Ukraine is export-oriented country, and is not going to change that status. Recently, the trade representative of Ukraine Nataliya Mykolska said that the export of goods and services — the guarantee of Ukraine’s independence. According to her, last year Ukrainian exports of goods and services amounted to 2.4 trillion UAH, which provided 49.3% of the country’s GDP. Often, however, when entering foreign markets, domestic enterprises make mistakes that can nullify all the efforts to promote our products abroad. Experts have identified three common mistakes, writes UBR.
1. Don’t know the market
“Oddly enough, but often enterprises believe that the main thing — to produce the product. And buy it or not, if he needed someone in this form or volume, so tastefully — not think. Or more confident that the buyer is always there. Meanwhile, for example, to sell agricultural products to Nigeria, which is collected on three harvests per year, it is meaningless,” told international business strategist, founder of the Agency Beweis Christina Shehaitly.
He is convinced that our companies need to take processed products, not raw materials. Our companies often want to sell a particular product, the customer needs a whole service. For instance, in Nigeria grow tomatoes, as well as in Ukraine. But about 80% of it rots due to lack of processing enterprises. This year, for example, the harvest was greatly affected by pests.
According to experts on international relations between the Arab-African region and Ukraine, Director of the business development working Group Victoria rahmatullinoj in developing countries of Africa, for example, there is a need to acquire technology for processing of products, primarily in the field of food industry.
“We are talking about a complex purchase of the equipment, technologies of processing and service maintenance of production lines. For these countries, it is important that the equipment be cheaper than European, but to the quality of the products was comparable, and the Ukrainian manufacturer could take this promising niche,” she said.
But in Africa it is very difficult to enter the market, including the fact that there are countries where physically is not always safe to be professionals. “Some companies are not really rebuilding the business processes in the trade within the country has run to sell goods abroad, where the competition is much tougher. They believe that the time has already left on a foreign market with your offer, the goods have to buy, and on our terms. But there the market dictates,” said Rakhmatullina.
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To understand how the industry works in the country where the company is going to export its products, and what product it is necessary, experts advise to begin to visit (and it is better to live for a while) a place where potential customers live. This will allow a better understanding of the preferences and market conditions. “That didn’t work out as one trading company, which was released in Arab countries are not with our products, and with products from China and other countries. Where there is a free economic zone and the China sells there its products directly,” — said Shehaitly.
According to her, it should be understood that the access to export markets, it is primarily the cost and only then the possible profit.
Rakhmatullina believes that to entrust the sale of goods of some agents is risky. Though, because as practice shows, the more intermediaries in the supply chain, the worse the quality of the delivered goods.
2. Do not chase the price
Even if a company representative visited the country and saw that the demand for a particular product is, this can be a apparent demand. According to experts, is to analyze the characteristics of demand, 90% of companies want to enter the foreign market, focusing solely on the price of the product on the store shelf in the country.
For example, in Arab countries like United Arab Emirates, the goods are in the stores, by our standards very expensive. But entrepreneurs don’t think about why there are price. Therefore it is useful to know what are the components of this price. For example, what percentage takes for their services distributor that requires the presence on the shelf of a supermarket.
“Therefore, for the preliminary analysis of the prospects of export I suggest to share the cost for the end user in half. Then, you can imagine the price of this product will buy,” said Victoria Rakhmatullina.
For some reason, companies think that if they can not earn in the country, you can do it by selling him abroad. Although sometimes foreign market eventually yields a lower price than domestic.
For example, enterprises often underestimate the problems associated with logistics. For example, the plan in the calculation of the cost of delivery of conventional container for a couple of thousand dollars. Meanwhile, due to the difference of temperature for delivery in a hot country requires the container-the refrigerator, the fee for which is higher.
“Because even the furniture have to be transported in such containers. For now, it is made from laminated materials. And when ambient temperature under 50 degrees Celsius in a closed container space heat reaches 100 degrees and the furniture crack,” said Rakhmatullina.
In the end, according to the expert, the high price sale on some market is not so attractive. Moreover, sometimes it turns out that the export can be sold cheaper than on the domestic market. So you first need to have a strategy of entering foreign markets, and then conduct a thorough estimation of the cost of such export operations.
3. Overestimation of its possibilities
Often companies do not analyze what conditions and regulations the business operates abroad. “For example, the UAE does not take long neither our certificate. Right now we’re working on signing the document on the recognition of certificates number of our Arab countries. Yet achieved only to the fact that our state agencies are sending to these countries, the samples of originals of certificates of conformity and phytosanitary certificates,” said Rakhmatullina.
Further, the company is a potential exporter has no idea where to go and what to do to, without intermediaries to trade independently on the markets of Arab countries.
It happens that our businesses believe that enough of the ISO certification process. But, according to experts, it’s just the standardization of the workflow in production. But there are still rules for the production of Halal products for the Arab countries and other requirements. But if European companies and the regulation characteristics of the market can find the necessary information, in such countries as Egypt, UAE, Nigeria — there is almost no information.
In addition, the state strongly contributes to the exports to the EU countries, achieving, for example, according to Natalia Nikolskoi, three-year abolition of duties on import of Ukrainian footwear in Europe on 1 October 2017. Or previously achieved an increase in quotas for the supply of our agricultural products to Europe.
Such a powerful support from the state in relation to other markets yet. Meanwhile, try to occupy part of a foreign market, for example, dairy products is a challenging task. “Because our product is more expensive. As is often the local producers have support of the state,” said the economist, “Economic discussion club” Igor garbaruk.
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Therefore, according to the expert, it is better to enter the market with some unique new product in a narrow niche. To form a new market is always more profitable than to fight with already established players on the old. Then you can dictate terms. “For example, when entering the Chinese market, Ukrainian producers of sunflower oil came up with a good story that our oil has a positive effect on health. Therefore, the bottle with a picture of Ukrainian girls in national costumes on the label sell well. And we need such strategies in all international markets”, — said Igor garbaruk.
According to him, promotion could be more effective if our companies can combine their efforts.
“Our entrepreneurs do not want to unite. For some reason they are willing to not earn anything at all, than to, for example, a third joint on the market with two other enterprises. This, alas, have to face,” — concluded Victoria Rakhmatullina.