Step 3: Entering your selected market

Direct exports
Most exporters usually begin by exporting directly. In this common scenario where a Singapore firm receives an order from an overseas buyer and subsequently sells directly overseas to that buyer, the Singapore firm gains the following advantages:
· A higher return as there is no cost of in-between agents brokering the deal
· The opportunity to establish a direct relationship with the overseas buyer
· The freedom to determine its pricing strategy
·The quickest way to sell into the overseas market
However, one disadvantage is that the firm will need to spend more time and resources to develop its relationship with the overseas buyer to establish and strengthen trust. Nevertheless, the potential higher returns and speed of getting into the market may very well justify this additional cost of relationship building.
To help you sell directly overseas, you will need to have some form of presence that enables you to attract global buyers to your product or service offering. You can begin by participating in trade shows, then setting up a representative office in your target export market. Or you can establish your presence on the internet through the use of e-commerce. Many exporters commonly start by employing all three methods.

Representative office
A representative office is an office which you establish in your target export market to conduct marketing and other non-revenue generating activities. A representative office is generally easier to establish than a branch or a subsidiary, as it is not used for actual business (e.g. sales) and therefore is less regulated. Your representative office can perform various marketing activities to raise the awareness of your product or service to your potential buyers.

Indirect exports
You can sell your product or services overseas through an intermediary, such as through in- market agents and distributors, and by partnerships through licensing or franchising. Compared to direct exports, you will need to incur the cost of commissions charged by your intermediary and you will not have the opportunity to build a direct relationship with your end buyers. However, the advantage is that you will be able to reduce resources as your intermediary will handle all licensing, shipping, distribution and logistics arrangements, and the cost of indirect exports is lower than fully funding a sales force in the market.

An agent will assist you to secure your sales in exchange for a commission. As in all business relationships, you are advised to do your due diligence. Choose agents who are knowledgeable about the market, with proven sales track records, have experience clearing your type of goods from Singapore through the local customs, and possess the network to the right customer segment.

Distributors purchase your products from you and then resell them to their customers. In such an arrangement, the distributor will handle all sales enquiries, after sales service and price setting. You will have a lower profit margin, but you will enjoy more resources for carrying out after-sales service.
When selecting a distributor, due diligence must to be properly carried out. You have to determine whether your distributor has the proven sales track record, the commitment of its sales force to selling your product, its product mix (such as whether it is also carrying competitors' products), and its marketing plan to push your products. Having a checklist will help you in your selection process. Alternatively, you may engage consultants who have the expertise and connection to assist you in sourcing for potential distributors.

Franchising is the practice of using another firm's successful business model. As a franchisor you can build chain stores to distribute your goods. Your success will depend on your franchisees which you have to provide with the know-how, training and marketing to ensure their success.

Branch or subsidiary
When your business has expanded to a profitable stage through the above market entry methods, you will have gained sufficient knowledge about your target market and financial and manpower resources to move toward establishing a branch or subsidiary directly in your export market to conduct sales operations. To establish a branch, you need to be aware of the market's legal, tax and profit repatriation regulations. This will require you to engage legal and financial advisers to assist you.

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