Even if your business has never exported before, it may be considering doing so now in the wake of ChAFTA. The opportunity for up to a billion new customers is just too great to pass up in most cases, especially with tariffs being relaxed across so many industries. If your business is contemplating getting into the export game, or just expanding into the Chinese market, there are many additional risks that it will take on in the process. Here are 10 things to consider, in order to manage those risks effectively and grow your exporting business.
In this article, we examine the potential risks in exporting and how to minimise them using an effective auditing system.
1. Find Your Edge
The quickest killer in exporting is to offer a product or service which is overly saturated. However, there may be (and probably is, if you look hard enough) an edge that your product or service has over the competition. Make sure that you identify your unique selling proposition, and focus on it as you expand into new markets.
2. Choose Your Products Wisely
In some cases it may be wise to export ideas or plans, rather than an actual product. An example can be found in Street Crane, a UK company which makes large cranes and hoists. They found that they could export their hoists and control systems, but that it was economically more feasible to sell their designs for heavy crane beams to be made in local markets, rather than to transport the product itself.
3. Allow for Budget Expansion
Exporting almost always means more expenditure on the front end. Having a large order for a product or service, that your company can’t meet due to budget limitations, is a sure way to exclude your business from the market going forward.
4. Protect Your Brand
New markets mean new risks to your brand name and reputation. Make sure that you protect these, and you can start with the tips listed in our recent article on 7 things you can do to protect your brand when exporting (link to last article “7 things every SME exporter needs to know…”).
5. Be Ready For Demand
In the early days, offshore orders can represent a major proportion of your business, according to Executive director of export finance at EFIC, Andrew Watson.
“In order to break in to a market in China, the business is probably required to fulfil minimum orders,” says Watson, “which are large by comparison with what the business does domestically. There is usually a cost of scaling-up for Asia-Pacific markets.” Don’t enter a market when you can’t fulfil the demand for your product, or they may look elsewhere.
6. Have Local Knowledge
As mentioned in our last article, knowing the culture, laws, standards, and other norms for any local region is crucial to doing business there. Selling bacon in Iran is a non-starter, for instance. Make sure that you are aware of the local disposition, or have a local partner who can guide you through these decisions.
7. Assess Your Supply Chain
Your supply chain may be very wide and very diverse, and that may be fine for the markets you are accustomed to. New markets, however, may have issues with some portion of your chain. Or there could be legal ramifications in the new market due to a supplier or distributor. Make sure that you are aware of any possible implications, throughout your supply chain, when entering new markets.
8. Assess Your Insurance
Make sure you’re covered. For what? Any number of things, depending on the market where business is being done or considered being done. It’s vital to know that you are covered, in case any new and unusual (to you) situation comes up.
9. Use Safe Payment Options
Non-payment is one of the biggest fears for exporters. When starting out, consider using wire transfers, letters of credit, or credit cards as payment or as proof of intention to pay. Your budget may already be stretched thin (see #3). The last thing you need is to not be paid.
10. Ensure Compliance
This is the all-encompassing way to make sure that your business is as ready as it can possibly be for exporting (and anything else). A good end-to-end auditing system will ensure that your business is monitoring the supply chain, following all national and international regulations, and maintaining a high level of productivity and standards. Compliance, through auditing, will get you where you need to go.
Compliance Experts provide clients with access to the Compliance Checkpoint Software Technology, which is complimented by our Professional Auditing and Consulting services. This is our unique point of difference. Learn more about Compliance Checkpoint here.