Once you have conducted your market research and made the decision to export, you will need to devise an international sales and marketing strategy for your products. To do this, you will first need to determine which markets have the most potential for selling your products.
Then, you will need to determine how you will sell your products in those markets (Direct Selling or Indirect Selling). You may decide to apply a different approach for each market or use the same approach throughout. When considering to sell directly or indirectly you need to analyze your company’s available resources, size and willingness needed to go into a foreign market.
Additionally, attending trade shows in foreign countries is a great way to learn about the market, your competition and how they market their products overseas so you can determine which selling method will be more beneficial to you.
Direct Selling:
Direct selling means that you are responsible for exporting your products directly to interested customers in foreign markets. You take on all aspects of the export process such as market research, identifying the best distribution methods, complying with foreign market regulations and requirements, collecting payment, producing export documentation, appropriately labeling your product, shipping logistics and after-sale service, etc.. It is highly recommended that you assign this task to a separate “Export” department comprised of specialized personnel other than your domestic sales and marketing department.
Once you have your key export personnel in place your next step is to determine how to distribute your products internationally. You can do so through local Distributors, Representatives, Agents, Salaried/Commission-Based Sales Personnel, or local Joint Ventures. Each approach has its pros and cons financially, legally, etc.. Keep in mind that each country has its own agency/representation laws and you must familiarize yourself with them first.
As you travel from one country to another distinction between the different forms of representation may be defined differently than in the United States or other developed countries. Ideally, if the local law permits it is always best to work directly with Distributors for economical, logistic, and legal reasons. You should also familiarize yourself with the U.S. Federal Foreign Corrupt Practices Act (FCPA) as compliance is critical.
You can also learn from your competition and study how they have established themselves internationally. Do they have local presence internationally with their own offices or do they distribute through local distributors, etc.. Many U.S. companies setup local offices in key strategic geographic areas of the world to cover and service entire regions. For example, Singapore is considered a gateway to the Far East for U.S. companies, whereas the United Kingdom is considered a gateway to Europe, Africa, and the Middle East for U.S. companies as well. You may also want to familiarize yourself with the major free trade zones that are located throughout the world (Hong Kong, Dubai, etc..).
You can get assistance from freight forwarders, shipping companies, international banks, and others when dealing with your exporting needs. By directly selling to your customers this will allow you to achieve maximum profits and establish a long term growth in the markets that you are interested in.
Indirect Selling:
Indirect selling means that you sell your product to an intermediary domestic company that specializes in exporting and they in turn sell your products to wholesalers or customers directly and assume the responsibilities of overseeing all exporting burdens. These intermediary companies are known as Export Management Companies (EMCs), Export Trading Companies (ETCs), or even Foreign Purchasing Agents.
EMCs typically represent manufacturers internationally with complementary products and offer a wide range of services. An EMC will carry out all aspects of exporting on behalf of the manufacturer. They identify international markets and customers overseas, deal with all aspects of shipping logistics, documentation and communication, set-up agent and distributor relationships and distribution channels, and exhibit at trade shows and meeting customers overseas. Typically, EMCs have a buy-resell arrangement where they buy from the manufacturer and then mark up the price to make a profit. A few additional EMC commission structures include commission along with buy-resell arrangements, fee plus commission, and fee plus commission and buy-resell arrangements. It will be treated the same way as if you were selling domestically to a customer in the U.S..
ETCs are very similar to EMCs but mostly function on a product demand-driven case-by-case basis. They may be tasked by a buyer to source for a supplier of a certain product. They do not assume any responsibility to either seller or buyer.
Finally, Foreign Purchasing Agents are mostly tasked by foreign governments to source for infrastructure projects, etc.
Trade Shows:
As a newcomer to the international arena attending trade shows in foreign countries is a great way to learn about the market as well as your competition and how they market their products overseas. It is recommended that you first attend as a “visitor” prior to committing as an “exhibitor”. You can pickup product brochures and talk to representatives about the local market.
You may also discover that some of the exhibitors there are potential customers. A great number of them are distributors and importers/exporters and are always searching for new lines to represent. You may want to attend a show once or twice prior to exhibiting there. First, you need to make sure that your potential customers will attend in numbers that will make it worthwhile to exhibit.
When you are ready to exhibit you should get in contact with the local U.S. Commercial Service office of the U.S. Department of Commerce in the country you plan on exhibiting in to see if there is a U.S. Pavilion at the show and how to become part of it. There are many advantages in being part of a U.S. Pavilion at a show. However, if the show is more industry general (i.e. Health) it may be more advantageous for your booth to be in the hall or area of the show that specializes in your segment of the industry (i.e. Pharma).
You may also find that you don’t have to travel too far to exhibit. A great number of trade shows in the U.S. do attract foreign attendees in considerable numbers. It may be more economical to start there first.
In conclusion, deciding on the most appropriate method of selling your product overseas is critical to your success. Using the “Direct Selling” approach will give you more control over your international sales, your profit margin will be higher, and you will have a more personal relationship with your customers. Most importantly, you will have more control over expansion and distribution. However, it will be more work for you and initially it may be more costly as you will need to hire the right personnel to run your international operation as well as travel to the markets you plan on conducting business in to meet customers and attend trade shows.
On the other hand, using the “Indirect Selling” approach will free your time from dealing with all aspects of international selling and won’t require too much upfront investment. However, your profit margin will be less and you may not have too much control over the international side of the business as you will be forced to rely heavily on the EMC or ETC that is handling your international sales. Furthermore, your expansion success will depend on how excited and aggressive the EMC or ETC will be with your product line.
