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Foreign Partners Are the Face You Present to International Customers
(Marketing Memo, April, 2007)*

For many technology startups, the question is when to go abroad and not whether to go abroad. You may not be ready to open an overseas office, and you may not wish to engage an agent. Selling directly from the US may also be impractical if you are selling complex technology products that require lengthy product demonstrations and significant post-sales support. Engaging a distributor may be a good option. If your company is considering engaging a foreign distributor or OEM, carefully vet the candidates. Look for competence and commitment.

For instance, a US software company had a network of distributors in Asia, Latin America, and Europe. Some of the distributors represented the company very well and contributed to the company's bottom line. One distributor had good intentions, but was ineffective. The distributor did not understand the software company's technology, applications, or business objectives. Another distributor represented a number of different companies and was not fully committed to the US company. This distributor's performance was also disappointing.

IDENTIFYING QUALIFIED DISTRIBUTORS AND OEMS

One way to find qualified distributors and OEMs is to consult Export.gov, the U.S. Commercial Services' trade portal for information on doing business in other countries. In addition, you can consult with the Chamber of Commerce. For example, the American Chamber of Commerce in Hong Kong (www.amcham.org.hk) provides business information for the entire South China Region. The next challenge is to choose the most suitable representative for your company.

When choosing distributors or OEMs to sell your technology abroad, first consider whether it is a good fit:

--- Do you connect on a personal level with upper management and the people who will represent your product? Will you be able to bridge language and cultural barriers when working with the particular distributor?
--- Does the distributor have a good overall reputation in your industry, and does the distributor share your business ethics and business style? This is critical as foreign representatives are harder to supervise than US representatives.
--- Is the distributor financially stable and unencumbered with legal or fiscal problems that could distract the distributor and jeopardize the distributor's business and your relationship with them?
--- Is the distributor committed to your company? Will the distributor provide its staff with adequate sales incentives and product training?
--- Has the distributor or OEM previously represented a company such as yours? What were the results? If the relationship has ended, find out why.

Also, evaluate the technical competence of the distributor:

--- Does the distributor understand your company's technology, products, and applications enough to achieve your goals?
--- Does the distributor have experience in your target industry?
--- Is the distributor familiar with the standards, regulations, and tax laws that apply to your product? This is especially important in regulated industries, such as healthcare and telecommunications sectors where having on-the-ground expertise is a plus.
--- Will the distributor be able to develop and implement a professional marketing program for your products?
--- Will the distributor train their staff so that they can adequately explain and support your offerings? Will they commit to training end-users?

To increase revenues and to beat the competition to foreign markets, young technology companies often begin to work with foreign distributors even before their US networks are firmly established. Choose foreign intermediaries carefully as they will be the face you present to international customers. Make sure the distributors or OEMs understand and value your company's offerings.


* Reprinted with permission of Mass High Tech, which published the article March 23-29, 2007.

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