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The International Entrepreneur – How to Respond to International Business Opportunities Outside Current Markets

Business Opportunities in New Countries

 

Michelle looked up from her computer monitors and directly at her business partner, Brian.

“Japan? Do we even know anyone in Japan? How did they find out about our company?”¬†asked Michelle.

Only 9 months ago, Michelle and Brian had launched their software startup. Things were going better than they ever dreamed they would. They were right about the need for their product in the market and the company was now hurdling forward at rapid pace – doubling in size roughly every month. It was all that Michelle and Brian could do to keep up with the growth.

There had been some sales in Canada and then Ireland, but Japan? That meant non-English clients and many more unknowns. This would be a large client, but was it the right time to expand to a market not yet covered?

How do you respond to a sales lead in a market you do not yet know?

As with most international business questions, the answer is, it depends.

Companies that seek out products and services not yet offered in their country are normally seeking a competitive advantage that they hope your product or service will provide. This is also true for distributors wanting to represent your product in a new market. They often want your product as is with little or no negotiated concessions, no trips to their country for sales presentations or other costly outlays. They are willing to pay in your currency and sign your contract terms. That’s probably how Michelle and Brian sold product so quickly to new customers in Canada and Ireland.

There are clear business risks for selling products to clients in markets where your company has no presence. Entrepreneurs need to watch for risks, including these:

  1. Intellectual Property Protections. For anyone relying on newly developed technology or a brand with growing market recognition, protecting your IP is paramount to long-term success. Trademarks, copyrights and patents can still be infringed upon, but at least if they are internationally registered you have the means to legally defend them. Once the damage has been done, it’s too late to register and try to recoup any losses.
  2. Compliance with Regulations. Sure, you can sell products or services into a country. But that does not mean that it was done in compliance with local, national and regional laws. International trade is governed by trade agreements and your own country’s laws, as well as the rules governing your customer’s location. Rules may govern your product’s packaging, tariffs, import restrictions, computer server locations, etc. This is an area where arming yourself with knowledge is smarter than learning through fines, penalties and bans.
  3. Logistics and Support. For products that need to be transported or assembled at the overseas location, logistics can be a costly part of the sale. Once a market is established, shipping costs can often be reduced with larger volumes and long-term contracts. But for early sales, be sure to fully understand logistics costs and build them into your price quotes. For Michelle and Brian looking at Japan, they need to consider how they will support their product with this customer. Will time difference be a challenge? Language? Discuss these issues up front so that there are no misunderstandings.

There are more risks, but this is a list of some of the most critical early considerations.

Entrepreneurs tend to approach their early international sales opportunities in one of three ways:

  1. Throw Caution to the Wind. This is a very common approach for young companies. The pressure to quickly show top-line company growth outweighs the perceived risks. Michelle and Brian assumed that all would be fine in selling to Canada and Ireland without checking for any issues. Normally this subsides around the same time as the first foreign fines are levied or IP piracy surfaces.
  2. Stall the Sale & Do Your Homework. This is a smart approach IF the sale’s margin is larger than the cost to pay for any in-country trademark registrations and to check for any cross-border regulatory issue. TIP: check your own country’s exporting resources first because they are often free or nearly free. Arming your company with knowledge also prepares the company for its impending growth into new markets. If further international expansion is imminent for Michelle and Brian’s company, this may be the best approach.
  3. Stick Your Head in the Sand. Ignorance can sometimes be bliss, if you need to focus on a critical path to success that has no room for deviation. International can be a catalyst for intense revenue growth. But if your staff is tiny and your product development list is large, you may not have the bandwidth to research Japan or any other remotely located opportunity until your company grows larger. It’s not ideal, but sometimes it’s temporarily the smart choice. Since Michelle and Brian seem to have a market-ready product with traction in their home market, they should try to learn all they can about how to intelligently move forward into new markets.

No matter which approach a company takes with leads from new markets, it is important to start learning about where to find new high-growth markets overseas, how to enter those markets, and how to stay steps ahead of the competition.

Good luck to you in all of your international business efforts!

Becky Park 

 

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The International Entrepreneur – 5 Smart Ideas for Protecting IP in International Markets

 

IP, intellectual property, international, business, global

How important is your intellectual property- your company and brand names, creative outputs, inventions and trade secrets? Most company leaders consider these aspects to be the most critical for long-term success.

I have also heard many business leaders shy away from international expansion because of IP theft fears. To be clear, any valuable intellectual property will likely be targeted by IP pirates. That said, you’re no safer staying home that forging on ahead. In fact, you may be less safe. In the meantime, companies who stay home miss a majority of their markets.

For those brave companies venturing into international markets, here are ideas to smartly move forward:

1. Develop an IP Protection Strategy.

Discuss as a leadership team:

  • How important is your IP to your company’s success?
  • How much potential market is outside your home market?
  • Will international IP infringement affect you domestically?
  • How much $$ do you have to fight infringement in legal systems overseas?

The strategy will vary by company based on factors like 1)

  1. The importance of IP protection
  2. Which countries hold the best market potential for your products and services
  3. Your budget for proactive & reactive measures.

If you need help to develop your strategy, please consult with someone experienced in international business and IP.

2. Cover the Basics. Check with the World Intellectual Property Organization (WIPO) to see which of your IP can be quickly and easily registered to cover countries where you do business or may do business in the future.

If you have key markets such as China, also register especially your trademarks with their government as well. Like in many countries, China is a “first to file” system, where the first to register a trademark has the rights to it. Even if the registrar does not use the trademark, their rights can supersede yours. The last time I checked, it cost under US$700 to register a Chinese trademark as opposed to thousands of dollars to pay off whoever beat your company to the Chinese registry.

3. Legal is Good, but Partners may be Better. If you are from a Western country, then the normal course to fight IP theft is through the legal courts. That is a less effective strategy in countries where you are the foreigner and the bias tilts towards the native IP thief. Another approach is to develop strong partner relationships in country. If a partner is also harmed by the IP theft, then they will have even more reason to use resources and influences to resolve the situation.

4. Use IP Theft to Spurn Innovation. Our mothers used to tell us that imitation is the best form of flattery. While no company appreciates their designs or ideas copied, there may be an unexpected benefit from copycats. Instead of spending resources to pursue the thieves, you can use those resources to spur innovation to stay one step ahead of those who would copy you. It also helps to keep your products at the forefront of your industry.

5. Balance Profits and the Real Risks. There are companies that will not leave their home market for fear of IP piracy. This I can tell you, I have yet to meet at least a technology company with more than 50% of their total opportunity coming from their home market alone. In other words, 50-90% of most companies’ markets are overseas.

By having an IP protection strategy that is proportionate to both the risks and rewards of international markets, your company can be smart about both.

For more information about IP protection strategies and other international business needs, please contact The International Entrepreneur.