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Exporting: 6 Reasons to Take the Plunge

By Federico Mazzella ,
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Exporting generates twice the chance of success as operating solely in the domestic market, according to a study conducted by IHS Global Insight and DHL Express. Learn the main reasons you should give exporting a try and discover how to start putting your export plan together.

Exporting brings many opportunities. However, companies need to undertake market research in the countries they wish to export to. By way of example, in one of the most important sectors in LAC, food, the following areas would need to be analyzed:

  • Growth: expansion is a natural consequence of internationalization. An increase in demand leads to increases in production and sales.
  • Risk diversification: Globalization drives a growing demand for products. If for some reason the local market shrinks, companies that have gone international will be less affected. By exporting, companies increase their client numbers so that a reduction in orders does not impact their profitability.
  • Economies of scale: increased demand may allow companies to increase their production and thus become more profitable. If they generate a surplus, they have the chance of selling this overseas, sidestepping the issue of seasonality and other factors that may condition local sales.
  • Innovations: to compete at the international level, businesses must adapt to the latest technologies and certifications, factors that will enable them to grow and also be at the forefront of the local market.
  • Tax benefits: by going international, companies may reduce the amount of taxes they pay.
  • New capacities: to grow and start exporting, companies need to become more competitive by improving the tools they have available to them, such as better training for their staff. This will allow them to adapt their production according to demand.
  • Image: access to the international market may raise companies’ profiles on the local market.

 

Four Tips for Food

There are excellent opportunities on international markets for quinoa, organic products, stevia, and chia from Latin America and the Caribbean. This was revealed by research carried out by Duke University for the Multilateral Investment Fund (MIF), which belongs to the Inter-American Development Bank (IDB).

Small- and medium-scale producers in the region should take note of these tips:

 

  • Follow health standards: foods are subject to a series of sanitary and phytosanitary standards to ensure their safety and quality and prevent the transmission of diseases. These foods have a significantly higher value that may represent an attractive source of income for small-scale producers.
  • Carry out market research: Before exporting, food companies should study the tastes and customs of the countries where they are thinking about selling their products. They can begin with simple research such as looking at restaurant and supermarket websites to see if there are similar products already on the market.
  • Take part in trade shows: to make contact with potential distributors and buyers, attending trade shows is key, as these are good opportunities for meeting potential customers, distributors, and suppliers. One such event is LAC Flavors, which took place in September 2015.
  • Reach out to chambers of commerce and promotion agencies: the official bodies representing each country can help with the export process.
  • Logistics and exports advisors also have very valuable information and can help streamline international processes.

 

Bibliography

Asesores de PYMEs. 2012. “There are more advantages to exporting than it might seem” (in Spanish).

Ferraro, Carlo (Comp.). 2011. “Supporting SMEs: Promotion policies in Latin America and the Caribbean” (in Spanish). (LC/R.2180). Economic Commission for Latin America and the Caribbean (ECLAC). Santiago de Chile, United Nations.

IHS Global Insight. 2013. “Internationalization—a Driver for Business Performance”. IHS Global Insight under commission by DHL Express. January.

PYMEX. 2011. “What you gain when you export” (in Spanish). PYMEX: Comunidad de emprendedores. July 22.

The UNIDO Programme. 2003. “Development of clusters and networks of SMEs: a guide to export consortia. United Nations Industrial Development Organization (UNIDO). Small and Medium-sized Enterprises Branch.

Droge, Cornelia, Calantone, Roger, and Harmancioglu, Nukhet. 2008. “New Product Success: Is It Really Controllable by Managers in Highly Turbulent Environments?” in: Journal of Product Innovation Management, 25.

MIF. 2013. “Inclusion of Small and Medium-Sized Producers in High-Value Agro-Food Chains.”

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