Local Markets: What do I need to know?

A recent article on Starbuck’s success in China triggered this blog post.

3 Tips to Success in a Foreign Market:

1. Local Tastes Matter

Many companies struggle to stay afloat while doing business abroad as they fail to study the market well enough prior to entry. Emerging markets like China and India are so fascinated by “western” products and culinary treats that it would seem very practical to begin selling your product abroad.  However, entering in to a foreign market based on a few people responding positively to your product is not the formula you want to work off of.  Know your market well.  Different regions have different appeals.  What might work in the village WILL never work in the city.

What Starbucks did right in China is a textbook case study in how food brands can succeed despite rising labor and real estate costs and increased competition on the Mainland.  Instead of trying to force onto the market the same products that work in the U.S., such as whip cream-covered frozen coffee concoctions, Starbucks developed flavors, such as green tea-flavored coffee drinks, that appeal to local tastes.  Rather than pushing take-out orders, which account for the majority of American sales, Starbucks adapted to local consumer wants and promoted dine-in service. (Why Starbucks Succeeds in China and  Others Haven’t , by Shaun Rein, http://www.usatoday.com/money/industries/food/story/2012-02-12/cnbc-starbucks-secrets-of-china-success)

2.  Status

Owning  a “western” product is a matter of status for most people.  Use that status appeal to your advantage.  This means that catering to local tastes but maintaining the quality and price of your good(s) is essential.  I use Shaun Rein’s Starbucks example one more time.  In China, Starbucks price their drinks higher knowing people would buy them just to “show off”.

It goes without saying……KNOW your competition. If your market research reveals that people prefer price over quality when it comes to certain products, you need to make sure people know WHY your product is being priced the way it is being priced.

3. Protect your Intellectual Property

I don’t think I stress the importance of Intellectual Property enough…  So all I am going to say on the topic is REGISTER YOUR TRADEMARK, PATENT or COPYRIGHT (PERIOD).

What are your personal experiences selling abroad?

Packaging My Goods For Transport Across The Border: Compliance Issues To Consider

U.S. customs officials and other government officials (read FDA) are appointed to examine every aspect associated with your shipment.

Does this mean that even the box I use to package my goods will be examined? ABSOLUTELY.

Take the FDA……it must approve any materials used in the construction or manufacture of containers for use in the packaging of food or beverages.  Further, certain plant materials used for bottle jackets for wine or other liquids are subject to special restrictions under plant quarantine regulations of the Animal and Plant Health Inspection Service.  That is, all bottle jackets made of dried or unmanufactured plant materials are subject to inspection upon arrival and are referred to the Department of Agriculture.

Can I use wood to package my goods? ABSOLUTELY.

All wood packaging material (WPM) for international transport must meet International Plant Protection Convention standard ISPM #15 with the proper markings indicated.  WPM is defined as “hardwood and softwood packaging other than that comprised wholly of wood-based products such as plywood, particle board, oriented strand board, veneer, wood wool, etc., which has been created using glue, heat, and pressure or a combination thereof used in supporting, protecting or carrying a commodity (includes dunnage).”[1]

The marking required on the wood packaging material must be placed in a visible location on each article, preferably on at least two opposite sides of the article; must be legible and permanent and it must indicate that the article has been treated as required as well as approved by the IPPC to certify that the wood packaging material has been subjected to an approved measure.

But I plan to  use  third-party packaging materials…should I be concerned? 

Ask your third party for a “letter of guaranty”.  A “letter of guaranty” releases you from any FDA liability.  If a third party supplier has followed FDA guidelines while providing you with the requested packaging material, such third party will not hesitate to furnish a “letter of guaranty”.

Did you say Intellectual Property?

Intellectual property and packaging go hand in hand. In particular, you should be concerned with the “trade dress”.  Trade dress is essentially the combination of elements on packaging, containers, wrappers, or labels that is unique to a particular brand or producer.  The key to determine whether a producer owns a protectable trade dress is whether the packaging has become unique enough that consumers associate that packaging with a particular brand. [2]

If an individual has not registered their trade dress, they can still sue under federal and state unfair competition laws, provided all the requisite factors have been met.

So ask yourself, why were my goods stopped at the border? …because  faulty packaging should NOT be the reason.

Remember to run through the same issues before exporting your U.S. goods.  Most foreign countries take wood packaging and intellectual property enforcement seriously.

DISCLAIMER:

The views expressed above are personal and for educational purposes only. This blog is not a substitute for legal advice from an attorney in your own state. 


[1] United States Department of Agriculture, Wood Packaging Materials, Frequently Asked Questions @ http://www.aphis.usda.gov/import_export/plants/plant_exports/wpm/wpm_faqs.shtml, December 22, 2011

[2] American Bar Association, Unique IP Issues @ http://www2.americanbar.org/calendar/young-lawyers-division-spring-conference-2011/Documents/jackandcolaprogrammaterials.pdf, December 22, 2011