Strategies to Enter Foreign Markets

Export Strategy 1: Sell through third-party distribution companies

This strategy is the most cost-effective way to enter a foreign market that you know little about.  The distribution company is supposed to know about the marketplace and how to get customers. The strategy works very well when doing business is based solely on existing relationships, such as selling to government agencies and large state-owned corporations. A local company has a clear advantage.

The downside of this strategy is that a distribution company may represent many companies and products at the same time. Their focus on your product is not 100 percent.  Communication between you and your distribution company can also be an issue from time to time and finding a viable distribution company is often a challenge.

Export Strategy 2: Set up your own sales office

Setting up your own operation in a foreign market gives you 100 percent control of sales and marketing, customer support, and more.  It can be costly however. It works well for companies with financial strength and for those that are committed to the markets. Such a strategy also undeniably avoids potential issues when working with a third-party distribution partner.  Companies that are considering this strategy have to establish a management structure for managing overseas offices from the head office.

Export Strategy 3: Set up your own representative office and sell through third party distribution companies

This strategy has worked well in minimizing the downside of working with a third-party company and offers a desirable customer and product support for local customers. The distribution company is involved in selling, while the representative office acts as a support office in such areas as logistics, communication, and collaboration on strategic issues.