It is a rainy Saturday morning in Edinburgh and I am working on a fascinating project for a UK manufacturing client. Applying the well-known business concept of delegation, I asked my husband to go out and buy some dulce de leche for some baking later on today. You wonder how this relates at all to international trade – apart from the fact that this dulce de leche (and don’t you dare call it “caramel sauce” or “milk jam”) will no doubt be imported (probably from Argentina rather than my native Uruguay, but I can just about live with that).
I’ll tell you. The moment Mr Smith left the house (yes, he is Mr Smith, but that is another blog altogether), my worries began. Would he be able to find the right dulce the leche? The one with the strong flavour for baking, and the one that has the thick consistency? Would he buy the right quantity? Did I remember to tell him how much I needed? Oh, and how long would he take? Half an hour or half a day? Would he pay an extortionate price or could he buy something good for a fair price in Edinburgh? Should I have just gone out and bought it myself? But how about my report? And, finally, could he deliver the goods?
This, as any exporters will recognise, has a lot to do with international trade. Just now, what I am doing for my client is sourcing distributors in eight Latin American countries. And the questions above apply to my research – my client will ask me exactly that when we meet next week:
– Will the distributor understand my client’s products? What can I do to make the products and the applications clearer to them? We have already identified that the catalogue must be translated into Latin American Spanish, but product training in some form, possibly through at least one visit and regular catch ups, will be essential.
– How much will the distributor buy? I am looking at the importation data for each country and I can estimate the size of each distributor based on the total amount they have imported over a period (FOB) for these particular products. But I wouldn’t based decisions on just this data. Moreover, my client has clarified that their strategy is about small but ongoing orders, rather than one-off big projects – can the distributors focus on these orders?
– Time is definitely a question for anyone dealing with Latin America. After I identify the distributors, how long will it take for that first key order to arrive? It could take months. And for profit to arrive? It could take years in this particular case, and my client knows that well.
– Pricing: there is a brilliant blog written by Tim Hiscock on export pricing – will my client’s products be competitive in terms of pricing? They are so unique that pricing won’t be an issue, but value-for-money will be – and showing value-for-money will no doubt take more time and be based on stronger relationships that price-only discussions
– Could my client bypass distributors altogether and set up an office to serve Latin America? We doubt it at this stage, since distributors will have the key knowledge and contacts, particularly given that my client would have to deal with the painful public procurement processes of Latin American countries, given the sector they serve. Also, my client has other markets to look after, and limited resources.
So it seems that we can learn a lot from a humble shopping experience. After all, exporting is about that: people, decisions, priorities. And manageable risk. I am still waiting for my dulce de leche…
We have recently written a blog post called “Agents and Distributors, the Latin American perspective” for Strong and Herd – click here.