By James Dallan
At a time when North American markets are steady, but not growing rapidly enough for manufacturing and supplying companies to attain their increasing sales objectives, one must not overlook the substantial opportunities that exists abroad for the extensive gamut of North American made and supplied water treatment products. The truth of the matter is that our North American water treatment needs are only the tip of the iceberg when compared with the world’s water treatment market requirements, which represent a much larger scale. Seeking new opportunities where they exist and shifting the growth focus globally would yield valuable rewards for companies who employ the right strategy for international expansion. The following are essential steps when considering making the move to international markets.
Select the right market
The journey toward international expansion must start with a destination. In other words, this means identifying the right region to tap into, where the greatest opportunities are easy to reach. The advent of technology and modern communications facilitates unprecedented access to world markets, which are now much easier to connect with. The approach and connection modality for penetrating a new market, however, are make-it or break-it elements of success. The most effective targeted strategy for tapping into these markets is harnessing the experience and valuable knowledge of international business consultants with a proven track record. Starting from scratch would mean a steep learning curve and (potentially) a lot of setbacks.
Other resources, such as commercial trade missions at local embassies, are very helpful in gauging the potential of a local market and providing a wealth of fairly accurate information about the area’s market activity, its needs and active competition. A search on the Internet can also be very useful; however, in some countries this is difficult to engage effectively because of the many languages that are used on company websites in different regions and the inability to judge accurately local business credentials by just browsing their website. A visit to the specific country or market, combined with attendance at local water or environmental trade shows and conventions can be very useful. Once there, a search of the local phone and trade directories will provide more information about regional dealers, distributors, other active water treatment-related businesses and competition in the area.
Following this initial research, a clearer picture of the local water treatment activity, general economy and the cultural differences will begin to take shape. The enterprise can then move to assess the suitability of its products for the targeted region, find the best way to structure its business and decide whether the intended market would be suitable, in order to begin a concerted sales and marketing effort. Again, an effective time- and cost-saving strategy is tapping into the expertise of existing international sales consultants who already possess the insight and knowledge in specific markets and can circumvent the long process of discovery by focusing sales and marketing efforts where they will yield the most results.
Finding the right partner
Finding one or more local partners can be very helpful when entering a new market because it can facilitate access within a shorter period of time and with less risk. From my three decades of experience in international markets, I find that having more than one local partner is always a wiser and more prudent choice for doing business in most areas overseas. This way you get more than one point of view about the region and you are not aligning yourself with just one potential dealer/distributor. They will also know the best avenues to bring your products to several market segments and cover multiple networks of clients.
Researching local feedwater quality parameters, special water treatment requirements or any special usage needs is a definite asset. This will help measure the general technical requirements in the area, and benefit in evaluating whether a company’s current products are suitable for the local conditions, or if modification(s) would be necessary. Special technical issues for the area should be evaluated carefully, including adaptability, power supply issues, special features, local certification essentials, official languages, service and maintenance needs and how warranties can be addressed in future.
Financials and personnel necessary to achieve success
Once the steps above have been thoroughly researched and established, a list of requirements can then be drawn and an estimate of the financial cost needed to achieve these requirements can be projected. The cost required would include personnel, regional conditions, regulations, local duty and taxes, commerce restrictions, exchange rates, currency fluctuations and payment terms. It could also be worthwhile checking the availability of grants or subsidies offered by local government to support water treatment equipment and/or services in the region. In addition, it is prudent to assess the local political environment, geographical landscape, time zones, cultural character, communications structures and languages. Considering binding local partnerships can be helpful and can make a market penetration easier, but it can also be complicated and difficult to get out of.
Price setting and adaptation
The first thing to keep in mind is that the world is a large place, with many different countries, levels of income and boundaries to Key Strategies for Successful International Sales Expansion By James Dallan Water Conditioning & Purification April 2013 what local end users can bear to pay. In some markets, one will find that North American prices can be applicable, but in many other markets (particularly in undeveloped, poorer regions of the world where clean water needs are extensive) income levels are not high enough to afford high product prices. Adaptability is key. In determining price levels, a review of locally available competing products would be the most important factor to consider. Assessing one’s cost, including material, profit margins, exchange rates, inflation, safe packaging, freight, insurance, warranty, advertising, installation and service, payment terms, bank charges and other costs is, obviously, a worthwhile consideration and key part of the decision-making process.
Approach and management
I’d like to clearly emphasize the fact that any long-term success has to be based on a mutually rewarding balance between the supplier’s benefit and the local user’s satisfaction. Sustainable commitments, product adaptability, flexibility, customer needs, patience, follow-up and persistence, development of personal relationships with local businesses, regular visits and never forgetting respect of local culture and character are also vital elements for success.
There exist some legal operating differences between various countries, but there are also some basic commonalities as well. Obeying the local import laws and regulations is a must. Adhering to certification protocols and codes is also absolutely essential. A regional advisor would be valuable in helping an importer understand the local legal framework within which they must operate. Laws regarding partnership agreements, product liability, insurance, personal safety and risk assessment are all important matters to consider carefully.
There are several pitfalls that can and should be avoided. These include not enough market understanding, weak financial and human resource allocations, not enough perseverance, disrespect of local business and social cultures, impatience and giving up too soon.
As with every successful business, multiple visits to the region, combined with a continual assessment of client activity, local conditions, economy, currency, political situation, rules and regulations, sales and profits (with the ability to adjust strategy, if needed) is absolutely essential for long-term growth and success. In outlining the values of international expansion and the staggering opportunities that exist versus the obstacles, it goes without saying that such a strategy is indispensable to any company’s growth and success and, with the right approach and expertise, definitely a worthwhile and hugely profitable endeavor.
About the author
James Dallan, a mechanical engineer and former WC&P Technical Review Committee member, has worked in the water treatment industry for over 30 years. During his career, he has established sales and distribution of water treatment equipment in over 100 countries. Dallan is Managing Director of J Dallan Environmental Technologies, specializing in global sales and supply of water treatment products. He can be reached at [email protected] or by phone, (416) 540 2520.