What is happening in international business?
Last October, Leif Holmvall, an international business consultant with 50 years of experience, gave an exclusive conference at EADA about the future of export and growth opportunities in international business. After the introduction of Jan Jonckheere, Professor of the EADA’s Direction of International Business programme, Holmvall told about what is happening in international business in general: the trends, the shifts in sectors and how and where we can grow our business.
The main points of Holmvall conference were:
- The fact that nowadays you can not just wait and see…sooner or later somebody will start nibbling at your market, so be alerted and proactive.
- The market is changing very quickly, players which were important 20 years ago, have disappeared today. So, change with the market, adapt and spread your risks (exactly as you would do in the stock market).
- Export business today is available for everyone. It was always and still is to a high degree a matter of cultural understandings. In international business, understanding the other culture is 85%, your company is 10%, your product only counts for 5%.
- International business is broader than export: also think about importing (instead of reinventing the wheel), licensing, joint ventures and other structures.
- Looking at markets, there is a clear tendency from local to global and from West to East; China, India, Indonesia, Thailand, South-Korea, all in Asia, are very promising markets.
- By 2050 the top ten countries with the highest GDP will have changed completely, and no European countries will be in there. Also, the population and workforce will change dramatically, with important consequences (a.o. a lot of older people).
- Growth sectors: there are lots, but the most important are medical tourism, 3D Printing (f.i. body parts), wearable technology, education, outsourcing services…
- The operational part of the international business will change: communication, ordering, payment methods, logistics…So, you will need your own personal update on a regular base
Apart from this, Leif Holmwall gave us good recommendations:
- The product life cycle: your product may get to the end of its life in some markets, but may have a new life in other markets – in this way you can enlarge the life of your product.
- Diversify, but at the same time do not shoot at all markets – you will lose too much time and money.
- Start at the bottom, the end consumer; he decides what he buys, where and at which price.
- Think where your future markets will be – they may not be the same as today’s markets.
International Business: Trends and challenges
In the debate afterward, in which took part the expert in international business Tom Van Der Heyden, the attendants asked about the following subjects:
- The Global Economy: Taken into consideration US President Trump’s latest decisions on putting extra tariffs on China, and other protectionist measures elsewhere in the world, are we on the verge of a dropdown in free trade, or will free trade to subsist? Leif indicated that there is, of course, a “damage”, but that is small, taking into consideration that “the products involved only represent a small percentage of total exports”.
- The channel conflict: Nowadays, companies want to sell on the e-commerce channel, seizing its opportunities and the easiness of working. The question is: How do the traditional channels (the classic distribution through stores) react? First of all, you have to invest in huge marketing and online budgets. Secondly, you can not start to compete with your distributors, which are – following Leif – your salesmen; if you do not support them, they will eventually leave and leave you without business. The solution is offering differentiated products, which can consist of f.i. a different branding or different product/service characteristics.
- Adaptation of your product to the local market: Leif clearly indicated that most companies make the mistake of not doing enough market survey, which was also confirmed by our Professor Jan Jonckheere, who works a lot with SME’s: “Companies should first of all go and check what the end consumer wants, and have a clear picture of local tastes and preferences, pricing etc…From there on you go up the distribution channel to find the ideal distributor or agent, but not the reverse way”. In this way, Professor Tom Van Der Heyden gave a splendid example of Juanola, the Spanish brand of strong taste candies, who wanted to introduce their products in China, but were confronted with a total rejection of the products. This is a clear example of a product that works very well in Spain but was completely rejected in China.
Sustainability: What is the responsibility of international stakeholders regarding sustainability and the impact on the environment? All panel members agreed that this is especially a matter of political will and goodwill. There are enough resources available, the problem is inefficiency: “If all would agree on the same measures and things would be done in a much more efficient way, there would be enough resources available in the world, even in a situation with 10 Billion inhabitants”. As they said, “unfortunately, some governments look only at their own interest and, therefore, efficiency drops with the known consequences”.
- E-commerce: Why and when a company decides to start up its e-commerce activities in various countries at the same time, they usually collapse? Here again, it was indicated that companies do not do their homework: they just think that they can sell the same product in the same way in various countries at the same time, but that is only occasionally true. Consumer habits and logistics are different. Here as well, companies should first do their homework well, and check out the end consumer first. What do they want (product/service)? Which return behavior do they have? What is he willing to pay for it (pricing)? How can we reach him (logistics)? Most likely, the companies should start up with fewer countries which they have studied very well before passing on to other countries, but the most important thing is: do your homework.
In conclusion, we go more and more from a local to a global or glocal market, and from West to East. It is necessary to know your end consumer and to build your strategy (pricing, distribution etc…) from the bottom to the top. Don’t mess around with your distributors – they are your salespeople. And, finally, think about the future and where your future markets lie. But do it now, before it is too late.