As the global market expands, companies of all types are looking for new opportunities for growth. Some countries hold more potential than others, and according to reports that were published in 2019, Guyana is of great interest to oil and gas companies around the world. In fact, this small country is moving toward the front of the line with per capital oil-producing countries. The local government has been more than willing to expand its trading partnerships, having already awarded even concession for both gas and oil explorations. The sound financial practices enforced by officials and the ability to move money through the safety and security of the GBTI bank make investing in this country a wise decision. However, not all trading partners are so accommodating, nor do all markets carry such investment potential.
Key Factors to Consider
If you aren’t in the oil or gas industries, you may not be able to capitalize on the booming trade partnerships with Guyana. However, there is an entire globe at your disposal for growth, but you need to take advantage of the right opportunities. Here are the key factors to consider when looking to establish new trading potential.
1. Market Demand
You can start your research by looking at the demand for your product. Look at the top 10 foreign countries and see how much of the product they currently import and analyze the last few years of import history. This gives you a big picture overview of where the growth probably won’t be and how well the rate of growth with your product has been. If growth is decreasing, making the move overseas may not be the best investment right now.
2. Country-specific Performance
If you have determined that the market can sustain your entry, look more closely at a specific region or country. The more detailed you make your assessment, the more accurately you can project potential. Take a look at the population and the per capital income, as consumer demographics and purchasing habits are important indicators of the health of the economy and market. On paper, it may look like your product is in high demand, but with a falling economic performance, you may experience the same dip in sales and success down the road. In countries where demand and economic performance have both risen, you are potentially looking at a more profitable venture.
3. Existing Competition
As you look at a specific region, check out the competition both locally and internationally. Find out as much as you can about potential competitors, including their price points, their consumer base, loyalty to products, and the company’s distribution methods. If there is a lot of competition in the area and you won’t be able to compete with the existing brands and prices, you may want to find a smaller market or location that holds more growth potential.
4. Trade Barriers
Moving your sales overseas will encounter many country-specific regulations. Tariff and non-tariff barriers can create a huge concern, as these issues can include production standards, importing or exporting licenses, and certain quotas. Your product may have to undergo packaging or labeling regulations in order to be approved by foreign customs agents. The logistical burdens of these issues can cause problems with distributions, further jeopardizing your ability to get your product on the market in a timely and cost-effective manner. Knowing these potential barriers can direct your operations to a market that seems to be more manageable and less restrictive or difficult to maneuver. The taxes and financial concerns also need to be evaluated, as local currency exchanges can wreak havoc on both your operations and the consumers’ ability to purchase your products. This is why businesses often hire international trade specialists and other international experts to assist them in moving their company to new, global markets.
5. Distribution Channels
Depending on the location and the climate, your product may require expedited distribution in order to avoid sitting in a shipping container or warehouse for several weeks. Getting your distribution channels arranged can be a struggle, as some countries have fluctuating access to distribution channels. Though a country’s tariffs may be low and there seem to be few trade barriers, if you can’t get your goods to the desired location or the goods are spoiled before reaching the final destination, you won’t be able to successfully conquer the market or address consumer demand.
6. Political Risk
There are some countries across the world that have weak political infrastructures. Moving your products to an area with political instability is not wise. Even if everything seems in order, for the time being, the first signs of turmoil within a nation could sink your business. Political factions also have different attitudes toward global investments, and policy reversals or raised taxes could create financial chaos for your company.
Global trading partnerships have the potential to increase your revenue and give your product or company extended life on the market. However, the potential for a bad investment exists if you aren’t diligent in analyzing the potential market and the factors that can impact your success.
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Last Updated: 09th December 2020