Bet on Expansion! How can Companies Expand into Foreign Markets?

By Viktor Andrukhiv, Co-founder of Fibermix and Savex Minerals

Expanding into international markets helps companies build a stable order book that is not dependent on local economic conditions. For example, at the start of the full-scale war in 2022, Ukrainian companies that focused only on the domestic market faced a drop in demand and logistical constraints. However, companies that already had foreign customers were able to compensate for their losses and continue to operate.

Export markets offer prospects for additional sales. Manufacturing companies are often faced with a surplus that cannot be sold within a country. This is particularly true in a limited market. Exporting allows them to use their existing resources more efficiently.

International trade motivates companies to adapt to high quality standards, certification requirements and environmental regulations. This stimulates innovation and enhances the company’s reputation.

How do you choose a market to scale?

I advise you to carefully analyse several key factors:

1. Market size and demand 

To do this, companies can use customs databases, which allow you to study export and import transactions by product codes; it is also important to research competitors, their activities and estimate market capacity.

2. Analysis of mentality and consumer habits

Understanding local characteristics and culture is an important aspect of entering a new market. It is worth investigating the extent to which your business can take root and create competition. For example, in a number of European countries, people choose local suppliers despite the higher price and quality of goods compared to foreign manufacturers. In other words, they buy from their own people because they are ‘their own’. It is difficult to work in such markets and it is almost impossible to fight such habits. That is why it is important to study the market and the characteristics of the public before you decide to start. 

3. Logistics and costs

Logistics can be a limiting factor, especially for low-margin or high-volume products. For example, shipping products to remote countries may not be cost effective due to high transport costs. 

Strategy for entering international markets

1. Ensure that your material and technical base is ready for a new start. 

Entering new markets means an increase in the volume of finished products and therefore an increase in frozen funds.

2. Your company website should be cool 

A modern customer gets to know a company through its website or social media. It is important to create a multilingual, easy-to-use website with high quality SEO optimisation.

3. Start testing

Once you have chosen a country, start carefully. One client, two. You’ll see how the market works, what you need to improve, where you need to strengthen and what skills you need to improve. Your first clients in a new market are the best opportunity to refine your strategy. 

Entering international markets is a strategic move that can lead to rapid growth for a company and help attract foreign investment. For many companies, expansion can be a lifeline in the current economic climate. However, it is important to consider all the issues and risks and develop an effective brand scaling strategy.