The world economy has never been more interconnected, yet many small and medium enterprises still limit themselves to their domestic market and do not even think about finding a partner abroad.
At first glance, this is understandable. Selling in another country is a hustle: you need to find local partners, and you will have language, legal and cultural barriers. Moreover, you do not know how the competition is going to be in your prospective market.
While all of this is true, there are several good reasons why doing business abroad is a great idea.
Diversification from the Domestic Market
For many small businesses, the domestic market is like home. Yet, there could be times when even at home you will not feel safe. A country may go through long periods of severe economic hardship. In such times, carrying on business only within the domestic market may be an insurmountable challenge.
Think about Japan. Its stellar rise in the 1970s and 1980s was followed by almost two decades of recession and deflation. What about Italy, a champion of growth underpinned by small businesses, which entered a vicious cycle of stagnation and high debt after 2008?
Italian and Japanese businesses can survive only by exporting their products to other countries. At first, you will be looking at a neighbor country. Yet, another time, the best thing to do is to diversify well all other the world. If you are in Europe, try to find clients in the United States and China. If you are based in Asia, look at North America and the United Kingdom. The farthest you go, the more insulated your business will be from a domestic recession.
If your firm is based in India or in the United States, there will be plenty of growth for your business. Yet, if you are located in a small country, such as Belgium, or in-country where the population is getting older, such as Germany, doing business abroad may be necessary in order to achieve growth.
Nothing can show the benefits of finding new markets abroad for growth as the German experience. After 2008, Germany looked for growth in rising China, and in 2010 it was already growing at 3% per year. German firms always look for growth beyond borders. If you look carefully as they do, you will find plenty of opportunities, whether emerging economies such as the BRICS, or developed countries such as Australia or Canada.
As we just showed, selling abroad brings a lot of advantages. But how about looking for reducing costs by finding a new supplier in a foreign country?
In some parts of the world, the cost of doing business may be lower than in your country. It could be because of lower labor costs, or due to a more efficient infrastructure.
Usually, European businesses would turn to countries such as Hungary and Poland, Chinese businesses to Vietnam, and American businesses to Mexico.
Look where it is more convenient to you: there is plenty of fish in the sea.
How To Go Abroad
There are four channels small businesses can use to go abroad:
- Personal network
- Trade fairs
- Chambers of Commerce
- Online marketplaces
Especially during this period, where personal contact in crowded spaces should be avoided, online marketplaces are the best choice. The first ones were established 20 years ago and are basically an online trade exhibition.
There, you can list your business and products and collect orders. Examples include Alibaba, Global Sources and eWorldTrade.
The second breed of marketplaces focuses not on the single item but on building long term business partnerships. Instead of listing your product, you will have to write what you are looking for, as detailed as possible. With a bit of luck, you will find your trustworthy local contact for the long term. The most famous platforms of this kind are Opportunity Network and Globartis.
Going abroad may look like a big hustle, but with the right tools, it really is not. Go out there and you will be rewarded.
Alessandro Lazzaro is an entrepreneur and business professional. After years of experience in Southeast Asia and Central Europe as a business advisor, Alessandro founded Globartis, a growing B2B marketplace where small and medium enterprises can find partners, trade real estate, and raise or invest capital.