As an international business advisor I always highlight that in order to succeed in a foreign market a product needs to command some sort on uniqueness, call it a competitive advantage, some elements of innovation or differentiation, a recognized brand awareness, a specific patent, something that makes it to stand out of competition and sends a vibe that allures, and attracts as something desirable, the interest of a consumer in a market some 8,000 miles away who is not in need of this product but he/she’s willing to consider it providing it is perceived as a new need or the right new product.
Therefore to see if this product is a “fit”, if not the next blockbuster, in a new foreign market it all starts by understanding the target market, and collecting valuable market intelligence favors the conditions for designing a market-tuned and product-bespoke market-entry strategy which turns to be more effective with the implementation of a calibrated marketing plan displaying the correct set of actions for presenting, promoting and positioning this product. Of course there’s no one single one-size-fits-all framework for running a pre|start market intelligence analysis that requires to be designed bespoke specifically on company’s goals and expectations, and on product potential, for enabling the company to make the final decision for a yes-go, or a no-go.
Company’s goals for entering a new foreign market can range from simply expanding more sales to accelerate revenue growth (via export solutions, searching for a local distributor to team up with, start with a store-in-store corner) to a more strategic aim (opening a representative office to be upgraded later to branch/regional office status, searching for a local partner to team up with for a JV or M&A, directly investing abroad for opening a retail/flagship store or for delocalizing manufacturing capability). So it all starts by selecting a target market which can be a single country (for instance, Malaysia) or a target of 2-3 markets within an enlarged marketplace (for instance, the ASEAN marketplace in South-East Asia that comprises the 10 economies of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) or a specific target within a larger single market (for instance, one or more of the 4 1st-tier cities in China, namely Beijing, Shanghai, Guangzhou, and Shenzhen).
But if China is the target market for export and the company has no experience in that market, which is huge and complex, it is probably easier to consider Hong Kong which is definitely much less complicated than mainland China and after developing some experience verify the conditions for scaling up the geographic scope right across.
While if China is the target market for a JV or M&A, the company will need to familiarize with the legal practices for doing business in China, IP protections, IP licensing, tariffs, negotiations, potential frauds and scams, and all business-related aspects to protect the foreign investment component of the operation. Next step is assessing how easy it is to do business in target market, if target market is a developed or developing or emerging economy, what are the local regulations that affect business, the local legal system, procedures for incorporating a local company, if there are trade barriers, if there are tax incentive to operate in the market as a foreign entity, the quality of infrastructures (airports, logistics, roads, transportation), how easy it is to travel from home country to target market and within the market, any language barrier or if English is widely spoken (for instance in Singapore and Hong Kong, English is fluently and widely spoken, in Malaysia is business language in most urban areas, in Vietnam the younger generation learns English, in Thailand and China can be a challenge), transparency in doing business.
Next step is the market environment in terms of a) competition, who are the key players in target market, how the competitors are positioned and how they communicate their product proposition.
And in terms of understanding b) customers’ behavior and all the differences that influence the purchasing decision process, in brief language, ethnicity, race, religion, diet, spending power and lifestyle as it will be mandatory for the company eyeing that target market to bridge the cultural gap because getting customer knowledge facilitates building market share overseas (note: there’s not only a cultural gap when doing business between the US and markets in Asia but also between the US and markets in Europe). And also in terms of prospect c) local partners to deal with for export operations, selecting potential distributors and conduct some due diligence to understand whether they can be a reliable partner to structure a business relationship with. A part of this pre|start analysis will then focus on the company’s capabilities to understand a) product’s competitive advantage and where this advantage can be used as leverage to compete in target market as-is, or if the product requires being partially redesigned or innovated to accommodate customers’ preferences and win their demand, and to understand b) how the company can source capital, time and team for the market-entry plan based on the type of market-entry strategy that will result more functional in line with business goals, and what marketing plan will need to be activated and implemented to support product and brand positioning.
