Five mistakes of Ukrainian farmers when entering foreign markets

According to the SIA “The World Factbook”, at the end of 2016, the share of the agricultural sector in the economy of Ukraine amounted to 14.4%. In neighboring Poland, which often like to compare our country the figure is only 2.7%. And in the more developed Germany and France — 1.4% and 1.7%. This discrepancy in the share of the agricultural sector in the economies caused by many factors, but for Ukraine, this means that the value of agricultural production for economic development grows. Especially for foreign trade.

According to state statistics, in the first half of 2017, exports amounted to 20.6 billion dollars. The share of goods from the agricultural sector — 42% or of 8.67 billion. Compared to the same period last year, this figure rose by 28%. This is a positive trend for the Ukrainian agrarki in the international arena.

But despite the success of the industry as a whole, individual cases of access of Ukrainian companies to other markets end very badly. When the user is accustomed to putting all your eggs in one basket, you can end up with bankruptcy of the company.

In my work I have encountered cases, when a large successful company, having good export potential, have failed. And the reason for that — errors in the choice of strategy of entering the foreign market. The choice of the country and the region

Planning to export their products abroad, businessmen often choose the country, not based on specific statistics or expert analysis of the market and the self-understanding of the functioning of the business abroad. Following the General trends of the Ukrainian market, entrepreneurs do not consider the fact that their products can differ significantly from their foreign counterparts. Sometimes it plays and sometimes leads to huge losses. And they will depend on the scale of the export campaigns for each individual company.

In my practice there was a case when the entrepreneur wanted to export nuts. To make sure that he correctly chose the direction of export, the producer called her daughter and asked her to go to the nearest supermarket. After a 10 minute hike along the shelves it was decided that the greatest success will bring the export of walnuts to the UK market. The idea failed — the purchased equipment does not fit the Ukrainian rind thickness, and the British trade network was not ready for such volumes of walnut in principle.

In addition, do not forget about protectionism. This trade policy consists in the granting of preferences to domestic producers and the restriction of foreign exporters. The first classic example of protectionism — customs duties in England in the late 17th — early 18th century. Then, import duties on certain groups of goods, mainly finished products, a ban on the export of raw materials from the country and an act of navigation, prohibiting the importation of goods to England in any courts other than English have contributed to the fact that the local bourgeoisie have got an advantage over foreign producers. The policy of protectionism is not just implemented in different countries in different period of history — in the Russian Empire in the 19th century, in the United States and Western Europe in the 1930-ies, etc. In our time, the policy of open markets is considered much more effective, and until recently it seemed that the future of developed countries is the maximum economic liberalization and open markets. More than 20 years, there is WTO, designed to protect the free market, but this does not prevent such policies as Donald trump or Theresa may, to build his campaign around the theme of protection of domestic producers and export restrictions. Product

Everyone understands that the idea with the export of fat and doctoral sausage to Turkey is unlikely to succeed, however, other less obvious things can also cause the failure of the export company.

One of my clients was going to export cereals to the market of a European country. The first months the percentage of sales was extremely low, although there are no objective prerequisites for this was not. Export campaign, which was supposed to bring a good income, turned a loss of almost million UAH, including production, transportation, customs clearance of products, etc. However, a superficial analysis of the content of the shelves in this country showed that all the cereal was produced in the form of small plates, and its in the form of asterisks. When the market of that country came a new batch of cereal the usual form buyer, sales went up sharply. On the other hand, if the manufacturer has prepared the audience to “stars” with the help of effective advertising or I would have prepared himself, having conducted market research in advance, the first months of exports could be to bring him profit, not loss.

Such small at first glance, the discrepancies are many, and each market has its own characteristics that must be considered if you wish to start exporting their products. Flexibility and adaptability should be the motto of everyone who dare to tread the path of exporting its products. Submission

The field of possible errors is simply amazing: from advertising in the sources, which enjoys a very low popularity — until very funny situations, when the Ukrainian name of the brand or product causes laughter or aggression of the buyer.

In Ukraine everyone is joking about the name of the soap “Duru”, the same thing is happening with Ukrainian companies — for example, the company “Not informatin technology” hardly ever thought about the fact that the abbreviation of their titles (NIT) translates to English as “NIT”.

But a funny curiosity that is associated with the name — not the worst situation you can get your products. Imagine that yogurt Ukrainian “Galicia” was on the counter Polish shop: it is very likely that the yogurt will remain to stand there untouched, as the name is not the warmest of the historical associations of the average pole.

In a completely unfamiliar market proper communication strategy must first be based on its traditions. Financial mistakes

This error is typical not only for export products — many Ukrainian enterprises is very careless about the allocation of its financial flows, constantly losing potential profits and not trying to strengthen the weak links in the value chain. With the export situation is even more complicated: there are additional variables in the form of new taxes, fees, logistics and other costs that leads entrepreneurs astray.

The entry into a new market — a very expensive process, and it is reasonable to consider it as a long-term investment in business development. Instead, many companies want to enter the markets of other countries just for the sake of profit at minimum cost. Sensing a new market as a windfall cash cow, they close their eyes to the necessity of significant expenditures and, in the end, or suffer losses, not investing money in the necessary processes, or too generous bundle of money, expecting that the profit certainly will definitely cover all the expenses a hundredfold.

Avoid financial mistakes when you export, the owner or Manager of the business should 100% be confident in the integrity of financial management in Ukraine, because the error that the homeland is calculated in local currency and abroad will be calculated in the currency with additional zeros. The adaptability of the company

To perform the export, we often review the work of the entire Corporation and try to stir up resulting in the routine “swamp”.

Differences in business culture, legislation, and simply tougher competition awaits any entrepreneur, looking beyond the horizon in search of export opportunities. However, not all entrepreneurs with that in mind, and realize that many things done by them in Ukraine, is simply impossible anywhere else.

For example, a clear system of taxation and tax control, on the one hand, makes the market more simple, on the other hand, can be confusing Director, accustomed to the Ukrainian black market.

Difference in legislation often leads to the fact that the enthusiastic entrepreneur in the result receives from the export of only debts and fines.

What to do?

The main lesson that can be drawn from the 5 most common mistakes of Ukrainian agroexporters is the following 3 simple points: A thorough market analysis is a prerequisite to start an export campaign. The choice of the country, marketing policies, delivery methods, etc. should depend on the specific situation of the market is the universal prescription does not exist. To be effective outside their country, it is first necessary to become effective on its territory. Before planning export products abroad, is to restore order in the structure of the company and to streamline its activities later this is neither the time nor money. Willingness and ability to adapt to the new market conditions is the cornerstone for successful implementation of the product on the shelves of shops and supermarkets of other countries.