Thanks to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) coming into force on 30 Dec 2018, SME owners can look forward to an especially exciting year.
According to Minister for Trade and Industry Chan Chun Sing, “The CPTPP is an important agreement that will complement Singapore’s existing network of bilateral free trade agreements. It will strengthen trade among countries in the Asia-Pacific, resulting in a more seamless flow of goods, services and investment.”
Even though there is a long list of trade deal benefits, many companies, especially SMEs, in Singapore, Japan and Australia do not know how to utilise them.
Avoid making the same mistake – stop lamenting about the small local market and think about the oyster beyond our shores.
Access to new markets
Before the trade pact, Singapore did not have any trade agreements with countries like Canada and Mexico. These markets are now open to us as they are members of the CPTPP.
We are more than capable of creating great products (check out this series), so why not market these products to the world? In the same vein, SMEs in other countries will have great products that they want to introduce as well.
However, setting up a physical presence in a foreign country can be a consuming experience, both in terms of time and money.
Some companies have gone overseas, only to close shop when they realise that there is no market for their goods. Partnering with a local is a less risky form of market entry – nobody knows their market better than a local SME.
Tips for partnering with foreign SMEs
Some dating experts advocate knowing yourself before searching for a partner. This wisdom holds true for business partnerships as well. It is beneficial to review your own business and identify what roles that you would require your business partner to play. For example, if you are unsure about distribution channels in a foreign company, you should make sure that your overseas partner has an established distribution network or is part of one.
Try using the Business Model Canvas to evaluate what you would need from your partner. It would also help you to better evaluate your own value proposition and position in the relationship.
Once you figure out the criteria you are looking for, the internet is your best friend. In dating lingo, some might call this “stalking”. In business circles, this is due diligence.
Spend some time learning about the other party before entering into a more serious relationship. Corporate websites will give you some basic insight about your potential partner. This will also help you to prepare some questions prior to the first meeting, so that you can verify that they “walk the talk”.
Remember that dating is a two-sided game. If you have been reviewing their website, you can be sure that they are checking your website out as well. Make sure that your business story is well articulated on your digital shopfront.
Some SMEs are still making the age old mistake of sealing deals with a handshake. This will not work overseas. Using my dating analogy, even marriages need to be registered and governed by the law. If you are entering into a business relationship with someone, it also needs to be governed by the law through the use of contracts.
Entering into a business relationship does not mean “showing your hand”, you still need to keep some cards tight to your chest. Similarly for your company’s intellectual property, you can license some parts like trademarks and copyrights to your partner but you should never divulge your trade secrets. The CPTPP may have a robust framework governing IP, but take some defensive steps by talking to your lawyer first.
Entering a new market by partnering with a foreign SME is one of the best ways you can maximise the new CPTPP benefits. If you need help preparing for this, contact us today.