciding to export is coming up with a targeted list of markets into which you’d like to expand. It may be a combination of seeing what opportunities present themselves, and making a more deliberate list based on relationships that you have and market demand. Identifying the right market is important because if you light too many fires and try to do too many things at once, it can be very resource hungry.
Evaluating Market Viability
Being deliberate, and perhaps doing things in phases, can help with resource allocation. That sometimes starts with considering adjacent markets. You might think about the neighboring countries — or you may want to leapfrog some of those because maybe the competitive intensity is too strong. Perhaps there’s a strong preference for domestic brands, like there is in France and Germany. Or maybe there’s a big opportunity in developing economies where perhaps the competition is less intense, and maybe the regulatory approval process is less problematic. Doing your due diligence to determine which markets are most viable will help focus your efforts.
Pricing Appropriately
You also need to determine whether you can sell the product at the right price to remain profitable in the new market. Different markets have different price points and requirements. In your home market, it’s reasonably straightforward to manage costs, expenditure and your margin. When you’re going into other markets, you may be going through a few layers in the customer sales channel and you need to be careful of margin stack.
There’s a transfer price, what you’re willing to sell your product to a dealer for. They may in turn have a sub-dealer. Pricing the product needs to make sense from a profitability perspective as well as a customer appetite perspective. It also needs to be ‘interesting’ for all parties to ensure that effort is applied to grow sales and for this to be sustainable. Introducing a new brand may require attractive introductory pricing to establish a presence in the new market.
What Product Makes Sense for the Customer?
The next question a company’s leadership should ask itself is whether the identified product is the right one for the new market under consideration. What works well in your home market may not work in other markets. Perhaps you need to be selective about which products from your portfolio you might take into different export markets, and may need to modify the product or the product range.
It may be that you need to develop your product a bit more to serve new markets. You’ve got quite a broad spectrum of different cultures and preferences in different markets. Listening to those markets and working out the right product, rather than assuming that you can take your existing product offer and hoping for success, is key.
The customer base may also be different when you export. Think about your target customers in that particular market. Let’s say in your home market you’re selling products to primary care. That won’t work in a market like China, where they’re based in a hospital setting, which might have a different procurement and approval pathway.
Regulatory Compliance
For orthopedics, the critical hurdle is meeting regulatory requirements. There’s a certain pathway, depending on which market you’re in. You have a route to revenue, whether you’re going to go through a dealer network, a partner, or do it yourself and set up a presence on location.
Clearly, some territories have very stringent regulatory requirements. It comes back to thinking about getting your ticket to the game. Quite often in the orthopedic arena, it’s regulatory approval, and that can take a lot of work and time.
To be successful when exporting, it needs to be a mix of the right timing, the availability of human and financial resources, and the right product for the market.
Nurturing and Leveraging Relationships
Identifying your channel and route into the market comes next. Usually, it comes through a partnership or relationships with people on location. Selecting and working with the right partner or partners will provide inside market information and lead to an effective two-way communication style.
To find these partners, utilize your network, spend time in the market and go to trade shows and conferences. Discover who’s operating in your field and who has a good reputation. Certainly, it may take a bit of serendipity. Maybe there’s a company dealing with a competitor’s product, but things haven’t worked out and they’re looking for a different product to add to their portfolio. That’s often a trigger.
Spending time in the market will help you see how people present themselves to customers in the location you’re considering. You can also utilize support from government agencies, which can make introductions through the local consulate office or embassy, who might have specialists working in their healthcare team that can make introductions. At a minimum, do a bit of market research to identify a list of potential target partners that you can talk with.
Wherever you are in the world, it comes back to relationships. You’ve got to invest time to get to know people, to know whether they’re right for you and your business and your products and equally, whether you’re right for them. Because if you’re not, you won’t be able to do a good job.
For this reason, you may consider a presence in the region. Establishing a facility in the new market is a logical part of the journey, and for some companies, it may happen quicker than others. When you’re building momentum and see a positive trajectory, it may be time to consider whether you should build a physical presence.
A physical presence brings with it some of the cultural nuances and understanding that comes with employing local staff, and it’s a signal to the market that you are legitimate. You’re indicating to both internal and external stakeholders that you’re committed, viable and serious about your business as an international entity.
Navigating New Cultures
Success is dependent on understanding the cultural differences in the market you’re exporting into. Misunderstanding or not considering strongly enough the cultural differences can devastate efforts. It takes a lot of adjusting and if you don’t adjust, you can come across as arrogant, and you will likely be unsuccessful.
The learning aspect of exporting into new markets is often overlooked. If we actually get ourselves out of our comfort zones, that’s when the real learning begins. Often, our comfort zone is a geography or a business culture that’s very familiar to us.
For those in the U.S. and many parts of Europe, there is a Western approach to things that can be described as low-context cultures. People say how it is; they’re fairly straightforward, without much nuance and subtlety. The farther east you go, and often the farther south you go, that tends to change. There are high-context cultures where you may be expected to “read the air.” Some people in Western cultures struggle with that. What may be considered arrogant in one culture can be considered polite in another, and vice versa.
The more exposure you have to the markets you’re considering, the more you’ll learn. It takes spending time in the market, not assuming things, listening a lot, observing a lot, and doing a bit of reading around culture in general. That is particularly important for senior leadership.
In many cultures, conversations start at the very top, CEO to CEO, usually face-to-face, to determine if they can trust one another and if there’s chemistry. You can’t do remote control from the mothership; you’ve actually got to get on a plane, spend time in the market and nurture the relationships at the top level.
Western business culture tends to be very results-oriented and focuses on seeing tangible progress. If you’re a Western business looking to partner with an Eastern business, it may seem as though you’re circling round and round and nothing is getting done. But a lot is happening — you are being assessed. Is this a viable proposition? Are you a trustworthy partner? Are you going to invest long term in this relationship? All of those observations are taken place, and you can damage the relationship if you charge to the outcome. If you’re an Eastern business, the Western business may seem as though they’re rushing the process and are fixated on return on investment more than nurturing a relationship.
Understanding and adapting to the local culture into which you seek to export will help smooth business dealings and improve relationships and outcomes. That adaptation also plays into your marketing and communications, which must be localized. The way products are presented in East Asia is very different from how they’re presented in the West, based on how customers engage. There are various marketing channels, marketing messages and strategies. Because at the end of the day, your job is to sell your product in that market, and you aren’t going to do that if you try to go about it precisely the same way you do in your home market.
Professor Keith Jackson has 30 years of experience in Medtech, leading change as a CEO, Director and Advisor. He has worked with, visited and learned from some of the most innovative organizations, from San Francisco to Shanghai. He has spearheaded international business expansion, developing his cultural fluency, including winning multi-million dollar contracts in China and Japan. He studied disruptive strategy with Harvard Business School and helps organizations create value across borders, enhancing competitive advantage.
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Heather Tunstall is an ORTHOWORLD Contributor and owner of Tunstall Content.
