Kevin McKenzie: Partner and Canada business development leader, Ernst & Young LLP
Emerging markets – Brazil, Russia, India and China (BRIC) – have become the destination of choice for many seeking new growth market opportunities. These markets have huge potential and an explosive growth trajectory over the next few years. But it’s the rapid rise of a huge middle class with deep pockets and an appetite to consume that’s really catching the attention of Canadian companies.
These new consumers are creating big business opportunities for companies that are innovative enough to serve them. Success requires companies to develop a set of key capabilities, including:
Customer insight: An understanding of local customers and their unique needs is essential.
People and culture: Culture trumps brand. Companies that don’t possess an iconic brand need to adopt a culture of being willing to tailor products to customers’ needs rather than attempting to market products from Canada in emerging markets.
Research and development: Companies must strike a careful balance between local relevance and global scale, paying careful attention to how innovations developed with one set of customers in mind can be reapplied elsewhere.
Operations and business model: Companies must consider how to tailor their pricing structure or business model when developing products and services aimed at this new emerging “spend” class.
The ability to see beyond your own backyard and be ready to leap out of your comfort zone from local to national to global is the first step to achieving success in BRIC countries – but it’s far from the last. Adapting existing products and services or creating attractive new ones that target the next three billion can set your company on the path to building market scale.
Craig Williams: Vice-president, B.C. division of Canadian Manufacturers and Exporters
Understanding the business climate, building solid partnerships and navigating the financial and taxation aspects of doing business in new markets takes time. You need to consistently schedule trips, attend trade fairs and visit partners, clients and distributors to build, maintain and strengthen relationships. It can take many months, and sometimes years, before a transaction is made. Develop a long-term commercial strategy and be sure that you have the resources to sustain your business development plan.
Don’t try to be everything for everybody; focus your entry market – not just by country, but by region and maybe even by city. These are big countries with diversity in cultural habits and economic activity. Find a niche market that is not being serviced or is underserviced in what you have to offer. Investigate the market and tailor your products and services to local needs. Also consider that it is very costly to maintain a single client in your new market so strive to build a solid client base.
Develop a strategic marketing plan, with well-defined goals, action plans and metrics. It’s all about successful execution. Use the knowledge and services of B.C.’s business network: B.C.’s government trade and investment representatives, the federal government’s Trade Commissioner Service, Export Development Canada, the Business Development Bank of Canada. Create a network support structure. It is important to have someone on the ground that knows the local market, customs and is well connected. The regulatory environment can be complex and language barriers can further challenge documentation, IP and contract completion.
Work closely with bankers, lawyers, accountants to avoid any unpleasant surprises. And remember: Vancouver is a multicultural society – don’t ignore the local connections that may be of value to your firm.
Derral Moriyama: Senior vice-president, business development, Western Canada, BMO Bank of Montreal
Doing business in the BRIC markets is appealing due to the obvious growth opportunities and the sheer size of these markets. But before you venture out, it is important to understand who you are dealing with and to prepare yourself prior to starting down this path. It takes patience, stamina and the ability to adapt.
It’s imperative to understand the culture of the market you are dealing in, the “dos” and definitely the “don’ts”. Many Canadian companies have attempted to do business the North American way and have been completely shut out of the market. Know what your customer values in this process, what are the most essential parts of the transaction (quality, price, speed of delivery, etc.), and how to win the bid by covering each of these points.
If you do not have staff that have the cultural background, you can hire agents who will provide this information and additional business leads for you. It’s also very important to get the right agent in this process with a strong reputation and good contacts. Canadian consuls have good people to help source the right agent – also people familiar with the country such as Export Development Canada or Northstar Trade Finance.
Next, take the time to talk to a bank that has a strong trade credit operation, that can give you advice in how to structure your transactions and what precautions to take to protect yourself. Sometimes these transactions have more complexity than a normal trade credit transaction.
Finally, how do you sell your products to BRIC countries? Well, how do you sell them here? Through connections, marketing, industry groups, direct selling and agents.
