When most people think about exporting, they conjure up images of parcels making their way by ship or plane across the world. But many businesses export services, where there is no physical trade involved but rather the provision of advice or time.
For those that can successfully take advantage of the potential to export services, the upside is that there are fewer logistical requirements than for goods. In most instances, it is not necessary to organise transportation or submit customs declarations.
There are still regulations, requirements and procedures to keep in mind, but the supply chain model differs often involving fewer steps.
Effectively, you can provide a service from your own home to a customer in a different country.
Services account for almost 65% of global GDP, and there are just as many different elements to consider when exporting services as when trading goods. To help those running micro, small and medium-sized enterprises (MSMEs) understand what they need to
know before starting a new relationship with an overseas customer, the Institute of Export & International Trade (IOE&IT) has produced this guide:
1. Identify the delivery model
There are four different modes of delivery. The first is cross-border supply of services, which involves two individuals sitting in different places, such as customer service provided over phone or email. The second covers services supplied by consumer movement to a market in another country, for example tourism. The third mode of services is provided through commercial presence in another country (e.g., McDonald's). Finally, the fourth mode involves movement of people where services are supplied through the presence of natural persons in another country (e.g., software developer moving for a short-term project).
The various modes will have different responsibilities. In the case of the first, there are unlikely to be visa requirements, as there may be with mode two or four, but there could be data privacy and retention laws that need to be understood. Establishing
a local business under mode three might require a licensing permit, as well as complying with business registration rules.
2. Conduct market research
It’s vital to research the country in question to establish if there is a market for your offering.
Find out if there’s any competition or barriers, and make sure you understand any legal requirements, such as licensing or permits. Remember that for many professions (e.g. lawyers, architects), you may be required to register with a local association even if you are already registered in your home country. Government websites or trade associations should be able to help here as an initial starting point.
If possible, it’s a good idea to visit the country before starting to export there. Export promotion agencies or government trade delegations regularly organise trips for businesses from their country to travel to another, or you can use networks of organisations.
Organisations such as IOE&IT or the International Chamber of Commerce (ICC) can help with advice and arranging visits.
3. Identify any cultural issues
One of the biggest worries businesses often have about exporting is making a faux-pas or inadvertently failing to respect a country’s culture. Many times there will be some cultural differences, so before selling a service overseas it’s important to understand those. This can be anything from language – there are four languages in Switzerland, for example – to local customs or business practices market.
The best way to approach this is to find a partner in the country that you’re wanting to do business with who can advise you on the local culture and language requirements.
You’ll also need to factor in time differences, as requesting meetings outside of working hours is unlikely to be well received.
4. Understand local or international standards
It’s important to ensure you’re familiar with standards that you may have to adhere to. Often this can lead to consumers of services wanting to see higher standards adopted in local markets.
One example is in the tourism sector, customers expect certain standards of hygiene in a hotel room similar to the hotel experience they would have in their home market.
5. Get the word out
You’ll also need to find a way to promote your services in the overseas market you’re targeting. Word of mouth can be particularly powerful here.
A good way to grow your business is by having people talk about what you’re offering. If it is something of high quality, it might be recommended between businesses and communities.
It is important to implement quality control measures and establish communication channels to ensure that you get feedback on your services. This can be useful for promoting your services through social media or advertising in the target country, as well as understanding where there is room for improvement and growth.
6. Next Steps
Expanding your business by selling services internationally can offer your business new and improved opportunities, but it requires careful planning and preparation. Conduct market research, understand the legal requirements, use available support resources for exporters, and tailor your services to meet the needs of potential customers in your target market.
These are only a few key steps to succeeding in selling services internationally, but by developing a strategy and building a strong international network your business can expand and grow in new markets.
IOE&IT contributors: Henriette Gjaerde, trade and customs stakeholder relationship specialist and Hunter Matson, trade policy and research specialist.