Chapter # 5 : Selecting the right export distribution
How do you find the right foreign distributor/dealer/sales channels for your export market?
When you select a foreign distribution channel do select how you do it on your domestic market. You have to adapt to the foreign market. How they do business there and how much resources you have in combination with how much control you want.
You also have to check what is allowed. China does not allow 100% foreign ownership, so you have to have a local partner.
Find your end-users in the country you want to do business in. Ask them what they want from the product/service you are offering including the price level. Ask them how and where they prefer to buy your product/service and contact the companies they suggest. Those could be your foreign partners.
You have to start from the end-user and work your way back. I.e. End user> Distribution channels> You the exporter.
Your solution overseas can look completely different from your domestic market and other export markets so you have to adapt to that specific market. Your solution influences your workload, your communication strategies, and your export price, including profit.
The longer the distribution chain you have, the more complicated is your communication with the end-user and receiving feedback from the market. It also influences your profitability. To more levels in the chain, the more partners that have to make money and what is left for your export price will be less.
Note that you might need to have different distribution channels for different end-users. Selling metalworking machines in Germany could mean one distribution channel for general manufactures and a separate distribution channel through certified/approved distributors to the Auto manufacturers.
To have full control you need to have your own local organization.
To use an already built up distribution and customer base you will utilize already existing distribution channels.
If you want partly control, a joint venture is one solution. There are hundreds of different solutions and you have to find one that fits the market in combination with your demand for control, available resources, and profitability
There’s an enormous amount of information available. The question is how to find what is appropriate. One way is to use commercial online databases.
Leif Holmvall, President
Export Pro Inc.
In our book “Export & Import – Winning in the Global Marketplace”
ISBN 978-0-9681148-1-0 those topics are covered in depth. You can also buy our book for less than $10 as an e-book visit e.g. https://www.amazon.com/dp/0968114814, where you can read part of the book.
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