International success - different
models for different markets
International Enterprise
Promotion Convention
Simon Bedford,
UK Trade & Investment
1
Aim of the workshop

To highlight the options for market
entry covering agents, distributors,
representative offices, licensing, joint
ventures, strategic alliances, and setting
up subsidiary companies.
©SGB Associates
Routes to market
JV
Degree
of risk
Virtual
Local
office
Contract
Manufacture
Overseas
Customer/
Supplier
UK
Customer/
Supplier
Salesforce
(UK base)
Franchise/
License
Acquire
Branch
Office
Foreign
Company
Strategic
Alliance
Direct
Marketing
Distributor/
Agent
Traders
Degree of
Control

Describe your ideal Agent, Distributor,
or other type of partner
©SGB Associates
QUALITIES OF IDEAL PARTNER
1.
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10.
Loyalty
Well Connected
Professional
Knowledgeable
Honest
Focused
Proactive
Enthusiastic
Realistic
Business Fit
QUESTION?
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Why appoint an Agent or a Distributor?
©SGB Associates
The benefits of employing an agent
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The local experience & contacts
Cost is relatively low
Quick entry into the market
Control final price
©SGB Associates
Disadvantages of employing an agent
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Competing for time with the other
principals
Agents need constant motivation
Unable/unwilling to provide required
coverage
©SGB Associates
Types of agent
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Commission Agent
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Stocking Agent
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Receives a commission payment from the seller
(in return for the introduction it provided between
seller and buyer leading to the sale). This is the
most common type of agent.
Receives and holds goods as consignment stock
but still does not have title to the goods
Servicing Agent
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Provides a servicing/maintenance facility on behalf
of the principal
©SGB Associates
Types of agent – legal definitions
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Exclusive – whole market
Non Exclusive – several different agents
Sole agent – agent + key accounts
©SGB Associates
The benefits of employing a distributor
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Some in market costs avoided
Local market knowledge and experience
Some commercial risk is removed
The distributor pays for the goods
whether or not they are subsequently
sold
The manufacturer can focus on fewer
core activities
©SGB Associates
Disadvantages of employing a distributor
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No control over the pricing structure
Less control over distributors actions
Distributors can become competitors
Possible underinvestment in marketing
efforts
©SGB Associates
Agent & Distributor agreements

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ICC Model Distributorship Contract
ICC Publication No. 646, 2002 Edition
http://www.iccbooks.com/Product/
Download legal business contracts
www.contractstore.com
Legal
document
templates
Immediate
download
Editable MS
Word format
“Dear Sir/Mam, We are Christian business man. We are manufacturers &
exporters of Surgical instrument Dental instrument and Beauty care
implements and all style of Razor Edge Scissors with Leather Kits.
We have Standard with Satinless Steel in lowest possible price please
let's have an opportunity in your company.
Note: our company helping to Christian pore people here in Pakistan by
donating fund from our sales if you will help our company by selling our
products So you will involve for helping Christian pore people and God
will help you.
Thanking and looking forward to hearing from you soon.
FURTHER MARKET DEVELOPMENT

Alternatives to direct exporting through
an agent or distributor
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Branch office
Local distribution company
Subsidiary company
Joint venture
Franchising and licensing
Strategic alliance opportunities
BRANCHES, JOINT VENTURES,
LICENSING, & ALLIANCES
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Reasons for considering these options
REP OR BRANCH OFFICE
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Minimum commitment of resource
Limited marketing support
Avoidance of tax and control problems over
subsidiaries and other ventures
Increased control over marketing and distribution
Greater market expertise
Increased market penetration
Opportunity to develop local support staff
LOCAL DISTRIBUTION COMPANY
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Commitment to more than just a branch
office
Large amounts of working capital would
be required
A significant level of staffing
A full subsidiary might attract a differing
tax basis
What is a Joint Venture?
There are 3 basic legal structures:
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Limited liability company i.e. Setting up an overseas
company – “the marriage”
A partnership (unincorporated)
A purely contractual co-operation agreement – “living
together”
©SGB Associates
REASONS TO CONSIDER SUBSIDIARIES
AND JOINT VENTURES
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Domestic capacity limitations
Market protection through import restrictions
To compete on equal terms with locals
Greater market penetration
Cheaper local inputs (labour, materials)
Provide platform for exporting to region
Foreign government pressures to invest
locally
STRATEGIC ALLIANCES
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This involves the partners pooling agreed resources, and
each partner brings certain particular expertise or inputs
to the alliance that complement those of other partners
Three main formats are:
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Distribution alliances
Technology alliances
Production alliances
Coca-Cola makes some of its portfolio of beverage
products available to and through McDonalds
Star Alliance - 24 leading airlines with regional strengths
have banded together to form an alliance
LICENSING AND FRANCHISING
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Licensing is the granting of permission,
usually for a payment of a royalty or fee by
the licensor to the licensee to exploit some
form of intellectual property right such as a:
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Patent
Trade mark or service mark
Copyright
Design
Secret know-how
LICENSING AND FRANCHISING
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Licensing typically takes one of three forms
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Technical licence where the grant is to copy a
product or process
Artistic licence where the grant is to copy or
reproduce something considered artistic
Commercial licence where there is a copy of the
licensor’s business
LICENSING AND FRANCHISING
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Franchising is primarily a sophisticated
form of licensing
Usually a full business format: trade
marks, products, systems, goodwill etc
Typical examples of franchising are fast
food restaurants, high street retailing,
hotels, car hire and car distribution
N.B. Franchisee promoting trade name of franchisor
Key markets and possible entry routes
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Different models can be more suitable
for different markets.
©SGB Associates
China - How companies enter the market?
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Export
Agent/distributor
Representative office
Investment
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Joint venture
Wholly Foreign Owned Enterprise
Foreign Invested Commercial Enterprise
How companies are entering other markets
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India
USA
Gulf states
Europe
N.B. EU Commercial agents’ agreements
– Council Directive No 86/653
Overseas Investment – Key Questions
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Can you cope with the worst case
scenario, i.e. the venture fails?
Do you have the resources to
devote to setting up and managing
another business?
Can you access the finance needed
to establish the joint venture?
Do you possess the necessary skills
to manage relationships with
overseas partners?
Can you provide a high level of
support from the UK in the early
years?
Are all the senior management
committed to the project?
31
Further market development – Key actions
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Select the right market
Develop a good
business plan
Choose the right
partner
Draw up a sound
agreement
Be aware of cultural
differences
Plan an exit strategy
32
Thank you - Any Questions?
Simon Bedford
International joint ventures & investments
[email protected]
07771 834238
www.tradeyorkshire.com
www.uktradeinvest.gov.uk