Relationships the key to exporting success
The importance of companies building relationships in target export markets has been highlighted in recently published research by Professor Kim Fam.
Professor Kim Fam from the School of Marketing and International Business
The importance of companies building relationships in target export markets has been highlighted in recently published research by Professor Kim Fam, Head of Victoria's School of Marketing and International Business.
Professor Fam and colleagues from City University in Hong Kong studied strategies that businesses can use when dealing with foreign institutions to improve their chances of success in international markets. Published in the Journal of Marketing, this research suggests businesses should develop strategies for establishing strong relationships with partners and distributors and adopt a flexible approach to contracts.
"Of course, companies need to understand the regulations, business practises and cultural norms in international markets they are targeting, but they should also have a governance strategy to guide relationship building at all levels," says Professor Fam.
The research looked at the CEO, General Manager and Exporting Manager in Chinese manufacturing companies and their distributors, and concluded they all need to spend time in the foreign market and build connections with their counterparts.
"The strategy should also include initiatives like gift-giving or other actions appropriate for individual markets."
Professor Fam says contract customisation is also important because it helps companies gain social acceptance in foreign markets.
"That means contracts that have room for movement. For example there could be broad agreement on payments with the option to reduce percentages in difficult times. That give and take builds trust."
The researchers are about to begin a longitudinal study, which will take place over the next decade, to find out more about successful business internationalisation. Professor Fam is only the second New Zealand-based academic to have work published in the Journal of Marketing, a leading international publication with a 75-year history.