Business abroad offers great opportunity as long as you understand and evaluate potential obstacles.
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Recap Of Challenges
Doing business abroad offers great opportunity as long as you understand and evaluate potential obstacles. Persistent problem areas include currency exchange fluctuations; intellectual property rights protection; cultural differences in need and receptivity towards specific products and services; establishing viable shipping logistics; dealing with foreign rules and regulations; credit card usage; cross-time zone management challenges; and disaster management.
However, if you do your due diligence, you will be well positioned to take advantage of the projected growth of 86% in international trade in the next 15 years (HSBC).
Tips For Improving Your Odds Of Success
- Get help from export assistance offices. Begin with the U.S. government site, www.export.gov where you’ll find valuable information about and support for new exporting ventures. There are numerous U.S. state-based and foreign nation export assistance offices located around the world dedicated to helping you.
- Carefully screen your foreign partners. Getting the right business partner in each country is vital to your success. Carefully investigate your potential partner’s financial status and business/community reputation. Do they have access to the essential resources required to bring your product or service to their home turf?
- Hire a well-respected international trade attorney. You will need the protection of an experienced attorney specializing in international trade and protection of intellectual property. They can help shield you from domestic competitors who may use legal (or illegal) means to undermine your invasion of ‘their market.’
- Make sure protective foreign regulations are enforced At first look, some target countries have regulations that would seem to protect foreign investors but are simply not enforced. This, of course, constitutes a ‘no-go.’
- Choose the right business model. Do you want to establish a franchise, joint venture or company-owned business? Each has advantages and disadvantages. But choose carefully because the business model you select will determine your earnings for years t come. Also, make sure that whatever business model you select is replicable. You don’t want to reinvent the wheel in subsequent international ventures, though modifications will be necessary. Finally, be cautious about long-term agreements in foreign markets.
- Set up a Virtual Office (VO). A VO will provide your company with a prestigious local address where you can send and receive mail and have a person responding to local phone calls who speaks the native language. Look for an expandable location in which you can rent/purchase additional office space as needed.
- Be patient, but not too patient. Be prepared for initial losses as your product/service gets established. Plan for long-term success with a five-year + business plan.
International Business Is Becoming Easier As Corruption Declines
Since 2010, the World Bank report has reported a significant increase in international business reforms. One of their recent reports states, “Governments in 125 countries out of 183 evaluated in the study implemented a total of 245 business regulatory reforms, up 13 percent within the span of one year.” Improvements include things like ease of getting construction permits and simpler tax compliance rules.
A parallel reduction in corruption is encouraging, spurred by the growing public and private sector realization that honesty accelerates growth. A recent survey found that 81 percent of international companies strongly favor anticorruption laws for this basic reason.
- “Companies from countries with tight enforcement report fewer losses than before from corrupt competitors. In 2006, 44 percent of US companies said they had lost out to corrupt competitors, compared with only 24 percent in 2015.”
The growing middle class in emerging economies is demanding greater honesty in government. This dynamic is now playing out in Brazil’s current political implosion. Whistleblower hackers are playing an essential supporting role, as well, as can be seen in the recent release of the Panama Papers. Bottom line– it is becoming more difficult for international elites to hide ill-gotten gains and avoid legitimate taxation in secret offshore accounts.