How can you
effectively expand your business abroad during these globally challenging
Expanding your business overseas can be a daunting feat. More often than not, there are rising questions about which markets to invest in, the common pitfalls to avoid and how to effectively take your brand to a global level. Speaking on the first day Elite Business’ live event on March 9, Arne Mielken, Vice President at the Institute of Export & International Trade, revealed how the rewards of taking your business overseas far outweigh the risks – as long as you have an effective approach. He discussed the steps you can take to prepare for overseas expansion and why bringing your company abroad will give you a greater advantage in a competitive market.
Starting his speech, Arne spoke about the impacts of Brexit and coronavirus on international trade in and out of the UK. Despite the looming global crisis, Arne insisted international trade has no barriers and instead businesses must find ways around any obstacles instead of foregoing overseas expansion altogether. “Going international is quite problematic right now,” he said. “The impact of Brexit and the coronavirus, does that limit our ability to think global, and go global? I would argue not. But precautions have to be made.”
Arne explained how taking your business to a global level can enhance and make your business stronger, giving you the chance to dive into competitive markets and meet the increasing demand for goods and services industries – however, this has to be done in the best practice possible. “Going global enriches our companies, going abroad makes them stronger and resilient and gives markets more choice,” Arne said. “We want to enhance the export performance of the UK. But the way to do that is not just to go and say ‘here’s the market, go fetch’. We need to do it insightfully, we need to do it by enhancing the professionalism of the industry. We need to set professional standards, we need to look into international trade management and best practises, and have those delivered to anybody who thinks about going abroad…If you’re in the service industry, and you thought ‘this is not something I can do’, that’s not true. Banking, finance, consultancy, advice, electronic services – all of these are services. And look at the increasing demand. So, if you’re in the UK and dealing with services, in the city of London or elsewhere congratulations, the demand is out there and so should you be.”
Arne urged business owners to bear in mind cultural differences, legal systems and languages when dealing with customers abroad as this can affect the outcome of business transactions, and it is important to understand the norms practised in different countries you trade with. “As you look for customers abroad, they are not the same as one another,” Arne said. “If you deal with someone from another country again there are differences, cultural differences. Trying to do business in the Middle East on Friday? Maybe not such a good idea. There are also language barriers. Trying to explain what you sell in a different language might be a challenge. All these different things plus different legal systems, jurisdictions, regulations, need to be understood… There are all of these differences, the culture and systems need to be thought of.”
Business owners can even look at sourcing materials from different countries or producing goods abroad and slowly moving them along a chain from country to country, adding parts as they go. Arne argued that this can be a highly cost-effective approach rather than producing everything in the UK alone. “Not only will you look abroad for someone to sell the goods to and be your partner, but you could also bring production units over from different countries,” he said. “You can source bits from all over the place and bring it all together to create the product. You can also start the raw material in one country and then keep producing, adding on and moving along the chain. That is something that we see and, in many cases, it is more cost-effective than producing it at home. We can argue the ethics of this, but it is a fact. And it is in this way that we’ve become so globally interconnected.”
Arne urged companies to be strategic when it comes to international trade and to face challenges head-on instead of fearing uncertainty in a post-Brexit world. With a solid export plan in place, businesses will be able to plan their logistics and work out the best approach to facilitate trade. If businesses can overcome these obstacles and establish a good international trading agreement with their buyers, the world is their oyster, Arne said.
“In trading, just like in business is a collaboration… However, you’re adding another layer of complexity which is the International Trade Law. Not only do you deal with the national law to comply with the regulations, but you also need to deal with the international law on top of it. There are customs fees, entry fees that inflate the price and potentially reduce profit margins. And there are also national standards you need to consider. Some may say they’re scared and they don’t want to go overseas anymore, but that would be the wrong approach. All you need to have is a reality check that that is different, and how do you accommodate that? There are opportunities such as free trade agreements, which is important in a post-Brexit world. In 2021, new trade agreements for the UK come into force. Who’s ready on 1 January 2021 to leverage over 21 free trade agreements? If not, shall we get ready? Let’s go! If we do, all of those duty and entry fees drop to zero. Now that is strategic, that makes us get ready for international trade. First, get the reality check, and then leverage on the opportunity. Where there is a challenge, there is always opportunity. And free trade agreements are the big thing to think about in international trade for us.
Explaining how to create a step-by-step export plan, Arne added: “You first need to identify the market, who’s going to buy my stuff? Then you need to search for the buyers who will get it. You then need to create some kind of international trading agreement, and that comes with pitfalls itself. Search for 3PLs, that is your logistic and transportation providers. Then arrange for the routing and decide which vessel it will go… And then you can carry out the proper exports. There’s a lot of stuff you have to do… Some people step away and fear this, but others say, especially now, they will do it. If you get over this, the world is your oyster. If you have the plan in place, exporting to the world is open.”