An Asian supplier, manufacturer, or distribution partner isn’t just a nice-to-have for startups and entrepreneurs seeking to grow their businesses—it’s an indispensable resource if you are planning on doing business in Asia. But how do you find the right Asian company to work with?
“Partnerships and strategic alliances are important to achieve superior business performance,” says Dr. Evaristo Doria, a senior lecturer in international business at the J. Mack Robinson College of Business at Georgia State University and coauthor of Oasis: In Search of Extraordinary Business Growth Overseas.
“However, their failure rate is high. When the partnership or strategic alliance is with an Asian company, the risk of failure might be even higher due to cultural differences in how non-Asian and Asian business executives approach relationships and communication.”
Due diligence is necessary to ensure your reputation and bottom line are positively affected by your partnership. There are many factors that should be considered when searching for an Asian business to partner with. Here are 8 steps to ensure you’re addressing these considerations.
1. Develop a strategy
Regardless of how an Asian business may fit into your own plans for market domination, you’ll need to consider the priorities of your potential partner before approaching any foreign companies. “The first step to developing a successful partnership or strategic alliance with an Asian company is to discover the potential for developing a win-win relationship between the two potential partners,” Doria says. Considering the capabilities, priorities, and needs of your future partner up front will allow you to better match your goals with theirs.
Engaging an experienced professional or agency with access to your potential partner’s facilities can provide a level of expertise and insight that your online research cannot.
You can find a lot of information about a company online or with a resource like Thomson Reuters World-Check, but be wary that some companies including manufacturers may not be completely truthful or upfront about their actual capabilities when self-reporting. Background checks including financial standing reports can help mitigate some of the risk of approaching a less-than-worthy (or disappearing) partner.
3. Hire an agency
Engaging an experienced professional or agency with access to your potential partner’s facilities can provide a level of expertise and insight that your online research cannot. An agent will assess a company’s operations and ensure the veracity of the company’s claims and can likely provide information you hadn’t considered.
Though you may not be an expert on best manufacturing practices or distribution optimization, a visit to a potential partner’s site can help you better understand the extent of their offerings, their quality control measures, and facilities’ upkeep. Most importantly, this will allow a face-to-face meeting with your potential collaborators—a crucial step in developing personal relationships.
5. Be patient
Take your time forming these important relationships with your partners. “The development of personal relationships will be very important to increase the level of trust,” Doria says. “As a result, the exchange of information will be more transparent and the environment more productive for collaboration.”
Language barriers and cultural differences will slow the process down, so expect negotiations to take more time than you might otherwise plan for.
6. Understand differences
Language barriers and cultural differences will slow the process down, so expect negotiations to take more time than you might otherwise plan for. “In this phase, it is important to be aware of the different negotiation styles seen in the Asian countries,” Doria says. “In some countries in Asia like China and Japan, consensus decision making prevails while in others, decisions are mostly taken by the higher authorities.”
Avoid future miscommunication by providing proper documentation—a thorough statement of work describing your agreement including manufacturing specifications, for example, so the factory can produce exactly what you intended. Include a stipulation that work not be sub-contracted if you need to control the process. Being proactive will minimize the potential for problem situations in the future.
8. Measure performance
Knowing how your partnership is doing is contingent on measuring the right metrics. “Most partnership and strategic alliances fail due to poor performance,” Doria says. “Partners should pay special attention to put the right processes and structures in place for maximizing collaboration, as well as develop and monitor a balanced set of qualitative and quantitative metrics to measure performance.”
These metrics should cover the following four dimensions of performance: operational, financial, strategic, and relationships. “Training sessions that bring non-Asian and Asian together to work on communication and team-building can be one of the processes to foster better results in the relationships metrics which is a very important dimension of performance in the Asian countries,” Doria says.
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