Any market entry strategy can involve working with a business partner. Direct exporters may partner with distributors and indirect exporters may partner with trading houses. All forms of strategic alliance involving partner organizations, mergers, and acquisitions are more likely to succeed if an organization has developed a working partnership with the target organization first.

Even with Greenfield investment, an organization might need to work with a foreign partner to, for example, find financing or obtain supplies for a newly built factory.

Local partners can provide on-the-ground knowledge and contacts. Foreign partners also help reduce the risk to the organization.

In a broad sense, partners can also include governments and other organizations, such as financial institutions. Governments play a significant role in the promotion of international trade and offer a number of support services to organizations to facilitate expansion into markets. The same can be said for non-governmental organizations (NGOs) and industry associations. Consultants also provide international trade services that organizations can access. Financial institutions can play a supportive role for organizations embarking on international trade.

The success or failure of market entry depends on the partners with which an organization works. The search for the best partner possible can be both time consuming and costly. Partnerships can succeed only if the participants are willing to devote sufficient time, energy, resources, and skilled people to make them work. This includes the effort needed to find the right partnership. The updated FITTskills seventh edition International Market Entry Strategies course dives into where you should be looking when searching for a foreign business partner.

Finding the Right Business Partners 

Organizations may have to evaluate many candidates before a suitable partner is found. Fortunately, there are many sources of information and assistance that can provide the names of potential candidates, supply background information about them and help verify information provided by the candidates. Such information is vital to building your team of foreign partnerships.

1. Business Associates

Effective partnering depends on effective networking. This is especially true for small businesses. Formal and informal business links are important ways of developing contacts, securing business information, initiating cooperative activities, gaining access to new sources of capital and obtaining technology.

Business associates with experience in the target country are especially valuable, as an organization can often hear about a potential partner when discussing other matters with a business contact.

Initial exploratory meetings with potential partners often produce much better insight into market dynamics, segments, and competitors. This means early meetings with other market insiders are often an incredibly valuable source of information.

Networking through people you have a relationship with is one the best ways to find potential partners. Personal introductions carry a certain level of trust, so start searching for introductions to likely partners. Let people close to you know you are looking for a partner. Ask for introductions. People are often willing to share their networks when it seems like a ‘win-win’ for everyone involved.

If you identify someone specific you would like as your partner, ask your network for introductions. You would be surprised how often you’re only a couple of introductions away from almost anyone.

2. Business Associations

Business associations include chambers of commerce, boards of trade, industry associations, and bilateral business councils set up to develop trade with specific target countries. These associations can provide contacts and business information. Chambers of commerce and industry associations in target countries are also good sources of information. In many countries, industry associations maintain industry statistics as well as membership lists.

3. Business Advisors

Organizations should consider using consultants and specialists, such as lawyers and accountants, to search for potential partners. Although this can add to the expense of market entry, business advisors can use their experience to set up new networks rapidly and speed up the introduction of contacts.

For smaller organizations new to international trade, such services can greatly decrease the time involved in establishing an effective partnership.

Some organizations with investments in a group of local firms might seek partnerships with organizations that have invested in a complementary group of firms, as a means of helping their clients expand and develop.

4. Financial Institutions

Banks, individual traders (brokers), export credit agencies (ECAs), and trading organizations are all useful sources of information about potential partners in target market. An organization’s bank has a vested interest in the organization expanding its business successfully, and if bank has a branch in the target country, the local branch will usually provide a broad range of local business information.

An organization’s relationship with relevant financial institutions can be critical for international trade, not only in terms of partnerships, but for all types of market entry strategies. Financial institutions can often provide referrals to other institutions and individuals that can assist the organization in achieving its goals. Financial institutions can also provide information and support towards financing a venture. They are also excellent sources for information about current governmental and non-governmental programs, such as foreign investment programs.

5. Social Networking Sites for Entrepreneurs

Similar to business associations, online communities of entrepreneurs can be a good source of information related to potential partners.

There is a growing number of social networking sites devoted to making connections between potential partners. They provide a platform for sharing information and often encourage discussion.

This can be a unique way to access current information and opinions related to the target market and potential partners.

How did you your business partners help your business grow? Let us know in the comments down below. 

The post The 5 types of foreign business partners you should seek when expanding globally appeared first on Trade Ready.

Obada Al-Dimashki, CITP|FIBP is the Supply Chain Manager for Orbit Aluminum Industries, which specializes in manufacturing pre-painted aluminum coils.

Driven by a passion for business and an unwavering desire to build better business relationships, Obada was inspired to choose a career in international trade in order to fulfill his broader career goals.

“I got started in international trade because I love travelling, making diverse friendships and experiencing different cultures. I really liked the idea of working with international business partners and learning how their different cultures impact the way they live and do business.”

To pursue a future career in global trade, Obada decided to take FITTskills courses through the International Business program at St. Clair College in Windsor. The courses offered him a practical introduction into his chosen field, which not only helped him to build his skills but also to narrow down his future field of specialty.

I really enjoyed that the FITTskills courses covered all aspects of international trade, and helped me learn them all one step at a time.

“I also found the FITT textbooks to be a very straight-forward and practical read. They are a great way to learn and still offer a good reference. Early in my career I was able to rapidly gain an understanding of what was going on around me through the things I learned from FITT.”

“My favorite course was the Global Supply Chain Management course because it played an effective role in developing my interest and career in supply chain management. I would recommend this course because supply chain management plays an integral role in any organization’s competitiveness.”

Education +  experience = opportunity

During his last semester at St. Clair, Obada seized the chance to intern as a supply chain analyst with Farrow, one of Canada’s largest customs and freight forwarding companies. During his three months there he was able to do everything, including evaluating the productivity of a new ERP (enterprise resource planning) system, classifying cross-border shipments for customs, reviewing documents, and searching for new ways to improve client management.

After graduating from his program he went to Nipissing University to complete a one-year Bachelor of Commerce program and then joined the Masters of Global Business program at the University of Victoria.

“This program gave me the opportunity to advance my international trade knowledge, travel and work on various supply chain projects in Canada, France and South Korea,” Obada recalls, including one project with LG aiding in the expansion of new technological products into the U.S. market.

In May 2015, just two months after completing his project with LG, he was hired by Orbit to be their Supply Chain Manager, the position he still holds today. Despite his busy work schedule he was still able to continue his Master’s program, completing it in early 2016.

Translating from the theoretical to the practical in SCM

Having now spent over a year in his job, Obada relishes seeing the practical side of his business firsthand, as well as any chance to work closely with his fellow international trade professionals.

No amount of studying could have prepared him for the sheer size, sound and might of the machines that power the manufacturing and supply chain efforts of many companies, and how it feels to stand beside them.

Coming from a business background, I never had much exposure to the industrial automation world. Now, it always amazes me how massive these industrial automation machines can get. The monstrous power and noises they discharge is comparable to a thunder storm! It is definitely breathtaking to witness the level of energy, technical expertise and managerial experience advanced manufacturing requires.

“As a supply chain professional, visiting suppliers is a big part of my job, and experiencing these industrial miracles is definitely one of my favorite responsibilities.”

Not only do visits like these allow him the opportunity to take a thrilling look at the machinery that powers international trade, but they also play a pivotal role in his efforts to build relationships and partnerships for his company.

“One of my most interesting projects was when I was preparing a sourcing deal with an international supplier for a big part of our business. We succeeded in building very strong relationships with senior management through inspecting their facilities and providing production, planning and technical solutions to run their operations more effectively.”

“The project enabled us to reach an excellent sourcing arrangement and succeeded in improving their performance. This definitely increased our competitiveness in the market and helped us source raw materials with very favorable terms.”

Enhancing his career through his global business relationships and certification

With some major successes already under his belt, Obada now looks to continue to improve his reputation in his industry.

On top of a strong foundation in education and training, he also recommends focusing on building personal relationships to those just starting out in global trade.

“I think this is very important because in international business, professionals from many countries dwell heavily on personal relationships in order to consider working with you. This means that having a solid reputation and relationship building skills can take you the extra mile in achieving more favorable agreements, opportunities, conflict resolution outcomes and market intelligence.”

Another way he has sought to improve his reputation is by earning the Certified International Trade Professional (CITP®|FIBP®) designation.

“I chose the CITP®|FIBP® designation because I was interested in advancing my international business expertise and academic achievements. I was also interested in becoming a member of an international trade community where I can continue to update my global business expertise and meet like-minded professionals.”

The designation has ultimately helped me to be recognized as an international trade professional, and I feel very happy and proud because it is definitely an achievement.

“I think that it will continue to enhance my credibility in my international business practice. I believe that the materials, membership and business relationships forged within the FITT community will keep me updated and effective within the international trade arena.”

Already excelling in his field, the years to come will undoubtedly be filled with many further accomplishments for Obada.

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You’ve had encouraging discussions during the exhibition about new opportunities to sell your products in high growth markets, and you may have even had back-channel meetings with prospects over dinner. You return to your home country, continue the discussion on-line and appoint new distribution on an exclusive basis.

A year later, however, you determine the new partnership has failed, export sales are well below expectation, communications to probe why go unanswered, and bilateral enthusiasm weakens. What went wrong, and what do you need to do differently next time to achieve a more successful result?

Your best options to identify new potential partners

Choosing your channel partners, who will help you sell your goods and/or services, is one of the most critical decisions facing new exporting companies entering ASEAN markets. The markets consist of multiple types and layers of channels serving a wide variety of dealer networks and end customers.

Identifying, establishing and developing the best-fit channel partners is essential in gaining market entry and building a successful ASEAN business.

As such, exporting companies should consider acquiring professional services to assist in identifying, appointing, and developing best-fit channel partners.

Firstly, it’s difficult to identify the best-fit and most capable channel partners during an interregional trade exhibition. Travelling to attend and exhibit at interregional trade exhibitions in major ASEAN cities has become very expensive due to the rapid pace of economic development. Moreover, a number of trade exhibitions have scaled back significantly over the past three years.

Most ASEAN top-tier channel prospects have limited marketing budgets and prefer to focus expenses and resources towards their local or host country exhibitions. In most cases, local exhibiting companies enjoy a significant rate reduction over visiting foreign companies.

When attending trade exhibitions, the main priorities of local companies are to gain new customers within their territories and identify new foreign suppliers and partners. As such, a more focused and effective approach is to attend or exhibit at specific trade exhibitions in strategically selected markets.

Trade exhibitions are just one method to expose channel partner prospects. Additional options such as customer referrals, competitor channels, adjacent products suppliers, industry organizations and consulting firms are other options that should be considered.

Keep the end goal in mind at all times

Secondly, when selecting and appointing channel partners, you should consider three priorities:

Do channel prospects have access to your target customers? ASEAN markets are made up of people and relationships, not products. A qualified channel will have strong existing customer relationships that the exporting company must tap into. This can be evidenced by making joint customer visits to gauge the quality of customers and relationships.

Favorable customer visits and responses to new products and brands will only elevate your value to the channel partner prospect.

Do channel prospects have the financial capacity to support the exporting company’s market entry and longer term growth strategy? Often channel partner ambitions outweigh abilities. It’s crucial to ensure channel prospects have the financial capacity to support marketing initiatives to promote new products and brands and scale up inventories and resources as you gain momentum.

Product supply interruptions due to unanticipated financial limitations will inevitably lead to the customers you gained seeking alternative suppliers.

Do channel prospects have the sales resources to proactively sell your products? Sales professionals have a critical role in engaging customers directly to demonstrate customer value and gains, convince skeptical decision makers, justify price, and defend profitability.

ASEAN channels are beginning to adopt best-selling practices by establishing product specialists to drive the growth of priority products. Tapping into channel product specialists will prioritize your products and optimize customer reach.

Partnerships are two-way streets, so make sure you’re adding value

Thirdly, developing meaningful, productive ASEAN channel partnerships and relationships is about understanding, acknowledging and acting upon channel partner needs and priorities.

Channels seek suppliers offering innovative value-added products that are simple to market and worthwhile to sell. They are reinforced by a willingness to regionally adapt and support mutually agreed upon growth initiatives and goals.

Making your products simple to market requires going beyond product training by developing cooperative market and customer relevant marketing                 campaigns.

It’s important to educate and coach channel salespeople on how to sell your products using a consistent, structured professional selling methodology. Leading regular and frequent joint customer visits will establish channel and customer confidence and accelerate growth.

A new product and brand must be worthwhile to sell in terms of generating new revenues and profits. Channel cost price needs to factor the type, intensity and behavior of competitors, acquisition costs such as logistics, and inward duties often overlooked by exporting companies.

Establishing the correct market price and channel cost-price that is able to gain market-share and provide sufficient profit for channel partners is essential in developing ASEAN markets. This will enable you to motivate channel partners to buy-in, actively market, proactively sell and succeed.

Be a leader in the ASEAN growth markets with the right partnership

ASEAN markets offer significant growth opportunities for exporting companies. The ASEAN region is the global growth engine and will be for the next decade, but accessing these markets requires identifying, establishing and developing dedicated, highly motivated channel partners who can reach your target customers.

Tapping into the many top-tier channel prospects available in the ASEAN region is vital to capitalizing on growth opportunities.

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There is more pressure on businesses to be innovative than ever before.

From technology adoption to process improvements, companies who invest in research and development projects are able to become more productive, and ultimately, more competitive on a global scale.

There are two broad options that businesses have when it comes to facilitating product or process R&D:

1. Complete the project in-house, using internal labour; or
2. Collaborate on the project with a partner using shared resources.

Given the benefits that come with collaboration, it’s amazing that many organizations choose the first option every time they have a technical or technological challenge.

Although it’s a more traditional option and may seem like a more direct way of coming up with a solution, collaborating will consistently provide better results.

Businesses use collaboration internally to solve problems more effectively. Why can’t this method of teamwork be leveraged from one business to another? There are a variety of benefits that research collaborations can have, including the following three:

1. Shared knowledge

Small and mid-size enterprises (SMEs) are rarely limited in their ability to conceptualize solutions to problems. In fact, small businesses are often the greatest source of innovation. However, their inability to commercialize solutions from start to finish can prevent good ideas from seeing the light of day.

Research and development collaborations are essential for SMEs because partner organizations can help fill knowledge gaps within your own team. Companies can share ideas, research, and a variety of skillsets to ensure that the innovation is commercialized.

2. Shared workload

Although performing R&D is essential for many businesses, it can be demanding on human resources. Large-scale research projects may require a greater portion of your team, which could affect capacity towards ongoing responsibilities or other projects. The sheer amount of work that is required may prevent some companies from performing innovative projects altogether.

Collaborative research teams that effectively use the workforce of two or more organizations significantly decrease the amount of work that is required, without compromising results. At the end of the project, your company will have an innovative solution with fewer resources required.

3. Critical analysis

Depending on the size and group dynamic within your organization, biases may exist that ultimately affect the project’s outcome. Groupthink is common within SMEs; without testing all possibilities, ideas may fail or not deliver the most amount of value possible. Critical review of all assumptions and methodologies will help to avoid this, however it can sometimes be difficult to achieve.

Working together with another organization ensures that all ideas are reviewed critically to identify potential weaknesses. If any flaws are found, ideas can be discussed and changed to strengthen the solution and develop a more valuable project.

Funding opportunities are available to fuel your innovation

Furthermore, the federal government is making a number of investments to encourage greater innovation within the economy. Lucrative government funding programs exist for businesses who are collaborating with international partners. Some of the most valuable collaborative partnership grants available now include:

Canadian International Innovation Program (CIIP)

Created to foster collaborative research and development partnerships, the Canadian International Innovation Program helps businesses find a qualified international research partner and supplies grants to offset up to 50% of project expenses.

Collaborations may receive up to $600,000 for R&D projects that involve at least one Canadian company and one research partner from Brazil, China, India, Israel, or South Korea.

CIIP grants are meant to support three types of projects, including:

• Technology adaptation: Modifying or improving existing technology to meet the requirements of a new market.
• Technology validation: Verification that the innovation’s functionality, performance, quality, or usability meets the needs of end-users.
• Technology co-development: Continued development and integration of technologies to create an innovative breakthrough.

Learn more about the Canadian International Innovation Program (CIIP).

Going Global Innovation (GGI)

The Going Global Innovation (GGI) program enables business leaders to travel to foreign markets and meet with potential partners, ultimately resulting in a collaboration agreement. Government grants are specifically targeted towards SMEs to reduce the impact of their cash flow and speed up the time to product commercialization.

Going Global Innovation export grants provide up to 75% of a business’ travel and administrative expenses to a maximum $75,000.

It’s important to note that this funding program cannot be used for partnerships that are already formed. Businesses must show that there is intent to discuss a collaboration, and that the partnership requires a trip to the foreign market.

Learn more about the Going Global Innovation (GGI) program.

Benefits of accessing Canadian government funding for international collaborations

Accessing additional project funding through government grants is just one benefit of engaging in the aforementioned programs. In many cases, there are also many more, such as:

• Commercializing innovations and bringing them to market faster;
• Reducing the risk of research projects;
• Reducing market entry barriers; and
• Providing matchmaking with knowledgeable, reliable partners.

To learn if your business is eligible for these Canadian government collaborative partnership grants, please contact Mentor Works, the Government Funding Planners.

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India

Here’s some advice based on my own experience that will give you an advantage over your competitors as you make the first steps towards success in India.

1. Find the right partner

India is the world’s seventh largest economy in terms of GDP, and has a population of 1.3 billion people. It is a complex market for the best Indian companies, and even more so for companies from abroad. Businesses with a pre-determined mindset and less exposure to international markets might find the commerce culture in India too intimidating.

Identifying the right partner goes a long way in successfully navigating the complexities of the local business environment for a new entrant into the Indian market. A local partner can provide much-needed assistance in understanding the Indian market. This partner can give you valuable market insights on competition, regulation and other important issues. They can also introduce you to the network with the reach to target prospective clients without much investment on the ground.

2. Localize your products to meet consumer needs and preferences

India is a vast and diverse country encompassing many different identities, languages, cultures and religions. It is important to avoid making generalizations or assumptions, as local practices and consumer behavior may vary substantially from region to region.

Since India has such a pluralistic, multilingual society, more often than not, a one solution fits all approach doesn’t work.  Even a global bigwig like McDonald’s had to localize its product offerings based on the fact that half of Indians are vegetarian. They also have to leave their most popular item, beef burgers, off the shelf given the religious sensibilities of the Indian population.

3. Remember the high level of price sensitivity

It is extremely important for a new entrant into the Indian market to get its price strategy right, particularly if it’s targeted towards the low and middle income populations. Even with a growing economy and a burgeoning middle class, there’s no denying the fact that India is still a low middle income economy, with a per capita income of around $2,000 and a huge population still living below the poverty line.

Since the government cannot afford to provide for education and healthcare coverage, the majority of the population has to pay for these necessities from their own income.  With little disposable income left after covering basic amenities, there’s not much money left in the hands of a significant portion of the population. This makes the market price sensitive as many people need to spend judiciously.

4. Enter the Indian market for long-term growth, not to make a quick buck

India is certainly not a place for businesses to make quick gains – you need to be invested for the long haul. Although it’s a huge market with a population of 1.3 billion people, including 400 million middle class consumers, it has its share of challenges when it comes to market entry.

Because India is such a huge and attractive opportunity, there is no dearth of competition. More often than not, you have companies looking for market share and compromising on potential short-term profitability in order to establish themselves more firmly there. Given the complexity of the market, it takes time for the companies to understand the environment and develop the right strategy.

5. Prepare to navigate a much different legal and regulatory landscape

The Indian judicial system follows “common law”, and the constitution has provided for a single integrated system of courts to administer both union and state laws.

Due attention should be paid, including seeking professional advice, before entering into a formal agreement. Court judgements are often delayed because of the huge backlog of cases, so any agreement should provide the scope for alternate dispute resolution mechanisms.

Have any experience building your own Indian market entry strategy? Add your advice in the comments for others who may be entering for the first time!

The post 5 tips for a better Indian market entry strategy appeared first on Trade Ready.

Brent McNiven, CITP|FIBP is an international trade consultant with nearly 25 years of experience, who owns and serves as President of XPM Global Consultants Ltd.

His career started when, as he completed his geology degree in 1991, he decided that moving offshore was the smartest tactic for his long-term goals.

His first international startup, located in Venezuela, was as owner and general manager of Sedex, which he grew to become the country’s largest mineral exploration operations and project management group.

By 1995, Brent moved operations to Peru, and Sedex was soon managing projects across most of South America, with Brent overseeing the entire operation. His greatest accomplishments included implementing new anti-corruption procedures, and collaborating with local economies to build greater social capital and community relations.

Even now, some of the projects he began are continuing to grow, which is a source of pride for him.

Some of the local firms I helped start are still operating and creating employment over 20 years on – long after the original project/FDI has vanished.

In 1995, while already running Sedex, Brent started GeoSupply in Peru, an outfitting import/export firm that established a just-in-time supply chain that undertook over 400 importations per year from up to 15 countries.

You need to be local and know local

Even from the early stages, his greatest points of emphasis have been to ensure he has boots on the ground, a thorough knowledge of the local market, and local subject matter experts to collaborate with the project.

“The mineral exploration industry is 100% knowledge based, and until we trained the locals, it demanded that we move Canadian professionals offshore. But by 2000 we had transitioned to almost 100% local staff and management, and many firms had relocated head offices as well.

Today, having a broad based network of local subject matter experts who could be called on to deliver quality services in the specific country, culture, and industry is integral to my consulting work.”

The rewards of an international trade consultant career

After selling his Peruvian companies in 1999, Brent was able to pursue new opportunities.

Among them was a business development project in South America, where he used innovative logistics approaches to reduce costs by 15%. He also worked with clients on opportunities for UN, NGO and military housing in Afghanistan in 2002, and business development consulting work to expand social housing across ten different countries, including Mexico, Tanzania and Afghanistan.

Working in a consulting role was extremely rewarding for Brent, as it allowed him to continue to work on what mattered most to him.

“In most cases, our task is not “trade” as an abstract concept – rather it is to work with clients to help them develop the capacity to function within complex international environments, and build effective cross-cultural bridges between the client and their customers, partners and divisions.

“We are the bridge between where they are now, and where they want to go.”

Finding the competitive advantage for Canadian SMEs in local markets

In his most recent work with XPM Global, Brent has spent the past ten years working with Canadian SMEs, to find out what gives them leverage in international markets.

Market intelligence and analysis from afar, or by holding in-country formal meetings with agents and lawyers, is no substitute for spending time knocking on doors and just following your nose, all while building out a network of local contacts.

Examples of how this has been successful include identifying an opportunity to open a processing facility in Brazil that turned a US$1.4M profit in the first 12 months of operation, and a very profitable services contract to bury garbage in Afghanistan that provided the client with the operating infrastructure, funding, and credibility it needed to go on to build millions of dollars in defence contracts.

“We must always remember that the client is optimized to operate in their home environment – it is our task to see the world through ‘new eyes’, and help identify and evaluate opportunities that meet their needs, and strategic objectives.”

Accessing new networks and opportunities as a CITP®|FIBP®

In the same spirit, Brent applied to become a CITP®|FIBP® to validate his expertise and develop stronger connections to those like him.

The elite CITP®|FIBP® designation provides access to a network of expertise and experience that is not available anywhere else.

The continuing transition to knowledge and services-based trade demands that a comprehensive network of highly qualified and experienced people be available, and the CITP®|FIBP® designation facilitates that.”

Brent has also found that having the designation has helped him work with organizations like EDC, the TCS, and other international agencies.

Now, he is excited to contact his fellow designation holders to find subject matter experts and form a team to assist SMEs in very specific market sectors. Brent says that contacting other designation holders was the only way to find such high levels of expertise.

We look forward to hearing how the project turns out, and know that any company who contacts Brent for assistance is in good hands.

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