By Nitasha Chawla
India primarily imports electronics products. However, in order to be competitive in the global market, India needs to play a bigger role in exports as well. Exports can be a rewarding growth strategy for any business, but need careful deliberation. Here’s a road map for electronics companies to embark on this journey.
Formulating an export plan
The secret to success in the exports field is preparation and a carefully researched export plan. This is your guide as you embark on your journey into export markets. An export plan helps you to act, rather than react, to the challenges and risks encountered in international business.
An export plan comprises many elements—a description of your company, its market and industry, and your business objectives. It should also include information about your products or services, an analysis of the target market and industry, and much more.
Gathering the right market information
This involves rating, evaluating and extrapolating market data. Market date can be collected through market research. Which helps you make sound export marketing decisions by giving a clear picture of the economic, political and cultural factors that affect your ability to sell your product or service. Ultimately, market research saves you time, money and the effort by reducing your exposure to unknowns.
Market access includes building your knowledge on governmental technical regulations and the conformity assessment measures that gauge your firm’s compliance with these rules. A company needs to analyse whether its product meets the market access standards and norms in the target geography.
Market entry strategy
After sorting out the market access issues, a company needs to think about finding its way to the end users, that is, the trade and distribution channels, promotional issues, costing and pricing, risk management, contractual issues and sales management.
There are as many market entry strategies as there are markets. However, these strategies can be grouped into three categories—direct exports, which involve direct marketing and selling to the client; indirect exporting, wherein businesses selling products enter into an agreement with an agent, distributor or a trading house for the purpose of selling (or marketing and selling) the products in the target market. The third market entry strategy involves strategic partnerships with other companies or individuals with complementary skills and capabilities.
Understanding the financial implications
Exporters must develop a financial plan to understand and address the diverse costs associated with exporting. This should factor in a two to three year cash budget to cover expenses and a capital budget. The latter is a cost benefit assessment of your export objectives and serves as your operating plan for measuring expenditures and revenue.
Understanding the legal and regulatory issues
There are numerous international conventions, treaties and national, regional and municipal rules that can affect your ability to operate successfully in foreign markets. Exporters may also encounter disputes with agents, distributors, clients or creditors. It is important to understand your rights and obligations when resolving disputes, selling goods or services and protecting intellectual property.
Major contributor to this article: Rajit Pal Singh is a member of the Foundation for Business Competitiveness, an organisation that enhances the capability of SMEs and MSMEs to export through trainings and other capacity building measures.