How To Test The Waters For A Foreign Expansion

When some business owners hear the word ‘expansion’ they shudder. It's such a daunting and risky move to make, but we all know that sooner or later we will have to do it. Whether you’re purely expanding online and providing your services and or products in different cities or regions, or moving into foreign territory, your challenges will mostly be the same. But it's such a daring thing to do because you’re risking a lot financially. This is why it's best to test the waters before you make it serious. Here’s how you can gain an accurate picture of how the local consumers will greet you and how your brand will fit in with the domestic culture when moving to a foreign territory.

Seek your rivals

Any business that is trying to enter into a foreign market, must understand what their domestic rivals have in the same product category. If you’re trying to sell a refreshment drink, you should scour the city and or country you intend to move to, for the most popular domestic products that will rival yours. Study the reasons for why they are popular with consumers. Once you understand why customers choose these particular products, you can try to muscle your way in. Maybe one product is popular because it's competitively priced. Another product may be very popular because it satisfies the local taste buds with a particular set of ingredients. You have to dive deeper into the cultural aspects of well-loved domestic products before you decide what kind of marketing angle you’re going to choose. This will prevent the overlap of your product and your competitors’.

Test the water

No matter how well you plan, sometimes you have to plant your flag and see who will flock to your business. That’s why you need to consider setting up in a shop for rent, particularly in a high foot-traffic area like a mall. The rent depends on the location, size of the store and the quality of the interior. Make sure that you can pay the rent in the local currency. If you’re planning on moving to Malaysia for example, you will get 4.21 RM for $1. This is why it's always great to expand into territories other than those in the Western world. Asian countries have weaker currencies, for the most part, therefore you can test the waters for a lot longer than you would otherwise.

Import challenges

Whether your product is well received or not, you will need to handle any import issues as soon as they crop up. If your product starts to sell really well, can you rely on your business exporting products to your store? Would it be better to set up a domestic production or supply partnership which will make your products in the new territory instead? These are large scale logistic and production issues you need to think about and react to if your business starts to do really well.

Any business expansion is difficult, but it's particularly hard when it comes to foreign expansions. You’re entering into a totally new environment, thus studying the domestic rivals is important to not overlap yourself.