Breaking into international markets may require forming strategic partnerships with companies and experts who have already done so.
Ignoring more than 1.3 billion potential customers isn't easy. Yet the thought crossed Dharmesh Shah's mind when he learned how expensive and complex cracking the China market would be. He wouldn't even have tried it if two things hadn't happened. First, Pyramid Digital Solutions Inc. (PDS), his $10-million software-design business based in Birmingham, Ala., received an additional $6 million in funding. Second, PDS was deemed a "partner" by $6-billion SunGard Data Systems, a monster in PDS's market of 401(k) plan software. Without SunGard's existing relationships, PDS wouldn't have had the wherewithal for an international debut, Shah says.
SunGard hired PDS to write the software code for a system it sells to the Bank of China. PDS collects a quarterly check from SunGard, working in the background while the larger company handles the dirty work of legalities, currencies, and collection. Still, it's no free ride. PDS has paid $250,000 for private groups to lobby the Chinese government for business. In addition, PDS swallowed China's demand for discounted prices. The Bank of China "knows its value as a customer reference," observes Shah.
Supporting a product that's 12 jet-hours away has also been tough for Peter Provenzano. His $38-million business, recently renamed SupplyCore.com, purchases maintenance and repair supplies for U.S. military bases at home and in Japan. Because many Japanese suppliers don't speak English, Provenzano hired Hironori Daiguji, a Japanese native who now works at the company's headquarters, in Rockford, Ill.
Daiguji works on a Japanese-enabled computer and stays late to communicate with the overseas office. He has helped smooth rough translations and patch cultural rifts. For instance, distributors were outraged when SupplyCore initially tried ordering directly from Japanese manufacturers. "Eliminating someone from the pipeline is real difficult," explains Daiguji. "Everyone is very protective of relationships."