It will be challenging to expand your small business into new markets. There are likely to be difficulties in starting up, distribution, or critical knowledge gaps. These problems are not only complex for small businesses, but they are made more difficult when you are trying to reach a new market in another country. Partnerships are a great way to address these issues and limit your risk.
Partnering is a way to leverage the strengths of another party in order to achieve your goal. For the sake of discussion, let’s say you’re a cosmetics producer in your country and want to expand into China. You and your team of leaders decide China is an excellent place for your business to grow. Once that idea sinks in, it will be immediately followed by many questions. What is the best place to put your office? What are the costs? How can you find sales contacts? What laws govern business in the People’s Republic of China? These questions can be answered by a partnership, which allows you to draw on the expertise and knowledge of the other party.
Here are some reasons to think about forming a partnership.
Startup Capital
It takes money to make money, just like in all other areas of business. No matter how you decide to invest in your growth, capital is essential. You will need to invest significant money if your cosmetics business plans to set up a manufacturing plant in China and other regional offices. You can save high startup costs by partnering with a Chinese company that already has the equipment and capability to produce your products. Partnering with a company in China can help you reduce your out-of-pocket expenses.
Distribution Networks
You want to sell cosmetics on the Chinese market. How do you distribute your goods in China? How would you establish relationships to ensure that bulk shipping is at its best? Partnering with established firms will allow you to tap into their existing distribution channels. This partnership does not only involve their delivery trucks but their entire network, including their service providers, pricing agreements, and suppliers. To make your relationship even better, you may offer distribution of the goods from the partnering company within your country.
Knowledge of Business Regulations
Partnerships are a great way to get an existing knowledge of laws and regulations, especially when you want to expand to another country. What type of license are you looking for? The rules for cosmetics companies entering China are very different. It may prove challenging to understand. Your small business can establish a firmer footing by partnering with another entity than if it goes it alone.
Marketing Knowledge
You will need to sell products to Chinese customers if you want to enter China. How do you market cosmetics in China? What are essential things that Chinese consumers value? How do Chinese consumers buy cosmetics? You can buy cosmetics online or in brick-and-mortar stores. Partnering with someone to answer these questions can help save you time and prevent unnecessary expenses. It will be evident to your partner if you have the correct answers.
Partnerships can be complex and require work, just like any marriage. Blocks often become a problem of control rather than profit. This is especially true for companies in the West, which tend to be focused on management, while Asian countries tend to place more importance on mutual benefit. Partnerships are not suitable for everyone. Your primary competitor might be the best partner for you, but you may not want to share any of your confidential information. It is unlikely that you will get what you want through a forced partnership.
While the context is primarily global, expanding into new areas within your country can also lead to partnership opportunities. Both parties must receive the benefits of a partnership to have a solid business relationship. Your business success is not about beating the competition. It’s about maximizing your profit. Partnerships can provide distinct financial benefits to small businesses while also protecting you from some risk. Blocks are fundamentally about maximizing the strengths of each partner to create mutual benefit and value.
Manager’s Resource Handbook provides online access to templates, tools, and articles that help you do business in a global environment. Our goal is to help companies and managers succeed by sharing our knowledge.
