As American companies strive to be more competitive, more and more manufacturers are taking their business global. This could mean exporting your business globally, outsourcing your resources and labor or a combination of the both.
Global expansion isn’t just a trend for large corporations. In fact, 58 percent of small businesses already have international customers and 72 percent plan to grow their international customer base by the end of 2017. Even more, 96 percent of these small businesses are confident about conducting business abroad.
Are you considering expanding your manufacturing business overseas? We broke down exactly what you need to know with these five global business tips.
1. Understand cultural norms.
Along with the territory of extending your business internationally comes the interaction with people of different cultural values than your own. Acknowledging this diversity, which can include everything from ethical differences to communication methods, is key to being able to do business across the globe.
For example, Japanese business culture is known to be more group-oriented, in the sense that leaders must seek consensus on decisions and drive others through a keen process orientation. Americans, by comparison, tend to be more individualistic and driven by competition.
Though these soft skills may not seem relevant to your specific line of business at first, at the end of the day, they have a heavy influence on how those of a different culture negotiate, make decisions, and ultimately, do business with you.
2. Don’t assume all customers are the same.
The wants and needs of a consumer don’t remain the same around the world. Even if there is a regional demand for the product or service that you are offering, the chances that you need to tailor your business plan to market to the local customer are high.
Take American equipment manufacturer Caterpillar’s success in Asia, for one. The global company receives immense pressure from its biggest competitor, Japanese- based Komatsu. But Cat’s willingness to add local features to its equipment and invest in local economies clearly resonates in Asian markets — the company’s worldwide earnings were up 22 percent last quarter, with added strength from Chinese sales.
Often an effective way to transition your business plan is going back to basics: taking the foundation of your business plan and implementing it into a new market that you’ve worked to educate yourself on.
3. Research local compliance laws.
When it comes to packaging, standards vary from country to country. In the United States, for example, companies must only include directions in English (and occasionally Spanish). This is not the case internationally.
“In Europe, your instructions, even for the simplest product, will be in multiple languages, sometimes up to 24 languages,” Joseph Paris, Jr., chairman of business consulting firm XONITEK and founder of the Operational Excellence Society, explains. “If your product is sold more regionally, you will have to consider the increase in packaging cost associated with labeling. In addition, your product will have to be certified as safe [by those countries’ standards].”
Before you start manufacturing your products, consult a local lawyer to make sure you’re following all the appropriate laws and compliance codes.
4. Partner with a local expert.
If you’re taking your business international but staying local in the U.S., you need to partner with someone who can vouch for you on the new turf. Since you’re not fully immersed in the local environment, he or she will be able to provide the mentorship you need to understand issues when they arise.
When determining an overseas partner, you want to look for someone who not only lives and breathes the local market, but who you can trust. It’s important that this person understands your business and is looking out for your best interests.
When you move your business into a new geographical market, you’ll most likely be competing with local businesses who already understand the customers and have determined a way to position their products to them. Without partnering with local experts, you could be putting your company at a huge disadvantage.
5. Immerse yourself in the new area.
Before you make the decision to bring your business to a global market, you should book a trip to visit the area yourself. Sure, expert business consultants and a Google search can tell you what you think you need to know, but there’s nothing like actually visiting an area to help you truly understand its values.
When you do visit, consider hiring a guide to help assimilate your to the area. Make sure you do your research to figure out what you’re getting out of your guide. The right guide will not only make you feel comfortable, but they’ll open up new doors for you.
“The price for an interpreter depends on where you’re going and what level of expertise you want,” Marc David Miller, managing director of the business consulting firm Discovering Eurasia, explains.
And, of course, it’s not enough just to visit once. In addition to regular online checkings such as video, chat messengers and email, you incorporate regular global business trips into your business plan. This will keep you in the loop and help you realize if there are any changes you need to make.
Want to talk global business tips?
Do your business have experience with international expansion? We’d love to hear about your global business tips. Let us know what works for you and your business by tweeting us at @AppleRubber.