Investing Internationally: Tips from Asim Khan
Khanstellation Group is a leading Export Management Company that offers consulting services specializing in international business development and export services. Khan and his team work with clients to identify export markets and potential buyers for a company, evaluate financing opportunities, create business development distribution and management strategies, and negotiate the terms for transaction and payment solutions.
What are some current trends that you’re seeing when clients come to you for advice in the export spectrum?
The trend has been consistent over time with clients who are fearful of the nuances of doing business in a foreign market. Those fears range from how to manage cultural differences, language, logistics, getting paid, and business etiquette.
Khanstellation Group takes the fear out of exporting for “newbies” by arranging payment and financing before products leave our shores. We can also help hedge threats from political, social, and currency risks associated with exporting to volatile markets or emerging countries.
What types of options are out there when it comes making a direct foreign investment?
There are options of utilizing your company's free capital to make a direct foreign investment into an emerging market. Companies in the US that have surplus reserves should use that same capital overseas. Remember that a dollar goes a long way in many countries so in essence, you are getting more “bang” for your buck by cost-effectively and efficiently servicing international customers, developing new products/services, and having a larger market base to spread risk over.
By establishing a physical footprint in a foreign market, US companies can develop an affinity with their new customers in more positive ways, thereby increasing the likelihood of raising brand awareness and loyalty which translates into more revenue.
Companies learn new ways in reaching consumers by understanding social trends and needs. This new insight translates into new product development and profits.
Lastly, if a company is very serious about market penetration, liquid capital can be used to establish a joint venture in the foreign market where the local partner takes more ownership of the business and shares their experience, “know-how”, and low overhead to increase market share and profitability.
What’s your take on this year’s market fluctuations? What’s your forecast for the rest of the year and 2011?
This year’s market fluctuations were certainly felt by everyone and exporters are no different. Costs are increasing across the board pushing some businesses out of business and others into a new game of survival.
Most of what you see is the same efforts to increase productivity or commercial activity – discounting, fire sales, and attractive incentives – which, in the end, is only a band-aid solution to the core issue of providing real value. With our domestic market as mature as it is with hundreds if not thousands of products and services, we have reached an apex that will only be overcome with creativity, calculated risk, and a new economic trajectory which will require a new way of thinking.
Those who are actively exporting or are planning to export will have the upper hand as markets overseas in emerging countries like Brazil, India, China, and the Middle East offer profitable opportunities for those who would like to participate in helping these countries meet their growing affluent populations by providing them with more products and services to pick from.
Next year offers even greater opportunity as most of the developed countries of the world will increase international trade volumes in pace with the global economic recovery relative to what we experienced in 2009 and 2008. However, that growth will only reach pre-crisis levels towards the end of the year, as the persistent effects of the financial crises will still be palpable and affect business’ ability to obtain proper financing, inventories, and talent.
What export companies do you see being successful in 2011?
There are a lot of companies actually poised to do well in 2011 by leveraging the export market – the medical, consumer goods, agricultural, apparel/fashion, media, automotive, and industrial goods sectors will fare well if they focus on export market sales. Some of our own clients, including Guardian Pool Fence Systems, Multicoat, MayDay Health, and Vitalee, all have aggressive marketing programs that include exporting as a major component of their sales efforts.
I think something important to discuss in relation to exporting, the US, and globalization is cultural awareness. At no other time in human history has integration and harmony been so important. If we want to maintain our dominance on the global stage, we need to make sure our fellow citizens are doing what’s necessary to stay competitive, relevant, and self-sufficient in a borderless economy that rewards innovation and punishes the lethargic.