During one of my first trips abroad, my partner and I were sitting in the lobby of a Moscow hotel, people-watching and wondering how to go about finding customers for our newly established, fledgling communications distribution business. Hearing the familiar English dialogue, one of the patrons approached us and we struck up a conversation. He turned out to be a mid-level executive working for one of the major Canadian oil companies drilling for oil in Northern Russia, just inside the Polar circle. After finding out about our business, he gasped. As it turned out, his company was having a very difficult time both sourcing the needed equipment locally and getting licenses to import the required equipment from abroad. Shortly after, this gentleman’s company became one of our first clients and we continued to serve them for years. Since the expat community was tightly knit, the word soon spread, and within six months we were supplying every major Canadian and US oil company with radio communications.
Opportunities to find clients abroad could come from anywhere and you should always be ready to convert a chance encounter into a sale.
Prepare to Serve the Target Clients
Of course, you can’t rely on hanging out in hotel lobbies waiting for orders. Finding customers abroad is a multistep process, which should start with advance preparation at home. Establish email or telephone contact with the U.S. Commercial Service, the local embassy of the foreign country, and the American Chamber of Commerce (AmCham) in your target country abroad, and introduce your organization, as well as its products or services. Use this process to seek guidance on overall demand, competition, ease of importation, and any specific taxes or other burdens that may or may not be in place to hamper or facilitate importation into your chosen country. For example, in some countries, the duties on used car importation are set artificially high, purposely crippling natural demand. In other cases, duties on alternative energy equipment imports are completely removed to stimulate the segment’s growth.
Once you determine the landscape for demand and pricing of your product or service, the next step is to inquire about necessary government registrations and localization requirements (translating manuals, adopting electrical voltage, etc.). Find out about local industry associations and trade shows where you can showcase your product or service. You also will want to make preliminary arrangements for service, warranty repair, and installation of your product by identifying potential partners with whom you may wish to enter into temporary arrangements, even prior to selling your first unit.
Why am I spending so much time on preparatory activities, without mentioning marketing and sales? Because unless you have fully assessed your market, determined your importation routes, and planned for service and installation, you will have a very tough time even getting out of the gate. You also will cede a great degree of control and pricing leverage if you do not develop internal expertise on each target country you plan to sell your products and services in. Yes, you may have an occasional buyer or two who will order from you in the US, prepay for the product, and take care of all the arrangements. However, this kind of passive approach leads to an outcome similar to winning the lottery; it will not allow you to build a sustainable overseas sales operation—whether it is export, independent distribution, or setting up your company’s own points of presence abroad.
Partner with Local Distributors
Once you’ve laid the groundwork, it’s time to find customers. Working through distributors or agents is the most common approach. Good sources for distributor candidates are local associations, chambers of commerce, and US trade shows, which oftentimes have potential customers from foreign countries who come as part of U.S. Commercial Service trade missions.
Developing a strong distributor support program will allow your company to attract strong distributor candidates, including companies selling competitive or related products, and it may also attract new players. The program should include extensive training for the distributor’s personnel on your company’s products and corporate culture, and financial incentives for the distributor to advertise and market your company’s products or services. You also should put in place a multi-buyer credit insurance policy for your target country to help the distributor extend open terms to local buyers and financial assistance in helping the distributor defray initial product certification costs. This could be either in the form of a cash rebate or a predetermined amount of goods or services at a reduced cost.
Once you have selected your company’s local representative distributor or agent, it is time to kick the search for clients into high gear—it’s time to start local marketing and PR efforts. These efforts should include a joint sales trip where your senior sales executive should accompany the local rep on a one- to two-week-long sales junket to call on key customers, pertinent government ministry and municipal departments, local law and accounting firms, as well as members of the expat community who have longstanding experience in the country and should be cultivated as referral sources.
Alexander Gordin is the managing director of the Broad Street Capital Group, New York, a private international Merchant Bank, Trustee of the Princeton Council of World Affairs, and author of the recently released book, Fluent in Foreign Business.