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Trade Routes: International Markets the Right Way
By: Michael Wynne
Posted: August 7, 2007, from the August 2007 issue of GCI Magazine.
An order from Paraguay is received by Wessex Devices in Montana. The company has never done any international business before. The sales manager determines the potential customer should be charged twice the U.S. price and make a cash payment up front. The terms are accepted, and the product is shipped.
Four months later, the same customer places a larger order. The terms are the same, the payment is made, and the order is shipped. This scenario plays out over the next two years with increasingly larger orders, culminating in an arranged visit by the Paraguayan customer.
A month later, the customer arrives at Wessex’s headquarters, and the sales manager presents him to Wessex’s president. During that meeting, the customer asks to become the exclusive distributor of Wessex’s products for Mercosur. The president and the sales manager look at one another; they both think the same thing, “Anyone who pays double the U.S. price and pays up front is a good client. We don’t have any business in that area other than this customer. Why not give him the exclusive distributorship for Mercosur?”
Neither the president nor the sales manager realizes that Mercosur is the name for the Common Market of the southern cone of Latin America, Brazil, Argentina, Uruguay, and Paraguay.
They have just given exclusive distributorship of a geographical area larger than the U.S., with a population of close to 200 million, to someone they know nothing about—other than he pays up front. Is he the right person in the right country? Does he have what it takes to become a worthy distributor who will represent Wessex adequately?