Exporting to new markets: cultural differences are key
Stuart Anderson, Director of Manufacturing and Supply at AstraZeneca Australia, takes Dynamic Export through the pharmaceutical company’s experience of exporting overseas and valuable lessons that small exporters can learn from.
As the global economy embarks on its first steps of recovery and Australia looks to drive growth of the national economy, there are numerous opportunities for Australian businesses to expand internationally and push our economy forward. There are many commercial and operational considerations for any business looking to export abroad, but one area that businesses may often neglect to address are the cultural implications of exporting to a new market – a sensitive area which, if you get wrong, can make it very hard to achieve success.
The medicines industry is the largest high-technology exporter from Australia accounting for $3.8 billion of exports in 2011 – more than the Australian wine and car industry exports combined. As Australia’s largest pharmaceutical company, AstraZeneca Australia exports over $220 million in finished goods to 36 countries and its top markets are China, Japan, Germany and Russia. Our experience has taught us some important lessons about the cultural sensitivities which need to be acknowledged and adapted to when exporting to these markets.
AstraZeneca Australia produces a range of medicines for the Japanese market, which is the second largest market in the world for pharmaceutical products and has very high requirements from a quality perspective, with specific aesthetic quality requirements that are unique to that market.
The cosmetic appeal of products is as important as efficacy and has to be perfect. If a pallet of shipping boxes arrives with a tiny gap of a few millimetres at the seal of one of the boxes, it will be assumed that if the exterior is not perfect, the contents of the box cannot be trusted. Packaging requirements can also be very specific. Businesses can counter cosmetic risk by sourcing their packaging materials from Japan and working closely with local suppliers to understand requirements. Australian suppliers are also capable of supplying packaging components of the right quality for the Japanese market.
The role of inspection in the Japanese market is critical, with a specific touch and point method used for inspections. For example, in 2004 we missed a single label on a package, which ordinarily would result in a straightforward recall in any other country, but in Japan it took us four years to recover the trust and control in the eyes of the Japanese customers and significant additional costs. Getting practical local knowledge on requirements is invaluable and can help you understand what inspections are looking for and how everything will be interpreted.
The ability to develop high level of trust and respect with your customer case is key. Strong relationships are built around trust, good data and statistical rigour, which all Japanese companies value. Customer service levels are very high so it is well worth your time making the effort to understand the finer subtleties of the market’s unique requirements, as reputational damage can be very high if these are not observed.
The Chinese market poses a very different challenge. The key task is keeping up with demand in this dynamic and exciting market. The product environment is highly regulated and constantly changing, so exporting businesses must be prepared to be agile and flexible, without attempting to anticipate changes.
Establishing good, knowledgeable relationships on the ground is key to keeping abreast of change. It is important use these relationships to ask lots of questions, and make sure they are the right questions, in order to get the information you need. It is advisable to use open ended questions where possible, and to clarify information to ensure understanding. Of course, this assumes ability to communicate, as the language barrier is often underestimated by foreign businesses operating in China.
China has a complex tax and pricing systems which is difficult to navigate remotely and varies greatly by province. It is advisable to seek out use of bordered business parks and free trade zones, though these have different implied uses. Trade commissions are a good place to start in order to get information on how to navigate the tax system.
Exporting to other countries can be challenging and the cultural subtleties can be complex. But if you make a mistake and your customers lose confidence in you, it can take a long time to recover. Take the time understand the intricate requirements of operating in a different environment is critical to ensuring success.