Build­ing a suc­cess­ful ex­port busi­ness

CEO: Greater em­pha­sis needed to boost ex­port in­dus­try

The Star Malaysia - StarBiz - - Companies & Strategies - [email protected]­

IN or­der to be suc­cess­ful in an ex­ports busi­ness, Stan­dard Char­tered Malaysia manag­ing di­rec­tor and CEO Abrar A. An­war ( pic) says there are six pit­falls to avoid.

Firstly, he says, don’t bet the farm. “Have a clear ‘Plan B’ if your ex­port plans fail to launch and en­sure you have lim­ited the risk to your over­all busi­ness,” he says in a re­cent in­ter­view with StarBizWeek.

It is also im­por­tant to not be dis­tracted by non-strate­gic fac­tors.

“Choose your ex­port mar­ket based on what works best strate­gi­cally for the busi­ness, rather than geo­graph­i­cal con­ve­nience or per­sonal con­tacts.”

Thirdly, Abrar says ex­porters should never sell to a mar­ket without do­ing the nec­es­sary home­work.

“Does the mar­ket have the right de­mo­graph­ics and growth prospects?

“Talk to po­ten­tial cus­tomers as well as in­bound in­vest­ment agen­cies about whether your busi­ness’s prod­uct or ser­vice will have lo­cal ap­peal,” he says.

Abrar also stresses on the im­por­tance of cul­tural nu­ances.

Don’t un­der­es­ti­mate cul­tural nu­ances, he says.

“Take coun­sel from ad­vi­sors with ex­per­tise in the mar­ket’s cul­tural norms and nu­ances.”

Fifthly, don’t dis­count tax and reg­u­la­tory is­sues.

He ad­vises ex­porters to con­sider the unique coun­try rules in ar­eas such as re­port­ing, ac­count­ing and tax re­quire­ments.

Also, he says, con­sider the im­pli­ca­tions for tax treat­ment back home.

Lastly, Abrar says: “Don’t be prod­uct-my- opic or mar­ket-my­opic.

“It is dan­ger­ous to as­sume that prod­ucts and ser­vices that are suc­cess­ful in the do­mes­tic mar­ket will be equally suc­cess­ful else­where.”

As Malaysia moves to­wards be­com­ing a de­vel­oped na­tion, Abrar says greater em­pha­sis should be placed on the de­vel­op­ment of the ex­port sec­tor in or­der to pro­pel and sus­tain the econ­omy.

Stan­dard Char­tered re­cently an­nounced its part­ner­ship with Star Me­dia Group Bhd for the in­au­gu­ral Ex­port Ex­cel­lence Awards 2019 – an ini­tia­tive to recog­nise lead­ing Malaysian ex­porters.

The awards pre­sen­ta­tion, to be held in Novem­ber 2019, will hon­our 46 com­pa­nies across seven cat­e­gories as well as three for the “Ex­porter of the Year” ti­tle.

Abrar, dur­ing the in­ter­view, notes that ba­sis for ex­port­ing into a new mar­ket could be one of op­por­tu­nity or one of risk.

Ei­ther way, he says, suc­cess­ful ex­port­ing is a chal­leng­ing process.

“Busi­nesses can’t just fol­low the herd, they must an­a­lyse the mar­kets they are in­ter­ested in and en­sure their prod­uct or ser­vice is ap­pro­pri­ately de­signed and scaled for the unique fac­tors in that mar­ket.”

He adds that the tech­nol­ogy avail­able to busi­nesses to­day of­fers great po­ten­tial to en­hance the ex­port mar­ket, but the value of these so­lu­tions could be en­hanced by col­lab­o­ra­tion amongst in­dus­try play­ers.

This, he says, will re­quire a change of mind­set both by or­gan­i­sa­tions and in­di­vid­u­als, to em­brace new tech­nolo­gies, col­lab­o­ra­tions and pro­cesses.

“The value of do­ing so could be ex­tra­or­di­nary, in­creas­ing global pros­per­ity, eco­nomic in­clu­sion and sta­bil­ity, and in­creas­ing ac­cess to in­ter­na­tional trade to the com­pa­nies that drive em­ploy­ment and growth.”

Fi­nanc­ing is crit­i­cal

Abrar says a well thought-out fi­nanc­ing struc­ture is es­sen­tial for busi­nesses.

Fac­tors to con­sider in­clude whether to fund the ex­pan­sion from the home coun­try, or in the new mar­ket, as well as the cost of fi­nance, tax rates, the lo­cal le­gal sys­tem and whether any in­cen­tives are avail­able from the lo­cal gov­ern­ment.

“Do­ing the ground­work will pay div­i­dends – in the long term, the big­gest risk is fail­ure to take a con­sid­ered ap­proach to ex­port­ing.

“The key is to do the home­work be­fore mak­ing the in­vest­ment and to build the ap­pro­pri­ate plat­form for suc­cess,” he says.

How­ever, he says, it is equally im­por­tant that busi­nesses do not spend too much time on this and end up de­lay­ing the process.

“Some busi­nesses ag­o­nise over how to do things be­cause of their fear of get­ting things wrong. Rather than try­ing things out, they miss the boat be­cause the lo­cal com­pe­ti­tion has caught up, or other com­pa­nies have made the first move,” he says.

Some­times, he says, the need to ac­cess fund­ing can also help de­ter­mine the choice of mar­ket for ex­ports.

De­vel­oped economies whose cap­i­tal mar­kets pro­vide ready ac­cess to fund­ing can be very at­trac­tive. How­ever, he says, set­tling on the right mix of self-fund­ing, debt and eq­uity can be tricky.

“Debt fi­nance does not di­lute own­er­ship and can be more straight­for­ward to raise, but eq­uity fund­ing can give busi­nesses more time and flex­i­bil­ity to grow their busi­ness.

“The two are not mu­tu­ally ex­clu­sive: the debt it is pos­si­ble to ser­vice com­fort­ably will also de­ter­mine the amount of eq­uity re­quired,” Abrar notes.

Busi­nesses, he says, must also de­cide which banks can help them ex­port in­ter­na­tion­ally.

An in­ter­na­tional bank, like Stan­dard Char­tered, with a pres­ence in many mar­kets may be the best choice for many busi­nesses – es­pe­cially those rolling out an ex­pan­sion pro­gramme – but it needs to of­fer ac­cess to lo­cal ex­per­tise.

Abrar also stresses the im­por­tance of en­sur­ing that SMEs have ac­cess to fi­nanc­ing.

Ac­cord­ing to the Asian De­vel­op­ment Bank, over a third of trade fi­nance re­quests made by SMEs are re­jected, com­pared with 7% of multi­na­tional cor­po­ra­tions.

Given that SMEs com­prise 50% of global GDP, ad­dress­ing these is­sues would un­lock a ma­jor con­straint on growth, he says.

“There are a va­ri­ety of rea­sons why SMEs find it chal­leng­ing to fi­nance trade.

“Ul­ti­mately, a fac­tor that un­der­pins many of these is­sues is com­plex­ity, which is ex­ac­er­bated by shift­ing trade pat­terns and ex­ten­sion of sup­ply chains, and in­creased reg­u­la­tion such as know-your-cus­tomer re­quire­ments,” he says.


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