Juan Ramon Zarco is the Managing Director of Magellan International (http://magellaninternational.webstarts.com/). You can see more content here on Docstoc.
- The cheapest way is building an independent sales rep that has cultural knowledge of the area. Establish core requirements for success. Provide an option to buy the person out.
- If you don’t have an independent sales rep, create a joint venture.
- Create a subsidiary or affiliate.
How are you going to build an international presence in the foreign market? Well, the cheapest way is I think is billing an independent sales rep which you sign up a contract with a person who knows his territory. And territory, what I mean is what is this country, especially if that person has, you know, cultural knowledge of that area. Does he know the language? Does he know the potential customers? And define that territory according to that person you basically identify as your independent sales rep.
Now, after you’ve done that and you’ve established core requirement, I mean, what is it going to sell with your, let’s say, trademark? How is he going to sell it? Does he have enough computers, office space? You can define that in the independent sales rep contract.
And finally, you can add an option to buy. If indeed you find that that market is growing and you’re paying just too high a commission, you can basically establish in your contract multiple revenues in order to buy this person out, that has been done in the past.
Yeah, the next step will be the joint venture. If indeed you’re looking into an independent sales rep and you can’t do it, there are certain countries like China where you cannot build a representative, but you’ll be able to joint venture. That’s the requirement on Chinese law.
In other countries, let’s say European countries, you can create a subsidiary or an affiliate. Now, you can start building up a corporate presence there, but that’s the only other way of operationally building a presence in the international market.