Going global – tips for rookie exporters

Some of the very factors that drive globalization at the macro level, including electronic communications, and especially the Internet, make it possible for even small and medium businesses to go global today. How easy? Read on. Point your browser to www.ebay.ca. Follow the links and fill in the forms to become a member and set up your own eBay store. Post some products for sale. You just went global. Sure, that only works for some products and services. Yes, there could be complexities around cross-border shipping, patent law, hazardous materials, etc. And yes, if you know nothing about the language, culture or market conditions of other places, your globalization efforts may not amount to much. But with the technology at our disposal today – the Web for e-commerce, VoIP, unified communications, new online collaborative tools – going global is well within the reach of even fairly small companies. Indeed, according to Statistics Canada, almost three quarters of all Canadian exporters in 2006 were small businesses employing fewer than 50, and they accounted for almost one third (30.9%) of the total value of Canadian exports. Incentives to go global are compelling, even now with the economic downturn – perhaps especially now. “If you look at where growth is happening in the world today, “in terms of absolute dollar growth, it’s clearly in developing markets – India, China, Eastern Europe, Latin America,” says Sean Poulley, vice president of online collaboration services in IBM’s Lotus division. “Then there’s the negative implication . Whether we like it or not, in a global economy, it’s difficult to compete just in Canada or America without experiencing competition from somewhere else.” Carrot and stick, in other words. Go global to expand your market and business. Or go global to offset market share lost to foreign competitors. But go global you must. The economic downturn changes some things – availability of needed capital, certainly – but not the essential drive to globalization. “The trend has so much momentum that it will clearly continue,” says Paul Edwards, director of SMB & channel strategies at IT research firm IDC Canada. Edwards believes the downturn may in fact provide an extra spur to Canadian companies to look at overseas markets. “As the economy shrinks, businesses will naturally be looking for new ways to increase revenue,” he says. “That might mean diversification within their own region, but the other avenue is to look for market penetration and growth .” Rick Moran, vice president of small business solutions marketing at Cisco Systems Inc., notes too that small businesses historically recognize early signs of economic recovery first and help push it along with their activity. So even if now is not the right time, it’s important SMBs be ready to roll when the time does come. Going global for most companies is, of course, not as simple as opening an eBay store – although Web-based e-commerce is certainly one model for globalizing your business. “The webification of business has allowed entry to new markets at the very lowest cost possible,” says Robert Dreyer, vice president of IT research at Info-Tech Research Group Inc. Before the Web, he says, companies had to establish a branch office, put people on the ground, think about physical marketing collateral – and overcome a bunch of other obstacles that were beyond the financial resources and abilities of most SMBs. “But with the Web,” Dreyer says, “you’ve got a virtual environment. You can reach out to people anywhere in the world – if you can attract them to your site. The Web creates a level playing field.” Not a slam dunk Any business really serious about attacking foreign markets will at the very least establish its own Web presence to attract customers rather than using something like eBay. That may sound simple enough – you already have a site, right? – but not necessarily. Do you need separate Web sites in foreign languages, for example? Or product manuals posted in different languages? It depends on the market and the product or service you’re selling, but it’s one reason many Canadian companies start with the US and Great Britain. Translation services are readily enough available, including on the Internet – as with virtually all the information and services you’ll need to globalize your business. But they obviously come at a cost. And then there are thorny issues around rules and regulations for importing products into your target markets, different for each one. Even assuming the simplest business model for globalization, what happens when your UPS or parcel post package hits the border? You need to know the procedure long before you make that first shipment, possibly before you price products for foreign customers. It means knowing harmonized customs codes for your products, learning the niceties of filling out international waybills and commercial invoices, and assigning staff to do it. The how-to information, again, is readily available on the Internet – start at the Government of Canada’s CanadaBusiness.ca site – but it will still take time and resources to figure it all out. And once you learn how to reliably get product into customers’ hands in foreign markets, how will you service them? Do you need a phone-in Help Desk? Or could you handle it using instant messaging? Will you need a foreign language capability? Ten years ago, cost alone would have nixed attempts to provide remote telephone support for overseas customers. Today, the emergence of VoIP, along with other market factors, has driven prices for international calling in general and toll-free in particular down to the affordable level, and made it very easy to provision. If you wanted to provide toll-free calling for customers in the Czech Republic, for example, you could go to TollFreeCallForwarding.com, a Web-based company in the U.S. It will charge you about $50 (U.S.) a month for a toll-free number that Czech customers can dial, which is then call forwarded to your number in Canada. The price includes 178 minutes of call time (additional minutes are 30 cents.) The company can provide toll-free numbers in over 70 countries. It takes about 30 seconds to provision service at its Web page. There are also click-to-talk tools that allow you place a link on your Web site that customers click to initiate an outgoing call to them from your contact centre. Most enterprise-grade unified communications and automatic call distribution (ACD) solutions include click-to-talk capabilities. Click-to-chat works the same way for initiating instant message sessions. But the pure Web commerce model requiring this simple level of organization and support will only work for some types of businesses and products, and can only take you so far. Most B2B companies will need feet on the street to market products or at least interface with customers on the ground. And you’re probably now looking at volume shipping, which requires more sophisticated solutions than UPS or Canada Post for dealing with logistics. Globalization at this level may preclude very small firms. It’s only companies with between 50 and 100 employees, Poulley suggests, that are well enough organized and have the skills to deal with issues that arise. Ricky Mak, an analyst in IDC Canada’s SMB & channel strategies group, says, “SMBs looking to go global have to ask themselves, do they have the resources to understand the different laws and policies that apply? Do they understand other markets, do they have enough HR and legal expertise?” Find the right partner – and technology Moving to this next level doesn’t necessarily mean setting up and staffing a branch office or hiring locally – but may eventually. The most cost-effective way to get into foreign markets, Poulley says, is to partner with a local agent or distributor. And you can outsource logistics to third-party organizations based in Canada. Export Development Canada can help you identify and negotiate with likely partners. Another source of referrals and country-specific information is the ExportTradingNetwork, a for-fee service with 190 of country-specific Web portals. The Canadian portal, lists over 400 companies offering export logistics services. Finding the right partner is the relatively easy part, Poulley contends. The hard part is establishing and maintaining good working relationships. “In the end, how well you work with that partner will determine how sustainable you are in that market. It will determine whether you succeed or fail.” He may be slightly overstating the case, understandably. His company has just introduced, LotusLive, a software as a service (SaaS) Web collaboration suite aimed primarily at SMBs. Poulley argues that such tools – LotusLive includes file sharing, Web conferencing, instant messaging, etc. – can help companies deal with the inevitable problems of maintaining long-distance relationships. With LotusLive, IBM is jumping into a market already full of start-ups, some with very low-cost or even free services. They’re often point solutions, though – only or mainly Web conferencing, only or mainly file sharing. New ones seem to appear weekly. Examples: Yugma Inc., CallWave, GigaTribe. They will mainly be of interest to very small firms. IBM delivers better integration of tools and an implied warranty that the tools will work better and more reliably than those offered by start-ups. But it is a crowded buyer’s market. LotusLive is also up against Microsoft with Office Live and Sharepoint Services, Cisco with WebEx and Citrix Systems with GoToMeeting. Online collaboration and other advanced IP-based communications tools clearly can solve partner and customer relationship problems, though. When Skymeter Corp., a Toronto firm that makes innovative technology for managing and controlling parking and toll collection, began taking its products to world markets two years ago, it implemented a Canadian online collaboration solution from Octopz Inc. to help it stay connected internally and externally. Octopz, which was originally designed for creative professionals, includes file sharing (including rich media file types), document mark-up tools, and text, audio and video chat functions. Mak, who researched the case for an IDC report, says the very easy-to-use Octopz suite helped reduce cycle times, speed interactions with clients and partners and reduce time and cost to qualify prospects by providing an online venue for communications and demonstrations. Skymeter, a small company with fewer than 20 employees, was stretched thin. “They had to be in different markets to drive sales and marketing,” Mak says. “And they found they just couldn’t effectively work with one in Mumbai, another in Toronto, another in Peking.” Octopz helped solve those problems. A Florida-based Cisco customer, Amazulu Inc., experienced a mini-eureka moment in dealing with a Chinese manufacturing partner by the (now) simple expedient of setting up an almost-no-cost Internet video conference using Cisco gear. Amazulu, a B2B purveyor of thatch and bamboo architectural products, was frustrated that it was taking months to finalize design of a new synthetic bamboo product its customers were anxious to buy. The supplier would send samples by FedEx, Amazulu would send them back with requests for changes. Language was a big problem. Company president Claire Evans finally sent the Chinese company a Cisco desktop conferencing kit and set up a Web conference. When they were face to face, by holding up various materials she was able to convey her requirements. “At one point, I pointed to one of the samples, and I saw a big smile on his face,” Evans recalls. “That was a special day.” When the next sample arrived in Florida, it was exactly right. At some point, for some companies, it may indeed make sense to have employees in distant markets, even they are only independent agents working out of home offices. But even the latter scenario would have posed huge communications challenges – and costs – a decade ago. VoIP services can overcome them. Sidebar: Telemanagement walks the talk Your correspondent is currently living in Europe but continuing to work with Canadian and American customers. For voice communications, I use a hosted PBX service ($50 per seat) from Primus Canada which works over the public Internet. With a standard North American phone plugged into the Linksys adapter provided by Primus and the adapter plugged into a router with a high-speed Internet connection (included in apartment rent), I can make calls to Toronto customers as if I was in the city – no tolls. Audio and connection quality range from more than acceptable to outstanding. Internet-based communications technology can even help companies with some of the most intractable problems of globalization – overcoming language and cultural barriers. When Humanature, a Vancouver-based video game studio, was tasked by its parent, Korean-based Nexon Corp., with improving communication and understanding within the highly distributed and fragmented Nexon group, it implemented ThoughtFarmer, a wiki-based intranet from OpenRoad Communications, also of Vancouver. The software let dozens of small operating divisions communicate internally, but also with the larger group. Part of the objective was cross fertilization among divisions. The problem: some intranets were in Korean, some Japanese, some English. OpenRoad came up with a simple solution. It implemented the Google Translation API within its software so that users can automatically translate intranet pages from one language to another and even flip back and forth between languages. Google provides only a rough, not entirely reliable translation, but it’s enough to let users know if the page is of interest. If it is, they can click a link to send the page out automatically to an online translation bureau staffed by humans. Going global may not in fact make sense for your business, but if it does, available tools now put it into the realm of the possible. Technology can help overcome obstacles that would have been insurmountable for many organizations even a few years ago. That doesn’t mean you don’t have to learn, understand, will yourself forward. But it does make the task easier.

Going global – tips for rookie exporters

News | February 20, 2009

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