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Selecting a local partner in your chosen overseas market is an important step for an Australian exporter. Forming the right alliances can give you access to advice, experience, local knowledge, customer contacts and resources far beyond the reach of your own company. However, it is important to know what to look for in a partner, understand the regional factors that can impact your decision and take the right approach to making and maintaining these strategic relationships.

"Good partners can give you instant entrée to the local connections that normally take years to build up," says Katharine Heather, Senior Export Adviser (ICT) at Austrade Sydney. “In particular, in countries where English is not widely spoken, a local partner can help you overcome cultural, language and business hurdles.

“However, you can't just sign up a distributor or reseller and sit back to wait for the sales to roll in. To make the most of your partnerships offshore, you need to be in constant communication, visit regularly, provide adequate training and, in some cases, even provide sales leads.”

Getting started: Finding your match
The first step in finding a local partner is examining your market and competition. You will need to identify established distributors and agents, key buyers and major national, regional and niche brands. This research will help you understand the way your competitors operate, the type of partner you need to find and the market challenges your product or service will face. During this initial period you should start compiling a broad list of potential partners, which you can source through tradeshows and conferences, industry associations, industry publications, and Austrade’s networks and allies.

Once this list is complete, you need to take a more in-depth look at the candidates. Some useful questions to consider are: What are their procurement processes? Do they complement your product or service? Do they fit within your geographic targets? By finding out whom they represent, the events they attend and their reputation, you can refine your list and focus on the main contenders.

Selling your partner on your product
Once you have identified potential partners, the next step is selling yourself and your products to them. At this point it is crucial to have strong and current marketing materials that clearly outline your company's proposition and the benefits your product or service provide. A prospective partner needs to feel confident that they have all the facts, know who you are and understand why your solution is relevant.

Your website and marketing collateral should provide information on return on investment (ROI), case studies, pricing and packaging. Materials should be localised by country and region, and be tailored to the specific needs of your prospects. Many large potential distributors or customers will have standard procedures for considering partnerships and it is important to adhere to these policies when you make your approach.

Fine-tuning the relationship
Once you've narrowed down your candidates and know who is interested in a relationship, it is time to move beyond the basics. You should meet with the management at each company and ensure you share a good personal rapport, complementary vision and similar business philosophy. This business will be associated with your brand, so a sound reputation and financial stability should be top criteria. You should also evaluate your potential partners against criteria such as knowledge of the local market and competition, established customers and networks, distribution facilities (if required), and access to their sales force.

The '4Cs' sum up some of the most important factors to think about when selecting a foreign partner:

1. Complementary skills,
2. Cooperative cultures,
3. Compatible goals, and
4. Commensurate risk.

Partnership Pre-Nuptials
Even if you think you've found the perfect partner, it is important to consider the fine print of the final agreement. Negotiations are the last stage of the decision and you need to feel comfortable during this process. You will need to be flexible on certain terms and firm on others so seek professional guidance at this stage.

No matter how great any agreement benefits sound, beware of exclusive relationships as they can limit your scope and are sometimes used by competitors to lock you out of the market. These are especially dangerous if you are new to the market and not fully aware of its dynamics.

Another factor to think about is the size of your partner. Choosing larger partners for integration and support can greatly add to the cost of your product. In many cases, their involvement can transform a low-cost offering into a high-cost deployment – although customers may be willing to bear this cost for a more complete solution.

Whether small or large, parties should be equally committed to the arrangement and focus on creating an outcome-oriented contract. You should ensure there are clauses that encompass sharing marketing, promotion and localisation costs; preserving your intellectual property rights; and allowing for clear review and termination processes.

Gartner reports that exporters rarely comprehend the differences that need to be accounted for in agreements involving intellectual property overseas. The most critical areas that need to be monitored include proprietary rights, security and confidentiality, legal compliance, fees and payment terms, and auditing.

Nourishing the commitment
Partners will not sell your solution unless you can sell it yourself. This means you need to pay constant and vigorous attention to promoting your products with your partners, including offering sales incentives, marketing materials and a steady stream of updated reference sites that they can incorporate into their sales pitch.

You should also provide training to the sales force and maintain frequent communication with them on their progress and changes to your company and products. Your sales forces can play a valuable role in your ongoing product development and will usually appreciate being involved in global activities and wins. Streamlined points of contact and careful account management will help you keep communication flowing smoothly and effectively.

Partnering advice from across the globe
Each region and country presents slightly different challenges and cultural strategies in forming business partnerships. Click here to gain some insights from Austrade’s experts around the world.

Austrade's team of technology specialists around the world assist hundreds of Australian ICT exporters each year find new partners overseas. To learn how Austrade can assist your company find new partners overseas, email ExportIT@austrade.gov.au.

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