When it comes to expanding your small business to the new market, you will likely face uphill fighting. You might experience difficulties with a start-up cost, you might have a distribution challenge, and you might have the main gap in the knowledge of the market you want. These problems are quite difficult for small businesses, but even further enlarged when your new market is in another country. An effective way to overcome these challenges and limit your risk is through a partnership.
Partnership functions as a means of utilizing the power of other parties to help you achieve your goals. Consider, for the purposes of discussion, that you are a cosmetics manufacturer in your home country and you want to enter the Chinese market. In this scenario, you and your leadership team decide that China can be the right place to expand your business. After the idea sank, it will be followed by a myriad of questions soon. Where do you have to put your office? How much will you charge? How do you make sales contact? What is the Business Law in the People’s Republic? The partnership allows you to take advantage of other party’s expertise and knowledge so you can answer these questions.
Here are some reasons you might want to consider partnerships:
Capital Startup – Like all business fields, it takes money to make money. Regardless of how you choose to reinvest your growth, you must allocate capital. If your cosmetic company plans to establish a factory factory and local regional offices in China, you have to do significant funds to do so. By partnering with companies in China who already have equipment and capacities needed to produce your items, you can save significant startup costs. Partnerships can limit part of your out-of-pocket expenditure.
Distribution network – you want to sell your cosmetics on the Chinese market. How will you distribute items there? What kind of relationship do you need to get the best price on bulk shipping? By partnering with established companies, you can use existing distribution channels. Keep in mind that this is not necessarily about their own shipping trucks, but all their networks from suppliers, service providers, and existing price setting agreements. You might want to offer the distribution of company goods partnering in your home country to make relationships more useful.
Knowledge of Business Regulations – especially when looking to expand to other countries, partnerships offer you knowledge about regulations and regulations that you must learn for themselves. What kind of license do you need? For your cosmetic company entering China, the rules are very different and may be difficult for you to interpret. Partnering with other entities can help your small business make footing more smooth than if you go alone.
Marketing knowledge – by entering China, you have to sell to Chinese consumers. What method does the marketing cosmetics work in China? What kind of things are Chinese consumers valued? How do Chinese consumers buy cosmetics? Online, or at a brick and mortar shop? Having a partner to help you answer this type of question can save a lot of effort and avoid unnecessary costs. A good partner will know it.
Partnerships are not easy, and they work together like business marriages. Many partnerships fight because they often become a control problem, rather than profit. This is especially true with companies in the West which tend to focus on control, while Asian countries will tend to focus on mutual benefits. Next, the partnership is not for everyone. Maybe the only suitable partner that you can find is your main competitor, and you might not want to share your property rights. Forced partnerships cannot give you what you want.