From time immemorial, partnership has been a crucial aspect of any business’s survival. The advent of the internet and friendly international trade law has proliferated international business partnerships as companies in different countries now easily leverage it to improve profitability.
Small and large businesses can leverage international partnerships to grow their companies or meet increased demands and needs. However, building successful international business partnerships requires careful planning, cultural understanding, and effective communication.
Below are some tips for a seamless international business partnership that will benefit your company.
Thorough market and partner research
Before embarking on any international business deal, whether you are the one initiating it or it was proposed by another company, it is vital to first determine what you aim to achieve from the deal.
Conduct thorough market research of your partner’s market, including cultural nuances, business practices, and legal regulations.
Assess your partner’s financial stability, reputation, and commitment to the partnership. Use the information gathered to decide whether the partnership will be a strategic alignment or liability for your company.
This can be in the form of complementary capabilities, such as when a company leverages the technological expertise and market dominance of another to reduce time to market or when a company takes advantage of the low-cost labor in a partner company’s country to reduce its overall cost of production.
Clear and effective communication
There will be a lot of communication between your company and your prospective partner. Clear and effective communication is the bedrock of a long-lasting and strong partnership relationship.
Every communication must be clear to avoid misinterpretation on either part. If necessary, use a translator or interpreter. When signing contracts, use professional document translation services to ensure effective communication among all stakeholders.
Understand your partner’s challenges and aspirations to identify a common ground where your business goals and values align.
Maintain regular contact with your partner to address issues promptly and build trust. Be consistent, transparent, and ethical to establish mutual respect and understanding.
Legal and regulatory considerations
Create clear and legally binding contracts that outline the terms of the partnership, including roles, responsibilities, and dispute resolution mechanisms.
Consult with legal experts familiar with international business law to protect your interests and ensure you are not jeopardizing your company’s assets.
Be prepared for culture shock. You will likely encounter some market conditions you are not familiar with.
Adhere to local customs and regulations to avoid legal or cultural issues.
Some of the legal considerations you might need to take into account include:
- Intellectual property
- Data protection
- Security bonds
- Free trade agreements
- Employment laws
- Company structure
- Tax obligations
Risk management
No matter how much potential an international partnership offers your business, it will always come with a risk. It is important you anticipate and mitigate the risks for long-term success.
Risks associated with international partnerships include political instability, currency fluctuations, and supply chain disruptions.
Do not take everything presented by the potential partner at face value; do your research and verification. Partner with local companies or individuals who can provide valuable insights and connections about your partners.
Set realistic and achievable goals for the partnership. Establish metrics for measuring the partnership’s success. This will help you better manage possible risks instead of merely taking a leap of faith.
Set contingency plans that outline how you will handle different possible risk scenarios. Design an exit strategy that defines the details of partnership termination in case you might need to.
Flexibility
Everything will not work out as exactly planned. There will be delays, and there will be hindrances beyond your control.
Similarly, market conditions such as consumer preferences are ever-changing. Be prepared to catch up and take advantage of new opportunities as they emerge. Some opportunities may not be available at the start of the partnership but emerge later on. Likewise, some challenges or risks may not present themselves at the start but show up later.
You need to be flexible to adapt to the changing market conditions and unexpected circumstances. Pay attention to geopolitical events and international trade policies that affect your partnership deal.
Regularly review and update your business strategies to ensure they remain relevant in efficiently handling the international partnership.
Compatible infrastructure
It is almost impossible to do anything today without using technology, whether directly or indirectly. Since most companies now leverage the efficiency of technology to boost productivity, it is more than likely that your international partner will have their own set of technological tools that may be different from yours.
For effective collaboration between teams and smooth communication, these infrastructures need to be compatible. Only this way can the teams seamlessly work together.
Companies like Airbus learned this the hard way. The launch of the flagship A380 aircraft was delayed for years, partly as a result of partners’ use of different versions of design software. The delay was estimated to cost the company billions of dollars in profit.