After you have done your market research and narrowed down your chosen market, the next step is to consider how you will enter your chosen market.
There are various methods of entering a market. Some common ones are:
Enterprise Singapore can assist you in each of these market entry methods.
Most exporters usually begin by exporting directly. In this common scenario where a Singapore firm receives an order from an overseas buyer and subsequently sells directly overseas to that buyer, the Singapore firm gains the following advantages:
However, one disadvantage is that the firm will need to spend more time and resources to develop its relationship with the overseas buyer to establish and strengthen trust. Nevertheless, the potential higher returns and speed of getting into the market may very well justify this additional cost of relationship building.
To help you sell directly overseas, you will need to have some form of presence that enables you to attract global buyers to your product or service offering. You can begin by participating in trade shows, then setting up a representative office in your target export market. Or you can establish your presence on the internet through the use of e-commerce. Many exporters commonly start by employing all three methods.
Participating in trade shows is not a method of market entry. Rather, it is a means of giving yourself an opportunity to exhibit your products or services in your target market. Participating in the trade show allows you to meet potential buyers, agents or distributors, and you can meet your current agents or distributors to build up relationships and update them about your latest products and services.
Singapore’s trade associations and chambers organise many trade shows that you can participate in (check out their respective websites for their scheduled overseas trade shows). Enterprise Singapore through its International Marketing Access Programme provides funding through the associations and chambers to assist companies to participate and defray costs in these trade shows. Check out Enterprise Singapore’s website for the list of IMAP supported trade shows. You can also tap on Double Tax Deduction to defray your costs of participating in trade shows.
A representative office is an office which you establish in your target export market to conduct marketing and other non-revenue generating activities. A representative office is generally easier to establish than a branch or a subsidiary, as it is not used for actual business (e.g. sales) and therefore is less regulated. Your representative office can perform various marketing activities to raise the awareness of your product or service to your potential buyers.
Amazon.com is a multi-billion dollar business conducting its business purely on the internet and selling directly to end consumers. There are also many world- renowned brands which exponentially increased their global market shares through selling their products, services and after-sales services directly to end users online. Some familiar names are Apple, Microsoft, and Dell, among others.
In this day and age of exploding online usage, not having a corporate website is no longer an option. In Asia today, there are one billion internet users, 273 million in North America and 77 million in the Middle East (figures extracted from Internet World Stats), and these numbers are growing. Through the web, millions of sellers and buyers have transacted across borders easily and instantaneously.
For businesses, having an online presence has become an essential, even compulsory, operational element. Electronic commerce, or e-commerce for short, is the buying and selling of products and services over the internet. With an online sales presence, you will expose your product or service to an immense global marketplace. Therefore, you should not ignore tapping on the power of the Internet to sell directly to buyers around the world.
To begin, you need to set up a website that clearly states your products and services offerings and how buyers can contact you. Your website can also leverage on other websites to further market your products and services, such as through Alibaba, e-Bay, Gmarket and even Amazon. These web portals provide the necessary technical and software support which you can tap on to easily and quickly set up your presence on their platforms. Thereafter you can proceed to leverage on the traffic that their sites draw to start selling to the sites’ visitors.
You can sell your product or services overseas through an intermediary, such as through in- market agents and distributors, and by partnerships through licensing or franchising. Compared to direct exports, you will need to incur the cost of commissions charged by your intermediary and you will not have the opportunity to build a direct relationship with your end buyers. However, the advantage is that you will be able to reduce resources as your intermediary will handle all licensing, shipping, distribution and logistics arrangements, and the cost of indirect exports is lower than fully funding a sales force in the market.
An agent will assist you to secure your sales in exchange for a commission. As in all business relationships, you are advised to do your due diligence. Choose agents who are knowledgeable about the market, with proven sales track records, have experience clearing your type of goods from Singapore through the local customs, and possess the network to the right customer segment.
Distributors purchase your products from you and then resell them to their customers. In such an arrangement, the distributor will handle all sales enquiries, after sales service and price setting. You will have a lower profit margin, but you will enjoy more resources for carrying out after-sales service.
When selecting a distributor, due diligence must to be properly carried out. You have to determine whether your distributor has the proven sales track record, the commitment of its sales force to selling your product, its product mix (such as whether it is also carrying competitors’ products), and its marketing plan to push your products. Having a checklist will help you in your selection process. Alternatively, you may engage consultants who have the expertise and connection to assist you in sourcing for potential distributors.
Enterprise Singapore is able to assist you should you wish to engage a consultant to help you source for distributors overseas. Please contact us to find out more.
Franchising is the practice of using another firm’s successful business model. As a franchisor you can build chain stores to distribute your goods. Your success will depend on your franchisees which you have to provide with the know-how, training and marketing to ensure their success. For more information on franchising, you can approach the Franchise and Licensing Association (Singapore) for assistance.
When your business has expanded to a profitable stage through the above market entry methods, you will have gained sufficient knowledge about your target market and financial and manpower resources to move toward establishing a branch or subsidiary directly in your export market to conduct sales operations. To establish a branch, you need to be aware of the market’s legal, tax and profit repatriation regulations. This will require you to engage legal and financial advisers to assist you.
The market entry methods mentioned in this section are the most common types but the list is not exhaustive. You may very well have other ways of entering your chosen market. Whichever method you choose, Enterprise Singapore is here to help you. Please refer to other steps of this guide for more tips and information to help you kick-start your export journey.