LOOKING FOR PARTNERS ON FOREIGN MARKETS Fiche ARTCADEMY

LOOKING FOR PARTNERS ON FOREIGN MARKETS

MA_C_5

Title: LOOKING FOR PARTNERS ON FOREIGN MARKETS

Keywords: market analysis, customers, competition, trends, barriers, partners, support, online tools, localization, language, brand name, references, reviews

Author: Comenius

Languages: English

Objectives/goals:

At the end of this course you will understand basic principles, steps and benefits of market analysis. You will be able to execute own market analysis, or identify and approach available support services on European Single Market. You will be able to analyse your potential foreign markets (i.e. understand main trends, demand, competitors and prices) using available online tools. You will be able to understand localization, its levels and options, will learn dos and don’ts of successful localization, and understand role of country brand name. You will be familiar with good practices how to earn references, boost customer reviews, improve your credible and trustworthy online image, and build an outstanding seller profile on online marketplace. You will be familiar with process how to select partners in foreign markets to support your business internationalization and competitiveness.

Descripcion:

There are the following approaches to identify and choose partners for foreign markets:

a) to find domestic buyers who then export your product. In this case partners are domestic one and your selling approach to them is like you would sell somebody in local market. You will filling orders from domestic buyer and he/she then will export it even you don´t know whether it will be successfully exported. This your partner has decided that your product meets foreign demand. He/she takes all the risk and handels all exporting activities. Advantage of this approach is that it doesn´t ask any your knowledge about doing business in abroad and due to that is simple for you. However, disadvantage is that you, as original seller and producer, are not aware what is going on with your product. Usually, if original seller (yourself) learns about his/her product success in selling abroad starts to think about the other approach to find partners for selling in abroad that would alow him to be better recognized and participate more on sharing export margin.

b) to find domestic buyers who represent foreign end users or customers. There are trading companies, local or foreing corporations, general contractors, foreign distributors and retailers etc. that purchase for export. In this case you may know your product is being exported even it is still the buyer who takes risk and handles all details of exporting.

c) to use intermediaries who provide special services to identify foreign partners for your products (indirect approach). You as exporter can gain access to well-established expertise and trade contacts. And above all you can still retain considerable control over the process and realizte som of the other benefits of exporting such as learning more about foreign competitors, new trends in your business and other market opportunities. Typical intermediares are: export management companies; foreign agents; piggy back exporting partners.

. Export management companies (EMCs) functions as an "off-site" export sales department, representing your product along with various other non-competitive manufacturers. The EMC searches for business for your company and in area of looking for partners usually provides locating new, and utilizing existing foreign distributors or sales representatives to put your product into the foreign market. Functions as an overseas distribution channel or wholesaler. Takes ownership of the goods and operates on a commission basis.

. Foreign agents (FAs) are hired by companies for representation in overseas markets as the agent has knowledge of business practices, language, laws, and culture. There are different types of agents who perform a number of functions. The one you choose to hire is based upon how much you want the agent to do for you and how much you are willing to pay.

• Exporters use commissioned agents most often. It is the simplest way of doing things: The agent is paid a percentage of a sale only when the sale is made. This provides an incentive for the agent to work on your behalf.

• Retainer agents are paid a fixed amount to do certain work for a company over a specified period of time. The disadvantage is that it is difficult to monitor how hard they are working and they get paid whether they do anything or not.

• Retainer/Commissioned agents are placed on a retainer but also receive a percentage from each sale. The retainer provides them with funds to help run their business while the commission gives them additional incentive to work harder on your behalf.

Piggyback exporting partners: when a company, which already has an export distribution system in place, is allowed to sell another company?s product in addition to its own. A good advantage is that the requisite logistics associated with selling abroad are borne by the exporting company.

d) to do directly own research in your target market to identify partners or end users as part of your direct exporting strategy. This approach is most ambitious and difficult. You have to be aware of significant committment of your time and effort if you want to find a good partners. On one side it is more risky and costly approach (as far as your own time and effort is) but may also be the best way to achieve high profit and long-term growth if it is properly executed with appropriate guidance from different state (national) and international institutions, international banks etc. that focus on exporting services. Partners for direct channels of your product may be: sales representatives, distributors/agents, end users.

• Sales Representatives/Paid by seller: foreign-based representatives who work on a salary/retainer plus incentive basis to locate buyers for a company’s products.

• Distributors/Agents: purchase merchandise directly from the home-country firm to re-sell at a profit.

• Direct Sales to End-User: Your product line will determine whether direct sales to the end-user are a viable options. Major end-user include foreign goverments, schools, businesses and individual consumers.

Approaches a/ and b/ are quite extensively used by small and medium size companies. However, they don´t require any special knowledge as far as foreign partners finding is. You can apply the same methods as for finding of local partners. If your export strategy, developed on your own goals and resources, is in favor of indirect approach (c/) it means you are new to exporting or you don´t have staff and resources that you could devote to more complex export activities then this approach is the most appropriate to you. There is a key to find suitable intermediares. However, applying this approach (c) still allow you to go directly to some well known markets for you (neighbouring country) and to apply indirect approach for finding partners in less known markets. Later, when you are more experienced in foreign market activities, then you can choose to gradually increase direct approach to find partners as part of direct exporting strategy.

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