Overseas Vendor Versus Partner

While doing business overseas, the very term “outsourcing” implies a certain detachment and distance, ripping it out of your own company and leaving it for another to do. This is usually justified by the argument that the partner/vendor can get the job done more effectively and quickly. That may be true, but will they do it on their own, just because they have signed a contract to do so? Or should you build a closer, more trusted relationship?

Hi, I’m Zacharias Beckman, President of Hyrax International, and I want to talk briefly about working with vendors versus working with partners, in your overseas adventure. Choosing the right kind of relationship is really critical. Sometimes a vendor relationship is a right way to go. Vendors are going to be easy to find. You can search the internet and quite likely come up with a number of vendors that’ll fulfill your need. They are going to be turnkey. They are going to be ready to business. Vendors are easy to engage, but, at the same time, they are not going to be looking out your best interests. They’re going to be making a profit, looking at their bottom line.

In an international setting you are throwing a lot more complexity into the mix. For example, legal agreements are going to have different meanings in different cultures. They’re also going to be much harder to enforce if you do need to enforce the agreement. And then, finally, you’ve got to deal with different country law and international law. So, the bottom line is many times when you engage a overseas vendor, if there is a problem, it’s just not practical to actually enforce a legal agreement.

When you engage with a partner, you are looking for somebody who is vested in your own well being. This is going to be a long term relationship and mutual success is what’s going to drive it. The advantage with a partner is that they are going to understand the local market better than you do. They are also going to understand local business culture and business law. So, they are going to guide you in your efforts overseas.  They will give you strategic advice that is better than your typical vendor relationship will deliver. They are more vested in mutual well being.

But, that said, finding a partner can be lot more difficult. Getting a partnership off the ground in the East or Middle East or South America is not going to be a simple numbers driven equation. Most cultures are going to want to build a strong relationship before they start talking about their partnership. It’s going to take time. It will take months in many cases and it requires a personal presence. Going to the other country, meeting with your prospective partners, socializing, developing the personal relationship, getting to know each other, and then opening up the door to a long term, very successful business relationship. Most business relationships around the world take time to build. The cultures of Brazil, Russia, India, China, most of Asia — these are relationship driven cultures. They are not going to just jump into business.

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