The recent UKTI Export Week really helped to raise awareness of selling security-centric products and services overseas, writes John Davies. With a huge diversity of worldwide markets, however, it’s important that security providers conduct thorough research and, where possible, enlist local help and expertise.
Some markets may seem inexplicably difficult to penetrate, but it’s worth remembering your competitors may well come to the same conclusion so perseverance can really pay off.
Naturally, it takes time and effort to research a market properly and it’s always well worth consulting helpful bodies such as the UKTI, as well as the BSIA‘s own Export Council, for advice on target markets.
It’s also important to consider local and international political and financial circumstances. Sometimes, a seemingly lucrative market can tail off, while another apparently impenetrable one could be about to yield huge opportunities.
Iran is a good example of a market which has been closed to exports for a long time now, but could soon be open to foreign imports once again. Before the United Nations (UN) and US trade sanctions were enacted back in 2006, Iran was certainly a buoyant and rewarding security market. Indeed, we enjoyed particular success across both the commercial and energy sectors there.
While fully complying with the trade embargo rules, we chose to maintain our contacts in Iran and, over the past few years, we’ve seen a growing number of Iranian representatives at IFSEC International and Intersec. This absolutely highlights a strong demand from local customers and security experts to engage with the wider security market.
With agreements hopefully being made between the Iranian Government and the UN and US, this could see a great resurgence in trade with the country. Naturally, the sanctions have taken their toll on the whole of Iran, with the security market not exempt from that statement. With considerable Iranian assets also frozen in banks around the world, an easing of sanctions should see these investments freed-up and ploughed into infrastructure. That would offer a perfect opportunity for security suppliers to provide the local market with the latest solutions required.
Trading in a market that has been closed to outside suppliers for so long will mean exploring the import regulations and tariffs, not to mention currency conversion, but this has the potential to be a very exciting security market indeed. Watch this space.
Although it’s a democratic and secular country, Nigeria has suffered in recent times from political instability and issues around violence from the likes of Boko Haram. However, with both a sizeable population and economy, the country offers a considerable potential security market for high quality imports.
Until two years ago, TDSi enjoyed a strong presence in Nigeria working closely with our partners in the country. The political situation made this much more difficult, but there are positive signs that the new political regime is making big changes, and particularly so in terms of dealing with issues of corruption that rendered trading a good deal more difficult.
We believe this is an excellent market which will soon become much easier to trade with again. Indeed, there are huge trading opportunities in Western Africa as a whole, while Nigeria shows every sign of becoming the perfect hub for making the absolute most of this commercial momentum.
In addition to being one of the world’s foremost manufacturing economies, of course, China is also a huge and potentially highly lucrative market for security systems. Although there have been rumblings over a reported economic slowdown, TDSi has seen its sales jump by 50% in China when compared to last year (which is quite a testament to the potential of the Chinese market).
In some ways, China is one of the most straightforward markets to target. However, I would voice a word of caution here. China presents a highly competitive market and one which needs the help of local expertise. A local partner or distributor is a must, even if you decide to set up a locally-based, wholly-owned enterprise. This will not only assist with appropriate marketing, but also help with the considerable amount of paperwork required to run operations on a proper and organised basis.
While there’s a considerable amount of administration involved, Chinese import tariffs are reasonable and will not detract from the appeal of that market. However, processing shipments through customs can delay deliveries, particularly if paperwork isn’t completed correctly.
Despite the bureaucracy involved, the system does work well, although don’t make the error of thinking that China is going to be a quick win. We’ve been trading there for 20 years, but are really only reaping the benefits now.
India and Brazil
Poles apart on a geographical basis, both India and Brazil present challenging import tariffs which can make foreign goods expensive for local customers. In the past, we’ve found this to be a real hurdle and it can limit the market penetration that’s possible.
This means your business needs to be clear on the products/services on offer and, preferably, you need to be supplying specific projects. This is particularly so in India, where being specified for a given project (notably a Government-funded one) as a specialist supplier will make the whole process much easier and more cost-effective.
Brazil presents a similar challenge. Here, it can be difficult to compete with local suppliers on an even playing field. One way around this is to base your operations in a fellow Mercosur Trade Association member country (Argentina, Paraguay, Uruguay or Venezuela, for example) which makes trading easier. That way of doing things does make for a complicated solution, but it could be well worth investigating to cater for the right customers.
Meeting the challenge
Not every export market will suit every UK security business looking to expand its customer base. However, sometimes the most apparently challenging markets can offer the most lucrative rewards.
Finding the ideal niche for your offer is always worth pursuing, as long as your business understands the market, the local economy and the political situation.
Furthermore, locating the right assistance, both here in the UK and locally, really is the key.
Adding a fresh market or two will diversify your sales portfolio and, when successful, can realise a significant gain when it comes to the overall share of the given local market.
John Davies is Managing Director of TDSi and Chairman of the BSIA’s Export Council