Looking at new export markets? Here's 10 things to consider to make it easier.
Now perhaps more than ever, I am working with and hearing from small and medium sized companies that are looking to diversify their export markets. Many say they have become too reliant on one or two key markets and are not seeing the same returns from them as in the past. In some cases, market dynamics have shifted so that they companies feel greater risks in their current markets and are exploring options as part of their overall risk mitigation strategy. If your company is facing similar issues, here are ten key areas to consider as you navigate market diversification:
1. Take a hard look at your product life cycle. If your product/service has not shown signs of growth in your current market, it might have greater success in new markets where it may be seen as a new offering enabling it to restart a new life cycle.
2. New barriers in existing markets (duties/tariffs/regulations) cause many companies to look at new markets. In the same way, so to do new free trade agreements. It is always easier to sell into markets that welcome your product/service.
3. Follow high growth markets. Emerging markets can offer great opportunities for companies. Just be careful to have done your research ensuring the market fits your product/service.
4. Market diversification spreads risk and increases your experience. Being in more than one market means you do not have all your export sales affected when things go wrong. It also gives you broader experiences with research, selling, logistics, trade finance and more.
5. Market diversification additionally introduces you to new contacts, suppliers, investors, technologies and more that can bring new ideas to your company and propel growth. Just like networking, exploring new markets will bring a wealth of ideas and contacts you will not find in your existing markets.
6. Identify markets you feel offer opportunity and research them thoroughly. Use the services of your provincial or municipal economic development agencies, reach out to the Trade Commissioners Service, and contact Export Development Canada, Take advantage of trade missions, in-bound missions, funding programs, attend trade shows, speak with business associations and other key potential partners in your target market which these export-focused support organizations can help with.
7. Look at companies around you and see where they are exporting. You might be able to partner with them to help reduce costs on items like packing, loading, shipping, distribution and more.
8. Alternatively, you may find companies in new markets looking to ship to Canada and you can equally partner with them for cost savings and potential new sales for your company by bringing in new product. Looking at Global Value Chains in these ways can help you enter new markets with greater chances of success.
9. Enter every new market with caution and care. Never go all in right away, unless you have exceptionally high confidence and/or great partners. Growing your new markets slowly ensures you can learn and adapt to any challenges or take advantage of opportunities as they arise. Monitor your diversification to confirm success.
10. Be prepared to walk away. Failure in market diversification is nothing more than a learning experience. Good research, leveraging partners, strong supports, sound financing and good logistics will prepare you for success, but things may not work out. Cut your losses and look elsewhere.
Canada Free Trade Agreements:
Here is a searchable database of all free trade agreements Canada has around the world
Taking advantage of Global Value Chains:
Six steps to Export Success – A guide from Export Development Canada:
Step-by-step guide to diversifying your exporting company:
Feasibility of Market Diversification:
A trade discussion with industry experts hosted by FITT