Exporting goods to a foreign market is not as simple as stacking them into a crate and putting them aboard a cargo ship. It can take two years or more to develop a profitable means of moving merchandise from, say, a factory in Los Angeles, to retailers located throughout Indonesia.
Trade licenses must be acquired. Then you have the issue of hiring the right freight forwarders and other logistics partners. In most countries, it’s also important to find an agent to represent the goods and ensure placement in stores. That can mean weeks or months of screening candidates, followed by more waiting while the agent gets up to speed on the product and your company.
These days, though, the time and toil may be well worth it. Soaring levels of affluence around the world are turning heretofore minor economies into thriving new markets for American goods. A new survey in The Wealth Report, compiled by global residential brokerage Knight Frank, in partnership with WealthInsight, predicts surging wealth in places around the globe that could provide lucrative opportunities.
Indonesia, for example, will grow in economic power by 132 percent over the next decade, based on the estimated number of ultra-high-net-worth (UHNW) individuals, or individuals worth $30 million or more, who live and do business there. Vietnam is expected to do even better, growing by 159 percent, according to the Wealth Report forecast. Singapore also is posting strong inflows of HNW individuals.
“The emergence of such markets has begun what might be a new golden era of exporting opportunities for American companies that are savvy enough to exploit them,” says Steven Bash, manager of international banking and trade finance for City National Bank. “The growth of wealth within what used to be minor markets is providing superb opportunities for companies to maximize their global potential and financial success.”
Of course, wealth is just one measure of global growth to consider when seeking out new markets. Another is gross domestic product (GDP), Bash says. According to the International Monetary Fund (IMF), China, the Philippines and several African countries such as Mauritania are posting higher than average economic growth, boosting demand for imported goods.
American companies hoping to cash in on the newfound buying power of such places should be aware that the competition is growing too, and substantial research may be necessary before venturing into the fray, trade experts say.
Would-be exporters “…need to look at whether or not they have the capacity to export. You have to do the market research, know all the financials – how you get paid, how to make sure you get paid, know about transportation and logistics,” says Anne Burkett, executive director of the North Alabama International Trade Assn., one of numerous regional and state nonprofit groups established to help business owners deal with the complexities of exporting.
You need to make sure that you have your internal team established,” Burkett says. “Marketing, legal, transportation – they all need to be in sync. And then the external team – a lawyer, a banker, someone to help with insurance.”
“If you get the right partners together,” Burkett adds, “and you proceed in a methodical way, it can be very beneficial to your company. Not only does exporting diversify your market, but you may find new uses for your product overseas.”
Veronica Pellot, president of iDiverse Export Consultants, says American exporters should strive to differentiate their goods from competing foreign merchandise. Remember, she says, manufacturers in China can deliver many types of goods throughout Asia at a lower price than United States exporters. To compete well in newly opening markets, American merchandise must have, or slowly build, a reputation for good workmanship and responsible corporate behavior, which often means standing behind consumer warranties.
“Those emerging markets – Africa, Asia, Latin America – recognize the quality of U.S. products,” Pellot says. “They’re willing to pay a premium for that quality and service.”
Companies that can offer the latest technology have the easiest time cracking foreign markets, the consultant adds. That technology need not be a new device for the home or backpack; in some cases, it can be new hybrid vehicles or equipment and machines that may bring about further economic growth.
“The Middle East and some Latin American countries are strongly looking for technologies in the renewable energy and health care sectors,” Bash says. “Those are hot areas right now.”
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