“The world is your oyster.” Going global is necessary for business expansion, be it due to the limited domestic market, better cost economics elsewhere or growth opportunities.
Recently in Singapore’s Budget 2017 announcement, the Government has initiated a $600 million International Partnership Fund under State-owned Temasek Holdings, to help Singapore-based companies increase their presence on the global market.
If you are intending to take your business overseas or have already started doing so, try answering the questions below to help you sharpen your readiness.
1. How differentiated is your brand?
While many may claim to have a brand, few are able to articulate well what the brand stands for and how it stacks up against competition. In today’s competitive marketplace, Singapore brands are competing with the better known American and European brands, the well regarded Japanese and Korean brands, and emerging ones from the region.
A strong brand resonates in the minds of the consumers, just like how Apple’s brand symbolises innovation and design, and Coca Cola for happiness etc. Having clear brand pillars will help to frame the brand strategy to differentiate one brand from another.
Ultimately you will be asked by the local consumers, potential partners (eg. franchisees, licensees or distributors), or service providers to compare your brand with the competitors. If your brand is still young, fret not. Every big brand today started out small. Find your point of differentiation and develop a professional brand position pitch with 3 – 5 key points. Be prepared to answer confidently “Why should I choose you over XYZ?”
Invest in quality video, presentation, brochures and be visible on social media. Technology today has bridged the gap in terms of cost. There are options to produce quality branding and marketing materials at fraction of costs now.
2. Have you protected your trademark?
Ignore at your peril! For international expansion, the primary consideration is whether you have the trademark protected. This is mandatory for any franchise business, especially in countries with strong franchise laws like Vietnam and Malaysia. Even for distribution business, securing your ownership rights against squatters, copycats and counterfeits rely on whether you have invested in IP strategy appropriately. There are government assistance schemes available to defray the cost of IP strategy.
The bigger question is often the registrability of the heritage brand. Brands with generic words, or that are undifferentiated often fail the rule of thumb for trademark registration. Brand owners may opt to forgo registration due to unwillingness to rebrand. For the purpose of international expansion, it is worth the exercise to relook at how your brand can be protected and if not, how to mitigate the loss in brand equity arising from rebranding exercise. A good IP attorney and brand consultant will be able to advise. Again, there are relevant government assistance schemes on this.
3. What are the Unique Selling Points (USP) of your products?
Do you have a signature product?
Breadtalk’s signature product is its pork floss bun. The iconic Singapore chilli crab is the signature product of JUMBO Seafood. What’s your signature product and why is it special? Build a brand story around your signature product.
Is there anything proprietary?
Just like Col Sander’s secret recipe of 11 herbs and spices for KFC, it is a bonus to have something proprietary. It could be technology, recipes, ingredients, syllabus or systems. A proprietary system erects higher entry barrier and provides greater control and protection to the business.
Do you have a product strategy?
Do you have a sustainable product strategy? Products have to be invented and reinvented to avoid obsolescence (think Sony Walkman and Eastman Kodak). Apple’s product strategy extends beyond just laptops into MP3, phone, watch and TV. What’s yours?
4. What’s your business model?
Are you a contract manufacturer? Do you grow by setting up your own branch offices, subsidiaries or corporate stores? Do you focus on pure export? Or do you work through local partners through distribution, franchising or licensing?
Is your business scalable?
Does your business model enable you to scale? Scalability is critical for business sustainability, a responsibility towards shareholders, a growth opportunity for employees, a commitment to your local partners and a measurement of upside for investors. Understanding the major choke points or impediments to scale earlier is a precursor to better execution in expanding overseas.
What is the revenue model?
Does all the revenue come from a single source? In the case of Starbucks, the revenue channels are generated from beverage & meals, merchandising, loyalty cards, from CPG channel with single cup, single serve, from tea etc. The split of revenue stream helps to sustain the business model over time to hedge against risk and increasing revenue potential. Develop a robust plan around executing your business model to set serious targets in scaling up.
5. Is your overseas business format profitable?
A big pitfall is always not knowing the market well and making assumptions based on home country context. If you are in a labour intensive business, it would be imperative to rework your financial modeling based on local labour cost. Eg. Labour cost in Australia may be 2 times more than Singapore. If your product has a warranty where it calls for replacement jobs to be done, you will need to evaluate if your current warranty offered can absorb the labour cost.
The bottomline is to understand the cost structure of the country to enter and work out the financial modeling based on local assumptions. Then, make decisions on the aspects of your business format to tweak.
6. How well do you know the markets?
Do you know which markets to enter first? Do you know the local law and regulation, demographics, culture/customs and competition?
Many companies venture out unprepared. In most times, you have only one shot of chance, especially if you are targeting to win over quality local partners. Even if the plan is to go small and slow first, it is important to know the markets first before going in. For instance, many countries have franchise laws. In the case of Malaysia, it is mandatory for franchisors to file for registration first prior to signing up any franchisees. There have been tough penalties meted out to foreign companies who have failed to do so.
Investigating the local business climate including importation constraints, labour cost/laws, local nuances prior to entry would avert future missteps. For example, a popular Japanese mass market ramen brand failed in China due to high cost in raw materials. To cook ramen broth, pork bones are used. In Japan, the bones are discarded and hence its cost is low. However in China, pork bones are sold along with the meat and not discarded, increasing the food cost.
Do your homework first in understanding the local law, regulation, importation duties, demographics, culture, customs and competition. Of course, many entrepreneurs would typically go with their instinct and intuition when entering new markets rather than following a systematic and structured approach. While many have proven to be successful, the markets today have grown more complex than before. Hence some level of investment in time and resources to get basic due diligence done would go a long way.
– Yin-Yin Yeo, HATCHHIT International –
– July 25, 2017 –
Credit to Enterpreneurs’ Digest