Research shows that companies that export their products or sell internationally are more resilient during economic downturns, make more profit, and enjoy longer lifespans. Businesses that are trading internationally have reported increased growth and revenues since they have access to larger markets and consumers.
According to The City Press,South Africa is experiencing a record trade surplus in the wake of the Covid-19 pandemic with our exports far outpacing imports. Standard Bank’s executive head of trade and supply chain finance sales believes that exports could hold the key to South Africa’s economic recovery and growth. It has been reported that there has been an increased demand for South African exports. Currently, our top three trading partners are China, India and Japan, (17 June 2021).
This may seem like an attractive option, but there are some critical factors you need to consider when trading internationally:
- Conduct thorough market research
- Identify all market risks
- Perform a competitive analysis
- Find the gaps and assess whether your product/services can compete with what’s currently in the market
- Determine your pricing
- Take into account currency differences, fluctuations, exchange rates
- Decide on payment methods, terms, currency (when selling in another country show the prices in the currency of that country)
- Identify payment risks and find ways to mitigate these risks
- Research all laws, rules and regulations related to exporting, such as duties, customs and taxes
- Generate an export plan with clear objectives
- Plan your staffing and financing requirements
- Devise a market entry strategy
- When working on your distribution plan, research the legal and regulatory aspects of shipping your product -customs, restrictions, taxes etc.
- Language and cultural barriers may exist with trading partners
To help mitigate the various risks associated with global trade, you should consider partnering with local companies or partner with a larger established entity and then enter the market. Larger companies will bring experience in sales and distribution and will have access to many other resources such as legal, marketing and financial.
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