by Selma Canas, CGBP | November 13, 2022
Working with the right partners is critical to the success of a company’s international expansion plan. Exporters need the local expertise of a good partner in order to succeed in a foreign market. Not only do they have the knowledge of doing business in the country, they have a network of potential buyers for U.S. products. It takes a long time to develop such a network without a partner.
That being said, in order to find and qualify the right partner, it does take some time, but it will be worth it in the end. Partners can either be agents or distributors. Agents make a commission from the sale of a product. Distributors actually take ownership of the product and mark-up the cost of goods to make their profit margin. Distributors can act as an extension of the exporter by participating in trade shows, maintaining inventory, training, and marketing.
The best way to find partners is by participating in industry specific trade shows either overseas or in the U.S. This is a great way to network and meet potential partners. Utilizing the services of the U.S. Commercial Service and Enterprise Florida is another great way to find partners. They can provide vetted lists of partners that want to do business with U.S. exporters and can arrange face-to-face or virtual meetings.
Online searches can be conducted on global company directories, such as Kompass or Alibaba. Company profiles typically list geographic areas and contact information for their distributors. Don’t forget to check out the profiles of companies selling complementary products as a way to get in the door with your product.
Take your time doing this. You should develop a substantial short-list of candidates for further vetting. You should create a full profile for each candidate. Start by creating a list of questions, pertinent to your needs, to be answered by the candidate. This can be done by phone, email, video conference, or face-to-face if possible.
Include questions on product mix, marketing and promotional efforts, financial strength, minimum quantities, geographic coverage, and exclusivity. Here are some examples:
What product lines do they represent?
Do they have capacity for your product?
Do they specialize in any one industry?
What are their technical capabilities?
How do they utilize social media?
What is their marketing/promotional budget?
How do they launch a new product?
What geographic areas do they cover?
What is the financial strength of the company?
What payment terms do they offer?
Then, there’s the question of exclusivity. Of course, most distributors want the exclusive right to sell the product in a geographic area but sometimes the exporter does not want to offer it. This can be a powerful tool for the exporter as it can motivate the partner to work hard to maintain exclusivity, such as including a minimum annual sales volume. Another option could be to have a six-month agreement with a partner as a way to get to know each other and determine if the partnership is a good fit.
Taking the time to find the right partner will have a positive impact on your success. Conduct due diligence, utilize the available resources, ask for references, and seek the advice of an international attorney before signing any agreements.