Exporting to foreign markets can be exciting and challenging for the small business firm !
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Trade secret revealed: Over 95% of the world's population is outside the USA.
The Number of Small Business Exporters is growing !
- Small and medium-sized firms account for the vast majority of growth in new exporters.
- Small and medium-sized companies account for almost 97 % of U.S. exporters, but still represent only about 30 % of the total export value of U.S. goods.
- Because nearly two-thirds of small and medium-sized exporters only sell to one foreign market, many of these firms could boost exports by expanding the number of countries they sell to.
The U.S. Department of Commerce indicates that an additional twenty thousand U.S. firms are capable of profitable exporting, but fail to do so. Why do so many companies restrict themselves to the domestic market in the face of open and expanding foreign markets?
Most companies are slowly realizing that success in the marketplace requires looking beyond national borders. In order to encourage successful exporting, many private organizations such as We Globalize! provide valuable information covering the full range of export activities. For exporters, such information is invaluable in evaluating product export policy and find distributors worldwide.
One of the most popular indicators of a product’s potential is the company’s success in the domestic markets. If a company is selling successfully in the domestic market, there is a good chance that the company will be successful in selling its products or services in the international marketplace.
For some Companies, exporting may not be all that different from domestic selling. The second indicator is the introduction of new products into both the domestic and international marketplace. This could also include a product that has reached its maturity stage in the product life cycle; when its sales starts to decline, the same product could be introduced in other markets in which the product was not previously sold, allowing Companies entry into newer markets.
Finally, in concept, most
experts agree that any decision to export requires the same ingredients as
decisions in domestic business. That is, the firm’s commitment, knowledge of the
market, a realistic budget, time and patience. Still, going global can be a
challenging experience for Companies, but the rewards can be substantial. To
remain competitive, profitable and to be part of the main engine of economic
growth in their country,
Your business cannot ignore international realities if you intend to maintain your market share and keep pace with your competitors.
Technical details of selling abroad differ when selling internationally but are reasonably standardized and easy to learn. Selling abroad is no more complicated than selling domestically. Your product's success in the U.S. is an indication of its potential in overseas markets, especially where similar needs and conditions exist. Nevertheless, even if the sales of a product are declining in the U.S., sizable export markets may still exist especially when products have reached market maturity or are technically advanced. Less developed countries may have lower demand for state-of-the art innovation.
Benefits of Exporting
Increase Sales and Profits. Expanding overseas will likely improve overall profitability. Average orders from international customers are often larger than they are domestically, since importers overseas stock by the container rather than by the pallet. Furthermore, increased sales tend to increase productivity by lowering per unit fixed costs.
Gain Global Market Share. Over 95 % of the world's consumers live outside of the United States, so if a U.S. business is only selling domestically, they are reaching just a small share of potential customers.
Reduce Dependence on Existing Domestic Markets. By expanding into international markets and spreading your risk over a wider customer base, companies become less dependent upon the ups and downs of the domestic economy and the likes/dislikes of the American consumer.
Stabilize Market Fluctuations. By expanding into
global markets, firms are no longer held captive to economic changes, consumer
demands, and seasonal fluctuations within the domestic economy. The U.S. is a
large market with a wealth of opportunity, but it is also a mature market with
intense competition from domestic and increasingly foreign competitors. (The
U.S. National Foreign Trade Council now estimates that abut 80% of all U.S.
industry now faces international competition - many of it right here in our own
backyard!) We are approaching the day when we will be doing business in a single
"global market" instead of foreign and domestic markets. For most food and
beverage companies, therefore, exporting isn't just a way to maximize profits
today. It also represents the future of their businesses tomorrow.
Enhance Competitiveness. Repeated studies have shown that exporting improves companies' competitive advantage. Establishing your company overseas will provide a new global perspective and can facilitate improvements with existing and new products. (Oftentimes companies discover an innovative product developed for an overseas market that turns out to be a success domestically, too.) In addition, exporting can help you compete more effectively against foreign competitors here in the U.S.
Economies of Scale: Exporting is an excellent way to enjoy pure economies of scale with products that are more "global" in scope and have a wider range of acceptance around the world. This is in contrast to products that must be adapted for each market, which is expensive and time consuming and requires more of an investment. The newer the product, the wider range of acceptance in the world, especially to younger "customers," often referred to as the "global consumer".
These are just a few of the reasons to export. For many firms, the decision not to export is based on the fear of the unknown; fears which are often myths, myopic business visions, and misperceptions about exporting. To assist in diminishing these phobias, we assist non-exporting companies to consider global trade.