How to find the best foreign partner?
Hello Dear Readers,
Today I want to share with you one of the most important aspects in export business. I mean that you should create a smooth, fast and effective distribution of goods and services for foreign customers as for inner market.
To achieve this goal, the supplier should start with selection of distribution channels in foreign markets.
Let’s look at various options which will help you to control the foreign markets reputation and to make necessary corrections in export transactions timely.
In this case you can:
• use sales agents or distributors;
• use your own sales potential;
• open an office abroad;
• enter into a license agreement with a foreign manufacturer;
• open a trading company abroad;
• establish overseas production enterprise and other.
In case, you are going to create your export department or work with the representative of export or international trading company you will need to interact with foreign partners.
In most cases, this is “sales agent” or “distributor”.
Sales agent is a kind of entrepreneur who commit himself for the implementation of product in exchange for a commission.
Usually, sales agent has a stock of goods. Sales agent acts as a broker, making sales of goods in foreign markets, concludes the transaction, receiving orders, and the only thing you need to do is to ensure the delivery of goods and execution of orders received.
“Distributor” works at his own risk and buys products offered by you and then sells it by setting own price.
Since the distributor has certain stocks of goods, he has his own network of services and is solely responsible for his income, so you will be spared from credit risk or the risk of default.
You probably want to be sure that the appropriate distributor handles your goods. In this case, it is better to train him the way of selling your products and to carry out after-sales service, as well as send your employees to assist Distributor while organization growth your products.
Looking for a good, reliable partner, you should not hurry. By signing the agreement, you will have to comply with its terms and conditions for a specified time. And if the choice is wrong, then you have to suffer with your broker until the contract expires or you may pay a fee. How to find the reliable partner?
There are several ways to obtain initial information about possible intermediaries:
• federation of foreign intermediary firms;
• foreign Chambers of Commerce;
• professionals in the field of marketing;
• the relevant advertisements in specialized trade publications;
• a variety of foreign trade enterprises and associations.
First thing you need to do is to create the list of potential mediators in the exporter country. Once it is done, you need to contact all potential partners to interest them in your offer.
Do not forget to clarify following aspects:
• what types of goods or services they are engaged in;
• staff instructions;
• where are they have their branch offices or subsidiaries;
• marketing plan for the withdrawal of products to the market and its implementation;
• sales targets for the next 3 years.
Most likely, you will not find a broker who will deal only with your products but, at least you must be sure that he is not selling competitors’ product.
After acquaintance with all potential intermediaries, you should chose 3-4 companies to work with.
Further, you need to have a personal meeting to be sure you did a right choice.
Here are some key points that should be discussed at such a meeting:
• the size of the territory where your products can be arranged;
• what kinds of goods and services potential partner provides at the moment;
• the number of employees, the scope of economic activities and prospects of the development of the company in the nearest future;
• the technical training level and quality of service;
• the financial condition of the company;
• knowledge of the market situation (including competitors);
• the possibility of your production establishment and product assembling.
Please note that your potential mediator wants to be sure that your products suit him and may be interesting for market and his commercial interests.
For example, you might be asked:
• why do you think that products you offer will be in demand among consumers;
• experience in the supply and geography of sales;
• what kind of information must be obtained as a result of marketing research;
• what do you think about the advertising campaign;
• what kind of support we can expect from your side.
Your final decision will be partially subjective based on results of your meeting. You need to make final decision guided not by emotions and personal experiences, but the logic and common sense.
The next important step is to negotiate terms and conditions and signing of appropriate cooperation agreement, but this is a topic for the next blog.
In this blog, we considered issues related to problem of finding the optimal agent to advertise your products in selected foreign markets.
However, you should not hurry in selection of suitable mediator. You must be sure, that you really picked the best one. In this case, you can give him full support and assistance.
Keep in mind that your intermediary will not work alone to sell more of your products. If you do not provide him necessary support, he can turn to another company.
I hope this article has been helpful for you.
And I would be really glad, if you share with me your experience how do you choose your foreign partners.
Your comments are highly appreciated!
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