Last night a student asked an excellent question about Plan A versus Plan B in exporting. How come in importing it is best to design our own product, Plan A, whereas in exporting we are selling an "off the shelf" item, Plan B. This takes a bit of unpacking.
First, for my part, I assure everyone I know nothing about foreign markets. One of the big dissuaders to exporting is the powers-that-be insist to export you must be expert in a foreign market. That is unlikely to happen in a lifetime, and unnecessary anyway. At the small business level we sell to an importer in a foreign port who is expert in the foreign market. They worry about the foreign market.
One such expert joined in a three way conversation with me regarding Pyrex glassware and the India market. One fellow said "I have been given $250,000 to start a housewares business and I want to import Pyrex glassware." I went on about competing on design, Plan A, when the third fellow agreed with his countryman and explained: "In India people who have never had a Pyrex measuring cup before want the real thing with their new wealth. Maybe in 50 years they will want designer hot liquid measuring cups, but for now they want the tried and famous."
Another instance where I learn yet again I know nothing about foreign markets. I don't argue with people who know their markets better than me, and especially since one had his phd in marketing. I work with people who do know, that is necessary and sufficient to build a business. Importers overseas know their markets.
Now the question in class was further complicated because we have one proposing to be an agent asking, instead of a principal. A principal has already created new product and is selling it in USA, and to offer it to an overseas buyer, quite often, like in the case of India about, "sold in USA" recommends itself to so many new emerging countries, 2nd and 3rd world countries.
Further, first world countries that DO want new tend to be less dynamic as to opportunity, more settled in trade patterns. Of course these generalizations may not apply to any given circumstance.
So let me give a concrete example from the class yesterday. April 5 I mailed a letter to a Hong Kong buyer of bone-in beef cuts assisting a particular butcher looking to export. April 22 the buyer emailed back affirmation, in short, of wanting to discuss possibilities.
Now this butcher is doing interesting things (redesigning) beef in ways of not corn finishing but dry aging to achieve tenderness. This process concentrates flavor. So we have a person designing beef, but it doesn't stop there.
The buyer indicated particular cuts for his market. Well, there are plenty of ways to cut up steer, so this is more design. An agent/exporter will be in between the rancher/slaughterhouse and the Hong Kong buyer. Necessarily the agent will be involved in this process of "redesigning" the product, so it is in effect Plan A business building.
So in exporting, after you decide your field, inevitably businesses, even as agents, find themselves "redesigning" even beef, for the local markets.
Feel free to forward this by email to three of your friends.
First, for my part, I assure everyone I know nothing about foreign markets. One of the big dissuaders to exporting is the powers-that-be insist to export you must be expert in a foreign market. That is unlikely to happen in a lifetime, and unnecessary anyway. At the small business level we sell to an importer in a foreign port who is expert in the foreign market. They worry about the foreign market.
One such expert joined in a three way conversation with me regarding Pyrex glassware and the India market. One fellow said "I have been given $250,000 to start a housewares business and I want to import Pyrex glassware." I went on about competing on design, Plan A, when the third fellow agreed with his countryman and explained: "In India people who have never had a Pyrex measuring cup before want the real thing with their new wealth. Maybe in 50 years they will want designer hot liquid measuring cups, but for now they want the tried and famous."
Another instance where I learn yet again I know nothing about foreign markets. I don't argue with people who know their markets better than me, and especially since one had his phd in marketing. I work with people who do know, that is necessary and sufficient to build a business. Importers overseas know their markets.
Now the question in class was further complicated because we have one proposing to be an agent asking, instead of a principal. A principal has already created new product and is selling it in USA, and to offer it to an overseas buyer, quite often, like in the case of India about, "sold in USA" recommends itself to so many new emerging countries, 2nd and 3rd world countries.
Further, first world countries that DO want new tend to be less dynamic as to opportunity, more settled in trade patterns. Of course these generalizations may not apply to any given circumstance.
So let me give a concrete example from the class yesterday. April 5 I mailed a letter to a Hong Kong buyer of bone-in beef cuts assisting a particular butcher looking to export. April 22 the buyer emailed back affirmation, in short, of wanting to discuss possibilities.
Now this butcher is doing interesting things (redesigning) beef in ways of not corn finishing but dry aging to achieve tenderness. This process concentrates flavor. So we have a person designing beef, but it doesn't stop there.
The buyer indicated particular cuts for his market. Well, there are plenty of ways to cut up steer, so this is more design. An agent/exporter will be in between the rancher/slaughterhouse and the Hong Kong buyer. Necessarily the agent will be involved in this process of "redesigning" the product, so it is in effect Plan A business building.
So in exporting, after you decide your field, inevitably businesses, even as agents, find themselves "redesigning" even beef, for the local markets.
Feel free to forward this by email to three of your friends.
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