As Wolfestone supports more and more clients with their export expansion, our website localisation and interpreting services helps to open many doors to profitability.

But it would be naive to ignore the risks that go hand in hand with these opportunities.  Even when clients have identified a suitable market and a customer base, pitfalls remain.

Our clients face the same key risk and reward questions time and time again, and the answers will go a long way towards shaping their financial future.

CREDIT RISK

Do your credit and payment arrangements protect your interests adequately?  What are the chances of non-payment and where would that leave you?

QUALITY RISK

Are your products satisfactory for this new market? Are there additional quality stipulations that you haven’t taken into account?

TRANSFER RISK

Are there exchange controls or trade controls between your country and the destination country that might cause you a problem? Might there be in the future?

TRANSPORT RISK

In the  most fundamental terms, can you get the goods from A to B safely intact? It’s sometimes easier said than done.

FINANCE RISK

Again, in the most fundamental terms, do you have sufficient funding to cover your trading cycle? If you have a potential credit risk, how will that affect this funding?

EXCHANGE RISK

Exchange rates can fluctuate considerably.  How might these fluctuations affect your business model?

BANK RISK

If you’re partnering with an overseas financial institution, how secure are their guarantees? Do you have a confirmed letter of credit?

COUNTRY RISK

Developing economies can be vibrant and exciting but how stable is your target market? Could your plans be derailed by political or economic instability?

DOCUMENTATION RISK

And how stable are your own your documentary procedures? Can you present compliant documents that will be acceptable in this new trading arena?

PERFORMANCE RISK

Perhaps most fundamentally of all, can you deliver? Have you in any way overestimated your capacity to give your new customers what they need in terms of quantity or quality?

Once you’ve asked and answered all of these questions, the final hurdle is the one that Wolfestone can give you the most help with.  It’s the risk that many people underestimate, even when the other elements of their business plan are in place.

CULTURAL AND LOCALISATION RISK

Is your website localised?  Are your marketing material and your technical specifications targeted to this new audience? Having invested time and money perfecting your product and identifying a suitable new market, have you taken that crucial final step to make sure your message is conveyed as effectively as possible?

As with all business development activity, exporting is a balance of risk and reward. But it doesn’t have to be a lottery. There are sensible steps you can follow to protect your long term financial future and when it comes to cultural credibility there are reliable partners who can make sure you’re always speaking to your target audience in a language they’ll understand.

That’s why clients come to Wolfestone.

DAVID JONES

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  • Paul Chammings

    Good to see realism rearing its head. It’s too easy to bang the drum for overseas trade without carrying out the research. This blog has focussed heavily on cultural and linguistic issues in recent months – understandably – but bad debt has torpedoed as many export strategies as bad translation.

  • Chiumbo Wangai

    We can create a virtuous trade circle or a vicious trade circle. By disregarding the merits of countries with lower sovereign rating or currency rating (ccc for example) you disregard great potential. You say this is risk and reward, it is also trust and partnership.

  • Thanks Paul and Chiumbo for your comments. I agree that we should create a virtuous trade circle but one of the key virtues of a successful export strategy is timely payment for services rendered. I’m certainly not suggesting we should disregard emerging nations but for trade relationships to prosper, all parties need to have a reasonable expectation of a return on their investment. I know clients who’ve had very positive experiences with trade partners in emerging economies, but the relationships succeeded because financial ground rules were established that everyone abided by. There is no reason why this can’t be a win-win situation, Chiumbo.