Political and safety risk events
Political instability such as a war or conflict could result in defaults on payments, delays or even loss of product. Civil disorder may affect the personal security of you and your staff.
Check the New Zealand Ministry of Foreign Affairs travel advisory website before you travel or enter into any export agreement. Some larger countries may have volatile regions, while other parts of the country may be safer to trade in.
Compliance with foreign regulations and standards
Never assume that rules and regulations will be similar to New Zealand. Make sure you understand the implications of:
- import procedures
- taxation
- employment practices
- currency dealings
- property rights
- agency/distributorship arrangements.
Seek advice from a respected legal practitioner in the country concerned. Alternatively, your New Zealand lawyer may be able to recommend overseas legal support.
Cultural and language differences
What works, or is popular, in New Zealand may not necessarily work overseas. Research the cultural habits of a target country or region to assess the acceptability of your product or service.
Find out how other cultures negotiate and make their business decisions. For example some cultures may treat a business meeting as an opportunity to make small talk. Decisions or commitments are put off until the evening meal or after work drinks.
Small things, like knowing how to present or receive a business card, can make a big difference to how you are perceived by an overseas customer.
Also consider if your product needs to be adapted for an overseas market. Find out if your logo, product/trading name or corporate colours have any significance in the local culture. Seek advice on cultural issues from people who have worked in or exported to the country so you can avoid costly mistakes.
Financial risks
Financial risks can include:
- non payment
- unfavourable exchange rate movements
- loss or damage of goods in transit
Dealing with success
As strange as this may seem, success can be one of the bigger risks in exporting. To succeed as an exporter you must be fully committed to your export strategy. Record your thoughts on how you will deal with success. Consider what export success would be for your business, in terms of customers and sales levels. What would you need to do in your business to sustain this activity (trips overseas, employees, reinvestment in your business)?
Unsolicited enquiries
Once you have enjoyed some success your market visibility will increase. You may receive more attention from:
- New Zealand companies wanting to benefit from your efforts
- unsolicited enquiries from overseas companies.
Be selective about which enquiries you pursue. Concentrate on those from your main target markets. Validate any enquiries carefully, and always confirm the importer’s ability to pay before sending any goods. When you deal with unsolicited enquiries remember the old adage that ‘if it looks too good to be true, it probably is too good to be true.’
The following steps may help determine whether or not the enquiry is genuine:
- request a copy of the company’s business licence
- request a copy of the company’s certificate of import/export authority (available from certain countries only)
- ask for references from companies that they have dealt with in New Zealand and internationally
- check out their website
- commission a company credit report to verify the company’s operations, territory, and payment history.
If in doubt, don’t do any deals or seek legal advice.
Protecting your intellectual property
Intellectual property (IP) can give companies the leverage needed to stay ahead of the competition. Whether is is a unique design, formula, invention, process or system, IP can be one of your most valuable assets. If it is protected, it can be a powerful barrier to competitors.
Confidentiality
Confidentiality conditions enable one company to disclose confidential information to another while protecting ownership and use. These conditions are best established in writing. In some cases companies may be reluctant to receive information under obligations of confidentiality in case the external information overlaps their own development work. If they then commercialise a concept based on their own work and confusion arises as to the origin of the IP, this could lead to legal action.
Although notoriously difficult to enforce, in the right circumstances confidentiality agreements impose a powerful psychological restraint on those receiving confidential information. When negotiated well, they can also make the receiving party feel an active participant in an exciting new venture.
Protecting your advantage
Other ways to ensure partial continued control of your intellectual property when exporting include:
- capturing market share and reputation through speed to market
- practising continuous improvement and innovation to keep ahead of the field
- maintaining low operating costs to create a price advantage
- targeting niche markets
- maintaining product design and quality ahead of likely imitators
- using marketing and branding which competitors need time to emulate
- maintaining secrecy about your process or formula
- providing a service valued by customers so they remain loyal.
Developing these traits is an important part of your export plan. Just owning a patent or trade name does not automatically guarantee success. The way you use intellectual property as an umbrella for your commercial or licensing activities can determine your success or failure.
Become a responsible exporter
Becoming a responsible exporter can reduce your exposure to regulatory risk and damage to your reputation in markets where consumers are increasingly demanding sustainably produced goods and services.
Other issues
Scams
Exporters can be exposed to a number of scams. Advance fee fraud, gift giving scams, dodgy business directories and visa invitation scams are just some of the ways fraudsters will waste your time and money.
To avoid your business becoming a victim make sure you:
- are very cautious when offered a deal that is ‘too good to be true’
- are not rushed into making a decision
- do background checks on the other party
- use the internet to investigate them
- get someone to physically check out their address (or use Google Maps).
Technology and innovation
Innovative technology plays a major role in many of New Zealand’s new exports. If you are exporting technology-based products or services, you may need special entry techniques, delivery and support in the market. Ensure you budget for this.
Companies can experience difficulties when bringing new products to market. These can be caused by the type of technologies clients use in the target market, and the rapid rate of technological change, combined with a slower than expected adoption rate by mass-market customers.
For example, EFTPOS gained rapid acceptance in New Zealand and is now in common use. However some overseas markets have been slow to adopt similar technology.
