Doing business internationally has more to do with relationships than it does with contracts, insurance companies or lawyers
It’s Monday morning and you’re rushing to the office. The weekend should’ve been relaxing. You were planning to get out of town, to indulge in the great outdoors, maybe do some fishing. Those plans quickly collapsed, as you were glued to the television set and your laptop.
On Friday night, there were some shakeups in a South American country. The country’s young people took to the streets in protest. Before you knew it, the protests turned violent and the military was brought in. By weekend’s end, the government had been dissolved. Now the military is in control and elections are forthcoming.
You really dropped the ball on this one. The company you work for has recently begun investing in the country, exporting products there. You were even promoted to oversee operations. For such a big venture, you should’ve done research, dug into the country’s history and socio-political climate more thoroughly. If you took the time and visited the country a few times, you would’ve felt the unrest, would’ve realized that the whole country was teetering on the edge of a cliff. With high unemployment rates for young people and an unfavorable president in office, such chaos was to be expected. After all, this country has a history of revolt and government shakeup, but you were seduced by the words of an administration on life support.
Now your job is on life support, as your company’s warehouses were plundered and burned to the ground. The amount of money lost is staggering…
As you enter the office, you wonder, Where did it all go wrong?
Exporting seems simple enough, doesn’t it? Goods are produced in the US, let’s say, and exported to another country. Exporting is as old as humankind is, and is integral to a company’s success, in terms of both profit and growth. Unfortunately, there is much risk associated with ‘exporting’, including country risk, financial risk, transportation risk, among others.
Too many businesses are seduced by the almighty dollar sign and engage in international relations without a proper plan in place. This is the same as walking in the pitch black without a flashlight. It is, of course, a big mistake. You will most certainly stub your toe or, in terms of a business, lose A LOT of money. A company can’t simply decide to export products or services to another country. It must plan, and plan accordingly.
Planning accordingly involves visiting the country and building relationships with business partners and government officials. Meet their families and share meals with them. While this may seem simple, you’d be surprised to find out how many companies don’t do this. By establishing bonds, you will better understand the country’s business climate, all while gaining much-needed acceptance for your product and/or service. In the event of unrest or, God forbid, a massive political shakeup, your products and interests are more likely to be protected.
As Zig Ziglar puts it, “People who have good relationships at home are more effective in the marketplace.” Doing business internationally has more to do with relationships than it does with contracts, insurance companies or lawyers. In a way, the country is your new home. At the end of the day, it’s all about building trust and fostering relationships with clients. This will (hopefully) protect you and your interests from political violence, expropriation, currency inconvertibility, non-payment and wrongful calling on standby L/C bond.
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Post by Mike Diati