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Reputations On the Line: Communicate Effectively or Lose Out

Monday, November 1st, 2010

To say that the Internet has revolutionised international trade over the last decade is to understate its importance. Thanks to the Internet, where once only substantial corporations were able to venture, now virtually anyone with something to sell and a computer has access to a world-wide market.

Direct access to overseas purchasers has delivered the means for smaller companies to prosper from international trade like never before. But as more and more companies get involved, buyers are becoming more discerning, and the competition more aggressive. It is now no longer enough to be able to supply a reasonable quality product at a good price; buyers are keenly aware that, where there were once just a handful of suppliers for any particular item a decade ago, now there are hundreds. In the U.S., for example, there are around 25 pharmaceutical distributors; in China alone, the figure is now more like 24,000. With such a huge rise in competition, both domestically and internationally, effective marketing has assumed a role of pivotal importance. But for smaller companies, developing and executing an effective marketing strategy is proving an uphill struggle.

The problem for many is that the sophistication of their marketing has not grown at the same pace as the sophistication of the market into which it’s being pitched. Techniques that were once sure-fire lead generators, are now floundering in a sea of competition or battering ineffectively against the seawall of a market that has grown largely indifferent to the “cost-down” message. Worse, many businesses don’t even seem to be aware of the problem they are facing, let alone making any attempt to develop strategies to improve the effectiveness of their campaigns. International marketing is perhaps seen as something that only affects multinational companies. But even if this was once true, with so many SMEs now dependent on international business, it clearly isn’t anymore. Developing a marketing strategy capable of rising above the clamour of the marketplace has become vital for even the smallest manufacturer.

Yet for a successful manufacturing enterprise in Korea, China or India, it might not appear so imperative. And all the time the sun is shining, that complacency is perhaps understandable. But what happens when the sun stops shining: blocked out by the factory chimney of a competitor newly arrived next door to steal customers away? As we have seen in China especially, a fast-growing economy makes the threat posed by new market entrants a very real and ever-present one. It’s a brutal truth that companies competing on price alone are vulnerable. Mitigating against the threat of competition means broadening the customer base and working hard to build value into customer relationships over and above short-term commercial considerations.

Relationships with overseas purchasers offer one such strategy. Whereas several domestic Asian markets are slowing, international markets still offer plenty of opportunity for growth. In August this year, the China Federation of Logistics and Purchasing announced a 0.9 percent fall in The Purchasing Managers’ Index for China’s manufacturing sector. But in Europe, many of the region’s smaller states have bounced back into growth at impressive rates. According to Eurostat, Turkey’s economy will have grown by 4.5 percent this year; Estonia, Slovakia and Romania are all forecast to grow at over 3.5 percent, with Poland, Latvia and Lithuania following closely behind. Much of the economic growth is still being driven by manufacturing, and this growth in demand provides a ready market for components and OE M parts made in Asia. In 2009, the European Union imported 97,383 million euros of goods and services from China alone – three times that of its next largest trading partner, the U.S.

Long-term value-added relationships with overseas buyers can offer greater stability, allowing companies to become insulated to a certain extent from the volatility of domestic markets and the worst effects of domestic price-competition. One of our clients, for example, is a U.K. based electronics company that has five suppliers in China. These relationships have been cultivated over a 10-15 year period and are the foundation for its success and for that of its suppliers, who have also prospered while watching their price-dependant competitors killed-off one-by-one by aggressive competition.

That there is value in such long-term relationships is beyond doubt. Establishing a basis for mutual trust to develop and flourish is a prime marketing objective. Western business media is awash with stories of companies being duped by unscrupulous suppliers. Even though such cases are actually comparatively rare, lurid stories in the press have made people extremely cautious about how they deal with any approaches, especially unsolicited ones. Reputation and a clear statement of business ethics are therefore essential marketing assets.

Major corporations invest heavily in managing their corporate reputations, frequently employing consultants to advise and guide strategy in each region. But in smaller enterprises, this task often falls to inhouse marketing personnel who may be inexperienced in how to approach it effectively. Many of the global trade websites, such as Global Sources, Alibaba, TradeTuber and others, offer users the chance to become audited suppliers and this is a good step towards establishing credibility and trustworthiness in the international arena. But it’s vital that the communication of corporate values also extends throughout the rest of the marketing communications strategy.

Proficiency with language is an important element in marketing success. Major Japanese companies such as Uniqlo and Rakuten recognise this and are now conducting all of their business meetings in English – even when no native English-speakers are participating. Poorly-conceived, inarticulate marcomms signal to a potential buyer that any relationship might be difficult to sustain. As in life, first impressions carry enormous influence, especially in the Internet age when initial judgements are made solely on the information available online. If a company’s corporate ethos appears to be motivated by short-term profit rather than long-term value, it is placing itself at a serious disadvantage in the international market.

Insensitivity to the business culture of potential customers is also likely to see marketing fail. Depressingly often, we see sales approaches that are overly familiar in tone. For example, referring to a potential customer who you don’t know as “a friend” is interpreted as a clear lack of respect and is frequently fatal as a sales pitch. Another is the use of poorly-devised e-mail marketing: Spam e-mail is universally loathed in Western business and it would be difficult to think of a more damaging marketing tactic to adopt for a company wishing to build business relationships in the U.S. or Europe. Social media services such as Facebook, LinkedIn and Twitter are used a lot by business people now and can be a powerful way to spread either positive or negative anecdotes about a particular business. The damage caused by a clumsy approach can spread very far, very quickly.

Business today, even for small companies, is a global affair. The ease with which business can be now conducted around the world would have been unthinkable 20 years ago. For small enterprises, the opportunities are boundless. Yet it appears ever more certain that success or failure in this modern world will be dependent on how well businesses can adapt to the new global business culture. Learning to speak its language , learn its customs and to communicate well, are the foundations on which success is built.

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