ALMOST every business should be thinking internationally. We live in an age in which growth in mature markets in the UK and other developed economies is stuttering, so it makes sense to consider establishing – or expanding on – an overseas presence that offers real potential.
The rewards can be great, but only for the companies that prepare thoroughly and go about the task in the right way.
International expansion has to fit with a company’s strategy and everything it encompasses: the business model, its products, target markets – anything that has a bearing. A company looking to expand into multiple jurisdictions may have to tailor a specific commercial approach for each.
Cultural differences and legislation can vary from market to market, but the way in which you begin doing business in a new location might also have an influence.
It could be that making an acquisition is the best way to begin trading in a new target market; a joint venture might work well; or it might be simpler to bring an overseas agent or a distributor on board. The method you choose will affect how your company moves forward.
One Livingston-based RBS customer that took a flexible, varied and successful approach to exporting is Empteezy, a manufacturer of engineered liquid storage solutions. With around 100 employees and manufacturing sites in the UK and France, MD Bruce Wishart seized opportunities available in foreign markets such as France, Italy, Spain, Estonia, Latvia, the UAE and Hong Kong.
Far from adopting an identikit approach to each new market, Wishart responded to differing environments, often scaling up the company’s presence incrementally. This involved developing operations in a foreign market from an initial deal with a distributor, step-by-step, until a wholly-owned subsidiary was established.
Although doing business abroad is getting easier, difficulties still remain. Global shipping puts a strain on working capital cycles. Goods can only go to market after extensive transportation procedures. Money can take time to come back into the exporter’s business.
Of course, exposing a business to currency fluctuations and international payments presents complications as well, but these too can be ironed out with various trade instruments and other services. Consult your bank about the services they have available.
• Eddie Rintoul is regional managing director Scotland at RBS Corporate & Institutional Banking