In any growing business, one way to increase your market potential is by expanding to other countries; specifically, to those where you see little or no competition or which are crying out for the solutions your business is offering.
Here are a few issues that companies should understand before expanding internationally.
Creating Localized Websites
Businesses forget that being local is crucial, both in the U.S. and abroad, because consumers like to know they are not purchasing from a far-removed beast, but are instead interacting with a locally adapted business. Clearly, if you’re a German looking at a .com website and a .de website, you’ll think of those two differently, and if you’re an American looking at a .de website and a .com website, the likelihood is you’ll exit out of the .de page without hesitation because you don’t understand German.
Other than making sure that your business is localized for the domain extensions and language, you want to make sure that you are buying new servers locally too because websites running on servers based abroad are likely to run much slower than locally based ones.
Cultural Differences In Purchasing Behaviors
Getting local press is quite difficult without the proper local angles (local manufacturing, partnerships, personal ties, etc.), and some outlets won’t even write about you unless you have a local office with local employees.
For example, because the Chinese enjoy purchasing expensive items as a display of wealth, they consider more expensive items to be of higher value. This is counter-intuitive to American culture, right?
Americans love high markups, only to be complimented with low markdowns, and, most of the time, there’s an inverse relationship between the price of a product and how many units are sold (the higher the price, the fewer units sold and the lower the price, the more units sold). For luxury items in China, however, there’s a direct correlation between the price and units sold (higher prices lead to more sales, and exponentially more profit).
Now you are entering a new market where the opportunities are endless, but how can you capture the audience that’s dying to have your product? Knowing the right places to advertise online is hard because you’re not quite the average consumer, who is surfing the web using local search engines, entertainment sites and shopping sites.
As a Western business entering the Chinese market, you might not realize that the dominant search engine isn’t the friendly Google you know and love. It’s Baidu. Google pulled out of China and any Google searches done in China are done through Google Hong Kong. Also, getting local press is quite difficult without the proper local angles (local manufacturing, partnerships, personal ties, etc.), and some outlets won’t even write about you unless you have a local office with local employees.
International Logistics and Manufacturing
Shipping internationally can be a royal headache, and might not always be an ideal business decision. While you can lower your costs producing product in other countries, you may fail to understand local customs in doing business. Work with suppliers who have limited liabilities to you and who may provide a less-than-satisfactory product and country-based tariffs may cause your costs to skyrocket.
Have you faced similar experiences or challenges? Any other interesting issues that might come about in international expansion for startups?
Photo by LittleMan