If selling directly to customers on your own or going through distributors or agents doesn’t satisfy the requirements of your exporting plan, you might want to considering forming a partnership with a local company which compliments or enhances your position.
Before you jump into a partnership, find out if your needs can be addressed in-house. If you require financing, investors or financial institutes might be a better option than a local partnership. However, to acquire special expertise or a local market presence, a partnership could be a promising option.
Once you have decided that you want to pursue a partnership, define the form, structure and objectives of that partnership. This requires evaluating your company’s goals and in what areas you need help to achieve them.
Finding a partner who meets the aforementioned criteria is critical, as is identifying a partner that has values similar to your own.
Partnerships can take on a variety of forms:
Taking control of a business in your target market, by purchasing enough of its stocks or assets, is an effective way to establish a local presence in that market. You can acquire a local firm either by purchasing control of it directly, or by setting up an affiliate to carry out the acquisition.
Acquisitions are complicated and require expert legal, accounting and tax advice.
Mergers, in which two companies form a new entity with a new management structure, are also very complex.
With any kind of foreign investment, you will need to ascertain detailed knowledge about the company’s legal structure, financial condition, environmental situation, the reputation of its management and its compliance with employee benefits requirements.
These endeavours take time, due diligence, and painstaking research, and are not to be entered into lightly.
A public-private partnership (PPP) is a long-term contract between a firm and a government organization which provides an asset or a service to the public. Often these arrangements are for infrastructure projects, or in some cases, social activities.
PPPs are lengthy contracts that encompass the life span of the asset, laying out the lifetime cost of the asset up front.
In a PPP, the majority of the project’s risks—design, construction, financing and long-term maintenance—are carried by the private sector party. Costs associated with project overruns, delays, defects and unexpected maintenance are the responsibility of the firm.
Another significant challenge the private firm faces in PPP is that it is only paid on performance, such as when the asset is built, and when it performs well and is properly maintained.
PPPs are a benefit to the public, as they save tax payers a lot of money.
As for the private firms involved, while they take on significant risk and responsibility, they have the benefit of being locked into a long-term contract without competition.
Source: PPP Canada
These projects became popular in the 1990s, and for companies that have the resources, they can be incredibly lucrative ventures. Whereas standard government procurement projects only cover construction or manufacturing and fixed service contracts that need to be renegotiated, PPPs give firms the security of being locked into a contract for the life of the asset they are providing (so long as they deliver).
There are PPP opportunities around the world that your firm can take advantage of. For more details, the Canadian Commercial Corporation can point you in the right direction.
More information on government funding opportunities and resources can be found in section 1.2.3.