Is it possible to enter and still receive warm hospitality, such as foot baths, cakes and coffee? Always follow the world-famous custom before entering a house in a friendly manner: knock on the door, ring the bell or clap your hands, but always greet the host politely. It is impossible to be welcomed by your host without following the most basic rules of neighbourliness. The same applies to the internationalisation of companies.
Sending goods to neighbouring countries without going through customs and complying with local regulations is akin to breaking into someone's home uninvited.
This approach will not last and the risk is that you will never be welcome again. Entering new international markets safely and legally requires planning, investment and adaptability to address cultural and regulatory challenges, but is usually achieved through one of the following strategies.
Has your company followed or is following these paths? The approach to entering new markets must be designed according to each company's vision and resources.
Indirect exporting is probably the most common strategy initially used to introduce products and/or services into international markets. It gets its name because it uses intermediaries located in the supplier's country. For example, an export trading company or trading firm can purchase products manufactured and developed domestically by domestic suppliers and then resell them abroad, manage the export itself, and often also do the customer sourcing. This type of strategy minimizes supplier risk and does not require a large initial investment.
Direct export means that the supplier sends the product directly to the importer (either distributor or end customer). The advantage of this type of export compared to indirect export is that, in addition to ensuring direct contact with the buyer, the supplier has better control over the brand, price and export process.
Direct and indirect exports are strategies that can be applied individually or simultaneously. Often, companies will choose to export indirectly to new countries while at the same time exporting directly to more established foreign customers with whom they establish long-term relationships, thus ensuring attractive minimum volumes.
Some companies go global by licensing brands, patents or opening franchises abroad as a strategy to enter these markets. These strategies significantly shorten the time it takes to enter products and services because suppliers, in addition to already having distribution networks and relationships, have access to local partners who understand the regulations and culture of the destination country. The legal relationship between the parties must be standardized and responsibilities and rights must be separated.
Partnerships and joint ventures are great ways to enter new markets while significantly reducing investment.
A successful example is Coca-Cola, which has been exporting beverage concentrates to licensed partners abroad who bottle and distribute the soft drinks. Why acquire factories in different countries when you can outsource production in the target market? Lower costs and greater efficiency.
The boldest set up their own distributors or even factories or assembly plants abroad . Structures must be carefully planned or one may face difficulties with manpower allocation, local regulations and political instability.
Ninja-level entrepreneurs prefer not to compete with their rivals, but to acquire their assets in one go or join forces with them to conquer territory faster. Ambev is a successful example of its global expansion. As a strategy, it carried out mergers and acquisitions to become the world's largest leader in the beverage industry.
Depending on the strategy, the path can be significantly shortened.
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We are CH3 Global and we want to work alongside you to help your company develop strategies to enter new global markets. Contact us to find out how we can help you achieve your international goals.
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