May 03 2009
USA Export: Currency Exchange
In tough economic times, one of the ways that may seem economical to export your products to Europe is to go it alone without a USA export master distributor, start in the UK, and work your way out from there. It’s a tempting argument; it seems like since the language barrier is small and it’s on a separate island, this would provide the best entry to Europe.
USA Export: US Dollar Compared to British PoundHowever, things are not always as they seem, and this argument has fatal flaws. Speaking the same language doesn’t mean conducting business the same way. First, as different as it is to do business in two regions of the US, it is far less than the difference in doing business in the UK. Second, as seen in the 8 year chart, there is far less play in terms of price advantage between the Pound Sterling and the US Dollar. This is absolutely critical, as your products have become far more expensive there than they were just two, three, or five years ago. Lastly, economic conditions are tied closer together between the US and the UK than between the US and the European Union. Simply put, the reason you export is to diversify; selecting a UK-only strategy minimizes your portfolio diversity, yet exposes you to the same level of market entry risk.
Entering the European Union, is not the long shot that one may originally believe. In fact, a strategy that includes a USA export distributor proves to be far quicker, cheaper, and risk averse than a UK-only strategy. The main point of an export master distributor is to allow a firm to export, while simultaneously sheltering themselves to the exchange rate, international transportation, and credit term risk associated with export. Further, the Dollar has indeed strengthened against the Euro from July ‘08 to March ‘09. The current exchange rate is near a level close to that of only three years ago; your products have remained price competitive in the EU. Finally, the amount of economic diversity between the European Union and the Dollar indicates a far better reward in terms of overall long term stability than a UK-only strategy.
USA Export: US Dollar Compared to Euro
There’s no doubt that we’re in a tough economic time. But, businesses that seize this opportunity will emerge far stronger than those that played “wait-and-see.” Skilled and experienced USA export master distributors can help you not just weather the storm, but put you at a strategic advantage above your competition.
This is really great information that has significant value. Thomas Friedman makes us all aware that the ‘World is Flat”. Your knowledge and expertise provides a competitive edge in this flattened world marketplace. With barriers being removed around the world and the distribution of technology on the rise, what will make the difference is the trusted and time proven cultural relationships.