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Set a maximum limit of one year for entering an international market (six months are even better)

Fail in foreign trade 5

Why should the economic success for which an entire generation of entrepreneurs was needed in Germany be possible abroad in the shortest possible time? Professor Peter Anterist, CEO of the global trust company InterGest, talks about fatal mistakes in foreign business.

Mr. A is a specialist in cold meat and sausage products and his factory in the heart of Germany is famous for its wonderful ham. Now in its second generation, his company markets meat specialities throughout the whole of Germany.

Every time he goes shopping in his local supermarket, Mr. A asks himself why it is that imported products are so successful here and wonders if he might also succeed in selling his products abroad.

If the Italians are so successful with their Parma ham and you can find Spanish Serrano in just about every refrigerated shelf in Germany, why shouldn‘t it be possible to sell German ham in London? Mr. A calls his team together and outlines his idea of investing in the British market – after all, as everybody knows, the British still have a thing or two to learn when it comes to matters of international cuisine. His employees think the idea is good and everyone agrees to put the plan into action as quickly as possible.

Indeed, work commences the very next day. A market study is drawn up to assess the competition, a team flies out to London to conduct test purchases and sample the products already on offer. Logistics are also considered, potential profit margins assessed, and the packaging modified to fall in line with British tastes. In short, everything is geared towards assured success.

Mr. A is extremely motivated. He has meanwhile set up a sales office, so that his customers will not have to import the products from Germany and has already begun organising tastings in the most important supermarkets with the aid of his new employee in England. People react positively to the samples and his first listings are as good as in the bag.
However, after a while, progress slows down, and Mr. A begins to lose his patience when his English employee tells him that Tesco only envisages a listing in year‘s time, because the Christmas season is coming up and there are other, better known, products that have priority. However, Mr. A‘s business plan is based on an ROI of 18 months maximum, which means that sales must be running at full steam in 6-10 months. At least Booths has put his products on the shelves, although sales are sluggish.

Mr. A gives it another four weeks and then he calls his entire sales team together, including the marketing man in England, only to tell them that he is considering terminating his involvement on the island in the event that the envisaged success fails to materialise. There is just no way that sales should be as slow as this, clearly people in London just don‘t have a clue and the sales representative down there has no idea what he is doing.

But no matter how loud he cries, it is to no avail. Sales are increasing slowly, but too slowly for Mr. A. He has already given up on the UK, even though there are several regions, including Wales and Scotland, where he has not even made a start. The sales office is liquidated after only 18 months and Mr. A continues to sell his products exclusively in Germany.

Just a few figures will help to elucidate the situation:

Country2017  2018Differences
1. Half2. Half1. Half
UK414.95353.946393.831-5
USA235.577258.066221.466-6
Italy167.971144.37161.464-4
China118.241140.202134.85914
France150.89136.187133.125-12
Spain123.997106.335123.314-1
Belgium and Luxembourg89.68374.01388.009-2
South Korea53.49153.03984.22557
Turkey64.40975.273.49514
Japan64.50976.57672.50312
Pkw-Export total2.225.1502.152.9582.189.651-2%

It is all too common for businesses to call off their internationalisation activities prematurely because of their unrealistic ideas of how long they will need to achieve success. It is often down to a misguided belief that all the work they have put in on their home market will somehow be noticed and make a difference on the foreign market, which of course is not the case.

Mr. A‘s company was first founded by his father, as a small butcher‘s shop that employed traditional manual methods to produce speciality hams. His father realised that he had the potential to sell his products in larger quantities through supermarkets and did what was necessary to obtain a supermarket listing as soon as he could. But it was not until eight year‘s after first setting up the trading company (alongside the butcher‘s shop) that he was finally listed in a supermarket and became established on the market.

The question that Mr. A really needs to answer is how he could seriously believe that he would be successful in a new region after only 18 months of a single marketing employee working the market. To put it another way, foreign markets are not waiting for us like a junkie waiting for his next fix. They already have ham in Britain and chocolate in South Africa. These days you can buy virtually anything virtually anywhere, and it has not got any easier to position one‘s products on a market – on the contrary, it is more difficult. Often, the products are so similar that success is down to other factors than product quality, such as brand image. But this is not something you can create in only 18 months.

Whatever you have managed to build up in your home market, unless you happen to be Apple or BMW, you can assume that you will only have to repeat your efforts when you attempt to enter a new market abroad.