7. Selling thru branch technical experts are needed to assemble goods after arrival in the foreign market, and large numbers of repair parts must be kept in a centrally located place within short distance from the local distributing centers, branch houses are necessary to the exporter.
The branch establishment may become the center of a sales campaign. It may build its own force from among native salesmen and handle all business in its territory. Orders may then be filled from local stock or from the home factory. Many firms quote two prices: one, the lower, for goods shipped from the factory, and the other or higher price for. urgent ship ments which must be filled at once from the branch house. The additional charge is made to cover inter est, insurance, depreciation and expenses of storage.
The branch may, on the other hand, be little more than a storehouse and reshipment center, and the ac tual selling may be in the hands of an entirely differ ent organization directed from the home office.
The United States Steel Corporation maintains about forty branch offices and warehouses, mostly lo cated at coast points. Large stocks of staple pro ducts are kept on hand. The sales are handled thru branch offices direct, thru branch office agents and thru local houses. Some business, as for example, a large government contract, is handled direct from the home office.
The International Harvester Company maintained in Germany alone seven offices, all of which were provided with warehouses. Each office had an American manager assisted by a German assistant manager, and all offices were responsible to the cen tral European manager located in Hamburg, who also directed the eight branches in Russia and Scandinavia. All Europe was managed from the Brussels office. After the occupation of Belgium by the Germans, the Harvester Company moved its headquarters to Co penhagen. From here forty branches and five fac tories are supervised.
8. Branch factories.—Where competition is keen and tariffs are high, it may be advisable to locate branch factories in the foreign markets. The Inter national Harvester Company had such plants in Neuss, Moscow, Neukopping. The Ford Motor
Company maintains branch factories in England and Canada besides maintaining fifteen foreign offices. The British-American Tobacco Company established factories in China and Germany. The Singer Sew ing Machine Company maintains branch plants in Canada, Great Britain, and Russia, and before the War had such plants in Germany and Austria.
Branch factories, by employing the lower paid local labor and escaping the high import duties, cut pro duction costs. The proximity to the consumer makes it easier to adapt the products to the needs of the market there. The fact that the products cease, in a sense, to be "foreign" products may also have a salu tary effect upon sales. The Singer Sewing Machine Company's policy is to emphasize the domestic nature of their product and to avoid all reference to the for eign connections of the local concern. Few buyers in the country where the company operates branch factories realize that they are dealing with an Ameri can enterprise.
9. Separate companies.—When the foreign organi zation has become very large, with many branches and branch factories, it may be desirable in order to se cure administrative simplicity to organize a separate company to handle all foreign business. The foreign sales of the United States Steel Corporation, with few exceptions, are handled by the Steel Products Company which has charge of all the foreign offices and operates steamship lines and railroads.
Another method is to organize a separate com pany to handle the sales in each country or section of the world. Legal consideration may dictate such mode of organization. The laws of many countries being unfavorable to foreign corpora tions, separate incorporation may be the only way to escape double taxation. The Standard Oil Company controls many such separate com panies. The American Radiator Company, in order to combat the German competitors, organ ized the "National Radiator G-M-B-II" ; the Inter national Harvester Company is known in France as the "Campagnie Internationale des Machines Agri coles de France," and has five branches in France and Algiers.