EAT their local food. Blend in with them. Make it a point to understand their culture, and their jokes, as well!

This is Lau Shih Hor’s personal strategy when doing business abroad. The CEO of local ICT firm, Elixir Technology, says his company has more than 40 partners overseas, spread all over the world, from small-time resellers to multinationals such as Sun Micro, Cisco and IBM.

“These people can tell if I am willing to be part of their world,” says Mr Lau. “So I make it a point to dine with them and eat the local food. In Thailand, the food can be super hot, and we always make a joke out of eating it!”

Since founding Elixir with two other IT researchers in 1993, Mr Lau has successfully pushed his company’s main product – business intelligence software – to markets in South-east Asia, China, the US, UK, Europe and many more places. In his cozy office in quiet Armenian Street, just across the newly refurbished Peranakan Museum, he expands on the process of going abroad. It has to be a well-thought-through process which does not necessarily follow the route that traditional management pundits espouse.

Four stages in going international
There are several stages in internationalisation of your company, he says.

The first is orientation, the “look-see” and investigate stage, where you leverage on trade missions organised by IDA and IE.You first do your literature research, to pinpoint markets that may be useful for further investigate, and you sign up with trade missions going there, to explore more.

The next step is to leverage on big brands. “I don’t follow the traditional DIY branding that many consultants advocate,” he says. “It is expensive and not very effective.” What he does is to tack Elixir’s brand to the brands of the big boys. Here’s a recent example. Mr Lau signed up as a sponsor of Sun Micro’s Tech Days World Tour, a kind of IT developers’ evangelisation programme spread over 13 cities.

Besides Elixir, the other three sponsors are AMD, Intel and Ericsson, all global giants.Suddenly, on the Tech Days Web page, Elixir’s logo is seen together with the three big boys, which creates a far stronger impact than if Elixir goes alone in its branding. Mr Lau says he paid for sponsorship for four cities – London, Madrid, New York and Tokyo – at US$4,000 per city, a reasonable sum for the exposure he gets. Hiring a branding consultant to conduct a campaign for you would cost more than that, and would not likely get the same result.

Third, establish partnership with local firms. Mr Lau calls it “creating a local ecosystem”. Your local partner needs not be big. You are looking around to choose the right partner, but they are also looking at you to see if it’s in their interest to pick you. It’s a chicken-and-egg situation, he says, and the answer is to give them the whole chicken!
What it means in practice is that when Elixir has a local partner, it will share all sales leads with them. In the short term, the margin may be small since profit has to be split, but in the long term, it develops a happy relationship. “Give them the chicken and when they get plenty of eggs, the partners will want to go on doing business with you. In the long term, it is profitable for all concerned.”

Elixir’s business intelligence products are targeted at three industrial sectors: telcos, government and banking. At the initial stage in a new market, it focuses on one customer per sector. All deals are shared with the partner.

Fourth, train your partners. From helping them generate pre-sale enquiry to closing the deal, Elixir puts in time and money to ensure the partner’s employees are thoroughly familiar with the product.
Partnerships at the initial stage are usually not exclusive, says Mr Lau. If the partner wants an exclusive deal, then they will need to meet a certain quota. Without exclusivity, trust becomes vital.
“Trust doesn’t come on Day 1. It is build on friendship and an open-heart approach,” he says. “You can’t go by black-and-white, i.e. sticking strictly to the legal terms and conditions. A large dose of goodwill is what it takes to succeed with your partner.”

Four kinds of partnership
Mr Lau classifies Elixir’s partners worldwide into four categories:

Alliance partners: These are usually the big boys such as Sun, HP, and IBM. “Our products complement what they are selling.”
Strategic partners: They are the distributors and resellers of Elixir products.

Systems integrators: “They take care of only what the customer wants, and they have no loyalty to you. If the customer wants your product, fine. If the customer wants someone else’s, then they chuck yours aside. In contrast, the strategic partner I mentioned earlier, is loyal to Elixir’s products.”

Independent software vendors: “They are loyal to nobody but their own software products. Fortunately, our BI Dashboard and Report components are necessary to enhance their application suite, so they take them and plug into their own product.”

Doing business with China
“I find that for computer products, the Chinese want branded stuff but at cheap prices. My strategy is to work with an OEM to rebrand our solutions.

“We found a company in Chengdu that was willing to do the rebranding. We put in their logo, name and other appropriate material, run them through our code, and created a Chinese version. The look-and-feel shows that it is their local product, so it enjoys home ground advantage.

“We also did rebranding of our products with our Australian and US partners. In the case of the US, our American partner is doing a project with Boeing, the aircraft manufacturer, and for security reasons, it requires American-made software.”
However, the rebranded or localised product would still need an activation key, which only Elixir could supply. This is to prevent the software from being claimed by the partner as their intellectual property, says Mr Lau. And whenever a new version is available a fresh activation key from Elixir is still required.

More on Elixir Technology