Insight

In industries ranging from software to automobile, most companies selling into Asia have to rely on a comprehensive network of partners and distributors to achieve effective penetration into this vast & diverse continent.

With the huge range of cultures, languages & business-norms across Asia, specific channel strategies can vary greatly in the details. However, in general, principals tend to provide their partners with access to world-class products, R&D, branding and selling-methodologies. Partners, in return, are expected to reciprocate with local networks and market knowledge, FOS (Feet on Street) resources and the necessary political connections.

In the past, most MNCs could count on there being a long line of potential partners eager to represent their brand. However, with the booming economies of China and India, this is no longer true as foreign companies fall over each other to access these promising markets.

Thus, attracting the best partners and keeping them motivated has become more critical than ever before. Effectively managing your channel partners is, of course, a complex topic, but listed here are a few main points that a principal needs to carefully consider:

1. One of the first steps of effectively engaging a partner is to clearly define their roles and responsibilities. Do you only want them to sell? Who is responsible for market research, marketing and fulfillment? Will they be playing the role of a VAR (Value Added Reseller), SI (Systems Integrator) or a Wholesaler?
2. Next, clearly articulate the goals and targets that are expected of the partners. To motivate partners, set clear profit and market-share expectations and explain how you intend to help them to achieve these targets.
3. Principals must also help the partners assess their potential risks and rewards of entering into the venture. What kind of relationship are they entering into? Are the targeted territory and margins big enough for them to make a decent return on investment and motivate further expansion? What are the key industry trends that they need to be aware of?
4. Another key factor is to provide adequate opportunities for learning. Most partners are hungry to learn from MNCs’ world-class best practices. Enabling partners to effectively upgrade their management, sales and fulfillment skills can be a strong motivator. Of course, you would be best served by carrying out a comprehensive assessment of your partner’s prevailing skills levels before spending your precious training dollars.
5. Principals should also ensure that the contractual terms are fair and not too rigid. If the benefits of the contract accrue primarily to the principal, partners may not be motivated to put their weight behind the partnership.
6. Finally try to understand your partner’s longer-term aspirations. Where and what does the partner want to be in three to five years? Ensuring that your partner’s longer-term goals are in sync with your own strategic roadmap helps keep the partnership strong and viable as time goes on. Forging a partnership on diverging visions is a recipe for disaster.

A properly motivated partner is crucial in maintaining the long-term viability of your business in Asia. Make sure that your own channel managers are well trained in this crucial aspect of their responsibility.