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Grab Your Atlas

Making Connections

Flush with expansion capital, and with international distributors begging for a chance to sell Mindless Reaction, the owners decided which country to hit first: Japan. "It wasn't that we said, 'We've got to get to Japan first.' [It was] the way they supported and pushed the brand. We found a distributor who would control our distribution properly, work well with us and put a good deal together."

Finding the right company to sell their product was a long process, but the parners finally signed an exclusive three-year deal with World Style in Osaka after nearly a year of interviews with potential distributors. "You can't just sign a deal with them, send a product and then never hear from them again-because your product [could end up] in Kmart in Japan, and that's not where we want to be. It'll ruin your brand," Mallos says. "If you ruin your brand internationally, you'll ruin your brand domestically.

"You've got to train [distributors] and teach them and learn about their markets," Mallos says. "We need to make sure they're an extension of Mindless Reaction because the brand needs to be portrayed the same through everyone's eyes."

Penski agrees that a distributor can make or break your chances of success overseas. He advises answering the following questions before signing on with international distributors:

1. Are they going to put up the money, or are you?
2. How big a staff do they have?
3. How good are their contacts?
4. What kind of stores will they put your product in?
5. Will they buy your products, or will the product be on consignment?
6. Who will be responsible for shipping, transportation and orders?

And that's is just the beginning, Penski stresses.

Business owners should be aware of different traditions outside the U.S. and understand that a distributor may not be able to follow your instructions to the letter. "You have to be careful with trying to get people in foreign countries to do things your way unless you know it's an acceptable way to do them," he says. "A lot of times what works here may not work there. In the U.S. sometimes you see banners and lights and flashy displays all around stores; in Europe, that could be a sign of cheap goods. You have to be attuned to what the situation is."

You can never control everything that happens to a product overseas, which is why Avritt says he visits Japan two to three times a year. World Style returns the favor with visits to California four to six times a year. "Get your passport, and try the sushi," Mallos laughs, adding: "You have to be over there. [Avritt] deals with the Japanese, goes to every store, sees where they're selling [the product], sees what kind of clients they have, what other brands are around, and makes sure it's merchandised right in the stores."


Spread It Around
Top 5 qualities to look for in an international distributor

Finding the right person to handle your product overseas is a bit like finding the right baby-sitter. If a company's management forgoes their homework and trusts the first distributor who seems interested, it can ruin the product both internationally and domestically. Frank Penski, a partner at the New York City-based law firm Nixon Peabody LLP specializing in international dispute resolution, offers these five tips for choosing the right international distributor:

1. Make sure the distributor is on solid financial ground. "That's where the biggest problems come in," says Penski.

2. Choose a distributor who is honest and respected. If you've got a guy who has bee convicted of crimes, you are bound to have problems. Ask contacts for resumes and references.

3. Visit the company in person. "I have a client who hired a guy to do something for him in Australia and come to find out, he gave him an address that didn't exist," says Penski. "He had business cards printed and everything. The guy was a complete fraud, and he was an American. Go over and see who you're doing business with."

4. Find out the company's track record. Says Penski, "Has he distributed other products like this, and how did they turn out? Look at other products he has put on displays for other vendors." And check with the vendors to see if they're happy with the arrangement.

5. Look for a company that has similar values to yours. "Where Americans sometimes gets in trouble is hiring guys that discriminate against women or minorities, or have some cultural biases against some of the things you want," says Penski. "You need to get somebody who is acquainted with the culture but does it your way and is willing to work with you as your helper."

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This article was originally published in the March 2001 print edition of Entrepreneur with the headline: Grab Your Atlas.

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