Choose the market with measurable criteria (demand, access, requirements, competition, logistics and risk) and define your position against competitors with a clear value proposition.
Goal: Compare markets with a weighted matrix, choose a main one and a backup, and define your position with a clear value proposition.
Choosing a market is not following a chance contact or copying the neighbor. It is a funnel. You start with a long list of 10 to 20 countries, narrow it with access and demand filters to a short list of three, and study them in depth with samples or a visit. In the end you choose a main market and a backup. Concentrating on a few markets lets you learn fast and does not scatter your cash or your time.
Compare the candidates with the same criteria. Demand: how much that country imports under your subheading (the tariff code that classifies your product) and whether the volume is growing; you can see this in statistics such as the ITC's Trade Map. Access: what tariff you pay compared with your competitors and which health, technical or labeling requirements you must meet. Competition and price: who sells today and at what price per kilo or per unit. Logistics: transit time, freight and frequency of sailings. Affinity: language and business culture. Payment risk: the strength of the country and of the buyer.
Trade agreements help, but they do not sell for you. An agreement reduces or removes the tariff, and only if your product meets the rules of origin (the requirements that prove it was made in Peru). The official page of Peru's Trade Agreements lists 28 agreements in force, including bodies such as the WTO or APEC, not only free trade agreements. A 0% tariff does not make up for a market where nobody buys your type of product. Origin and taxes are covered in depth in the course on Customs Taxes, Trade Agreements and Origin.
Position is the place your product occupies in the buyer's mind, compared with the competition. There are four paths: price (volume and low costs), differentiation (origin, quality, certification), niche (a specific segment) and service (reliability and flexible batches). A small or medium-sized company rarely wins on price, because it has no scale. It usually wins with a niche and differentiation. Sum up your position in one value proposition sentence: who it is for, what benefit it gives and what proves it.
Also define how you enter. Direct export: you sell yourself to an importer, distributor or retail chain, with more margin and more work. Indirect export: you sell to a Peruvian trading company that exports, with less margin and less risk. Digital channel: you sell through marketplaces or an online store, with small shipments. Choose according to the capacity that your diagnosis measured. International marketing is developed in the course on International Trade and Marketing.
| Position | When it fits | Main risk |
|---|---|---|
| Price | You have scale and low costs, and the buyer buys by volume | Any larger competitor matches or beats you |
| Differentiation | Your product has an origin, quality or certification that the customer values and can verify | If the difference is not proven with evidence, the buyer ignores it |
| Niche | You serve a small, well-defined segment that large companies neglect | The segment may be so small that it does not sustain your volume |
| Service | You offer reliable delivery, small batches or customization | It demands daily discipline; a single failure damages the relationship |
Result: With the initial weights, Chile wins (3.80) over the United States (3.65) and the Netherlands (3.40); with more weight on demand, the United States wins (3.75). The decision depends on the strategy, which is why the matrix is tested before deciding.
19/09/2021
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force for Peru on 19/09/2021, according to the official page of Peru's Trade Agreements, which cites Supreme Decree No. 011-2021-MINCETUR. The signatory countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore and Vietnam. For an exporter, this is a reason to review destinations that were not on their short list before.
A new agreement can change your list of markets, but you only get the preferential tariff if your product meets the rules of origin.
31/12/2020
When the Brexit transition period ended, the United Kingdom was no longer covered by Peru's agreement with the European Union. The official page of Peru's Trade Agreements records the agreement with the United Kingdom as in force since 31/12/2020 at 18:00 hours. That same page lists 28 agreements in force, among them free trade agreements and bodies such as the WTO and APEC.
Treat each country as a different market: if its rules change, check whether your tariff access is still the same.
Practise with the calculators, the COMEX Simulator and the review questions on the main page.
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