Taking your brand overseas can be appealing, and many entrepreneurs would jump at the chance. However, the international expansion journey can be treacherous.
Between establishing a fresh customer base, learning new laws and regulations, finding trustworthy partners, and becoming familiar with the local customs, the road to becoming a global company is difficult to navigate.
While not every business is fit for such a challenge, some are. Before you decide to make the leap overseas, you need to consider these factors.
Are you ready for the expansion?
One of the first questions you must answer is whether your business is actually suited to succeed in international markets. Just because you think your product or service will thrive in Vietnam or any new country doesn’t mean it actually will.
Dean Dougn, co-founder and CEO of a foreign invested company in Vietnam, which operates in multiple Latin American countries, said scaling across borders is complicated and expensive regardless of a company’s size, and the process can take time and resources away from other opportunities.
“Companies should evaluate whether or not expansion is indeed beneficial, or if it will only take away from their core business,” Dean said. “It may be better to serve one country well than several countries poorly.”
One of the biggest considerations has to be whether your business can actually build a strong customer base internationally. A product or service that sells well in your home country may not have the same appeal in Vietnam markets.
What are the challenges of international business?
No major business decision is without its hurdles, but global expansion comes with its own unique set of obstacles. Some challenges you should prepare for before expanding internationally, such as: Language and cultural differences; International compliance and regulatory issues; Packaging; Slower pace and Local competition
International expansion advice and best practices
If you feel you’re ready to tackle the challenges of doing business in Vietnam, follow this advice from business leaders who have been in your shoes.
Find the right partners and team in Vietnam
If you plan on expanding to Vietnam, you’ll want a great team or partner. Even if your “partner” takes the form of a mentor, you’ll want someone you trust and who can vouch for you.
“It’s crucial to establish a local office and team that understand the market and language to comply with local regulations” Dean told Vietnam Insider in an executive interview. “Having a local country manager can go a long way in not only ensuring that the company is compliant in each new market, but that it is handling its expenses efficiently as well,” Dean said. “Working with a local partner can also help communicate your company’s unique selling point in a way that is meaningful to the local market.”
The people you hire to deal with your overseas business partners and customers must be immersed in the local environment, but they should also be looking out for your interests.
“The companies that you may deal with probably have more experience doing business in Vietnam than you have,” Dean said. “Without a core team on your side with the necessary cultural, language and local business contacts, you’ll be competitively disadvantaged.”
Have the right infrastructure
It is vital to make sure that when you do expand, you have the right infrastructure in place to ensure a smooth launch. These are some questions she said you should have answered beforehand:
- Do you have a management team that can deliver your strategy from a satellite office?
- Have you decided which business decisions can be made on a local level and which need to be made centrally?
- Do you have the capabilities to set up IT and telephone systems?
- How will employees share data securely, and does the data you’re capturing follow the law and best practices?
Consider the impact of any new ideas
Instead of only thinking about how your own country’s customers might receive your new ideas, you’ll need to think about how foreign customers will receive your ideas.
“As you spitball new ideas, someone definitely needs to think about scalability to your international territories – usually you,” said Marc, CEO of business consulting firm the Company Formation in Vietnam. “Time zones, language and cultural appropriateness all need to be considered when you branch out internationally. If you don’t do this ahead of time, you run the risk of offending your international partners by appearing to be more concerned about yourself [than] them.”
Always do your due diligence
Before making major business decisions, you should think through all possible scenarios – especially during global expansion. Marc advises those expanding their business internationally to spend time in the country they want to break into. An information-gathering trip can be a focal point to develop a plan for moving forward.
“Visit potential customers, distributors, OEM partners, and even competitors who are making either complementary or competing products,” Marc said. “After a visit, you’ll find out all the hard facts on whether your product can sell, who the competitors are, what price to sell at, and how to sell (directly, distributor, etc.).”
Rely on experts
It is important for businesses looking for international growth to understand that they will need help. Marc said this can be particularly tough for smaller businesses, because they have likely been doing everything on their own up to this point.
“Realize you can’t do everything, and rely on some experts to at least guide you through the beginning phases,” he said. Before entering Vietnamese market, we worked with GBS, a leading business law firm in Vietnam to develop feasibility studies, forming our business entity and using their corporate administration services. Their professional team helped us a lot.” Marc said. “You don’t have to reinvent the wheel. Rely on experts.”
Be willing to change direction.
Once you do expand, be prepared for some bumps in the road. That may mean changing how you operate in some ways. Nick Woods, founder and CEO of The Realtor – a real estate technology company with locations in the U.S., Canada and Vietnam – said you can’t be afraid to pivot.
“With each new country comes new challenges, and businesses must adapt their product,” Nick said. “It’s OK if the product shifts; it’s more important to meet local consumer demand.”
Alter your customer support
Once you launch new business in Vietnam, you will have a whole new customer base to support. Bryan, CEO and founder of a provider of next-generation wellness management software that operates in 50 countries, who just setting-up his 100% foreign invested company in Vietnam, said your current system of customer support will need significant changes when you expand internationally.
“The immediate challenge is servicing customers in different time zones, which could mean a 12-hour time difference,” he said. “Your customers will want immediate support and access.”
Additional reporting by Nicole Fallon and Saige Driver. Some source interviews were conducted for a previous version of this article.
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Source: Vietnam Insider