Business internationalization as a strategy for the future

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Business internationalization has once again consolidated as a lever for salvation in the face of economic crisis.

The pandemic caused by Covid-19 brought with it a serious health emergency that forced the imposition of a series of drastic measures worldwide, which affected the economy dramatically.

We still had in mind the consequences of the financial crisis of 2008, when everything was reeling again.

One of the positive consequences of the “Spanish brick crisis” in our business fabric was that it forced companies to explore opportunities abroad, since the domestic market practically disappeared overnight. And the word internationalization was put on everyone’s lips.

Once again, business internationalization has become a means of escape from the crisis created by the pandemic, as shown in the latest Foreign Trade Report of the Spanish Ministry of Industry, Trade and Tourism. The report indicates that we have had record exports of 229,963 million euros between January and September, a record high for that period. This volume is 6.7% higher than the exports recorded in the same period of 2019.

It is essential to be able to take advantage of the change of paradigm that this unfortunate pandemic has brought with it to transform it into something positive for businesses and, from what the statistics indicate, our companies are making great efforts to achieve this.

INTERNATIONALIZATION TO ASIAN MARKETS

Our main foreign market continues to be Europe, but we must aim to have a greater presence in the Asian or Sub-Saharan African markets where the rest of the European economies have greater penetration.

Another major change associated with COVID, and also related to exports, has been the boom in online sales.

According to data published by Amazon in its “Report on the Impact of Amazon on Spanish SMEs 2021” it is shown that small and medium-sized Spanish businesses that use this marketplace to sell their products, managed to increase their exports by 30%, managing to invoice 650 million euros.

But going back to Asian markets, Amazon, for example, does not exist in China and if we want to sell online in this important market, we will surely have to do it through the JD or Alibaba platforms, the main players in this market. And not only the marketplace is different, but the promotional channels, such as Instagram, Facebook or Google become Wechat, Baidu or XHS.

Lack of knowledge of the target market is undoubtedly one of the great barriers that businesses face when they implement their internationalization plans, and even more so when the market is so geographically and culturally distant.

The fact that this market is alien to us does not imply that our products or services are not of interest to them, on the contrary,  the experience of our European neighbors confirm that they are succeeding in markets in those latitudes.

INTERNATIONALIZATION BY MERGER OR ACQUISITION

The organic growth of businesses is also a task for the medium and long term, which, in the case of international markets, also involves an extra cash outlay. It therefore requires additional doses of patience that many boards of directors are unwilling to take on.

The alternative in the short term goes through corporate transactions, for example being able to acquire a competitor in the target market, automatically generating a solid sales channel. And while these acquisitions typically require a significant investment, more and more examples of creative solutions that minimize the need for capital are appearing.

At UHY Fay & Co we are certain of this fact since we have been accompanying our clients for many years in their internationalization processes in markets in Europe and America, but also in Asia and Africa, such as Namibia or Taiwan.

Having a multidisciplinary team of professionals with an international profile who are used to working in these environments, where cultural barriers and delicate moments must be overcome until the Sale and Purchase Agreement (SPA) is signed, allows us to convert apprehension and uncertainty in opportunities for our clients

Javier Bahut Vega
Business Development Manager
jbv@uhy-fay.com

 

 

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