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Saturday, June 25, 2022

Key to the internationalization of my company

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Exporting the products and services offered or setting up a branch abroad is the dream of many companies because the benefits are multiple: they increase revenue streams, which boosts billing and reduces the risk of losing customers. This in turn improves competitiveness and ultimately allows the organization to grow. But going abroad is not easy. It requires prior analysis and reflection, as Elisa Carbonell Martín, Director General for Business Internationalization at the Institute of Foreign Trade (ICEX), points out: “Strategic planning is essential to be successful.” The advice of public and private organizations along with banks is also the key to completing the expansion process with guarantees.

First, the company needs to find out if it has the strength to make the leap abroad. To do this, it is recommended that a SWOT analysis (acronym for Weaknesses, Threats, Strengths and Opportunities), they explain from the General Directorate of Industry and Small and Medium-sized Enterprises, a body of the Ministry of Industry, Trade and Tourism that exercises the functions related to the policy of the industrial sector and this kind from companies. Such an analysis makes it possible to assess the benefits and check whether the company’s product or service will be successful in the target country.

Tools that facilitate internationalization

There are several tools on the internet to help with this type of study. One of them is export to growBanco Sabadell, with the aim of facilitating access for national companies to foreign markets.

Another is the self-diagnosis of access to new markets offered by the Ministry of Industry, Trade and Tourism. By answering a series of questions, the site diagnoses the state of the company, identifies its strengths and weaknesses, and then offers a series of recommendations.

Once this internal analysis has been conducted, the company will be ready to investigate where internationalize. Antonio Clemente, Professor at the Faculty of Economics and Communication at the International University of La Rioja (UNIR), assures that visiting trade fairs is a good way to make contacts and learn about international markets, since each one has unique characteristics and specific challenges brings with it . For example, if you sell bikes, you should know that in certain countries like the UK, since you ride on the left, it is necessary to change the handlebars and adjust the brakes to the opposite side.

Export or install?

There is no uniform answer to the question of whether the internationalization process should start with export (shipping of products abroad) or with direct settlement in another country. Export is cheaper but involves little contact with the target market. This, explains the UNIR professor, allows for a much smaller compilation of information on the needs and trends of consumers abroad than if the organization had a delegation in the country.

Opening an office allows you to be closer to and better understand the local market, which multiplies the opportunities for penetration and consolidation. On the other hand, according to Clemente, it is more expensive and requires more monitoring and more stringent legislation (commercial, labor and tax law).

From the ICEX they explain that the sales platforms, such as e.g marketplaces, offer the opportunity to sell abroad without the need for a strong business structure. In the past it was necessary to have staff, agents and contacts in the markets where the products were aimed.

Now this is no longer necessary, but you can start exporting without anything. For example many tarnishing and technology companies are starting to sell their services without being adapted to the new markets and are doing the integration on the fly, they explain from this organization. “The most important thing is to find a way to access local distribution channels. Sometimes it can be interesting to work with a local partner who will certainly help to understand and adapt to the legislation,” says Clemente.

Find out about the legislation and taxation of the country of destination

Understanding the legal and tax system of the country in which you intend to sell is a important step in internationalization. The company needs to know how the legal and regulatory framework affects the operation of the company’s value chain. To find out, you need to consider tariffs, currency fluctuations (the statistical tendency of a market for the value of your money to rise or fall sharply), legal instability, and administrative procedures, health and safety standards. In addition to language, which must be used without problems in order to reach customers, interpreters and translators can be used.

These variables must be taken into account even in the European Union (EU) markets, to which 64.2% of Spanish exports are directed, according to the latest monthly foreign trade report. “Despite the favorable framework conditions that the EU offers (e.g. legal certainty and the use of the same currency), there are certain points that need to be taken into account, such as the fiscal incidence of operations: value added tax (VAT) or the reporting of intra-community transactions ‘ warns Clemente.

Advice and European funds

In addition to ICEX, there are other central, regional and provincial bodies that offer advice on how to carry out the internationalization process. These include the Secretary of State for Trade and the Spanish Export Credit Insurance Company (CESCE). It is also important to have professional advice such as that offered by the bank’s manager as he or she will advise you on what the company is most interested in and will answer your questions. Economic organizations such as chambers of commerce or associations offer such services.

One of the government’s goals is to encourage business activity outside the borders. And for this she has launched the Action Plan for the Internationalization of the Spanish Economy, a series of programs with resources from the European fund Next Generation EUdesigned to strengthen the presence of national small and medium-sized enterprises (SMEs) that help move things forward ecological change and in digital transformation, two of the main objectives of the European funds.

Source elpais.com

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