Exporting

Definition: Exporting is one of the most widely used entry modes for companies expanding into international markets. It involves selling goods produced in the home country to consumers in a foreign market. This can be done directly, where the company manages all aspects of the export process, or indirectly, where a third party (such as a distributor or agent) handles the international sales (Kompass, 2024).

Direct exporting gives the company more control over the entire process, including pricing, contracts, and delivery. This is typically better suited for companies with international experience and resources to manage logistics and legal matters. Indirect exporting, on the other hand, is often chosen by companies that are new to international trade, since it involves less risk and fewer responsibilities. However, it also means less control over customer experience and market development (Kompass, 2024).

Advantages of Exporting:

1. Low Investment Risk
   Exporting is considered a low-risk strategy, especially compared to modes like joint ventures or establishing a subsidiary. It allows the company to enter a foreign market without needing to invest in local infrastructure, stores, or manufacturing plants (Hill, 2014). For Sanjo, this means they can expand into Canada without committing major capital upfront, which is ideal for a brand still growing internationally.
   
   

2. Fast Market Entry
   Because exporting doesn't involve setting up operations in the foreign country, it allows for faster market entry. Sanjo can begin by selling online or through Canadian retailers, reaching customers without waiting for physical setups like store leases or warehouses. This is especially useful in a digital-forward market like Canada, where over 78% of consumers are expected to shop online by 2025 (Codemasters Inc., 2024).
   
   

3. Preservation of Brand Control and Heritage
   Exporting allows Sanjo to keep its manufacturing in Portugal, preserving the authenticity of its product. Since the brand’s identity is strongly tied to Portuguese craftsmanship, this helps maintain its core values while still reaching a global audience.

4. Sustainable Growth Strategy

From an environmental and operational perspective, exporting enables gradual scaling. Sanjo can control order volumes and avoid overproduction, which supports its sustainability commitments. It’s a more flexible and environmentally conscious approach compared to large-scale operations in a new market.

Disadvantages of Exporting

1. Limited Local Presence and Market Feedback
   By not having a physical presence in Canada, Sanjo may struggle to fully understand and respond to local customer preferences. Especially in regions like Quebec, where cultural and language differences play a role, it may be harder to connect with consumers without a local team or partner (Kompass, 2024). In indirect exporting, there’s even less feedback because the middlemen control the customer relationship.
   
   

2. High Transportation and Customs Costs
   Shipping sneakers from Portugal to Canada involves significant logistical costs, including freight, import duties, and potential delays. Although the CETA trade agreement reduces tariffs on many goods, including footwear, companies like Sanjo still face expenses related to transportation, customs clearance, and possible handling delays (CBSA, 2024; European Commission, 2024; Freightos, 2024). These expenses can make the final retail price less competitive compared to local or North American brands. Additionally, long-distance shipping increases Sanjo's carbon footprint, which might clash with its eco-conscious image if not managed properly.
   
   

3. Exchange Rate Risk
   Because Sanjo’s production costs are in euros and Canadian sales will be in Canadian dollars, the company is exposed to exchange rate fluctuations. A sudden drop in the Canadian dollar could reduce profits or force Sanjo to raise prices, which might affect demand. This is a common issue for brands operating globally without local currency hedging strategies (Sanjo Canada Report, 2024).
   
   

4. Low Control Over Distribution
   If Sanjo chooses indirect exporting through a third-party distributor or retailer, it will have little say over how its brand is presented or marketed in Canada. This could lead to inconsistencies in branding, customer experience, or even pricing strategies all of which are crucial for maintaining a premium brand image.