The Manufacturers Ultimate Guide to International Expansion [2022]

Everything you need to know about taking your business global in 2022 and beyond.

If you’re anything like our clients, your story probably goes something like this:

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You started your manufacturing business 10-15 years ago, on your kitchen table or in your garage. You were trying to solve a specific problem and ended up with a product people wanted to buy.

Or you bought (or inherited) the company from someone else, with a plan to upgrade it.

Either way, you figured things out as you went and grew over time.

These days, you’re a grown-up company. You have offices and staff, millions of dollars in revenue and expenses to manage … and maybe even a board.

Your team has fantastic technical expertise, your products have a loyal following at home and revenue is stable. You might be making some international sales, through enquiries to your website or via your e-commerce platform.

But you want more. You have a vision to scale your company internationally, so that people everywhere can experience the incredible products you create. You want to amplify your impact, make more money and make the world a little better in the process.

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But you’re also thinking …

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… I’ve only ever done business at home … Where do I start?

… Which market should I sell to? I don’t know how to choose …

… Going global looks complicated … how exhausting …

… Selling internationally seems risky …. What if it doesn’t work out?…

…There’s so much uncertainty … perhaps we should just focus on our domestic market…

If this sounds like you read on. The Manufacturers’ Ultimate Guide to International Expansion is for manufacturers who want to scale a business internationally.

I’ll show you the three ingredients you need to successfully scale a business internationally and the core areas of business that you’ll need to consider as you do so.

International Success:

The Key Ingredients

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If you want an internationally successful manufacturing business, the three key ingredients are
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A crystal clear vision and strategy

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Momentum

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Money

Without any one of these, you won’t get far.

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Vision & Strategy - Your North Star and Roadmap

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When it comes to creating a powerful international strategy, the first thing you need is a vision.

The Vision - Your North Star

You must first clearly see a thing in your mind before you can do it. - Alex Morrison

Getting real clarity on what you want to create and why is the first critical step in being about to successfully scale your manufacturing business internationally. That’s because

Clarity is power – the more clear you are about EXACTLY what it is you want, the more your brain knows how to get there.

Until you have a crystal clear vision about what you want to create on the international stage and why, you’ll struggle to come up with a winning plan for making your idea a reality. A little like getting in a car and driving without a destination in mind – how do you know when you’ve arrived?

When I talk about ‘crystal clear vision’ I don’t mean a CEO who says:

“I want to expand our company to China so that we can generate more revenue”.

I’m talking about the CEO who says (for example):
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"My vision is to expand our healthcare furniture company into China.

I believe that our product will appeal to elderly, middle-class Chinese in second and third-tier cities, because it will address some of the significant quality-of-life issues that people in those cities face.

I know we can address those problems at a price that they can afford.

In five years time, I’d like us to have offices and at least one factory in Chengdu, Wuhan, Hangzhou and Daqing and 20 staff on the ground.

I expect that we’ll be turning over $30-$40 million a year from the Chinese market in that timeframe and that we’ll be giving back $1-2 million to local communities in the form of social care programs for the elderly”.

While the first example spells out a general idea, it doesn’t include any goals or targets that the CEO can use to plot a course or to measure success against. The first example only mentions profit as a driver for expanding overseas, but it shouldn’t be the only reason. While making money is important, it’s not necessarily inspiring. It’s far easier to get your team, clients, investors, advisors and partners inspired, motivated and committed to an international expansion plan when there is a deeper motivation involved.

For example, one of my clients manufacturers sustainable packaging made from discarded wool. The company is going global and the vision is to rid the world of polystyrene packaging … much more compelling than just generating a pile of cash! In short, the first step on the road to international expansion should be getting clarity about what you and your company plan to do overseas, and why.

The Strategy - Your Roadmap

Once you have clarity on the scope and shape of your international project, you’ll need a strategy to get you there, a roadmap to achieving your ‘big picture’.

Without a roadmap, your crystal clear vision will remain just that – a vision, without a lot of substance behind it. As someone once said

‘A vision without a plan is a dream … and a plan without a vision is a nightmare!’

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So what should your roadmap look like?

Your strategy should be a plan in the form of a document, which sets out how you will achieve your ‘big picture’ in a way which anyone can understand.

It should cover all of the key areas that you will need to address as you take the business overseas, from market selection to how you’ll price, market, sell and distribute your product, from how you’ll finance your international venture to how you’ll get your goods to the end user … and how you’ll deal with the brand new culture you’ll be operating in.

A good strategy will include milestones and metrics for each of the areas you address.

It will make clear links between your goals and the work that you will do to reach them. A good strategy doesn’t need to be long, but it does need to be clear. In my opinion, the best strategies run to a few pages at most and are so compelling that you can use them to win investors, secure funding, motivate staff and keep yourself inspired on days when the going gets tough.

It’s crucial that your strategy doesn’t sit in a drawer. Everyone on your team should understand the roadmap, know where they fit on it and how they need to contribute to realise the ‘big picture’.

You and your team should regularly review the strategy and make sure that it can still deliver what you need. If it can’t, you’ll need to make some tweaks so that you stay on course to achieve your vision.

Momentum - Your Secret Ingredient

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Momentum is “the impetus gained by a moving object’. Without it, your international expansion is going nowhere, fast.

In a business sense, I like to think of momentum as the impetus gained by a team, as they move forward towards a common objective. Momentum in action is a beautiful thing to see – a group of individuals, working together to achieve a specific project: goals being set, work being done, milestones being achieved, progress being made and celebrated, bigger goals being set, a vision unfurling.

Unfortunately, momentum is also one of things that manufacturing businesses struggle with most, especially when it comes to international growth.

Why?

There are a whole lot of reasons.

Some leaders lack confidence. No matter how much they want to grow the business internationally, fear of failure holds them back.

Others are apathetic. International expansion pops up in their consciousness now and again, as something they’ll do seriously ‘one day’ but it never gets enough attention to become a reality. They toy with the idea or stick a toe in the water, go on a trade mission or sell a thing or two abroad. But they never commit and the international plan never amounts to anything.

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For some, it’s a question of focus. They see other manufacturers selling or even setting up production offshore and think “it would be great if we could do that”. But the day-to -day demands of the domestic business keep them in a tailspin and they never make time to think or act strategically. Others get started, but the gravitational pull of “business as usual” prevents the international side of the business from ever really taking off.

No matter how clear the vision or how great the strategy, it’s all a waste of time if you can’t inspire, empower and equip yourself and your team to embark on the international project and complete it.

The difference between the businesses with low and high momentum is striking, especially where it’s combined with clarity of vision and purpose and a great strategy.

I know low momentum companies that have raised millions on the back of an international strategy, only spend it all with nothing to show in the way of international clients because they couldn’t get moving fast enough to make it a reality.

I also know high momentum companies, where the leader and the team are rocketing along at a hundred miles an hour, straight towards their goal. They know what they’re doing and why, everyone understands what’s required of them and they’re excited to show up each day and make progress on achieving their big picture. This is a zone of real focus and a whole different set of values and behaviours. It’s compelling, magnetic and powerful. These are the people I love working with.

If you want to make your international business a success, you need momentum.

Money - jet fuel for your business

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Thirdly, if you want to build a successful international business, you’ll need money.

While you may need to talk to banks or look for equity investors, your starting point should be to optimise cash flow in the company, so that you can finance as much of your international growth as possible from your own funds.

Paying attention to cash flow isn’t just important for staying afloat and setting up your manufacturing business offshore. If you do have to look to external sources for finance at some point, you’re much more likely to be able to access it if the money in the business is well-managed.

There’s a lot to be said about money, but essentially, you get consistent, positive cash
flow in a business by paying fanatical attention to the numbers and consistent, quality execution.

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You need clear financial objectives, solid financial systems and regular reporting (and action) in place. It really is all about knowing your numbers back to front. If you try to scale internationally without these planks in place, you take a big risk.

Nuts and bolts

Let’s dig a bit deeper now and talk about the core areas that you’ll need to address and the key things you’ll need to do as you start to grow your manufacturing business internationally.

Before you get started on your international expansion, you need to make sure that your company is ready for the ride. This means being clear about what has enabled your company to be successful in the domestic market and having some evidence that you will be able to repeat that success in another country.


You should ensure that all your key stakeholders (board, shareholders, senior managers and life partners) support the international expansion and work with them to map out a shared vision of what success looks like that you can all agree upon, as well as a high-level roadmap for getting there.


As you’re doing this, make time to think about whether your business is resourced to expand internationally. You’ll need some understanding of how much the venture will cost and how you will cover those costs. You’ll need to decide whether your team has the right skills to operate in international markets, especially if you are dealing with a country where the language and culture is very different to your own. And you’ll need to figure out whether you have enough staff to meet the extra work and demands on the team’s time that scaling internationally will create.

The manufacturers that do best overseas choose which country to sell to based on data and evidence, rather than ‘gut feel’ or serendipity. They take a good hard look at which countries have the most opportunity, the least risk and are most likely to be highly profitable. If you want to do well internationally, you’ll choose your target market this way too.


Don’t be one of the people who goes on holiday somewhere, falls in love with it and decides to set up shop there, only to discover two years and millions of dollars later that there’s no market for their product!


At a minimum, you should have carried out some research on more than one country before choosing a market to focus on. With data on the macroeconomic, microeconomic and industry trends in several countries in hand, you’ll begin to get a sense of where the best opportunities lie for your company. Understanding the circumstances and trends in different markets will also help you to get a handle on where your best return on investment is likely to be and to secure support from your stakeholders, based on something more than guesswork.


In the process of selecting a market, don’t forget to check that you can actually turn a profit there. No matter what methodology you use, this is a vital part of the exercise.


Remember to investigate whether there are things that will make it difficult to work in or trade with any of the countries you’re considering - tariffs, licensing regulations, national employment quotas, product standards, or other bureaucratic hurdles. You should also make sure that you can repatriate capital easily and that the taxation regime won’t be too onerous for your company to bear.


As you can see, there’s quite a lot to think about as you choose a market to expand to, but it’s worth doing properly, so that you can make a sound decision, based on data.

Who is your ideal client in your new target market?


You might imagine that your ideal international client is more or less the same person as your ideal client in the home market, but it isn’t that simple.


If you run a successful manufacturing business domestically, you probably know your ideal clients inside out. You understand what makes them tick, what they struggle with and how to satisfy their needs and wants - that’s one of the reasons your company has thrived. But when it comes to doing business internationally, the deep understanding that you have acquired about your clients at home through years of client contact does not exist in the new market. You don’t know your new international clients yet, and they don’t know you.


It’s not just a lack of familiarity and established relationships that can be problematic. Clients in different countries behave differently. Different societies can be visibly different in terms of level of prosperity, language, diet, dress, ethnicity and religion. There will be invisible cultural gaps too. Culture can create stark differences in consumer spending habits, attitudes towards youth, respect for privacy and preference for tradition, to mention a few.


To give yourself the best chance at successfully attracting, engaging and impressing clients in your new target country, it’s important that you get to know as much as you can about the people you want to serve, before you get too far advanced with your plans.


Don’t assume that you know what people want. Building up a client profile on the basis of guesswork is a recipe for disaster, because it won’t reflect the client’s real desires, goals, challenges and cultural preferences. It’s worth making the effort to do your homework. Research your future international clients through secondary sources (market reports, media, social media), talk to potential clients in the target country, speak to associates who understand the market, visit the country yourself and spend time talking to and observing people.


Making sure that you understand the people you hope to sell to will give you the best shot at doing so.

In the section above, I talked about how important it was to truly understand your ideal international client. One of the most important reasons for this is to make sure that your product is going to hit the mark with that client and that you can get traction in your new international market.


Once you understand your client and his/her preferences, you’ll be able to work out whether your product as it stands will do the trick, or whether you’ll need to modify it in some way. It will also help you to understand whether you can sell your product or service at a price that makes sense.


An anecdote from Gillette (the razor company) illustrates this point beautifully.


In 2009, Gillette razor brands accounted for more than 60% of razor and blade sales in the US and about 70% of the world’s total razor and blade sales. But in India, a market with the potential to be four times bigger than America’s for shaving products, the company had just a 22% market share, because its products were expensive for the Indian market.


To increase market share in India, the company realised that it had to target the lower-to-middle income segment of the population. To do this, Gillette decided to create a new product for Indian men, but before they did so, they spent time interviewing people in India and other emerging markets. Gillette observed potential clients at home and on shopping trips to understand what features razors had to have, and which features were nice to have.


On the basis of its research, Gillette designed and priced a new razor - the Guard - creating a razor with a single blade and a hollow handle, which cost just 34 cents, a fraction of the cost of a premium product. The results were swift and stunning. By 2012, the Guard had captured 60% of the razor category in India, tripling Gillette’s market share there.


As the Gillette story shows, taking the time to make sure that there is ‘fit’ between your ideal international client and your product has the potential to dramatically improve your results in international markets.

Next up, it’s time to choose a mode of market entry, in other words, what model you’ll use for going to market. Your options include everything from online selling, using agents and distributors, licensing and franchising, right through to setting up a subsidiary or wholly-owned company in the new country, or merging with or acquiring a local entity.


It’s important to get this decision right, as it will have implications for the scalability and profitability of your international business in the long-run. It’s also smart to consider different market entry options for the short, medium and long-term. What might work well as a way of demonstrating initial demand or getting early traction, may not be so attractive several years down the track.


As you ponder different modes of market entry, check out what your competition in that market is doing and what seems to be working for them - you may want to replicate some aspects of their model. Also think about whether there are other companies, including clients, suppliers or even potential competitors with whom you could partner to enter the market. A partnership or strategic alliance can reduce some of the risks related to market entry.

It’s not enough to understand your international clients and the products that they’re looking for, you also need to understand where your offering fits in the competitive landscape.


A common mistake that manufacturers make as they go overseas is to assume that they have no competition. The truth is that even when your offering is very niche or has many unique features, there’s probably a competitor of some kind. If you don’t know and understand the competition, you can’t develop a strategy for dealing with them. In the worst case scenario, this could mean that you get knocked out of the market by a competitor who creates something better, sells something similar for less, or offers a more appealing experience for the customer.


The best way to avoid this is to spend some time mapping out the competitive landscape - getting to know who else is playing in your space, looking at what they are doing, understanding where your strengths are … as well as your weaknesses.<.p>

Armed with this information, you’ll be able to make better decisions about which areas of the market to focus on, whether to try and compete with existing players or to play in a space which no-one else is occupying.


You don’t want to be a “me-too” company, which sells the same thing as a hundred other companies (with different packaging). Take the time to understand who you’re up against, so that you can create a strategy that will allow you to compete effectively.

To be successful in international markets, you need to be clued into the culture of your target market - how it is different to your own culture, what values matter to people from those cultures and what kinds of preferences your potential clients in those cultures are likely to have.


Understanding the culture of the country you want to expand to will inform not just what you sell, but how you sell it, and should influence everything from how you run initial meetings with potential clients and suppliers, right through to how you collect payment and supply after-sales service.


Culture is a huge and multi-faceted topic, but there are a few simple things that you can do to begin equipping yourself, even early on.


  • Read widely about your chosen country
  • Join a relevant chamber of commerce or industry association
  • Get some cross-cultural training
  • Plan a market visit

When your plans are more evolved, you should also create culturally relevant marketing materials and campaigns, translate and localise the company website and hire team members or consultants with experience in the culture of the country you are targeting.

To get traction in international markets, you’ll need a powerful pitch which resonates with your international clients and partners and a crystal clear marketing strategy that enables you to build influence and credibility on a global scale. Build in a turbo-charged lead generation funnel and you’ll have the leads you need to reach the clients you want.


One of the biggest mistakes that manufacturers make in this space is that they try to “copy, paste” whatever marketing strategy has worked in the home market to the new market. This approach usually fails, because each market is different. Language, social cues and tastes vary, social media channels, usage patterns and penetration rates differ and regulations affect how your company can market itself to varying degrees in different places.


That’s not to say that if you already have a marketing strategy that works that you should abandon it and start over. By all means take what has been successful and apply it internationally, remembering that you’ll need to make allowances and adjustments to account for the cultural, structural and regulatory specificities of your target country.

When the topic of regulatory frameworks comes up, people’s eyes tend to glaze over, but it’s an area you can’t afford to ignore. You really need to understand the regulatory environment of your international market, because there’s a lot that can go wrong in this space.


Essentially, you have to follow the rules and regulations of each country you do business in. The most common global compliance rules include equal opportunity laws, tax compliance, minimum employee entitlements, and financial reporting requirements. There will also be rules relating to your product and whether it complies with national standards - safety, product composition and so on.


Because regulatory stuff isn’t fun, it’s tempting to skimp on research and keeping up-to-date on regulatory development. Do so at your peril! Ignoring global compliance requirements can lead to fines or reputation loss.


Here are some initial steps you can take to make sure that you are operating within the regulatory framework of the target market and stay out of trouble.


  1. Appreciate that there will be regulatory considerations that apply to all areas of your business, from your product, to establishing a presence, from IP protection to hiring and firing, from repatriation of profits to winding up a company structure.
  2. Understand the context in which you are operating - don’t just rely on the regulations that you can see on the page - speak to advisors, colleagues and competitors who are operating in a similar area and seek their views and experiences on how the regulations are applied in practice.
  3. Set up an early warning system - there’s nothing worse than being blindsided by sudden changes in the rules that prevent your business from operating. One of the most practical ways to mitigate this risk is to build relationships and goodwill with relevant people in your target market early on so that you can seek early updates if you believe that the rules are about to change and adapt accordingly.

As I mentioned earlier, cashflow is oxygen for your business, so it’s vital to understand what kind of financial resources your international venture will require and get them lined up before you need them.


In the excitement of planning an international expansion, it’s easy to underestimate the costs of the exercise, or to assume that you’re going to incur the same costs that you incur at home, in a different currency.


Failure to resource properly and unexpected contingent costs are two of the big danger areas for manufacturers starting out in the international space. To protect yourself, it’s a good idea to have some financial modelling done by someone who understands international business and to map out a high-level budget and forecasts, before you make a big investment to get set up somewhere.


It also pays to do your homework on the range of funding options available in case you need them as you go. These obviously vary depending on where you are based but include, bank debt, equity, government loans and grants, crowd-funding and angel investment. Start early on this so that if you do need extra sources of capital you’re prepared in advance, not scrambling to build relationships and source money at the eleventh hour.

And finally, team. Having the right people, doing the right things at the right time in your business, is key to your success - even more so once you start expanding overseas. Your people are your most precious asset, but creating and running a team which is spread across multiple countries can be quite a challenge, so it pays to put some thought into how you’ll do this.


Ideally you should have mapped out a process for creating your global team and plan for operating it before you make your first international hire. You’ll also need the right tools to make sure that the team can communicate and function effectively, no matter where they are.

In summary…

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International expansion isn’t a huge, frightening project that only large companies can undertake. With 21st century technology, even manufacturing businesses with just a million or two in revenue can access clients around the world. With some careful thought and planning, some money and a big dose of momentum, you too can go global!

You need clear financial objectives, solid financial systems and regular reporting (and action) in place. It really is all about knowing your numbers back to front. If you try to scale internationally without these planks in place, you take a big risk.

Get in touch to book an introductory call with our team.

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Download the Manufacturers Ultimate Guide to International Expansion ebook

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