International markets can offer technology companies significant opportunities to expand and diversify their product and service offerings, increase brand awareness and drive revenues.
But companies contemplating international expansion also face daunting risks and uncertainties, along with operational challenges that can be difficult to anticipate.
Because seizing global opportunities requires knowledge and preparation, it helps to draw on the lessons of companies that have successfully made the transition.
At the Washington Technology Industry Association’s first GoGlobal event, which brought together experts in international expansion to share their knowledge about various aspects of doing business abroad, the most common topics were knowing when and how to expand, product globalization, sales and distribution, and finance/capital.
Here are of the insights I took away from event:
Knowing when and how to expand
Expanding into foreign markets can be an attractive proposition. While investors, partners and customers may be pushing for new sales and distribution opportunities, companies should first ensure they are excelling in existing markets.
Overextending resources by going global too soon can negatively impact domestic operations and impede success in new foreign markets. Once current geographies are functioning properly, it’s best to expand into one new market at a time.
When considering expansion into global markets, companies must determine where there are legitimate opportunities for their products. For example, Spanish, Italian, German, French, Chinese and Japanese language markets represent about 75-85 percent of global GDP outside of the United States.
As a result, these markets are often the most saturated. Depending on the product, it can be advantageous to focus on underdeveloped countries where competition is not as fierce. Emerging markets can be very lucrative, but the existence of a truly untapped customer base must first be verified.
U.S.-based companies should not approach international markets in the same way they treat U.S. sales regions. Companies need to go beyond language when localizing products and services and account for specific cultural differences and customs.
Hiring a local sales staff with the correct accent and knowledge of the region is essential. Local staff can also ensure that potentially devastating language-usage mistakes aren’t made in local marketing materials.
Rajeev Singh, President and COO of Concur, gave a keynote speech that emphasized the need for a strategy that was much more than just hiring an in-market sales person or team.
Without the necessary support from all business levels — from executive to technical — the sales staff wouldn’t be successful. Concur’s strategy was ultimately to enter new markets by transferring their top domestic execs to the target market.
As challenging as the separation might be to domestic operations, this strategy guarantees that the company vision and culture will be carried over as they build a new team in a foreign market. A strong channel partner can also be an excellent strategy for rolling out a foreign market.
Sales and distribution
To establish a sales beachhead in a new region, both customers and partners can provide routes to initial success. If possible, companies should use existing customers to facilitate a connection with a foreign counterpart. A happy “lighthouse” customer in a new region can provide local credibility, references, public relations opportunities and introductions to other local businesses.
Alternatively, finding a channel partner with established connections and having a company representative attend local trade shows and events can provide a faster route to sales and ultimately generate larger revenues and more profitability.
There are many aspects to financing operations and to getting paid in international markets, and these change on a country-by-country basis. Companies need to be educated in how to manage financial risk created by operations abroad.
Smaller companies and entrepreneurs often are discouraged by these factors when considering international expansion. But, there are resources to assist them. Banks and government organizations such as Small Business Development Centers can help to identify and mitigate risks. Also, the Washington State Department of Commerce tries to match local companies with partners overseas.
While international expansion may seem daunting, there are many resources available to help educate companies and entrepreneurs successfully create ventures beyond our borders. You can find detailed notes from our Go Global session here. Best of luck to you!
Susan Sigl is president and CEO of the Washington Technology Industry Association.