1. Socio-political factors:
Having listed the potential markets within neighbouring countries, potential markets which are further away should be looked at. This may lead to listing the countries that have a common interest with the exporters own country, e.g. in an economic community.
Such communities are mainly based on political agreement, on the necessity of common (economic) interests. Politics have created a more or less stable trading environment for the member countries. They can be for example structured as “customs unions”, having eliminated internal custom tariffs in favour of a common external system of import tariffs.
If the government has established such ties with other countries, there will probably be a potential export market there.
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The same goes for countries where the social structure (relationships, family composition, age division, life styles, etc.) is similar.
There are some basic requirements stemming from social situations that run parallel worldwide. For example: blue jeans is a universal clothing of the young, young families spend more on their children than on themselves, newly- weds spend a lot on housing, furniture and interior decoration.
In fact, when selecting markets this way, socio-political factors are used as the criteria. All countries that have social and/or political environments comparable to the exporter’s country should be screened. Those countries that show similarities are selected for the simple reason that, fewer risks of misunderstanding may occur.
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That excludes unfriendly countries; Trade only flourishes in a stable and friendly climate and not in a hostile situation. The Governments may wish to impede all influx from countries with different life styles or political systems. That will stand in the way of exports.
2. Economic factors:
When selecting the country, the potential market should be screened regarding their economic climate. That refers to their economic possibilities can they afford to buy the product?
Of course, in such countries bartering potential may exist. But it would be wise to exclude such economics from the initial screening. The exporter may run into problems of fast devaluating currencies, of inconvertibility, of currency losses and of delay in payments.
The economic screening will limit the number of potential export countries to those with a medium or high per capita income. This information (the Gross National Product (GNP) divided by the number of inhabitants) has been calculated for all countries in the world.
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Although the per capita income may prove a helpful screening factor, it can be deceptive. Firstly, it does not show the actual buying power per household. That figure is got by multiplying it by the number of persons in the average household.
Secondly, even in the poor countries, there may be money to spend, for instance in certain large cities or regions. Their governments may be able to buy the goods or services. In other countries, bartering may have created an economy without money payments (like in the UK). So, treat this screening factor carefully.
A better figure may be derived from the actual productivity per head. Productivity supports the balance of payment as well as the economic stability and growth.
3. Cultural factors:
The most intangible selection criterion has to do with cultural differences. Culture, the sociologists say, is the strongest determinant of human behaviour.
In cultures that differ, the exporter should have to deal with people very different from him that is, people with different ideas about what are good or appealing, consumers with different preferences and with different buying habits.
For example, an exporter of swimwear wanted to advertise his merchandise in a Saudi magazine. He found out that showing partially undressed women is against Arab ethics and had to withdraw from the market.
A successful Asian exporter had selected a potential trade partner who was an importer in the US. With utter politeness he entered the negotiations and found his counterpart far too brusque and too direct to accept him as a reliable man.
So he dropped him. Later he learned that he had turned down a very attractive party, who was famous locally for his fast and sound judgement and also for his swift business successes.
Culture is evident in the life style of the consumers, in the communication with business relations, in social life, in religion, or in business ethics. It may be tempting to relate culture with the degree of civilisation. But that consideration should not interfere with the commercial purpose.
It is the exporter’s task to recognise that there are cultural differences and to estimate their effects on the communication and commercial operations.
However, it is not necessary to understand the cultures. They should merely be respected. Similarly, the trade partner too should reciprocate respecting by the exporters culture and customs. Mutual understanding is based upon respect.
4. Technological factors:
The last screening factor tries to describe the relative degree of technological advancement in export countries. That factor will be evident when comparing the “state of the art” technology in the Western target markets with the exports technology.
It can be safely assumed that some of the country’s products may seem old-fashioned in industrialized countries, having been made obsolete by technological innovations. It is not possible to sell an ox-drawn plough to Western farmers who use tractors and are used to computers and robots on their farms.
Simple field research will quickly show the degree of technological development. The trade promotion official in the target country will see to that. He could also collect some trade magazines and competitors’ catalogues in the interested sector.
5. Climate:
Indeed, the climate influences product preferences and can be used as a selection criterion. This need not be followed by the later. Classic examples of the opposite include, selling iceboxes to Eskimos, skates to Saudis, water to the Dutch (all of which was prayed possible).
Instead, conditions of climate and geography which may influence logistics (transport, storage) should be identified. Selling ice cream in the ASEAN started becoming big business only after the supplier installed a chain of open-top cooling display units.
Exporting fresh produce and flowers from Kenya became a possibility after a direct air link was established with a Dutch auction, enabling shipping whilst still fresh.