Successful Export Managers can be compared to Roulette experts. You need to spread your bets around many countries in order to achieve your sales budget. Winning reflects luck in the countries where you place big investments and avoiding high risk regions . Export Solution has completed projects in 31 countries across 5 continents during the past year. China,Philippines,Brasil,Mexico,UK,Myanmar, Sri Lanka, and of course the USA. There’s plenty of new business opportunities if you know where to look !
The “loud” conclusion is that most brands should consider an Asian pivot focusing on high growth countries with large populations and expanding middle class. This includes priority countries like China and Southeast Asian Tigers like Indonesia but also Saudi Arabia and Gulf countries. The USA opportunity is “Bigger than BRIC’ for international brands. Favorable exchange rates make this an excellent time for international brands to invest in taking their USA business to the next level .
Country Segmentation Definitions
All countries are not created equal, with population and GDP representing just starting points. Category development, retail fragmentation, and cost of entry also signify key filters. Historically, Export Solutions one page strategy grids have segmented countries into three groups: Strategic countries such as China, India, and Mexico that boast large populations and require focused investments in marketing and human resources. A second group of countries is identified as Priority countries. Priority countries are mid size, with populations between 10 – 50 million and require more modest levels of investment and management oversight. Our third group can be considered Opportunistic countries. These are small countries which can be important profit generators with minimum resources deployed.
Export Solutions is adding five incremental segments to assess market potential.
Crawl, Walk,Run,Wait, and Halt refine our market development recommendations based upon commercial realities of the countries today. These comments reflect where the countries may be in the development curve combined with current economic and retail dynamics.
Crawl countries are markets where it’s time to get started ! This may include initial market assessment and a small first order. Crawl countries have an emerging retail structure supported by a network of professional distributors. The objective in crawl countries is to establish a brand presence, gain learning, and secure some first mover advantage benefits before the “rest of the crowd” arrives and listing fees escalate. Maintain modest expectations, even in giant countries like India.
This signals a second phase in country development. It is likely that your brand has already established a beach head and may be experiencing impressive year on year results from a small base. These countries warrant more attention and investment. In the walk phase , you may change your partner from a small distributor who is really a “buyer” to a more powerful partner capable of building your brand at another level. Philippines,Indonesia,Colombia, ans Saudi Arabia are all excellent examples of “Walk” countries.
Now is the time for brands to invest in these high potential countries. China and the USA ( foreign brands) top the list of strategic countries where your senior management must commit to incremental resources. This includes local team, small factory ( or copacker/jv) , research, and marketing investments. Evaluate your China and USA shipments and validate that you are content with your current shipment trajectory. More likely, you will need to revise your strategic plan to better access these benchmark countries. The Gulf, Korea, and Panama are smaller countries that offer exceptional growth opportunities.
I am a big believer in Brasil and hope for a turnaround in advance of the 2016 Olympics. However,the current recession coupled with existing market complexities make Brasil a country for only the most seasoned multinationals to compete. Africa’s one billion citizens represent the last, great untapped consumer market for most consumer brands. Each month, I receive two types of calls on Africa: The first requests help as no one seems to have cracked the code. The second type of call relates to another diversion problem from Nigeria,Kenya, or Ghana. I never receive calls on any success stories. South Africa is the exception, a “Crawl” or “Walk” country for most.
Newspapers and financial indicators accurately identify these countries. Some exporters with “poor eyesight” continue to pursue these countries despite the obvious risks. This month, I took a call from a mid size Italian company, where the export manager had lost his job over a $400,000 default from a well known Russian distributor. I recently completed a $20 million project for Argentina where the big issue was not brand building capabilities but access to capital and ability to clear foreign goods through customs. Most hope that the fourth quarter election results in Argentina will break down protectionist import barriers and resume normal trade with one of my favorite countries.
What about Europe ?
Most European producers find Europe excruciatingly difficult, let alone the possibility for premium foreign brands to enter. Opportunities always exist in Europe, particularly for innovative brands or pursuing ethnic channels like the market for Made in the USA or Asian products. However the high cost of entry in Europe coupled with declining populations signals that you will likely enjoy a higher ROI elsewhere. Proceed cautiously and profitably!
The Crawl,Walk,Run,Wait,Halt assessment model provides a framework for all exporters. However, actual grid output may will vary for each company based on brand dynamics and existing export footprint. For example, Mexico or Philippines may be “Run” countries for certain USA brands, but less important for European companies. I would argue that China and USA development focus would be a long term “Gamechanger” for most companies. Please excuse our pessimism on “Wait” and “Halt” countries, as it is our hope that these important countries recover to create new business ion the future. Export Solutions works in 95 countries, with relevant field based, insights based upon projects for many mid-large size USA and European brands. Contact Greg Seminara at firstname.lastname@example.org to help you define your Export Strategy Road Map.