International Business Expansion – What you need to know
With the developments in technology and now widely available internet, numerous ways of reaching target audience are available to business owners. As a result, an international expansion is the next step for many UK based companies. However, it can often be a daunting process and often much easier on paper than it is in real life.
Determined business owners who are looking to expand their horizons and increase revenue live in a fortunate age. The internet, free trade agreements and a global supply chain make international and intercontinental expansion an achievable goal.
Although easier than ever before, branching out into foreign territories and new markets is still an immense task. There is a great amount of details to consider. Not only do you need to convert your marketing materials into another language, you also need to understand the culture and mindset of your target audience and how certain impulses will affect their consumer behavior.
Additionally, you must also have a sound understanding of the laws of the country you intend to enter. Then there are various other aspects, such as logistics, infrastructure, and communications.
In this article, we list potential difficulties you need to be aware of, together with critical information you need to know about the three continents – Africa, Asia, and Latin America.
Regardless of how big or successful your company is on your home turf, if this is your first international business adventure, expect to encounter difficulties as even established corporations with international experience still suffer setbacks when they attempt to set ups shop in a new country.
Reflect on the current state of your business
You first need to consider whether your business is financially able to undertake an international project. This is a long-term endeavour which will potentially take years of work and constant effort to come to fruition.
While expanding your business in a foreign country can be very profitable, many companies tend to underestimate how much an international expansion will cost. If the development project does not go according to plan, you could be left financially crippled.
Establish a team
You will no doubt have an internal team which will manage the project together with operational staff who will carry out the legwork.
However, you should also consider external touch-points that are able to handle some of the critical issues you may not be sufficiently qualified to handle in-house.
A good example of this could be the need to hire language translation professionals, who are not only skilled in writing marketing content, but are also native to the customs of a country are targeting.
A skilled linguist is essential. Having someone on your team who can speak the language fluently and who can accurately articulate your thoughts and desires is paramount to the success of your relations with both the public and your business partners.
Furthermore, hiring someone who has knowledge of local culture helps to ease the process of interacting with consumers. If you are dealing with native businesses, a linguist can also act as an interpreter and give you advice about business ethics, dress code, body language and local culture, which can often have a direct impact on your company’s success abroad.
Understanding the business culture of other countries can be critical to the success or failure of your businesses. Asian countries in particular have particular business ethics, which vastly differ from European standards. Deals can be very lucrative in the Far East, but you will need to be patient and understand how business works in Asia.
There is even a difference between business etiquette in Latin America and the United Kingdom. South American countries have adopted the Spanish culture as well as their language.
Business meetings typically start with a light conversation before starting the business meeting proper. Latinos tend to be quite open about their personal life and often blend it into the business conversation while the British ethics dictate a more reserved approach.
Avoid word-for-word translations
The temptation to use a free online tool such as Google Translate could be more damaging to your international project than you might imagine. Copy-paste a paragraph into an online translation engine and you may only need to make a few edits to make it readable.
However, whilst you may only need a few edits to convey an idea, there is more work to be done to evoke emotion from another person in a different language, which especially for marketing material, is nothing short of essential. The best solution here is always to work with a translation agency which specialises in marketing and creative content.
You will also find that word-for-word translations don’t always work for tagline or company names.
To give you an example of global branding that backfired, the German brand Mercedes-Benz introduced itself to the Chinese market under the name of “Bensi”. In Mandarin Bensi means “rush to die.”
This is not an isolated incident. As a matter of fact, dozens of household brands have made expensive translation errors because they failed to hire professional linguists.
Follow a solid, well-thought-out plan
After you’ve done some serious market research, it’s time to develop a marketing strategy that allows you to seamlessly introduce your products and services to the local market.
Consider the ways in which you will market your products and make sure you tailor them according to cultural preferences and social customs. Have a good knowledge of your finances and budget, do research and keep an eye on your competitors.
Your marketing plan should also consider potential risks which might damage your progress. Unstable political climates, economic fluctuations, cultural assumptions and laws of the land could pose real problems.
Where to Expand?
Another advantage of modern day businesses is the number of emerging markets. Asia has seen a considerable growth over the last decade and has the largest conglomeration of the emerging markets.
Africa, previously considered as a continent less desirable for businesses to explore is also enjoying a new lease of life. As a matter of fact, six of the fastest growing economies are in Africa.
Business opportunities in Africa
Economic growth in Sub-Saharan Africa is roughly around 3.0% in 2018 and estimated to rise to an average of 3.6% in the next year.
Although the lack of a modern technological infrastructure and high crime rates signposted Africa a risky investment for many companies – the fast rate of growth in the current economy is also encouraging numerous building projects.
African governments are encouraging foreign investment with a view to creating jobs and helping to fuel the economy. The consumer market is maturing and new products arriving in Africa will be considered exotic.
Companies with strong leadership, knowledge of economics and a business acumen geared towards investing in overseas markets can flourish in Africa.
Expanding into Asia
Asia is a highly populated continent and with a growing middle-class is a prime target for international businesses. Although Asian countries tend to be very proud of their own products/services, Asian customers love to spend and have a curious fascination with western products and culture.
The largest markets undoubtedly belong to the Chinese and Japanese consumers, who are always looking for ways to innovate and impress. However, these nations have largely been infiltrated by American businesses and the consumer markets are flooded.
Nevertheless, there are plenty of emerging markets in Asia. Vietnam, Bhutan, India and the Philippines are enjoying a rapid growth and offer excellent prospects for British brands.
The Singapore market is encouraging for foreign brands given their laws and tariffs encourage investment and expansion. The country also boasts a very well developed entrepreneurial ecosystem and an infrastructure that encourages economic growth.
South Korea is another country that has a growing middle-class that are not shy when it comes to spending. The country is a powerful technological stronghold and is considered a forward-thinking nation in the digital age.
Asia may provide endless opportunities for expanding your business, but you also have to contend with an immense market that is already flooded with western businesses – particularly from Europe and the United States.
Small businesses hoping to compete with international stalwarts in the global community may find it hard to acclimatise to the business culture Asia. Progress can be slow, and if you don’t have time to flitter money away, you could suffer financial loss.
Launching in Latin America
With 380 million people, expanding into Latin America is a mouthwatering prospect. However, the patchwork of economies will need careful research. A one-size fits all business plan will not suffice.
South American countries are vast and the culture can change even within a country. Before launching a business in Latin America, it is imperative you understand your audience.
A linguist that is native to a specific area will be extremely valuable in South America. The best way to approach such as varied market is to choose one region and expand from there.
The prospects for modern businesses to grow your business in foreign territories are endless in the interconnected world we live in today.
There are legal and language hurdles to overcome of course, but businesses that build a team of external experts, including linguists and lawyers, increase your chances of success.