Understanding Regional Differences Within Markets
Choosing the right market is one of the most important factors behind the success of any international business expansion.
Among the barriers that businesses can face when expanding overseas, however, is a failure to understand regional differences within larger markets – whether it’s failing to take into account the differences within a single large country, or inadequately researching the variations between the countries within a continent or trading bloc.
Often, this could simply mean considering the considerable differences that could exist between parts of a much larger single country.
These differences could be regulatory – as the expansion consultancy Galvin International note in their guide to Canadian expansion, the country’s rules differ by province. But the differences can also be geographical. In China, for example, the eastern coastal regions face far fewer trading and import restrictions than the landlocked, mountainous areas to the country’s west. Similarly, southern China benefits from a closer proximity to tropical climates, with plenty of rainfall and water sources, than northern parts of the country.
These regional differences can produce pronounced disparities in factors ranging from the education and quality of life of the local population, to access to natural resources – all of which can impact the business growth strategies of an overseas expansion.
The same principle can apply to much smaller countries. The UK has traditionally seen a divide between London, which has been popular with investors and overseas companies, and regional cities, which have been less so. However, the impact of Brexit may challenge the capital’s reputation, and several of the UK’s regional cities are growing rapidly – a reminder that regional variations can and do change over time.
However, proper research is also important when it comes to the differences between individual countries and markets within a larger continent or trading bloc – not every country within the EU offers the same advantages and business benefits, for example.
Perhaps the most illustrative example here is the wariness that investors and businesses have often held towards the markets in individual African countries. This is often based on a perception of the continent that is clouded by the volatile political climates of some countries, without accounting for markets like Mauritius or Botswana – both of which have business-friendly climates, strong economies, and the infrastructure necessary to support businesses form overseas. In addition to this, a number of central African countries, including Rwanda and Kenya, are proving to be increasingly popular with overseas investors.
For any business looking at expanding into an overseas market, it is vital to carry out thorough research of your target markets. From variations within its own borders to its relationship with other countries within a trading bloc or continent, regional differences within a market can have a big impact upon the success of your expansion – and an in-depth due diligence process early in your planning stages can help you to identify them.