How to Identify Profitable Markets to Place your Products or Services
Expanding a business to other markets is a logical step after establishing a highly profitable company at home. Many companies are very hesitant about expanding into foreign markets, so they stick close to home without ever realizing their full potential.
With the rise of modern technologies, investing in foreign markets is easier than ever, but it also comes with some amount of risk, mostly due to the rules, regulations, taxes, customs and even politics of various countries.
When looking for the right market to invest in, each company should conduct extensive research before engaging in any international enterprise. Here we present some methods to assist business owners in expanding their companies abroad.
Investigating Local Laws, Rules, and Regulations
This is one of the most important things each company needs to examine before opening a foreign branch or attempting to expand its business overseas.
Different countries have different rules when it comes to business and investments and a lack of information regarding these can lead to significant loses as well as government seizures, closures and confiscations.
A telling example of the importance of research into foreign regulations and bureaucracy, is the current situation in China, where different city governments decided to roll back all the incentives which had been previously offered. In addition to this, more foreign companies, including Microsoft and Qualcomm, have been hit with anti-trust probes.
These corporations were fined for price-fixing, bribery, not being able to answer customer complaints in a timely manner, etc.
Market Research
Market Research is another must when it comes to foreign investments. This research takes time and should include investigating industry trends, import and export quotes, prices, and competition, among others.
And this investigation shouldn’t stop there: demographics, history, geography, and politics can all play a significant role when it comes to expanding a business into other markets.
Ability to Find Local Partners
Finding a good local partner with the same goals as the company wishing to expand is one of the keys to a successful international business campaign. A local partner has a better understanding of the market and has the necessary contacts to further the business’s expansion.
However, local partners must be selected with care. Sometimes these partnerships don’t pan out, thus ending in a spilt that can be costly for both sides. One recent and particularly expensive example is the split between Wal-Mart and their partner in India with whom they were planning to open chain of cash and carry stores.
This case is simply further evidence of how important is to set mutual goals when trying to find a compatible partner abroad.
Which Countries to Choose?
Some of the world’s emerging markets that are ideal for expansion are located in South-East Asia. Indonesia, the biggest country in the region hasn’t been affected by the 2008 economic crisis and during last decade its market has been steadily expanding.
Another place that offers safe investments is Singapore, Nicknamed the “Asian tiger,” it is one of the least corrupt countries according to the Corruption Perception Index. Singapore company incorporation works like a charm and extending business into developed markets like this one comes with much less risk than would other expanding markets with complicated bureaucracy and a higher corruption index.
Expanding a business overseas is the first step in building up a powerful international brand and with careful planning can be a very profitable move.
A smart businessperson should be fast enough to get ahead of the competition by entering foreign markets at the best possible time, but patient enough to conduct extensive research into all of the necessary criteria.
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Category: Business
