Going Global? Try "Piggybacking" With a Customer

Say you're the CEO of a parts or components manufacturing company with annual sales of $40 million to $200 million. You've done pretty well in the U.S. market and you've grown over the years by supplying your wares to larger companies. There are thousands of companies just like yours.

Then one day the CEO of a major customer calls you and says, "We're building a plant in China and we want you to come over and supply us." It could be India or Poland or any of the places where major manufacturers are expanding capacity these days, but the point is the same: after staying at home, you're being asked to take the global plunge.

You may be terrified. It's going to cost money to build an assembly and/or testing facility in the new market. You're going to have to figure out how to recruit and maintain people on the ground. And you're going to have to figure out how you personally are going to oversee a company that is suddenly more complicated.

But this is an opportunity. It's called "piggybacking." It's a much easier way to explore global markets than having to do it all on your own. You have a customer and you understand the product specifications and quality standards. And you have guaranteed sales. That's a huge advantage over trying to meet customers and establish distribution channels from the ground up.

You also should do it for defensive reasons. If you don't agree to keep supplying this major customer in a distant market, he is going to have to go out and find another supplier, whether Japanese or Chinese or European. And guess what? That supplier is almost certainly going to want all your customers's business in markets around the world, including the good old U.S. of A. Most big manufacturers want to consolidate the number of their suppliers.

So if you get that phone call, figure out a way to piggyback on your customer. The alternative may not be pleasant.