Seeking export opportunities in emerging markets can be an excellent way to build your business, since these countries often exhibit the fastest economic growth.
Emerging markets typically have a low to middle per-capita income and they have undertaken substantial economic reforms to open their economies. Brazil, Russia, India and China — collectively known as the BRIC nations — are the leading countries in this category. All have experienced exponential growth and all have populations hungry for new products and services. These countries hold great promise to entrepreneurs.
Your first step is to determine which emerging markets are best suited to your products or services. Some factors to consider include local demand and competition, customer dynamics — why, when, how much they buy — market segmentation, marketing dynamics including distribution and promotional regulations and requirements, as well as local business practices.
Evaluating emerging markets
A good place to start is the Canadian Trade Commissioner Service, which offers free information about specific countries and sectors. When evaluating a country be sure you carefully assess the risks involved, such as political instability or economic challenges. Contact the Canadian embassy in that country and talk to trade commissioners about local conditions.
It's also worth finding a local partner or agent to help you better penetrate your market. A local agent usually has good contacts and can help you navigate through red tape.
Take the necessary time to explore the market before diving in. Remember that becoming familiar with local customs, culture and language will generally improve your odds of success.
The rapid economic growth of emerging markets and their heavily populated urban centres has created an increase in demand for raw and specialized products. Top export niches include infrastructure (roads, railways, ports, urban transport and airports), the transport sector (including seaways and cars), telecommunications, health-related products, business management systems, agribusiness, environmental technologies, power generation to meet an explosive demand for energy, measuring instruments, and machinery and equipment (particularly for the oil, gas and mining sectors).
Major Canadian export products include measuring and control devices, engine and turbine components, electrical machinery, auto parts, IT equipment and aerospace parts, raw materials (including pulp and paper, minerals, oil and gas), resins and industrial chemicals, newsprint, fertilizers and agri-food products.
Below is an overview of the world's four biggest emerging markets. This information can change quickly, so be sure to check with your Canadian Trade Commissioner Service on local conditions.
With one of the world's largest economies and the second largest in Asia, China is a big draw for exporters. Bilateral trade with Canada represents billions of dollars. China's massive population, growing disposable income and sophisticated consumer tastes make it a prime emerging market.
Doing business there requires a significant investment of time and resources because China is a complex market. Money needs to be set aside for airfares, accommodation, legal services, advertising, promotion, translation and setting up representative offices. Intellectual property is also a major consideration; it is highly recommended that you register any copyrights, patents and trademarks with the appropriate Chinese agencies. As always, perform due diligence when doing business in China by checking any potential partner company's financial record and key personnel.
Sensitivity to cultural differences is of the utmost importance in China. Mutual trust is an important value and it is the basis for doing business in China. Be sure you arrange meetings through appropriate channels and build long-term relationships. Allowing your interlocutors to save face is especially important; never take actions that cause potential customers or partners to feel they have been insulted or criticized in front of others.
Always show respect. Offer your business card with two hands and make sure it is in Mandarin. The Chinese are often inquisitive and may seek information about your personal life. During negotiations, don't be offended if potential customers or partners talk openly about competitors' offers. It's also important to use qualified interpreters and translators; these intermediaries help ensure there are no misunderstandings or miscommunications.
India's explosive population growth has led forecasters to predict it will become one of the world's top five economies within the next three decades. One of India's biggest potential niches is in its telecommunications infrastructure, the fifth largest in the world. India is known as the world's information technology lab: Google, Nokia and IBM have all set up research and development centres there.
When doing business in India, refine your market entry strategy. India is such an enormous country that it makes sense to consider its regions separately. Contracts should always be vetted by Indian and Canadian lawyers, and keeping good documentation is important, especially when dealing with Indian bureaucracy. Avoid long payment terms such as open credit, and take your time to make the right decisions: Indian business people can be averse to risk. It's advisable to do business in person, dress conservatively and never judge a person on appearances.
Within an organization, make sure you deal with decision makers. Exchange business cards with both hands. Allow women to offer a handshake first, don't be aggressive, avoid discussing religion and show respect for elders.
Brazil has by far the largest economy in Latin America. A stable democratic government has had a positive impact on the country's economy.
When doing business in Brazil, perform due diligence on any potential partner. Understand all issues involving contacts with a Brazilian partner, and formalize everything. Brazil has an excellent postal service; direct marketing can reach up to 35 million Brazilian customers. And with one of the world's largest Internet markets, e-commerce initiatives are worth exploring.
Advertising in specialized trade magazines can be a good way of reaching target audiences. Brazil is known for the creativity of its business sector.
Ensure your products are high quality, and adapt them to meet the cultural differences of the country's various regions. When preparing bids to the public sector, consider establishing a joint venture with Brazilian partners.
Be sure to build strong relationships with people, discuss business after a meal and speak in Portuguese unless otherwise indicated.
Russia shares land borders with 14 countries and spans 11 times zones. Moscow is a principal attraction for foreign investment.
Russia has seen rigorous growth in the past decade, and its credit rating has improved substantially. Its major source of revenues are oil and gas, with the petroleum sector making up more than 35 per cent of total revenues and 55 per cent of exports.
When doing business there, find a local Russian partner who knows the ins and outs of the market. Watch your costs, as wages and prices in Russia are subject to rapid change. Do a background check on people you deal with; Russia's tumultuous political environment creates security issues for exporters.
It's also important to ensure that you meet Russian manufacturing standards. Russia's Gosstandart requires all imported manufactured products to carry the GOST-R mark to show conformity with national safety standards.
Cultural differences are also important to take into account. Respect hierarchical formalities, and be sure you're doing business with someone at the right level within an organization. Russians should be addressed by their name and father's name — not by their family name. Be direct and punctual with local business people. Russians are more "people-to-people" oriented than contract oriented; keep this in mind when closing a deal. If you're invited to somebody's home, a gift is seen as a token of your appreciation.
Emerging markets shift according to political and economic conditions. Countries such as Malaysia, South Africa and Vietnam may also warrant your attention. However, be sure you consider all the risks involved and exercise patience before pursuing any venture.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.