Considering exporting to China or wider Asia? Exporting is an exciting way to take advantage of growth opportunities in other markets. Begin your journey now and find out our top tips for export success.
Make sure you have the cash
Many businesses commonly overlook the costs of exporting to Asian markets – including the hidden costs that can really add up. Breaking into an offshore market requires substantial funds to cover the following costs:
- Research and development
- Airfares, accommodation, and entertaining guests
- Physical fit out costs – for a new premises, signage, and equipment costs
- Trade fairs and promotions – establishing a presence in the industry and building networks
- Hiring and training of overseas sales agents
- Compliance costs – including unforeseen taxes, duties and levies
You’ll also need to consider the possibility of hidden costs relating to language and cultural issues, and the time you need to spend building relationships and intellectual property protection. Finding, buying or leasing premises can also present a variety of challenges. These often relate to the size and unfamiliarity of the local real estate market, new legal and financial rules to negotiate, and cultural and language difficulties.
Setting up overseas
You can sell services internationally in a variety of ways. Firstly, you need to decide if your business will provide the services directly to your target market, or whether you’ll form a subsidiary company overseas. An overseas subsidiary is subject to overseas company laws, relating to the filing of annual returns and financial statements, for example. This will also affect the tax you need to pay in New Zealand and in your overseas market. For companies wanting an 'on the ground' presence, some common options include:
- Representative office – set up a local branch of your New Zealand business
- Wholly foreign-owned enterprise (WFOE) – form a separate legal entity from your New Zealand enterprise
- Joint venture (JV) with a local partner – work with a foreign-owned business to establish your presence Find out more about your obligations by visiting the Companies Office Overseas Business Hub.
Accessing bilingual support
Many Asian cities, such as Beijing and Tokyo offer bilingual support for foreign businesses that are new to the market, including shared office space and serviced offices with local staff. Serviced offices provide useful services, including bilingual secretarial support, as well as the usual handling of mail, fax and telephone calls, and courier services. This one-stop approach to setting up an office allows many companies that are new to focus on core business activities by bypassing the technical difficulties of finding an office and hiring staff.
Ensuring quality when producing locally
A number of international companies and established brands have fallen foul of publicity campaigns highlighting labour or environmental abuses in their factories. You should be aware of production owners and managers who offer to cut corners – often with serious implications for consumers – to deliver the lowest possible price.
Drafting a legal code of conduct
If you decide to contract manufacturing, it’s a good idea to consider a legal code of conduct for the factory as part of your agreement. If properly implemented, it can help protect you against serious financial and public relations fall out. You could also contract a third-party inspection and audit agency to give you peace of mind.
Cultural research and sensitivity to local customs can make the difference between winning a contract and being left empty-handed. Before you begin exporting, it’s vital that you have devised strategies to overcome any cultural or language barriers. Be sure to educate yourself on cultural practices as well as the business dos and don’ts in your target country.
Protecting your Intellectual Property (IP)
Protecting against foreign competitors copying your idea is important no matter what you’re exporting, but when your export is innovative, hi-tech or has a unique way of working, you’ll need to be particularly careful. Here are some suggestions:
- Take specific intellectual property laws into account when you choose your potential export markets – some jurisdictions are more diligent than others when it comes to enforcing IP rights and resolving infringements.
- Either make a specific foreign filing through the Intellectual Property Office of New Zealand (IPONZ) to register your patent in your overseas target market; or
- Make one patent application, again through IPONZ, to the World Intellectual Property Organisation (WIPO) Patent Co-operation Treaty that has powers in most international markets. Although seeking patents in different markets can be a sizeable time and money investment, it’s worth doing because the process will include searches for existing patents your design may infringe upon.
Quick export-ready checklist
This handy checklist will help you on your path to export success.
- Take another look at the export potential of your business – what are your perceived strengths and weaknesses and how can you minimise risk?
- Have you conducted thorough market research before you commit funds to an export drive?
- Have you devised a comprehensive export plan? This document is absolutely essential to help you clarify your ideas and cost out each step with detailed estimates.
- Have you worked out how you’re going to distribute to your target market and how you’ll back up and service your sales?
- Have you spoken to successful exporters about your strategy? Learn from their mistakes and their successes.
- Join your Chamber of Commerce and industry groups for free advice, help with export documentation, and exposure to Asian trade opportunities.
- Talk to NZTE to get help with any of the above and access assistance.
To know for sure if your business is up to the challenge, we recommend completing the Business of International Quality (BIQ) Barometer offered by The Icehouse. Their tools and knowledge will help you develop your strengths while identifying areas for improvement. This information is crucial when it comes time to developing your export plan further down the track.
BNZ is ready to help
We’ve helped thousands of New Zealand businesses on their paths to export success. Once you’re ready to take the next step, we’re here to make sure you get the support you need. We’re ready to help with:
Our specialists can provide advice on how to protect your balance sheet and finance your exports.
Export letters of credit
Our trade specialists will help you with improving cash flow while minimising risk.
Export documentary collections
We act as a go-between the buyer and seller to ensure that the buyer can collect their goods and the seller receives payment.
Call us any time on 0800 ASK BNZ (0800 275 269) or get in touch with a BNZ Business Specialist in your area.