Articles

Getting Ready to Export Your Product

Not just product expertise, but also understanding of the specific features of each target market is required when selecting and preparing your goods for export. Market research and interactions with overseas partners, purchasers, consumers, and others should provide insight into what items may be marketed and where they can be sold. However, before the sale can take place, your organization may need to change a specific product to meet consumer preferences, market demands, or regulatory restrictions in the foreign market. A crucial policy problem for management to consider is the amount to which your firm will be willing to change items supplied for export markets. Some exporters feel that their local products can be exported unchanged. Others want to create items that are uniform and marketable in all markets. It is critical to conduct a study and be certain of the best plan to pursue. For example, you could need to modify an electrical product so that it can run on a specific voltage in various countries, or you might need to change the packaging to comply with labeling requirements or cultural preferences.

If your firm produces many products or provides multiple variants of a single product, begin by exporting the one that is most suited to the target market. In an ideal world, your firm would be able to pick one or two items that meet the target market without requiring large design or technical changes. This is most effective when your company:

• Provides parts for U.S. goods that are sold to foreign nations without modification
• Deals with worldwide clients that have the same demographic traits or manufacturing criteria.
• Produces a product with few or no distinguishing features that is sold nearly solely on a commodity or price basis
• Produces a product with few or no distinguishing features that is sold almost exclusively on a commodity or price basis

 

Consider the following questions:

When considering selling internationally, you must examine various factors, including:

 

• What needs does your product meet in other countries?
• What items should your business sell in other countries?
• Is it necessary for your firm to make changes to its domestic market product in order to sell it internationally? Is it necessary to create a new product for the international market?
• What precise qualities should your product have, such as design, color, size, packaging, brand, labelling, and warranty? How important are cultural or linguistic differences?
• In the presale and post-sale periods, what special services, warranties, and spare parts are required?
• Is your company's service and repair infrastructure up to par?

 

Adaptation of Products

To effectively enter a foreign market, your firm may need to alter its product to comply with government rules, geographic and climatic circumstances, consumer preferences, or living standards.

Your firm may also need to make changes to its product to make it easier to ship or to account for variances in engineering and design standards. International trade is rife with foreign government product laws, which are anticipated to grow in the future. High tariffs or nontariff obstacles, such as industry restrictions or product standards, might be used to impose these regulations. Regulations are imposed by governments for a variety of reasons:

• To safeguard home industry from international competitors.
• To safeguard their residents' health and safety.
• To compel importers to adhere to environmental regulations.
• To guarantee that imports comply with local electrical and measuring system regulations.
• To stifle the flow of products from or containing components from specific nations.
• To safeguard their inhabitants against cultural influences that are judged unsuitable. Your local U.S. Commercial Service office can provide you with detailed information on foreign country rules. If a foreign government erects especially onerous or discriminatory barriers, your firm may be able to enlist the assistance of the US government to have them removed. Call (202) 395-3230 or go to ustr.gov for further information.

The Office of Trade Agreements Negotiations and Compliance can also be contacted (TANC). TANC regularly monitors, examines, and reviews foreign government compliance with our international trade agreements to ensure that American businesses and people benefit fully from them. This free program is open to all U.S. exporters and investors who are experiencing trade impediments, but it is especially beneficial to small and medium-sized businesses, who typically lack the resources or experience to address these issues. It is the United States government's one-stop-shop for assistance in lowering or removing such obstacles. The TANC website has a fully searchable database with the texts of around 250 international trade agreements. To help, TANC has compiled a list of the most prevalent trade restrictions imposed by foreign governments at 1.usa.gov/1yRJbr5. This program allows exporters in the United States to register complaints about trade restrictions imposed by foreign governments or unfair commercial circumstances in foreign markets.

It's also possible that buyer tastes in a foreign market will force you to change your goods. Local customs, such as religious rituals or leisure-time usage, are frequently used to assess if a product is marketable. A product's sensory impression, such as taste, fragrance, or visual appearance. Japanese consumers, for example, favor various types of packaging, prompting many U.S. corporations to create cartons and packages for the Japanese market. It's also possible that body size is an issue. If a product is designed for persons of average height in the United States, it may not work for those of shorter stature.

The market opportunity must be sufficiently significant to warrant the direct and indirect expenses of product adaption. Your organization should evaluate the expenditures that will be expended and, though it may be difficult, calculate the higher revenues that will be expected as a result of the adaption.

 

Redesign and Engineering

Your organization should be aware that, in addition to cultural and customer preferences, even fundamental components of products may need to be changed. Many foreign nations' electrical standards, for example, differ from those in the United States. It's fairly uncommon to come across phases, cycles, or voltages (for both residential and commercial usage) that might harm or impede the efficiency of equipment built for use in the United States. Even within the same nation, electrical standards might differ. Knowing the specifications, the manufacturer can assess if a unique motor is required or if the desired operating revolutions per minute can be met with a different driving ratio.

Similarly, many types of equipment must be designed in the metric system for compatibility with other pieces of equipment or to meet a country's regulations. The United States is essentially alone in using a nonmetric system, and American enterprises who compete effectively in the worldwide market understand that conversion to metric measurement is a critical aspect when selling to international clients. Dimensions in millimeters, weights in grams or kilograms, and temperatures in degrees Celsius should all be included in instruction or maintenance manuals. Information about international standards and certification systems may be found at the National Institute of Standards and Technology (nist.gov).

 

Labeling, packaging, and branding

Consumers are interested in the product's primary characteristics as well as supplementary elements such as packaging, warranties, and services. When it comes to branding and labeling items for international markets, there are new issues for your organization to consider, such as:

• Is it necessary to use foreign brand names to advertise and identify a product? Should local trademarks or private labels, on the other hand, be utilized to pique local interest?
• Is the use of bright colors on labels and packaging objectionable or appealing to a foreign buyer? In certain nations, for example, particular colors are connected with death.
• If needed by law or practice, may labels and instructions be printed in official or regional languages?
• Is it necessary to disclose information on the product's substance and country of origin?
• Is the local unit used for weights and measures? Packaging and defining contents in metric units (e.g., kilograms, liters) might be crucial even with consumer items.
• Is it necessary to mark each item separately? What is the labeling's language? For example, "Made in the USA" may not be sufficient; the product may need to be labeled in the country's native tongue. Foods, medications, and other items may have unique labeling regulations.
• Are local preferences and expertise taken into account? A cereal box featuring a photograph of a US athlete might not appeal to international customers as much as one with a photograph of a local sports legend.

 

Placement

Another aspect of product preparation that your organization should think about is the simplicity with which the product may be installed internationally. If technicians or engineers are required to assist with installation in another country, your organization should try to keep their time in the field to a minimum. To do so, your organization may choose to preassemble or pretest the product before shipping it, or provide online, in-person, or DVD-based training for local service providers. Visual aids are used by Zeigler Brothers, a fish food company, to help instruct individuals who utilize their goods. It's possible that your organization will disassemble the product for shipping and then reassemble it in another country. This strategy can save your organization money on shipping, but it may cause payment delays if the sale is conditional on the goods being constructed. All product information, such as training manuals, installation instructions (even the most basic instructions), and component lists, should be provided in the local language.

 

Guarantees

Because the customer will anticipate a precise level of performance and an assurance that it will be attained, your organization should carefully evaluate the conditions of a product warranty (and be very explicit about what the warranty covers). The amount of expectation and rights for a warranty varies per nation, based on the country's level of development, competitive practices, consumer activism, local production quality requirements, and other things. Customers in other countries often have service expectations that are equal to or greater than those in the United States, thus product service assurances are critical.

 

 

Success Story Working Through the Pain Avazzia

The Company

Tim Smith was instrumental in putting a man on the moon. What would be a suitable follow-up for an experienced manager who spent his career at Texas Instruments building computer chips for the Apollo space program and important military systems, given that career highlight?

"I began hardwiring circuits in our home at the age of 12 because my father taught me all the basics of electronics," Smith adds. "Then I had a fantastic electronics instructor in high school, who inspired me even more and set me on my career path."

Smith was ready for a change after working for Texas Instruments for 21 years in chip design, production, and research & development. Smith believed he might help after discovering that a close friend was suffering from diabetic neuropathy. He learned about the Russian space program's use of electronic gadgets to relieve chronic and acute pain shortly after leaving Texas Instruments.

"Working out of my garage, I became familiar with the concept of using electrical impulses to switch on the body's neuropeptides—the body's defensive mechanisms that promote healing and relieve pain," Smith explains.  I then decided to launch my own firm, Avazzia, which stands for 'beauty and health freedom.'"

It wasn't just about generating a profit for Smith; it was about his quality of life. "Also, prescribed medicines kill more Americans than illicit narcotics."

Smith finally employed people and created 11 different types of treatment devices as well as 50 different accessories.

Avazzia markets to hospitals, physicians' offices, and rehabilitation clinics, as well as providing medical staff training. The devices are only accessible via prescription in the United States, although they are not necessary in other countries. His product has shown to be highly successful thus far. According to Smith, two-thirds of consumers who responded to his survey said they used less pain drugs and slept better, and that they no longer needed to take oxytocin.

 

The Challenge

Smith initially ventured into foreign markets by exporting to Taiwan a few years ago. He's also done well in Canada and Malaysia, and has sold in Korea, Singapore, and the United Kingdom. To meet import regulations, he began working with the United States Food and Drug Administration (FDA) and the International Standards Organization (ISO) to secure product quality and safety certifications, as well as the CB globally recognized safety approval. His products are typically accepted in most nations with these permits, reducing a major commercial obstacle. Smith began considering India as a prospective location about a year ago, owing to the country's vast English-speaking population and expanding middle class. However, when he tried to start conducting business in new areas before, it took several months and a lot of money to find distributors.

 

The Solution

Smith met Trade Specialist Richard Ryan of the US Commercial Service in north Texas at a local chamber of business event. Later on, Smith sought business advice and learned more about entrance techniques. "I knew India's populace tends to avoid medications in general," Smith adds, "but the extra market research really underlined the Indian medical community's receptivity to nondrug therapy."

Ryan assisted Smith in finding possible Indian distributors by working with US Commercial Service colleagues in New Delhi, India. Smith traveled to India after Avazzia's demands were matched with several potential Indian distributors. Smith recalls, "I interviewed many distributors and really 'clicked' with one in particular since we both had comparable technical backgrounds."

"Having the backing of the US government contributed to my credibility with him, so that worked out nicely, and I ended up signing him as a distributor."

The distributor bought a small quantity of Avazzia items and displayed them at a trade exhibition. Thirty Indian physicians visited Avazzia's exhibit, resulting in extra sales that have lasted to this day. Avazzia is now in the process of selling to a large sports injury rehabilitation facility that handles 500 patients every week.

 

Lessons Learned

Smith anticipated that overseas clients would seek the lowest price possible, regardless of quality. "However, I've discovered that if you have a good product, people will pay for it," he continues.

So, what does Avazzia's future hold? Smith's business now has 15 employees. "Exports account for 20% of our total revenues," he adds, adding that this figure might rise to 50% in the next two years. His next major emphasis will be Mexico, with intentions to extend into Latin America, where the US has a number of free trade agreements. Oh, and what about Smith's diabetic neuropathy-affected friend? He continues to utilize Avazzia technology, which has significantly decreased his reliance on painkillers.

"Do your study first and make use of the US Commercial Service if you have no prior overseas commerce or export expertise." I would have begun marketing to Europe earlier if I had known what I know now ten years ago. "Make the most of your business experience; you could have more skills than you know." If you've sold in the United States, for example, that's a huge plus in terms of becoming a successful exporter."