Expanding to overseas markets presents a whole new set of challenges, but the reward can be enormous.  Overseas markets presents the opportunity to reach hundreds of millions more consumers for your products or services.  The world economies are more connected than ever.  It is a lot easier now than it was 30 years ago to conduct business in other countries.  Expanding your business overseas is a wise choice.  You should take advantage of this unique opportunity.

 

There are many areas that you need to pay attention to when expanding your business overseas.  

 

Methods:  If you wish to expand your small business internationaly you must first determine which method to use.  Chose one of the following ways to expand internationally.

 

Exporting: 

Exporting to an overseas market can be done in one of two ways, Direct or Indirect.

 

Direct Exporting:  With this method you find overseas buyers and ship your products to them.  You conduct Direct Exporting by using foreign Sales Representatives or Distributors.  Sales Representatives will work for you on a commission basis.  They will do the work of locating buyers for your products.   Distributors will will buy the product from you and turn around and sell it at a higher price and pocket the difference. 

 

Indirect Exporting:  This method uses an intermediary who will perform the task of making the export arrangements.  Intermediaries can be Commissioned Agents or Export Management Companies (EMC) (or Export Trading Companies (ETC)).  Commissioned Agents will do all of the work for you (on a commission basis) such as find the specific foreign buyers for your products and let you focus on fulfilling the orders.  EMCs/ETCs do the work of conducting market research, promoting your product, accessing distribution channels, etc. 

 

Licensing:  Another way to expand into overseas markets is to license your product to an overseas manufacturer or distributor who will then offer that product in an overseas market and pay you royalties.  Learn more about Licensing.    

 

Joint Ventures:  Joint Ventures is another way to expand your business overseas.  Forming a partnership with another overseas company that will sell your products in their markets is a way to expand into a foreign market without taking all of the responsibilities that come with cross-border transactions.   Your foreign partner will utilize their resources to get your products into the foreign market.

 

Off-Shore Production:  Setting up production off-shore is another way to expand the business overseas.  Off-shore production can be a way to benefit from lower labor cost and avoid costly environmental regulations.  Your products can then be sold in foreign markets or imported back to the U.S. and sold at competitive rates.

 
Buy a Company:  Buying a company in an overseas market is an expensive way to get into the foreign market.  But, it may be the only way allowed by government rules.  The advantage is that you gain access to a business with an existing customer base, market share, local licensing, ties to local manufacturing base, etc.   
 
Piggybacking:  If you are selling products to a domestic customer that also sells overseas you can approach them with an offer to include your products in their overseas offerings.  By getting your products sold overseas by someone who is already doing business there significantly reduces your cost.
 

Pricing the Product:  Consider the exchange rate when you price your products in overseas markets.  You may have to make some pricing adjustments based on the exchange rate.  You have to consider what the best price is for your product in the overseas markets.