If I opened up a small or medium business of my own, I'll go with contract manufacturing as a foreign firm manufactures goods under a domestic firm's brand because I consider myself new to the global market and there will be a lot of areas that I will make mistakes. The advantage of contract manufacturing is that I can test out my business in the global market in a different country and if I do make mistakes there won't be any big problems. The marketing can be handled by us the foreign manufacturer or by the domestic company who has more knowledge in their culture and market. It's also a win-win situation for both the domestic company and foreign firm because the contract will allow us to produce a certain volume of products to specification, while the domestic company can broaden their brand name towards the community and the market as we incorporating to produce mutual benefits. 

Moreover, if the contract manufacturing is going well and if our company would like to work with the domestic company for a longer period of time we can switch to a joint venture or direct foreign investment as the business grows. Using contract manufacturing as a solid base we can test out our abilities in a foreign market with decent knowledge with the help of the domestic company, and also building a relationship and networking with not only the domestic company but also the community we serve.  It's better to know where and what to start out first rather than control everything in a foreign country ourselves.