Exporting to foreign countries is a great way to grow your business but it’s important to assess all the risks before entering new markets.
With a slight upswing in the export market possible for 2016, Australian-based export businesses should take stock of their customers and the state of the countries they are based in.
Mark Hoppe, managing director, ANZ, Atradius, said: “Exporting can deliver success, but it’s important for business owners to have a thorough understanding of the market they’re exporting to before investing time or money.
“Trade credit agreements usually suffice when it comes to payment for goods. However, a shipment to an overseas market can be affected by several external factors including policy or law.”
There are, however, a number of things an exporter can do to prepare Atradius recommends three key tips for export businesses to follow to minimise their risks in 2016:
Manage risk with discipline
Businesses should actively implement a risk-management plan. This includes thoroughly researching the potential customer and supplier, and the market it operates in before signing a deal. The research should start with visiting the Australian Trade
Commission’s (Austrade) website. Businesses should understand the sweet spots and also the pain points of the country they’re exporting to
Build a network of advisors
Rules and regulations are constantly changing. This can work in your favour or can have a negative impact on your business.
One of the biggest challenges Australian businesses face when it comes to export rules and regulations is getting good advice.
Speaking to a credit insurance provider and experienced export businesses is a great way to further understand exporting risks, and how to protect your products and profit.
For example, not fully understanding the impact of import duties on the market value of your product in various countries before you invest can create huge problems.
Ask the right questions
Don’t be worried about asking too many questions.
At a minimum, make sure these three questions are always on your list:
- Is the country you’re exporting to right for your particular products? Think about political relations, culture, and perceptions.
- Is there a suitable local distributor in the country?
- How will you market your product in that country? You may need to change your marketing tactics to suit the country’s culture and expectations.
With a clear idea of the potential risks involved with international markets, exporters can then begin to plan to minimise their exposure to them.
“There are so many variables when it comes to dealing with businesses overseas, so it is important to keep your eyes wide open at all times for risks that might otherwise be missed,” Mr Hoppe said.
“These could include a rise in bribery or corruption incidents in your target market, or changes in regulatory conditions while goods are in transit.”