Leveraging Local Partners

In a previous post, we discussed the need for on-the-ground resources who can help accelerate your efforts and narrow the gaps in market understanding, local relationships, etc. Whether simply as an initial tactic or as part of a long term strategy, local partners can be invaluable.

While it may feel a little unsettling to not be in complete control of your execution, the right partner(s) may be the difference between success and failure in a new market. So how should you be thinking about local partnerships?

Partnership Structures: Options and Considerations

Strategic Alliances

Pros: Can be quick; more flexible; usually complementary resources; reduced bureaucracy.

Cons: Easy to end up with ambiguous commitments; can suffer from a lack of coordination; may have lingering potential competitive tensions.

Distribution or Channel Partnerships

Pros: Immediate market access, existing customer relationships, minimal infrastructure investment.

Cons: Less control over customer relationships and brand positioning; potentially reduced margins.

Licensing Arrangements

Pros: Can minimize capital requirements; potentially faster market penetration and reduced regulatory complexity.

Cons: Limited to no operational control; quality assurance difficulties; may be setting up a potential future competitor.

Joint Ventures

Pros: Shared risks and rewards; combined expertise; existing local credibility; probably enhanced market positioning.

Cons: Takes time to find, vet, and finalize a JV partnership; complex governance; need to avoid with misaligned goals; IP protection concerns; difficult to change your mind and unwind.

Conclusion

The reality is that there is no right answer and every situation is different. A pragmatic approach is to have all options on the table, being mindful of the pros and cons, as you explore potential partners and build relationships.

Initially, a non exclusive distribution or sales agency relationship may be the best way to test out the waters of both the market and a partner. As your understanding of the market and the opportunities there mature, you'll have a better sense of whether a partnership with more significant commitments is right for your business.