How foreign firms tap local intelligence in new markets

Deals where an international company gains entry into a market through a distribution partnership have  proved fruitful. PHOTO | FOTOSEARCH
Deals where an international company gains entry into a market through a distribution partnership have proved fruitful. PHOTO | FOTOSEARCH 

Barron, a corporate and promotional company based in South Africa, entered the East Africa market last month through a partnership with Ramco Printing, which supplies off-set, digital, and screen printing, and promotional items, in a low-cost and direct market entry.

The partnership will see Ramco distribute Barron promotional materials to all sectors of the market with special focus on trade and business to business, giving the South African company access to the market without the hastle of setting up shop and gaining valuable knowledge on how the market operates from Ramco’s 20 year experience.

“We have been looking to make ventures in the East African region as we seek to grow our African footprint. With a growing SME and private sector in East Africa expressing an insatiable demand for promotional and branding materials to reach out to their customers, we saw a gap that we have sought to fill through some of the most innovative platforms. After intensive market research, we chose Ramco Printing as our local distribution partner due to the company’s strong network base across East Africa and its unique business model,” said Steven Isaacson, the CEO of Kevro, under which Barron falls.

Locally established businesses already have a strong grasp of the market and this gives Barron the advantage of beginning with an established client database, with Ramco’s clients ranging from local cement companies to global consumer goods firms.

Ramco also has a strong understanding of the market in terms of expectations, trends and the competition.

“Given that our target market is B2B, which we intend to reach through direct, digital, PR, event and customised marketing, a distribution partnership serves as a strategic way to enter the market,” said Isaacson.

Partnerships where an international company gains entry into a market through a distribution partnership have proved fruitful.

Brands are able to minimise investment risk because local distributors have expertise in the particular market and guide the foreign brand on business practices of the industry and how to meet regulatory requirements.

They also gain introductions to potential customers, said Stella Kimani, a brand strategist. An example of a company that used this strategy successfully is Whirlpool Corporation, an American multinational home appliances manufacturer.

In its bid to globalise operations in the 1970s, the firm entered a distribution partnership with Sony, a multinational corporation, gaining access to the Japanese market.

“The purpose was to build a distribution system in southeast Asia and to gain an understanding of the consumer.

‘‘Within the past year, we have opened three regional offices in Asia: in Singapore to serve southeast Asia, in Hong Kong to serve Greater China, and in Tokyo to serve Japan,” said Whirlpool CEO David Whitwam in a Harvard Business Review article titled, The Right Way to Go Global.

Sony offered the foreign brand an established distribution network, service operation and through its reputation of retailing quality products Whirlpool was able to build consumer trust in a new market.

“In Japan, Sony operates its own very extensive network of retail outlets which were made available to Whirlpool. Through that partnership, Sony was able to offer a broader product selection to its customers, and Whirlpool gained access to Sony’s distribution network.

This highlights the benefits for international companies seeking to venture into the Kenyan market of embracing local distribution partners.

- African Laughter