Analysis: the threats from Brexit and US tariffs means there's a need for Irish firms to look at opportunities further afield
With Brexit convulsing our nearest neighbour, the largest market for many Irish companies, and our main trading partner, the United States, threatening new tariffs on $11 billon of EU products, there is a need to diversify risk and seek opportunities further afield. Here are eight insights for Irish companies thinking of exporting or investing abroad.
(1) Internationalise because you have a compelling logic to do so.
Don't do so because you are reacting to competitor moves, following trends or seeking growth abroad only because it has declined at home. A proactive approach is essential in the long term, to ensure you are not only international but have an international strategy. This means that you have done your homework and understand where there is opportunity and how you can best meet it. It also means that you decide what not to do and where not to go, because they do not align with your vision and objectives.
From RTÉ Radio 1's Marian Finucane Show, Liz Fulton from Sales Optimize and Graham Parker from Kontainer discuss the impact of a hard Brexit on Irish business
(2) Look for a good match.
Consider the match between your company's sources of strengthen and advantage and the market characteristics of the country you intend to enter. Go where there is regulatory and taste fit between the product or service you are selling and the customer segment and regulatory requirements in an overseas market. Are there enough customers there for what you produce and will you be compliant with local rules and regulations?
(3) Draw on experience and expertise – your own or others.
For instance, you may have existing employees who originate from the country you are targeting. They understand your home and host country, and they understand your business. Can they act as bridgeheads into these markets? Also consider the knowledge and access provided by Ireland's embassies and offices overseas, including IDA Ireland.
From RTÉ One's Six One News, IDA Ireland warns of knock-on impact of Brexit
(4) Choose partners carefully and wisely.
You will need to make deals with local companies, whether it be for distribution, production, or sales and marketing. Be cautious as to who you trust and how much of your proprietary knowledge and technology you share. Focus on partners with proven business models and functional expertise. For example, you may be better partnering with one of the best logistics companies in a country, rather than with a well-known local brand in your sector. Don’t forget, today’s ally may become tomorrow’s enemy!
(5) Don't reply on what has worked before.
Consider a range of entry modes for each country and do not simply rely on what worked well previously. Joint ventures can be effective risk sharing vehicles in some places but may be a means of intellectual property theft elsewhere. Acquisition may be a mechanism for swift and decisive market entry in some instances and may expose you to significant political risk, including expropriation, in other cases.
From RTÉ Radio One's The Business, Edna Lyatuu Hogan from the Tanzania Chamber of Commerce EU and Ireland on huge opportunities for Irish businesses and investors in Tanzania
(6) Go after the less obvious.
Secondary cities in large countries or smaller markets with less competition can be better choices, particularly if you are relatively new to international competition. This can be particularly pertinent for smaller companies coming from small countries. If you lack the financial might of a global enterprise or the political support of a major power, it can be extra difficult to enter and win in many emerging economies. Better then to go where it is less crowded and you are wanted. Consider the advantages to being number one or two in smaller markets, rather than fighting tool and nail to be a player in larger markets.
(7) Go where it is more accessible and easy.
Consider places where entering and establishing a business presence is less complicated, costly and corrupt. The World Bank's annual Ease of Doing Business Score is a useful reference point, as is Transparency International's Corruption Perceptions Index. When cross referenced, they might suggest for instance that Malaysia is preferable to India and Rwanda is easier than Kenya.
(8) Commit for the long term
Once you have reached your decision, avoid appearing opportunistic to local stakeholders and embed in local communities. This may include hiring and contracting locally as much as possible, transferring higher value added activities to overseas locations, and adhering to best international practices on responsibility and sustainability. Good citizenship is not only the right thing to do, it is also expedient if you want to build social and political capital in foreign markets.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ