business-planning

Whether you’re planning to enter your first market, or your fifth, good research is a critical step in your preparation for export success.

Of course the best way to ‘get a feel’ for a market is to actually go there. Meeting potential customers and partners and checking out local competitors will provide invaluable market intelligence.

However, this should not be the first step in your process: you’ll need to do plenty of research before you visit, to find out whether the market you’re looking at will reward you for the significant investment required.

Where to start

A good first step in assessing the viability of an export market is to find out how much trade the country already does with others. Check short term and long term trends. Are spikes in demand due to seasonal factors or has there been a consistent rise in demand?

Analyse the trade other countries do with your target market. For example, if you are looking at exporting to Taiwan, have a look at trade that Australia does with Taiwan.

Demographics

Demographics can provide valuable information about potential customers and their spending patterns. Statistics such as the population make-up, per capita income and spending patterns can be important indicators of the market potential for your product or service.

Good sources of demographic information are the websites of national statistics agencies, where you can generally access population estimates and projections by state, ethnicity, age etc. A list of national and international statistical agencies is maintained by Statistics New Zealand.

Public information vs paid market research

Sites like Statistics New Zealand, Austrade, the WTO, United Nations and the OECD are just a few examples of the many free public information sites offering valuable trade data.

Commercial resources can be even more useful, but usually involve costs such as subscription and association fees. However, you’ll end up spending far less than you would if you hired a research team to collect the data first-hand. Using commercial information makes sense when you are seeking detailed analysis, such as ‘key demographics’, ‘market buoyancy’, ‘purchase frequency’ and so on.

Another good source of market information is from the education sector. Higher learning institutions are frequently overlooked as viable information sources, yet there is more research conducted in universities and polytechnics than virtually any sector of the business community.

Digging deeper

Lessons from people in your target market

Contact people who are already exporting to your target country. This may sound obvious, but would-be exporters often fail to talk to those already in-market. You may be surprised to know that many successful exporters are happy to give advice to those starting out. Plus, they have the potential to give you more useful information than every other type of research combined.

If you’d prefer not to go the direct route, try using tools such as Twitter and LinkedIn, which allow you to follow business leaders in your chosen industry or market.

Networking events

Some of the best sources of information are networking events and workshops, which can be particularly helpful as some of the best advice comes from experienced exporters.

Get in touch with your local Chamber of Commerce or industry association.

Competitors and partners

Another topic that should be investigated is the number of competitors selling similar products or services in your target market. Are they succeeding? Who are they selling to? Are they local or international companies?

In most countries, public companies are required to publish regular reports and financial information. In addition to disclosing the company’s financial performance, these documents may also contain valuable insights into company strategy, market share, product innovation, and planned expansion into new markets. While private companies are not required to disclose as much information about their financial activities, you can often find out information about them in local business directories, and by monitoring coverage in business newspapers and journals. Google Alerts is a great tool for doing this automatically.

As well as researching your potential competitors, it is just as important to research any companies you are considering doing business with. One simple check that you can undertake is to determine whether or not the company is registered with the relevant national or state agency. For example, in the United Kingdom Companies House provides a free search for company names and information.

Taxes and duties

Before you start exporting, be aware of any tax compliance issues in your chosen market. Different countries have different tax laws, and there may be several levels of tax jurisdiction (e.g. federal, state, and local) within individual countries. Taxes are often based on income, or on the sale or use of a good or service.

For advice on tax laws specific to your market, searching for the national revenue agency website is a useful way to begin your research. Several international accounting and auditing firms publish general guides to tax compliance and corporate tax laws for specific countries.

One factor that may influence your decision about which market to go into is the rate of duty, if any, that applies to your product in different markets. In order to determine the duty rate that applies to a particular product, you will need to know the Harmonised System (HS) code that applies to it. Contact Alliott NZ to find out more.

Professional customs brokers with knowledge of your market can also help with tax and duty enquiries – search online or review the CBAFF member directory to find a broker who can assist.

The information above provides a useful starting point for research before you face other issues such as quotas, customs requirements, freight and product liability.

If you’re a business looking to operate in the New Zealand market, Alliott NZ Chartered Acccountants provides strategic business guidance and practical financial advice on how to structure your business here. Please call Greg Millar or Vanessa Williams on +64 9 520 9200 to discuss your particular situation and receive advice that is relevant to you.