Technology licensing is, like offshore manufacturing, a mixed bag of potential successes and misadventures. However, the strategy of licensing technologies or processes to a foreign enterprise is the most often used alternative to setting up and running manufacturing facilities overseas. It is also an attractive method of “exporting” for small companies or firms with little or no international experience. Licensing can also be used to acquire foreign technology with such arrangements as cross-licensing agreements or “grant-back” clauses awarding rights to improved technology developed by a licensee. Franchising is also a method of licensing and is used most often by non-manufacturing companies to expand overseas.


Licensing as a form of “exporting” has obvious potential drawbacks that must be considered both prior to licensing agreements are signed and afterwards in maintaining control of the technology as you are transferring knowledge to an unaffiliated firm. In addition, potential profits from a licensing strategy are typically less than actually exporting or setting up your own manufacturing facility.
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And as briefly mentioned in the opening paragraph on our Offshore Manufacturing page, there are significant risks to the protection of the licensed technology from unauthorized use by third parties. Foreign licensees may also try to use the licensed technology to manufacture products in direct competition with the licensor or its other licensees.


EXIM Partners will assist you in determining if licensing is an appropriate strategy and then use our experience and resources to investigate not only the prospective licensee but the licensee’s country as well. The government of the host country usually will need to approve the licensing agreement and their may be restrictions royalty payments or exportation of products manufactured under such an agreement.


Let EXIM Partners reduce your risks by leading you through the minefield of licensing and out onto the other side to the increased growth and profits that can be achieved with this strategy.