Move into foreign markets

4 factors to consider before moving into foreign markets

To engage in international trade, you’ll need to identify demand for your product or service in markets overseas. Before targeting specific foreign markets—particularly those still emerging—you’ll need to account for:

Business environment

• Understand your targeted market's business environment - Emerging markets are nothing like domestic ones. Be mindful of cultural differences, unfamiliar business practices, varying trade regulations, and political unrest.
• Will Brexit—the United Kingdom’s (U.K.) break from the European Union (E.U.)—affect your exporting strategy? The longstanding practice of using the U.K. as a ‘gateway’ to trade with the rest of Europe could expose your business to tariffs when goods pass through the U.K. and again upon arrival in the E.U. Keep close watch on the ever-evolving U.K and E.U. trading relationship as it could mean renegotiating your existing contracts and intellectual property rights over the coming years.
• Keep up with your company’s access to credit, investor protection, trade across borders, and contract enforcement - Analyze your targeted market’s export potential and accessibility using information from rankings on 190 countries.

Labor costs

• How will labor costs affect your business? The labor cost advantage in emerging markets is smaller than it once was but may still be significant to your company. Be sure to consider the indirect costs of supporting labor overseas, like benefits, training, commercial real estate, technology, etc.

Transportation methods

• What are the implications of domestic vs. offshore/nearshore production for your business? How is your product transported? Is it easy to ship? What’s your optimal shipping method—by air, sea, rail, or some combination? How will that affect the price of your product or service in foreign markets?
• Can your product be shipped directly to consumers? Ecommerce provides a direct way for you to reach customers in targeted markets. However, many countries are changing how low value shipments are treated. Some—like Australia—are no longer waiving value added taxes. How will changing fee schedules and shipping costs affect your pricing model?

Delivery channels

• How will your product or service be delivered? Developed vs. emerging markets have vastly different infrastructures. How will infrastructure affect delivery of your product or service to consumers? Will you need a broker for B2B prospects? Can you reach “mom and pop” operations in emerging markets? Does your company deal directly with product specific mega-marts like furniture outlets in China or electronic retailers in Thailand?
• Do foreign markets have the infrastructure you need? Emerging markets vary greatly in standards for roads, rails, ports, and even power supplies. Make sure your product can be delivered and serviced without adding substantial costs.

Take advantage of available resources.

The resources below will help you assess your product’s marketability within specific markets and target the most promising ones for your company’s exporting initiatives.

• The United States International Trade Commission (USITC) – provides detailed information on trade shifts, import injury, intellectual property violations, and tariffs, including the official Harmonized Tariff Schedule (HTS).
• The International Trade Administration (ITA) – helps businesses compete abroad with online export and trade data tools, plus on-the-ground field staff expertise.
• The U.S. Customs and Border Protection Agency (CBP) – offers thorough instruction on the laws, regulations, and clearance of imported goods, including the Automated Commercial Environment (ACE) tool that determines import admissibility.
• The United States-Mexico-Canada Agreement (USMCA) Center – CBP digital initiative that supplies comprehensive material on the processes, rules, and certification of trade with Mexico and Canada.