Build your international network

Like your export plan and market-entry strategy, it takes research to build networks, but there has to be a commitment in the company to make networking a strategic priority. 

Networking doesn’t happen by accident. It takes resources – time, money and people – to make it truly effective. That means it has to be a part of the company’s overall business plan and part of a company’s marketing strategy.

“It takes time to penetrate a market and build a relationship with potential customers,” says Carl Gravel, Director of International Expansion at the Business Development Bank of Canada (BDC). “This means that you will need a supply of working capital to support your export program until it starts making money. This financing aspect should be integrated into you export strategy right from the beginning.”

The BDC offers Canadian companies looking to expand both domestically and into foreign markets, financing through its Small Business Loan program. This loan can be used to build your network by attending a trade show, among other benefits.

MSquare’s Rojas agrees that networking is crucial to a company’s business strategy. 

“Networking needs to be part of the overall business plan,” he adds. “Like anything, if you don’t make it a priority and dedicate resources to it specifically, it won’t happen.”

When looking for the right contacts in the market, a solid business practice is to take your time and conduct research to find good contacts and opportunities that are a proper fit for your business.

In many foreign markets, there are salespeople who will spend more time selling their companies’ services than they will working on your behalf, explains Rojas.

“You don’t necessarily want to partner with the first company that seeks you out. You need to do your due diligence and find contacts that will actually help your business instead of those that offer you the world and can’t deliver,” he says.  

Sean O’Reilly, founder and CEO of British Columbia entertainment company Arcana Studio Inc., had many potential partners or customers offer him the world when he first started his export journey.

“We’ve had lots of bumps and bruises (in our export journey), especially big investors with big promises that have contacted me from India, the U.S. and China who ultimately wasted my time,” he says. “You have to be careful and do your research so you don’t spend a lot of time spinning your wheels for nothing.”

Technology has made it easier to market a company’s products/services to the world, 24/7/365, in a virtual marketplace. It has also made it easier for companies in any corner of the globe to communicate with each other. Searching the web for contacts, participating in chat forums as well as tapping into the power of social media can help you build an initial list of contacts in a specific market.

An online presence is a must-have, because potential customers or partners will undoubtedly research you, explains Rojas.

“A potential partner will undoubtedly turn to the Internet to learn more about you,” he says. “It’s crucial for companies to have some online presence that spells out who you are and what you do, because it demonstrates that you are legitimate.”

For Ottawa’s hockey-inspired clothing manufacturer, GONGSHOW, the digital world has expanded the company’s networks. It now exports to 10 different countries.

“It is much easier for suppliers, brands and customers to connect nowadays than it was in 2002 when we started,” says Ger McNamee, Co-Founder. “You really had to know someone who travelled to those areas back then. Now, you can do a few quick Google searches and you’re talking to a customer or supplier in Berlin, Shanghai or Helsinki. There has never been a better time to sell your goods to the world.”

Social media is changing the way business is being conducted in the world as this powerful tool offers many benefits for companies looking to expand their prospects internationally.

Specifically, this low-cost marketing vehicle helps companies build networks and acts as a strategic communication technique to keep your network informed on the latest developments. It also provides companies with real-time customer feedback as well as valuable market insight.

According to a 2017 report by We Are Social and Hootsuite, there are 2.7 billion social media users globally, with 91% accessing these networks via mobile devices. North America accounts for the largest number of users – 66% – followed by South America and Asia. Facebook is the most popular social media platform, with more than one billion users every day.⁹

However, tapping into the potential of social media takes dedicated resources, Lisa Shepherd, President of Toronto’s Mezzanine Group explains.

“B2B relationships are fundamentally about people, so it makes sense that B2B marketing is increasingly done through social media. The pace of change is accelerating and even the least digitally-savvy industries are now moving towards social media,” she says. “There are two important things for B2B companies to understand about social media. First, it’s about having a dialogue, not a dictation, with customers and prospects. Second, it’s resource-intensive.”

When looking to engage in a specific platform, a best practice is to be focused and not use every tool.

“It seems that every few years a new crazy social media platform emerges and everyone scrambles to become a part of it. However, in the way social media is evolving many companies have taken to narrowing their focus rather than spreading their attention too thin over too many social media platforms,” says Shepherd.  “Especially in the business-to-business sphere, it is more beneficial to find the social media platforms that work well for you and your business and focus on making those platforms the very best they can be.”¹⁰

Selling directly to the end user through the internet is not just a growing trend. For many companies, it’s an essential part of their exporting plan and an easy way to generate international sales.

International e-commerce, in short, is levelling the playing field in ways that may have far-reaching consequences for many Canadian companies—even those that are not (yet) doing business overseas.

Consider the Statistics Portal facts on e-commerce:

• Retail sales from worldwide electronic commerce are expected to grow from $1.92 trillion (U.S.) in 2016 to $4.06 trillion in 2020
  
• In Canada, retail e-commerce sales are expected to reach almost $29 billion (CDN) by 2021, up from $18.3 billion in 2016
• Retail e-commerce revenue in Canada in 2017 was $20.2 billion (U.S.)
• E-commerce sales accounted for 7.3% of total retail sales in 2017¹¹

Selling abroad via an e-commerce platform can be a very rewarding strategy for a small or medium-sized company.

Here are some of its major benefits: 

Expanded customer base

Selling online can open up markets around the world. A company can escape the limits of a brick-and-mortar store, or even a chain of them.

Increased visibility

Going online makes it easier for customers to find your products—and, when they do, to buy them.

No physical location needed

Many traditional exporters feel it’s necessary to set up a physical presence in a new market, even if it’s just a sales office. Using an e-site instead can sharply decrease the cost of doing business abroad.

Lower marketing costs

Instead of depending on traditional marketing strategies, you can use more cost-effective online approaches such as Google AdWords, Facebook and search engine optimization. This can be especially important abroad, where marketing by conventional means can be expensive, difficult and unpredictable.

Adaptability

You can adapt quickly to shifts in sales channels. Shopping via mobile platforms is increasing rapidly, for example, and is likely to become the most common way of buying online.

Streamlined business operations

You can keep all your customer data, order history, credit information, inventory and sales records in one integrated, readily available database.

While e-commerce can expand your network and customer base with ease, it offers both challenges and opportunities. It’s not advisable to focus solely on digital. It’s better to use e-commerce in conjunction with traditional methods of expanding your global networks.

Whether you are a small- or medium-sized enterprise or a multinational, your company has existing networks that operate in some form of supply chain. Tapping into the networks of existing suppliers and customers is a great way to expand your network and find new customers.    

For example, if you are selling aerospace parts to a company in Quebec and that company has an affiliate in Mexico, you can sell directly to the Mexican affiliate.

Finding a ready-made international customer, whose parent company is familiar to you and with whom you have an established relationship, can eliminate much of the risk of entering a new market abroad. This can also help you learn about the foreign market and give you a ready-made presence there, both of which make it easier to find new customers.

One of the best resources to tap into are industry associations in Canada. These membership-driven organizations, possess member companies that are in a specific sector or have common interests and provide a ready-made network.

While tapping into that network of expertise requires a membership fee, the main value proposition almost all associations share is the ability to network with other companies. As a result, companies that are engaged with the association, working with its staff, and partaking in events, can develop a positive return on the initial investment.

Global Growth’s Sauvé says that industry associations are a vital tool for Canadian companies looking to expand their international networks.

“Canada has a number of good trade associations that can provide expertise to companies as well as introduce them to potential partners,” he says.

When developing international networks, there’s no substitute for face-to-face meetings and handshakes in market. Visiting the market frequently demonstrates to potential customers and partners that you are serious about doing business there. Success in global business hinges on the ability to leverage relationships and that takes time.

“A company that thinks it will show up to a market once and have success needs to think again,” says Rojas. “It takes time and effort to develop contacts and to show that you are serious about doing business.”

It’s also important to follow-up with those contacts as soon as possible once you visit a market and make contacts.

GONGSHOW’s McNamee says having a presence in a specific market is one of the best lessons he’s learned on his export journey.

“Get boots on the ground first – don’t just ship goods and cross your fingers. Research into the local culture and customs; go visit the business that wants to import your goods to get a feel for its setup. You can’t just export goods and hope that your brand story will be told properly overseas,” he says. “Spending the time and effort to build your brand with your distributor or retail partner in new markets is worth it in the long run.”

Scott Jenkins, President of Calgary’s office interior manufacturer, DIRTT (Doing It Right This Time), says that while technology has made developing relationships easier, nothing is better than face-to-face meetings.

“You can’t be successful in exporting by doing it remotely; you need to have boots on the ground and you have to spend time in the specific markets,” he says. 

“In today’s world it’s very easy to communicate remotely from anywhere, but there’s nothing more valuable than a face-to-face conversation, sharing a meal and spending time developing a relationship.”

One of the most proven – and original – methods of face-to-face international networking is attending or exhibiting at a tradeshow. These events are excellent vehicles to find new contacts and conduct research in a potential market, even with digital communication rising in popularity.

“There are many international trade shows around the world that are excellent vehicles for generating leads, finding partners and creating opportunities,” says Global Growth’s Sauvé.

According to 2015 data from the Center for Exhibition Industry Research (CEIR):

1. 99% of exhibitors find B2B tradeshows deliver unique value which other marketing channels do not provide.
2. 90% of tradeshow attendees have not met face-to-face with any companies exhibiting at the show in the 12 months prior to the event.
3. 50% of attendees have not been to another show in the previous year.
4. 46% of executive decision-makers made purchase decisions while attending a show.
5. 92% of tradeshow attendees come to see and learn about what’s new in products and services.
6. The cost of a face-to-face meeting with a prospect at a tradeshow is $142. The cost of a face-to-face meeting at a prospect’s office is $259.¹²

Develop a cultural IQ

As Canadians, we are lucky to have one of the most diverse nations on the globe. To get a taste and learn about many different cultures from around the world, we only have to look in our own backyard.

With the majority of Canadian exporters doing business in the U.S. with a similar language and culture, we often overlook the importance of cultural sensitivities in other countries and their impact on business.

Global Growth’s Sauvé says understanding these sensitivities, no matter how small, can be the difference between success and failure in particular markets.

“In North America, it’s commonplace to have charts naming competitors and then discussions on how we can beat them,” he says. “But in Europe, you never mention a competitor – you just don’t do that. “

In Asia, relationships as well as personal matters are critical, so developing a cultural IQ is very important, Sauvé adds.

Joe Vidal, President of Saskatchewan’s Bioriginal, says Canadian exporters need to consider cultural differences when entering a new market.

“If you export you have to be open to new concepts of how business is done. You must be creative and open-minded; take a global view,” he says.

One of the best ways to break into a new market and develop international networks is through partnerships. Whether it’s a Canadian company doing business in your target market or a foreign intermediary, having the in-market expertise can mitigate risk and overcome many unforeseen challenges.

Partners can provide established marketing and distribution systems, as well as knowledge of the markets they serve, ensuring that products get to market faster and are more likely to be purchased, according to Tradeready.ca’s Daniela D’Alimonte.

“Foreign partners can advise a company on how to modify a product to meet local regulations and market preferences. They can help with such issues as translation of documentation, conversion from metric to imperial measures, conversion of power requirements and compliance with packaging regulations,” she says.¹³

Developing strategic partnerships in your target market can also ensure that you are compliant with local laws and regulations as well as help you avoid corruption and other financial crimes.

Building a successful international business is hard to do alone, as Vladislav Golovin, a US-based International Business Consultant, explains.

“Unless you’re a multinational monster with unlimited resources, it’s really tough to build a proper business internationally,” he says. “You need partners, you need agents – you need some qualified help. International partners and agents can make your life easier, save time and resources, and help you earn more money.”¹⁴

Global Growth’s Sauvé agrees. He says his main advice to his clients before they enter a market is to find a partner.

“If you are doing business in a foreign country with a different language, you really need a partner who speaks the language, knows the customs and regulations, and who has the contacts that you don’t,” he says.

Partnerships can be a direct relationship with a company in the market; it can take the form of a distribution agreement or a company can seek out an agent to sell its products. Deciding on which type is best for your company relies on the market and your current situation, MSquare’s Rojas explains.

“There’s no one-size-fits-all solution when it comes to international partnerships,” he says. “The type of partnership you want to develop hinges on your overall goals, the market you are entering, risk mitigation and your overall business situation.”

Direct partnerships are mutually beneficial as each company can focus on what it knows and does best. A good partner complements your capabilities by providing local expertise, intelligence and contacts while sharing the risk and reward. Furthermore, this type of partnership can provide a competitive advantage to both companies as the resources – financial, technical and workforce – are combined.

Agents are either firms or individuals you employ to sell your products to other businesses or end users in a specific market and act as your company’s representative. Agents are usually paid on a commission basis and as a result, are not involved in the sales transaction. Agents aren’t responsible for checking clients’ credit histories, leaving the financial risk with your company.

Distributors purchase your product then sell it to their customers in a market. Usually in this type of partnership, you relinquish control over the marketing and branding of the product. However, you don’t assume much risk, specifically financial, as distributors are responsible for importing, sales and logistics.

When entering your target market, undoubtedly you will need the assistance of professional services like accountants, lawyers, tax consultants or international trade consultants who can provide expert advice on the specific legal or tax requirements. Many of the larger organizations have a global reach and connecting with an organization’s Canadian office is a good starting point for acquiring these services.

EDC has created a valuable resource to assist Canadian companies with their market research as well as identify critical resources in many specific markets. Market Entry Advisors is a question-and-answer forum with key market experts in Europe and Central Asia; North and South America; the Middle East and North Africa as well as Sub-Saharan Africa.

Dale Kelly, President and CEO of Saskatoon’s POS Biosciences, says Canadian companies need to invest in creating partnerships in global markets.

“Forging new partnerships is a major investment in trust, time, and capital — if you’re not prepared to make those investments and wait to see the return, exploring beyond your own borders may not be for you,” he says. “Lean on those who know more than you do. It truly is amazing the number and calibre of peers willing to lend you their advice and years of experience. Leverage those individuals who have been there and accomplished what it is you’re setting out to do.”

Navigating the political system of a new market can be tricky and subject your company to a host of risks.

According to Business Consultant Billie Nordmeyer: “Political risk results from various factors that can negatively affect a company’s income or complicate its business strategy. These factors include macroeconomic issues such as high interest rates and social issues such as civil unrest,” she says. “Government actions, like confiscating a company's assets, make it difficult to acquire financing, which can affect the ability of a company’s supply chain to support production. Other political events may mean a company will be unable to convert foreign currency, export or import goods and supplies, or protect in-country assets.”¹⁵

That’s why it’s important to conduct as much research about the political landscape as possible before entering the market and find a trusted in-country partner who can help you navigate potential risks.

“When doing business internationally, especially if you have boots on the ground, it’s a best practice to source out a partner that can help you navigate any unforeseen (government) occurrence and help you get in front of key government officials,” says MSquare’s Rojas. “It takes time to develop a good political relationship based on trust. But it’s a must in any exporter’s toolkit.”