Today, companies that are aiming to grow should expand their strategic horizons and look beyond our borders for new audiences, new partners and new opportunities. Why should your company go global? Consider this: in 2015, global exports are expected to grow by 5.3 percent, an increase that amounts to over $1 billion in new revenue for companies across the world. To make some of this revenue part of your organization’s bottom line, it is essential to harness the power of technology and global connectivity that have made the move into new markets possible for even the smallest of companies.
The best place to start your trade planning is with a careful analysis of exactly where your company and your products should be. Whether you are setting your sights on established or emerging markets, here are four key geographic considerations that should inform your overall strategy:
Even though China’s rapidly growing economy is expected to slow down, its growth will still outpace many established markets. Businesses can expect the demand for American goods to increase in the long run thanks to the growing middle class, which is expected to expand by 500 million over the next decade.
The market is suited particularly well for luxury goods, as affluent Chinese consumers drive demand for items like high-end clothing, transportation and new technology. Food producers should also consider targeting China as recent food scares have led to a lack of trust in the domestic food sector, driving massive demand for foreign produced foods.
2. United Kingdom
The United Kingdom is the United States’ 7th top trading partner and imports from the U.S. have been consistently growing at 3.3 percent per year for the last five years. The most popular imports from the United States are largely for business functions (aircraft and machinery), which tend to be less price sensitive than consumer goods. This is positive for American exporters, as currency fluctuations happen frequently and can affect demand for exports. Whether you are new to exporting or a seasoned pro, there are many opportunities in the United Kingdom, where massive quantities of American goods continue to be imported even in slow business cycles.
U.S. exports to Kenya increased by 2.5 times between 2013 and 2014. The numbers are also showing strong demand this year and are projected to outperform 2014. The demand is largely driven by large government projects for a stronger infrastructure throughout the country. We could see trade relations improve even further after President Barack Obama pledged $33 billion to invest in Africa in August of 2014. While Kenya is one of the many countries that will benefit from investment, the country is particularly well poised to enable new international business. Kenya is the 8th largest country by GDP in Africa and is quickly becoming one of the fastest growing nations on the continent. Aircraft and machinery manufacturers have thus far been the biggest beneficiaries of current investment, and we will likely see this trend continue moving forward. Companies that service these industries or build machinery themselves should look to Kenya for new opportunities.
Colombia has been making strides to improve its economy by investing in technology and fostering trade relations with companies across the globe. American companies, like Starbucks and Google, are setting up offices in the country as the middle class continues to rise. The Free Trade Agreement with the United States makes it easier for American companies to export to Colombia, which has helped increase exports to the country by an average of 11.45 percent year over year since 2012. As its economy improves with foreign investment, demand for American goods will continue to increase further. If you are a consumer goods producer, it’s a good idea to take a deeper look at this flourishing market.
While going global may not make sense for every U.S. business right now, the potential benefits are so vast, and the avenues for cross-border commerce so plentiful, that new market strategies must at the very least be explored. Regardless of the size of your organization, international audiences are clearly more accessible – and more interested in doing business on a global scale – than at any time in history. By analyzing potential markets and understanding your company’s products and services in the context of these markets, you can jump start your strategy – and you very well may jump into the next big thing for your firm.
Is your company in the global game? Let us know at @DHLUS.
Austin Grandt is the CEO and co-founder of Export Abroad, a global research and strategy software platform. Austin harnesses both his private and public sector experience to help companies be successful in new markets. Since starting the company, he has worked with companies of all sizes, conducted research for firms across multiple continents, and brokered distribution deals in numerous markets.