Are you thinking of internationalizing your company, are you looking to make a profit by taking advantage of the opportunities offered by foreign markets? Below, we show you the different ways that a company can adopt to start its commercial process in a foreign market.
The method that tops the list is exporting, and this is divided into two types: indirect, when intermediaries located in the exporter’s market carry it out on our behalf or buy the product and sell it for their own account; and direct, when it is the company that sells directly to the foreign consumer.
The simplest of direct exports is through agents and distributors, such as MingTa, as no market knowledge is required and it is the perfect option for companies entering foreign trade for the first time and SMEs.
Another option is to create a commercial subsidiary through two legal forms: a branch, which depends on the parent company and does not have its own legal personality; and a subsidiary, which has its own legal personality and must comply with the country’s legislation.
On the other hand, there is the export, which involves collaboration with other manufacturers and distributors. The company does not fully develop the international activity, since part of it is assigned to the partners.
Its different options are:
- Piggyback: a company that uses the foreign market distribution channels of another manufacturer. A commission on sales is applied as a payment from the supplying company to the channeling company.
- Export consortia: allows local companies that are competitors or have complementary products to cooperate.
- Joint-venture: two companies located in different countries achieve synergy by joining together in the same sector with different competitive advantages.
- European Economic Interest Groupings: were created by the European Union in 1989 to encourage cooperation between companies from different EU countries.
- International franchising: transfer by a company (franchisor) of the product, brand and know-how on management and marketing procedures of a business to another person (franchisee) located in a foreign market.
- Strategic alliances: two partners of similar size seek to exploit synergies, the companies are competitors.
Lastly, manufacturing in foreign markets would require a manufacturing contract, a manufacturing license and the establishment of a production site.
