Product AdaptionProduct Adaption
The extent to which your company will be willing to modify products sold for export markets is a key policy issue to be addressed by management. Some exporters believe that their domestic products can be exported without significant changes. Others seek to consciously develop uniform products that are acceptable in all markets. It is very important to do research and to be sure of the right strategy to pursue. For example, you may need to redesign an electrical product so it can operate on a particular voltage in certain countries, or you may need to redesign packaging to meet labeling standards or cultural preferences.
If your company manufactures more than one product or offers many models of a single product, you should start by exporting the one that is best suited to the targeted market. Ideally, your company may choose one or two products that fit the target market without major design or engineering modifications. Doing so works best when your company:
- Deals with international customers that have the same demographic characteristics or the same specifications for manufactured goods
- Supplies parts for U.S. goods that are exported to other countries without modifications
- Produces a unique product that is sold on the basis of its status or international appeal
- Produces a product that has few or no distinguishing features and that is sold almost exclusively on a commodity or price basis
Questions to Consider
You must consider several issues when you are thinking of selling overseas, including:
- What foreign needs does your product satisfy?
- What products should your company offer abroad?
- Should your company modify its domestic market product for sale abroad? Should it develop a new product for the foreign market?
- What specific features, such as design, color, size, packaging, brand, labels, and warranty, should your product have? How important are languages or cultural differences?
- What specific services, warranties, and spare parts are necessary abroad at the presale and postsale stages?
- Are your company’s service and repair facilities adequate?
To enter a foreign market successfully, your company may have to modify its product to conform to government regulations, geographic and climatic conditions, buyer preferences, or standards of living. Your company may also need to modify its product to facilitate shipment or to compensate for possible differences in engineering and design standards. Foreign government product regulations are common in international trade and are expected to expand in the future. These regulations can take the form of high tariffs, or they can be nontariff barriers, such as industrial regulations or product specifications. Governments impose regulations for several reasons:
- To protect domestic industries from foreign competition
- To protect the health and safety of their citizens
- To force importers to comply with environmental controls
- To ensure that importers meet local requirements for electrical or measurement systems
- To restrict the flow of goods originating in or having components from certain countries
- To protect their citizens from cultural influences deemed inappropriate
Detailed information on regulations imposed by foreign countries is available through your local U.S. Commercial Service office. When a foreign government imposes particularly onerous or discriminatory barriers, your company may be able to obtain help from the U.S. government to press for their removal. For more information, call (202) 395-3230 or visit ustr.gov.
You can also contact the Office of Trade Agreements Negotiations and Compliance (TANC). TANC systematically monitors, investigates, and evaluates foreign government compliance with our international trade agreements to ensure that U.S. companies and workers receive the full benefit of these agreements. This free program is available to assist all U.S. exporters or investors facing trade barriers, but it is particularly valuable to small and medium-sized companies, which often lack the resources or expertise to deal with these problems. It is the U.S. government’s one-stop shop for getting help reducing or eliminating those barriers.
The TANC website includes a fully searchable database containing the texts of approximately 250 international trade agreements. To assist, TANC provides examples of the most common foreign government-imposed trade barriers at 1.usa.gov/1yRJbr5. This service enables U.S. exporters to file complaints about foreign government-imposed trade barriers or unfair trade situations in foreign markets.
Buyer preferences in a foreign market may also lead you to modify your product. Local customs, such as religious practices or the use of leisure time, often determine whether a product is marketable. The sensory impression a product makes, such as taste, smell, or a visual effect, may also be a critical factor. For example, Japanese consumers tend to prefer certain kinds of packaging, leading many U.S. companies to redesign cartons and packages that are destined for the Japanese market. Body size may also be an issue. If a product is made for U.S. body types, it may not work for people of smaller statures.
Market potential must be large enough to justify the direct and indirect costs involved in product adaptation. Your company should assess the costs to be incurred and, though it may be difficult, should determine the increased revenues expected from adaptation. The decision to adapt a product is based partly on the degree of commitment to the specific foreign market; a company with short-term goals will probably have a different perspective than a company with long- term goals.
Engineering and Redesign
In addition to adaptations related to cultural and consumer preferences, your company should be aware that even fundamental aspects of products may require changing. For example, electrical standards in many foreign countries differ from those in the United States. It’s not unusual to find phases, cycles, or voltages (for both residential and commercial use) that would damage or impair the operating efficiency of equipment designed for use in the United States. Electrical standards sometimes vary even within the same country. Knowing the requirements, the manufacturer can determine whether a special motor must be substituted or if a different drive ratio can be achieved to meet the desired operating revolutions per minute.
Similarly, many kinds of equipment must be engineered in the metric system for integration with other pieces of equipment or for compliance with the standards of a given country. The United States is virtually alone in its adherence to a nonmetric system, and U.S. companies that compete successfully in the global market realize that conversion to metric measurement is an important detail in selling to overseas customers. Even instruction or maintenance manuals should provide dimensions in centimeters, weights in grams or kilos, and temperatures in degrees Celsius. Information on foreign standards and certification systems is available from the National Institute of Standards and Technology (nist.gov).
|Electrical standards can vary wildly between, and sometimes within, different international markets.|
|International buyers may have different expectations than U.S. buyers. Packaging, advertising, and labeling requirements can all vary between markets.|