In reference to the futility of trying to close a business deal, you may have heard the expression “This is like trying to sell sand to the Middle East.” Well as a matter of fact, the U.S. does sell sand to the Middle East. Almost any product is in demand beyond the borders of the United States. After all, 95% of consumers representing 70% of the world’s purchasing power live outside of this country.
In today’s world of technology, a consumer can find a product he or she wants anywhere in the world at a moment’s notice on a mobile device. Approximately 90% of internet users live outside of North America. Of those, 48 % are in Asia, 18% in Europe, and 10% in Latin America/Caribbean region. You may go online and purchase a gift from a U.S. based retailer and not realize your order originates in Italy. An interesting example of an unlikely export is the Georgia retailer who imported pewter toy soldiers made in England and turned right around and sold them back to European customers who found him online.
So what makes a product exportable? It starts with service. Does the foreign buyer trust you are representing your business and product accurately? Is he confident that you will deliver it to him when you promise? For higher priced items, is he confident you will support the product once it is purchased?
Then, there is the product itself. Its characteristics play a big part in determining how attractive and accessible it is to the foreign consumers compared to those in your domestic market.
Size and weight will influence the cost of shipping to your foreign customer. If your product has a large content of air or water, he is paying for the transport of two abundant natural elements with little or no commercial value. So foam cushions and liquid cleaning solutions may be more attractive to consumers located in markets closer to the U.S.
How unique is your product? The more unique, the more potential export markets. In addition, there is probably a larger margin with which to work in determining pricing that is attractive to consumers around the world. The two products mentioned in the previous paragraph are not unique so there is not much available margin to absorb shipping costs.
Whether a product is high or low tech and whether it is protected intellectual property contributes to its uniqueness. The higher the level of technology, the fewer the possible competitors. Germany knows this well. Exports are absolutely critical to its economy. They are 50.67% of its GDP compared to 13.49% for the U.S.A. It has keenly focused efforts on technological advancement in product development and manufacturing. Though it has a population one quarter that of the United States and much fewer natural resources, its total U.S. dollar value exports for 2015 was 81% of that of the United States.
The U.S. is the largest producer of intellectual property in the world. Its protection is a key component in U.S. government’s trade policies. If your product has a patent, it is more valuable to foreign consumers. However, if you wish to protect your intellectual property, you may need to avoid selling it into countries with great potential, if their governments don’t diligently enforce intellectual property laws.
A product may need to be modified in order to meet standards or consumer preferences before exporting to certain countries. If you have an electronic device in front of you, turn it over and you will probably see a CE mark on the back of it. This means the manufacturer needed to design or modify its product in order meet specific standards so it could sell it to consumers in the European Union.
Just as in the U.S., each country’s consumers have their own unique preferences. A very large Japanese trading company approached a U.S. manufacturer of small refrigerators; the size college students use in their dorm rooms. Everything was going well in the negotiations until the Japanese trading company requested the refrigerators be pink. The manufacturer could not accept the image of its refrigerators in the color pink and turned down the business. This is a modification other companies would have probably been happy to make in order to open up the Japanese market for their products.
In summary, there are buyers outside the U.S.A. for almost any product you want to sell, if you are willing to meet their needs and provide good service. The bottom line is treating them like your domestic customers. By the way, the U.S. exports tortillas to Mexico.
(Source: Rick Martin, Director, UGA SBDC International Trade Center)