Exporting your products overseas can grow your business rapidly. However, sending a shipment without researching the target market first is risky. Proper market research helps you find the right country, understand foreign regulations, and set the right price.
Here is a simple, step-by-step guide on how to research a foreign market before exporting.
Step 1: Identify Product Demand Using HS Codes
Every product traded internationally has a specific 6-digit Harmonized System (HS) code. Using this code, you can check trade statistics on free tools like ITC Trade Map or UN Comtrade. Look for countries with high import volumes and steady year-on-year growth.
- Example: If you produce organic turmeric powder (HS Code 0910.30), search Trade Map to see which countries are importing the highest volume of turmeric. You might discover that demand is rising rapidly in Germany and the United States.
Step 2: Check Import Tariffs and Local Compliance
A market may have high demand, but heavy import duties or strict rules can make your product too expensive or illegal to sell. Always check:
- Customs Duties: What import tax will the buyer pay?
- Product Certifications: Does your product need special lab testing, labeling, or organic certifications?
- Example: If you export packaged snacks to the UAE, your packaging must feature Arabic labeling and comply with local halal certification standards before customs clearance.
Step 3: Analyze Local Competitors and Landed Costs
Calculate your landed cost—the total cost of your product after adding factory price, packaging, freight, insurance, and import taxes. Compare your landed price with local brands and other exporting nations already selling in that target market.
- Example: If local suppliers in the target country sell leather shoes for $\$50$, but your total landed cost is $\$60$, you must either offer superior premium quality or optimize your logistics to compete effectively.
Step 4: Validate Ground Reality and Target Buyers
Data alone is not enough; you must verify market preferences. Analyze online marketplaces (like Amazon or local B2B sites) in that country to check customer reviews, popular packaging sizes, and price points. Joining organized international trade delegation tours or attending global trade fairs is another great way to test product samples and speak directly with local distributors.
Conclusion
Researching a foreign market before exporting protects your capital and ensures long-term profitability. By following these four steps—identifying demand with HS codes, checking local compliance, calculating landed costs, and validating real buyer preferences—you can enter new global markets with total confidence.
Frequently Asked Questions (FAQs)
Q1: What is the best free tool to check global demand for my export product?
A: ITC Trade Map (by the International Trade Centre) and UN Comtrade are free tools that provide detailed import and export statistics worldwide using product HS codes.
Q2: How many foreign markets should a new exporter target at once?
A: Beginners should focus on 1 to 3 candidate markets. Focusing on a few countries allows you to manage compliance, shipping costs, and buyer relationships effectively.
Q3: What is “landed cost” in export market research?
A: Landed cost is the total price of a product once it arrives at the buyer’s door, including original product costs, transportation, insurance, customs duties, and local taxes.
