3 Steps: What do you need to know in order to launch your products in international markets?
Russia is a trade powerhouse, with total foreign trade turnover of close to USD 350 billion in the first half of 2021 and key trade partners in China, the United States, Germany, the Netherlands, Belarus, Korea, Turkey, and Italy.
Moscow accounts for a significant share of Russia’s non-resource non-energy exports. In the first half of 2021, companies based in the capital city exported over USD 15 billion in non-resource and non-energy exports, up 31.5% year-on-year. Goods from Moscow traveled to 175 countries around the world, with major importers including the United States, Kazakhstan, Belarus, Germany, and China.
Are you interested in building an effective export strategy in times of economic uncertainty? Take a look at how the city of Moscow helps companies scale up to reach international markets.
Study your target markets and perform a qualitative analysis of the countries where you want to sell
You’ve decided to start exporting your products. Your first step is to analyze your target market and evaluate the relevance of your business for that specific region. Since similar buying behavior can be observed across a range of countries, you might be tempted to assume that most foreign markets want the same products. The truth is more nuanced.
Here’s an example: all three Baltic states import products from Moscow, but each country is interested in entirely different categories. Automobiles are the top item in Estonia, while Latvia is focused on pharmaceuticals, cell phones, and communications equipment, and Lithuania imports cardboard, paper, machinery, and parts. Companies looking to sell to the Baltic states have to understand what demand looks like in each country. Precise data – to a tenth of a percent – is vital when making these decisions.
The Mosprom Export Support Center made business easier for export-oriented companies by creating ADEPT 7, Russia’s first digital modeling tool for evaluating a region’s export potential. The tool’s two-stage analysis helps companies identify how successful their products might be in a specific foreign market.
At the qualification stage, the modeling tool assesses a company’s strengths and weaknesses to see if it is ready to start exporting products. At the validation stage, the potential exporter sees how successful a particular product might be in a specific market. The export evaluation is based on several key parameters: human resources, finances, existing foreign trade infrastructure, management flexibility, the economic environment, implementation, motivations and goals, and product uniqueness.
By analyzing a product’s advantages and disadvantages, its alignment with the target market’s quality expectations, its packaging, and many other data points, the modeling tool shows a company what it can expect from exporting that product.
“Companies have to pass the qualification stage before they can use the validation stage of the tool,” says Alexander Prokhorov, head of Moscow’s department for investment and industrial policy. “We like this systematic approach to working with companies, whether or not they have experience as exporters, because it answers the two most important questions every company faces: how to keep from wasting money and how to reduce the chances of making a mistake when selecting foreign markets to target.”
Learn the target market’s laws and product certification rules
Launching in a new market is never easy, especially during a pandemic. The recent deal between Moskabel-Fujikura and an Argentinian mining company is a good example. “Winning the tender brought an influx of cash, but it also created a lot of questions that we needed to answer quickly,” says Viktor Petrikov, head of export sales at Moskabel-Fujikura. One complicating factor was the fact few people in Argentina speak English.
The company also found that it needed expert advice on potential legal issues when its Argentinian counterpart sent it a lengthy, general-use document that could be used to purchase goods of any kind instead of a contract specifying delivery and acceptance terms and dispute resolution procedures. “Thankfully, a legal expert at the Mosprom Center pointed out that their document made us liable for any problems that might arise,” Petrikov says. “We declined to sign it and drafted a contract of our own that satisfied both parties.”
Moskabel-Fujikura is a Moscow-based manufacturer of optical fiber cable that has used the Center’s services for two years.
Use an individual approach to crafting an export strategy
In order to create a profitable export strategy, you need to understand demand in the foreign market, but you also need to know the country’s domestic laws, product certification rules, and logistics environment. The professionals at the Mosprom Center often see companies run into trouble when they don’t have enough employees with foreign sales experience. Without that expertise, they end up wasting money and time.
The Center takes an individual approach to every company it supports through the export process and does not believe in creating barriers for companies trying to access export assistance. That is because a successful export strategy depends on more than a company’s experience or the complexity of the target market. It’s also highly dependent on the type of product. Unlike many export support centers, Mosprom does not use a single tool for every situation. Instead, it designs individualized support services for each company.
As an example, China has strict rules about product sales that are not always publicly available, but the Center keeps companies informed about any changes to the country’s regulations. The Center analyzes the liquidity of a product before it ever hits Chinese stores, and it also develops a ground-up product promotion strategy tailored specifically to the Chinese market.
Choose your foreign trade partners wisely
Finding distributors or building your own network of foreign buyers is the next key step in developing an export strategy. The Mosprom Center creates a pool of potential partners that Moscow-based exporters can access as they make important decisions.
The Center conducted ten business missions in the first eight months of 2021, organizing over 700 B2B meetings for 70 Moscow-based manufacturers with potential partners hailing from neighboring countries or as far away as Latin America. The Center also helped local businesses participate in missions to Italy, Nigeria, China, and the Middle East.
Three of the business missions were held in a new global format that put Moscow’s industrial manufacturers, pharmaceutical companies, and agribusinesses in contact with players from markets around the world where their products might be in demand, instead of narrowly focusing on a specific country or region. Each mission lasted one month, giving potential foreign partners time to learn more about Moscow’s products and local companies time to prepare for successful negotiations.
In addition to support for local exporters, the Mosprom Center drafts detailed reports on foreign markets that include a general forecast for each market and an analysis of its potential for companies based in Moscow. Fueled by this level of data and driven by its commitment to its clients’ success, the Moprom Center is able to offer a more individual approach than most business event organizers.
“We kept getting invitations to an event in India, even though it was clear that they didn’t have any companies that could partner with us,” recalls Mikhail Korolev, deputy managing director for innovation at NPO Bakor, a manufacturer of fire-resistant materials and industrial equipment for the mining and metallurgical industries. “We turned them down because we value time and resources – both ours and theirs.”
NPO Bakor’s experience with the Mosprom Center was different. At the first meeting, Korolev says he felt that the Center’s specialists were committed to making his company’s journey a success. “In Rwanda, the Mosprom Center set up meetings for us with representatives from a list of mining companies they helped us put together. We visited several mines, met with Rwanda’s minister of ecology, and signed a memorandum of understanding. We haven’t made any sales yet because of the pandemic, but I am confident that together we can make headway in the Rwandan market.”