Leveraging Relationships to Expand Overseas
When a company is seeking to grow but has reached its maximum potential in the U.S., expanding into overseas markets can be a smart move. According to a study by the Institute for International Economics, U.S. companies that export grow faster and are less likely to go out of business than non-exporting companies. Exporting a product or service gives a company access to new markets, can extend products’ sales life, and mitigates the impact of fluctuations in domestic markets.
If you’re seeking to expand internationally, establishing or leveraging relationships with potential customers, suppliers, service-providers, and other third parties can make doing business in a new market easier and less risky. In any location, good relationships can carry a company through challenging times, as both parties can share resources and best practices. Internationally, such relationships can help bridge cultural gaps, navigate unknown territory like country-specific regulations and trade laws, and expand the company’s network in its new region.
When evaluating your relationships for potential partnerships, a good partner for overseas expansion should have expertise and experience in the regions your company hopes to target, and in the product or service your company plans to sell. In the search for a partner, it’s important to remember that the cheapest option is not necessarily the best one; finding a partner with knowledge and experience should be the top priority.
Tapping into existing relationships
The search for potential partners often starts close to home. A company’s existing relationships—including current customers, financial institutions, logistics firms, insurance agencies, law firms, and/or tax firms or financial advisors—often can be leveraged into partnerships for expansion. An existing customer relationship, for example, could translate almost seamlessly into global expansion; if a customer has needs in the targeted region that are not being met, that customer might allow your company to begin serving them in that market. If your company provides a truly distinctive, value-added product, the customer might even be willing to partner with you and invest in overseas expansion.
When leveraged into overseas partnerships, other existing relationships can facilitate the expansion by offering valuable help and expertise. For example:
- A banking relationship can provide financing and guidance for conducting business abroad. The bank should understand the international marketplace and its accompanying risks.
- An insurance company can identify and assess risk in an international business.
- A logistics firm can manage shipping costs, add efficiencies, and help maintain control of goods.
- Law firms can plan legal processes and write legal agreements.
- Tax firms or financial advisors can set up tax and financial infrastructures.
If your company has multiple partnerships or relationships abroad, consider creating an internal “alliance team” to manage and foster those relationships.
Establishing new relationships
If you don’t yet have any business contacts overseas, you can start building them by joining business associations focused on international trade or contacting local businesses in the target region. Business associations focusing on international trade can offer assistance and advice to companies seeking to start exporting their products. These groups are usually composed of global service-providers, other companies that sell globally, and industry experts who can offer advice. When seeking out local businesses in the new market, look for companies that have complementary products or that could become partners for manufacturing or distribution.
Government resources are available to businesses seeking to expand overseas, too. Federal and state governments often have programs and offices that encourage export sales by helping companies find foreign buyers or providing grants to fund exploratory travel overseas. U.S. Commercial Services and state and local economic development teams can help you identify resources and offer guidance for your company’s expansion.
When a partnership is established to enable international expansion, it’s advantageous for both sides: the partner firm benefits from increased volume, for example, while the expanding company benefits from the partner’s knowledge and resources. A collaborative partner who provides value-added services leads to a long and transparent relationship—which is a win-win for both parties.
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About the Author
Michael Salerno joined the bank in 2002 and currently leads the Global Banking team, which includes business development, international payments, foreign exchange management and trade finance solutions for corporate and correspondent banking customers. International issues can present challenges for organizations, and Michael enjoys creating simple and transparent solutions that reduce the complexity of doing business internationally.Find Global Banking Solutions