By: Dorcia Carrillo
International business may seem daunting because of language barriers and cultural differences. Additionally, doing business in a foreign country involves diverse regulations and laws. But if you are already operating a domestic business, you are in a good position to launch an internationally. And there is a very good reason to consider expanding your business internationally: according to the U.S. government site export.gov, two-thirds of the world’s purchasing power is in foreign countries. So, here are some ways to increase your business’s presence and profits by entering the international market.
1. Use an online marketplace.
One fairly easy way to reach foreign consumers is through online marketplaces like Alibaba, a Chinese e-commerce platform. Alibaba provides small businesses with access to international markets through Internet technology and infrastructure. U.S.-based online marketplaces that can provide businesses with international market access include Amazon, eBay, and even Craigslist.
Of course, there are pros and cons to doing business with the any of these platforms. For example, some producers and buyers have had issues with counterfeit goods sold via online marketplaces. You should determine the best platform for your business in the same way that you would select other service providers like a phone company or accountant. Factors to consider include the platform’s reputation, performance, and cost.
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2. Work with a foreign distributor.
Similar to online marketplaces, foreign distributors are intermediaries that connect your business to foreign customers. A foreign distributor relationship can be more advantageous than an online marketplace presence because the foreign distributor can market, sell, and service your product. Online marketplaces are mostly just sales platforms. A foreign distributor will do more on the ground in the foreign market for you.
Refer to your local U.S. Department of Commerce Export Assistance Office to find a reputable distributor in the region into which you want to enter. Once your business has found a distributor, be sure to negotiate an effective distribution agreement that at least addresses price, territory, intellectual property, and governing law.
3. Enter into a partnership.
Last but certainly not least, a partnership may be the only way for your business to break into a foreign market. Many multibillion dollar multinational corporations use partnerships, specifically joint ventures, to enter foreign markets. A joint venture is a separate legal entity through which parties pool resources for a specific business objective for a specified period of time. Not to worry, your business does not have to be a Fortune 50 to enter into a foreign partnership. All you need to do is research the target market, find a suitable foreign partner, and agree on the terms of the partnership.
Of course that is easier said than done, but a partnership might be worthwhile if it allows your business to grow in a hard-to-penetrate market. The right foreign partnership can save your business the time and money it would spend to develop new customer and supplier relationships. Moreover, some governments strongly encourage foreign companies to partner with their local companies as a condition for doing business in their countries.
The methods described here are just three ways to expand your business internationally. Other means can be as simple as selling directly to foreign consumers (without an intermediary) or as complex as setting up a foreign subsidiary. Your company might benefit from using one or any combination of these methods. Importantly, U.S. government agencies, including the Small Business Administration and Export Import Bank offer information and services that can help your business successfully enter the international market. International markets are accessible to small and medium size businesses that are willing to pursue them.
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Dorcia Carrillo is an attorney who worked in the international trade compliance function at a major defense contractor for five years. Dorcia now manages her own law firm where she focuses on international business and immigration matters.
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