Dear K&L Gates Agony Aunt,
Over the past three years, my handbags and accessories label has taken off. I've signed distribution agreements with both major and boutique retailers, I operate my own boutique stores in Melbourne, Sydney, Brisbane and online and I'm enjoying fantastic media coverage. My dream is to launch a store overseas. It is a pretty serious investment for me, can you give me any advice?
Congratulations! You're clearly doing something right in today's competitive retail environment. Launching your brand internationally is a significant business decision. Our top tips for things to consider before making the move internationally are below.
- Take stock of your business, and test your strategy
Now is the time to make sure that your business is in good running order. You should maintain quality financial reports that tell you whether you're producing stock at the right rate (that is, always having enough to meet demand, without ending up with too much unsold stock taking up warehouse space) and whether you have the cash flow to comfortably meet your business' operating costs. Your business plans need to be adaptable to changes in the Australian marketplace, such as the stiff competition created by the current influx of northern hemisphere brands. The cost of running your business can be impacted by the legal structure you have adopted and the terms of the contracts you have with suppliers and retailers. Now is a good time to review these matters to make sure that your business isn't at risk if the market dramatically changes.
It is also crucial that your strategy is dynamic enough to successfully adapt to an overseas debut. This is particularly true with online sales overseas. It is infuriating for customers to order and pay for your products, only to have to pay high shipping costs or wait for weeks to receive their purchases because you don't have efficient warehousing and shipping operations. Make sure that you will be able to service your overseas clientele with the same level of attentiveness as your customers back home.
- Know your new market
No matter where you are, it is the quality of your products that will set you apart and build your customer base overseas. Never underestimate the value of researching new markets. Your competition on Fifth Avenue, New York will be completely different to brands jostling for space in Harajuku, Tokyo, and it is important not to set out with a one-size-fitsall approach. This might mean you need to be discriminating about where you want your products sold, and although it is flattering to receive attention overseas, not every approach might be a good fit for your brand.
You also need to consider the legal ramifications of selling overseas. Each country will have different legal requirements, from taxes to company laws, safety regulations and employee entitlements. You will need specific legal advice about operating in each country from lawyers familiar with that jurisdiction.
If you're starting out by entering into distribution agreements with retailers in another country, it is important to do your research. A lawyer can assist you to negotiate a favourable agreement with an overseas retailer, and advise you about your rights if you are unhappy with how the retailer is marketing and selling your products.
- Protect your label and designs
It is also crucial that your label and designs are protected from potential imitators in your new market, and that you're not at risk of being accused of copying another designer's work or brand in that country. Registered Australian trade marks and designs are only enforceable in Australia, but you can register your trade marks in individual countries, or in multiple countries, in many cases, based on your Australian registrations. In some countries you can also register your copyright (such as fabric prints) and your designs (such as the shape and look of distinctive products).
Your name, logo and key elements of your branding should always be protected by trade marks, which cost relatively little to register in most countries. Remember that the more distinctive your branding, the easier it will be to protect, so you should seek advice from an intellectual property lawyer about protecting important aspects of your branding. It is critical to do this before you start trading overseas, so that you don't have the nasty surprise of finding that a copycat has registered your trade marks in their own name overseas. Brand hijacking is unfortunately becoming increasingly common in some countries. This is also true of overseas manufacturers registering the brands of the businesses that engage them.
We also recommend registering variations of your domain name covering important extensions, not just the principal one you have registered. Registering a domain name does not give you any property rights (unlike a trade mark), but prevents competitors or counterfeiters from using similar domain names for profit or to mislead the public. Ultimately, your branding and designs are your most valuable assets, so it is important that you protect these wherever you are selling your products.
Above all, maintain good communication with your international agents, stockists and customers so you get a true picture of how your brand is performing – good luck!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.