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On Bribes, Red Tape and Cultural Differences: Doing Business Abroad

Laurel DelaneyLaurel Delaney | September 22nd, 2008 - 06:30 AM
(15) found this useful. Do you? Yes

On Bribes, Red Tape and Cultural Differences: Doing Business AbroadIn my last post I talked about two success stories that illustrate how easy it is — provided you consider forming a strategic global alliance (SGA) — to take your business global. As a result of my post, which focused on product exports versus services, one reader raised a great question: Is there a true opportunity for consultants in the United States to do business globally or is the opportunity primarily for product companies?

I touched on the surface of the answer here but I’m going to dig a bit deeper now.

Whether you are exporting a product or service, it is a given that you will confront numerous market barriers — governmental, practical, cultural and economic. These barriers can be quite challenging, not to mention extremely frustrating, to a new-to-export service company. To overcome them and beat out the competition, you will need to plan on being aggressive and persistent, and on taking longer to establish a business presence than you may have expected. Let’s get acquainted with the barriers:

1. Government – Red tape; bureaucracy; bribes; infringements of copyrights, trademarks or patents; and special rules that only the natives seem to know about — these are just a few of the government-generated barriers you’ll encounter.

For example, you might discover that your target market has a labor regulation stating that, whenever there is a locally funded project, local experts must be hired for any required specialized services. Or there might be restrictions aimed at a specific industry, like accounting, which rule out foreign participation. Sometimes you will make dozens of solicitations, which will go unanswered — and you’ll never know why.

The most notorious barrier is the governmental regulation that the locals ignore without ever getting caught. Yes, the regulation is valid, and it’s enforced just rigorously enough to leave would-be exporters out of the trade loop. These slippery, elusive protectionist practices are very real, and they may well end up compelling you to take your business elsewhere.

What to do? Contact an American Embassy in the country you wish to do business to do the legwork up front to avoid wasting time, energy and money in a market you can’t crack.

2. Local practice and custom – Before you export your service, you must conform to global industry standards. If your service depends on scientific accuracy, for example, perform any calculations using metric measurements and notation. If you don’t, your proposal might end up in the trash because of your lack of compliance with local practices.

Presenting your proposal in the local language is an obvious necessity if you want it read and understood. If you don’t know the language, hire someone who does and get a high-quality translation. The U.S. Department of Commerce’s BuyUSA offers help on these issues.

3. Culture – Look closely at the photographs and print copy for an advertising campaign you are about to launch abroad; examine the materials you are about to use for a construction project; think through the pictures you have selected for your client’s web site — are any of these items offensive or illegal in any way?

If they are, then edit accordingly. If you don’t know, then find out from someone who does before you implement the service package. BBC News offers country profiles. Wikipedia provides country analysis if you type in the name of the country at the end of the url. For example, Chile has the word “Chile” at the end of the URL: http://en.wikipedia.org/wiki/Chile. Zimbabwe has the word “Zimbabwe” at the end: http://en.wikipedia.org/wiki/Zimbabwe.

4. Economy — One sure-fire giveaway that your target country is economically unstable is when you are locked solidly into a deal, and then find out that your customer is slow to pay or doesn’t pay at all! Also, watch out for infrastructure factors, such as astronomical prices for land, making it impossible to start a building project; undrinkable water, making it impossible to open up a tourist bar; electrical service so scant and unreliable that additional power generators are needed to keep things running smoothly.

Where to turn? The World Bank Group offers “ease of doing business” rankings for many of the world’s nations.

All these factors present very serious barriers for your service business but none so great that you cannot overcome them if you do your homework.

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About the Author: Global business expert Laurel Delaney is the founder of GlobeTrade.com. She also is the creator of “Borderbuster,” an e-newsletter, and The Global Small Business Blog, all highly regarded for their global small business coverage.

Laurel is a member of the Small Business Trends Expert Network.

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Comments

  1. Shawn | September 22nd, 2008 at 9:49 am

    I think this information is quite useful. I’ve been trying to look for more money to go back to adult college so i can finish my associates degree. Can you possibly make that your next blog post on the AMEX blog here please?

    Thanks kindly,

    Shawn

    http://www.ShawnDrewry.com

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  3. Arthur Bland | September 23rd, 2008 at 12:39 am

    Red tape generally includes the filling out of seemingly unnecessary paperwork, obtaining of unnecessary licenses, having multiple people or committees approve a decision and various low-level rules that make conducting one’s business, more difficult, or both.

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  5. Laurel Delaney | September 23rd, 2008 at 7:44 am

    Sure does Arthur — thanks. Where did you experience this? How did you overcome it? Or did you?

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  7. Jay | September 23rd, 2008 at 7:51 am

    Seems that there is much involved in global business, as would be expected. The information contained here is very helpful to those looking to take the leap. I wonder though, just exactly how helpful an American Embassy would be to you in that situation? Anyone have any experience with them?

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  9. Laurel Delaney | September 23rd, 2008 at 4:36 pm

    Thanks Jay. Waiting to see if anyone else weighs in with their experience but in the meantime, what they do — the American Embassy — is facilitate getting answers for Americans on anything relating to the country you wish to do business and they operate in.

    If they don’t have an answer, they will direct you to a key person who will at The U.S. Department of Commerce’s BuyUSA. Having an introduction like that can save you lots of time and headaches.

    The point is to leave no stone unturned when you are challenged in the global marketplace. The more people you know and trust and contact on the ground in the country you wish to do business, the better off you will be.

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  11. Arthur Bland | September 23rd, 2008 at 11:28 pm

    Hi Laurel,

    I have not yet experience it(for my personal business) but I’ve known a lot of large corporations(including where one I used to work with for a project) where this red tape seems to be a trend to them. It’s really disgusting.

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  13. Laurel Delaney | September 24th, 2008 at 7:47 am

    Arthur … understood. Also, backing up a bit to touch on your and Jay’s ‘red tape’ frustrations, I caught this article last night in Crain’s Chicago Business that goes into some detail on what you should do if you run into a situation where an overseas governmental person requests a bribe to move the business along. You can find the article here:

    http://www.chicagobusiness.com/cgi-bin/mag/article.pl?articleId=30628&seenIt=1

    There are a lot of good tidbits of information in it from handling corruption to hiring overseas employees to what to do if you do get in a dispute.

    One of the things I did not cover in my post is when you might need a good international lawyer. I’ll touch on that next time or in a future entry for it’s complicated!

    By the way, here’s another good clip in Crain’s (same issue) entitled “Russia raises red flags,” and they mention when checking the reputation of a foreign company, do a Google search but also inquire with the U.S. Embassy.

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  15. Laurel Delaney | September 24th, 2008 at 7:48 am

    Second clip referred to above:
    “Russia raises red flags”
    http://www.chicagobusiness.com/cgi-bin/mag/article.pl?articleId=30630

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  17. Arthur Bland | September 25th, 2008 at 2:32 am

    Wow. Thanks for this Laurel. :)

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  19. Faol-Inc.Com - Education Guide » On Bribes, Red Tape and Cultural Differences: Doing Business Abroad | December 19th, 2008 at 8:24 am

    […] Source: Laurel Delaney […]

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