Selling your product in foreign markets is a terrific way to increase sales and diversify your customer base. But just like any aspect of your company, exporting brings with it potential problems, says Gerhard W. Kautz in Exporting from Canada. Learn about them now so you won’t be surprised later.
Some of the most common issues that arise are:
- Agent issues. Your foreign sales agent might pressure you to sign an agreement right away. This is a warning sign. A good agent will suggest that you not make a formal agreement until he or she tests the market with your product. Another agent problem is lack of activity on your behalf. But before you jump on an apparently inactive agent, make sure you have been giving him or her enough support, in the form of marketing materials and product knowledge.
- Government corruption. This is common throughout the world; the usual form is bribery needed to speed up the issuance of permits. There are also many countries in which government officials may demand kickbacks for doing business with you. There’s not much you can do about corruption, short of giving up the business in that market. Payoffs have been going on for centuries, and despite international efforts to stop corruption, they will probably continue.
- Sucker bids. It’s a dirty trick pulled on the novice exporter: a buyer wants to choose a supplier who has offered him personal benefits. But since he must prove that he considered several suppliers, he gets the proof he needs by asking several other firms (like yours) to bid on the project, even though he has no intention on doing business with them. You can thus end up spending a lot of effort and money for nothing. A good agent should be attuned to sucker bids and not get suckered himself.
- Industrial espionage. It’s real, and Canadian companies — especially those with a high-tech product — are being targeted. A typical approach is for a foreign competitor to buy your product and reverse engineer it. Unfortunately, you can’t do much to stop this, except try to make your product as difficult as possible to reverse-engineer.
- Customer issues. Common complaints are late shipments, incomplete delivery and problems with customs clearance. Your agent should deal with minor customer problems, at least initially. One of the more difficult challenges is overcoming any lack of understanding of a product due to language and education differences. Solving this problem can be an expensive and daunting task. An 800 number can help your North American customers, but for the rest of the world, you’ll have to put a lot of faith in your agent.