Look South Instead of East

In my previous blog, titled ‘The Case for Manufacturing in North America’, I noted the reported increase in the number of North American manufacturers who are considering repatriating manufacture from overseas factories, and suggested that serious consideration be given (by those companies who qualify) to viewing ‘NA manufacturing’ as a strength rather than a weakness, and that they figure out how to exploit that strength as a strategic opportunity.

 

Blindly following ‘conventional wisdom’ can be a killer, and conversely, bucking the trend can be a game-changer. The point is that the strategic leader of your business needs to be both a skeptic and a contrarian to break away from the pack. If you embody those characteristics you may still decide to adopt the same path that is conventionally accepted, but you will not have overlooked the existence of a break-out strategy that will elude those who blindly follow the crowd.

For at least the last 10 years too many companies have simply accepted the premise that if you didn’t manufacture in China you would be at a strategic – and possibly fatal – disadvantage. Similarly, it has been simply accepted that if your company is not developing markets in the Far East, you are missing the proverbial boat.

I dealt with the manufacturing issue in my previous blog.

Now, here are some of the reasons that developing markets in the Far East may not be your best strategic option:

• even though a market is ‘large’, if all of your competitors are fighting for a share your expected share will be smaller, and achieved at a higher marketing cost
• conversely, your expected share (and possibly volume) in a smaller market may be higher than in the point above if fewer of your competitors are present (plus, your marketing costs may be lower)
• some markets are so vast that only the largest companies can afford to be there physically – and if you cannot match them, then you are playing David against Goliath
• the real costs of engaging with a market must include effective, real-time communications and these costs rise in relation to the difference in time zones – can you afford to have head office staff working on ‘China time’?
• not all distances are geographic in nature – the cultural distance between N America and China is huge
• not all markets view N America in as positive (or at least favorable) a fashion as do other markets

 

So, if you are an export-oriented small to medium-sized company, China and the Far East may simply not be the place to go despite the fact that everyone else seems to be going there. In fact, because everyone else seems to be going there is the very reason you should at least consider other targets.

Throughout my career I have vocally and energetically made the case for ‘looking south’ in terms of assessing the potential of growing sales in various markets outside of N America. I have grown exports globally in most cases, but the most dramatic and profitable gains have always been made in Latin America – for the very reasons listed above.

Those reasons, including less ‘social distance’ (I have had hands-on experience in both Latin America and the Far East, so I know first-hand), are still valid.

And there are many additional reasons you should at least consider focusing efforts on Latin America. Here are just a few:

• strong economic growth – the IMF ‘World Economic Outlook’ (April 2012) shows the 2011 GDP increase in South America (in total) as 4.8% vs. 2.0% in N America; for 2012 they project 3.8% vs. our 2.2% (which has since fallen)
• many of these countries have consistent, impartial legal systems in place that are transparent in nature
• many of these countries have sophisticated, English-speaking dealers, distributors and agents who are trustworthy and reliable potential partners
• Latin America, as with both the USA and Canada, is heavily populated by people whose ancestors originated from Europe – a significantly lesser cultural distance than that which separates us from the Far East
• with the possible exception of Brazil, fewer N American-based companies are engaged in Latin America as in the Far East

 

There are more reasons, but these should be enough to encourage you to at least consider that there may be strategic advantages to looking south, rather than east. Specifically, I suggest you start by looking at Chile, Argentina and Peru.

 

JP Roszell and his partner Verne Milot work with business owners who have the burning desire to take their businesses to the next level – whether it’s past the energy-draining and cash-consuming start up phase (which can last for years) or to the level where profitable growth takes place without the owner’s personal day-to-day involvement. Verne and JP work directly with business owners to improve ALL aspects of their businesses.

With regards to selling, JP has had a lifelong passion for sales and sales people. His sales groups have successfully built profitable sales at every company with which he has been associated, from the smallest to some of the biggest companies in their industries. He knows what it takes.

Looking for more than a business coach?  JPand Verne are different. They have been there, and if they can’t help you, they will say so. 

Call today – JP can be reached at 705.725.4104  or email him at JP@Growth-Associates.com

 – Verne can be reached at 905-688-2226 or email him at Verne@Growth-Associates.com