Here’s how to take your business overseas. Discover useful and informative global business tips.

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We’re all aware of stories about how firms get cheated in overseas dealings. Businesses complain of it, and there seems to be little way to enforce a company’s rights in overseas markets. Sometimes it’s foreign companies that cheat us, sometimes foreign governments.

While we may not be able to protect ourselves, here are the most popular ones to avoid:

• Pretending to be a buyer
U.S. firms are likely prey. A foreign firm approaches a “supplier” and starts asking for quotes and proposals. Once the U.S. firm feels a deal is in the works, they start to do everything possible to curry favor with their new “buyer.” The “buyer” isn’t a customer at all, but a potential competitor wanting to learn about trade secrets, intellectual property, sales methodology, pricing, service, etc.

Solution: Start with small pilot projects to generate trust and cash flow.

• Needing to register your intellectual property
Many times a foreign buyer, consultant, or agent needs blueprints, technical specifications, source code, ingredients lists or other sensitive items in order to “register your firm with the government.” Handing over the secret-sauce recipe has happened to more companies than we can count. Also, some foreign governments will reveal your technology to local competitors.

Solution: Don’t register through third parties you don’t know well. Keep a piece of your IP to yourself.

• Putting your firm (or trademark) in their name
Burger King, Ford, Car & Driver magazine and Reader’s Digest have been some of the many companies that have been taken by this scam. Firms work with unknown consultants, and the consultants have been known to register the company name for themselves and blackmail the parent company into buying its own name back.

In other words, a Taiwanese consultant knows that ABC firm is planning to enter Taiwan, so the consultant trademarks the name without ABC firm’s knowledge.

Solution: Register your name in any markets you are thinking about. All countries have embassies in the United States where this can be done.

• Show high interest, then stall

First of all, most overseas negotiations take longer than U.S. negotiations. But many negotiating parties like to drag it out endlessly. They may do this because they are working with a competitor, or they may be one themselves.

Solution: Plan on long time horizons to begin with, and do proper due-diligence on your negotiation counterpart.

• Bad payment documents, holding shipment hostage
International trade is most often financed through financial vehicles such as letters of credit (a guarantee from your bank to theirs to pay if shipments are done properly). Regularly these documents are not perfectly completed, and the banks won’t pay if anything is amiss. (For example, a delivery date is one day late.) The customer then tells the supplier that they will get the letter of credit cleared if the supplier lowers his price. The supplier has to decide whether to take less, or have the ship bring back the merchandise

Solution: Verify your payment documents with an expert. Try to use the same bank on the buyer’s and seller’s side. Or open a bank account near your customer.

• Tying up your international rights
U.S. firms are often ignorant as to how international market entry is performed. They can often fall prey to charlatans who offer them a “no money down” deal to export. They simply ask for the international sales rights to your product. When they don’t perform, you have missed a market opportunity and may be blackmailed into buying the rights back from them.

Solution: Start by handing the rights over to, say, just one country. If the intermediary performs, move on to more countries.

• Losing your brand legally
In some countries, it can become impossible to change distribution. You may be finding a distributor in Mexico, for example. When that distributor doesn’t perform, it can be impossible to get out of the relationship. The distributor can argue to the Mexican court that it has taken all risk, and the U.S. firm is needlessly stopping them from succeeding.

Solution: Slow down. Get to know your distributor.
• Dialing for dollars
Sometimes a distributor or retailer will be selling your product for you in their country, and you will get “dialed for dollars.” The conversation goes something like this: “Give us $200,000 now or your product is off the shelves.” You can’t sue, you don’t want to lose the market, and you don’t want to pay blackmail.

Solution: Plan on a marketing budget in foreign countries. Take control over your marketing efforts so no one can dictate terms. Use a marketing mix and have several methods of distribution and sales
available to you.

There is obviously a pattern here. Slow down, do your homework, make real efforts in foreign markets, and prepare to spend time and money. These scams are common overseas, and you’ll often find them right here in the United States as well.

Technorati Tags: international business, international advice, international strategy, foreign trade, market entry

The trend is obvious. US firms crushed by a credit crises and fear in the private equity and capital markets need to look elsewhere for money. Many are looking overseas for Chinese, Japanese, and European investment.

Hat in hand, our executives travel to these far off and distant capital markets in search of money to grow, and money to survive. Many come back empty handed.

How can a US firm position itself to get foreign investors?

1) Follow the first rule of sales: make it easy to buy. Put your literature, marketing materials, and website in localized forms for overseas audiences. When using English, simplify it. When selling a piece of your firm to Germans, have the courtesy to remember that English is not their first language.

2) Commit or Forget. Partnerships are harder than marriages. If you take someone else’s money, you take on their demands, curiosity and compliance requirements. You will need to cater to them, not the other way around. You may have business and social demands placed upon you.

3) Be extremely flexible. People from various cultures handle money differently. They may have meetings at times of the day or week that are unusual for outsiders. They may spend much more time getting to know you than you are accustomed to. If you can’t bend, you will break.

4) Forget the rush. When I hear things like: “We need Chinese money and we need it now,” then we know we have a recipe for disaster. Most countries move more slowly than we do. And our emergency is, quite frankly, not their problem. There is nothing more ridiculous than an American CEO telling a Chinese venture fund that they need the money in 30 days. Save the plane fare if that is your approach.

5) Make a safe haven for them. Investors need to know they will be welcome (not just their money). Make sure you have an appropriate place for them to stay when they visit, with appropriate meals and activities. Bring them translators and culturally sensitive people on this side of the ocean.

6) Ditch your NDA and your Non-Circumvent. That’s like starting a meeting and saying, “hello. I don’t trust you, but need your money.” And you won’t enforce them anyway, because you can’t!

7) No power point. No “canned” presentations. You will be better off asking your investors about themselves, their goals, their fears, and their frustrations in foreign investing. If you need to present something, use creative words and communicate to a partner, not an audience. Remember, business is not business. Business is personal.

Plan your investment meetings as you would sales calls. Have a schedule of meetings, a follow up program, a customer contact program, information sessions, and frequent get-togethers. It’s hard to sell Wall Street with a one-call close. How can you sell Hong Kong with that approach?

9) Listen, listen, and listen. Too many presentations (money raising or any others for that matter) are “presentation focused.” It’s better to ask than tell, and better to show you are listening than to be the best pitchman in history. Many cultures are indirect. Hence, you may require listening lessons.

10) Offer a menu of options for amount of funds needed. It’s best to offer more than one way to participate. The successful money raising deals I’ve been involved with utilized a menu of options. “if we get X, we can do Y and you, the investor, get Z. If we get X+2, we can do Y+3, and you get +4.”

11) Offer an array of options for the investment vehicle. Loans, equity, warrants, stock options and combinations of these vehicles should all be utilized to increase the investor’s comfort.

12) Don’t meet without “deal authority.” Nothing will be more infuriating to an overseas investor than someone who is representing the opportunity, but doesn’t have the authority to change or close a deal.

13) Be prepared to do favors. These can range from helping the investor’s other business interests (carrying their products, structuring their export departments, or training their staff for examples) to helping the investor’s personal interests (helping their children find housing in the USA, for example)

14) Consider opening a bank account in the investor’s country. Why should someone who is helping you have to deal with currency conversion, exchange rates and wire transfers? Remember that first rule of sales?

15) Consider opening a subsidiary of your firm in the investor’s country. This allows the investor a chance to recoup losses, have local presence, add or subtract funding as needed, while learning more about your business. It also shows a major commitment by you to the country and the culture

These methods should be used in combination with each other. None of them are a guarantee you will get your funding. Omitting most of them will probably guarantee that you won’t.

The term “America” or “American” will always strike emotion overseas. Many other countries seem more neutral, but the United States has its history, its power and its media.

Now more than ever, the United States is a controversial business ally. In addition to fighting two wars, we have a declining stock market, CEOs going to jail, widespread corruption in industry, banks that can’t lend and the biggest job losses in decades.

How then, can we possible sell our wares abroad? How can we overcome the new stigmas that are being piled onto the old ones?

Below are some survival tips for those firms that need overseas marketplaces. None of them are panaceas, (as there isn’t a single cure to our damaged reputation).

No moralizing: Companies and universities throughout the United States are continually talking about corporate governance and business ethics. Some universities teach courses on it. Firms are discussing it more and more. The sad truth is that few people believe it. Few people overseas ever believed that the United States was the moral and ethical leader of the world.
Now with constant scandals, CEOs taking bonuses the night before they receive government aid and a complete mismanagement of taxpayer funds, there is doubt we can ever talk about ethics without being laughed at.

If you want to be taken seriously overseas, don’t talk about your corporate ethics. Ethics are a suit of clothes anyway, so it’s prudent to remember that an overseas customer may have different ethics than you and still consider himself to be ethical.

Get local: The less you are an American, the less baggage you carry with you. If you can establish your firm as a local firm in your market (for example: you become a German firm in Germany), you will be seen as local. Localize your website, your marketing materials, your product and your staff. Let your German employees deal with your German customers.

Find a partner: If you can wrap your product in a foreign partner’s wrapping, you are doing better. Better for you to supply the technology to a Japanese website, or put your cereal into a French box, than to go it alone. The more French you appear to be, the more likely your French customers will buy.

Go person to person: Because international business is done though relationship, it’s time to think of yourself (not your firm or your country) as the business partner. You may be trapped in a country with controversy, and your counterpart may be living in an impoverished country, but it’s the two of you that have the bond, not your respective countries.

Bank overseas: One of the first things that a firm selling abroad should do is have a local banking relationship. Make it easy for your clients to pay you locally. Ask them which bank they prefer to do business with. This will enhance transaction ease and trust at the same time.
Remember we aren’t alone: If you’re realistic, you are carrying a sense of embarrassment with you. Because the current recession is indeed global, your counterpart’s country has its own woes and issues.

If you can remember that whomever you meet may have a sense of shame greater than yours, you can work on future cooperation instead of assigning blame.

Use “power distance” to your advantage: Power distance refers to the emotional distance between a citizen and those who govern the citizen. We call our president “Mr.” and critique him constantly (low power distance). We refer to our CEOs by name (often first names). Increasing that power distance helps separate you from your leaders. By contrast, the leader in Iran is called Ayatallah (reflection of Allah).

Offer financing: With trust at an all-time low, be ready to finance your deals for your clients. If you are shipping sports drinks to Mexico, you may not get paid until way after the drink is consumed. Be ready to wait and assist your clients in financing.

Be prepared to admit it: Telling an overseas business person that you don’t wish to discuss politics is the same as saying “I don’t want to know you.” Prepare to play the diplomatic role and be questioned on U.S. politics, progress and other issues. Admit our wrongdoings and ask for forgiveness.

Don’t take it personally: Listening to someone badmouth your country, your company, your family or even your street isn’t easy. Remember, most people have their opinions shaped. Few take the time to realize that while we have many firms in trouble, we also have firms that provide good wages, clean jobs and add value to society. We have a recession; things haven’t grinded to a haut.

These pointers should be used at the best of times to help with international market shares. They are certainly necessary at the worst of times.

Technorati Tags: international market entry, international business, global business, international marketer, Obama

1.Lack of preparation.
The three P’s of negotiation are preparation, preparation, and preparation. Do you know about the people with whom you will negotiate? Do you understand anything about their history, culture, or needs? Have you researched the firm you are speaking with, and brought in a guide to coach you as to what to expect? Is your negotiation team prepared, with each member having assigned roles and responsibilities?

Has your team practiced speaking through an interpreter (if that will be necessary)? Are they carrying the correct audio visual aids, and translated materials?

2. Lack of control
It is essential to try to control the timing, pacing and venue of negotiations. Where will these negotiations take place? Under what circumstances, and naturally, what points will be covered? Has your team submitted and agenda, and had that agenda been agreed upon? Has the negotiating team received the correct buy-in and deal authority from headquarters?

Most importantly, it is necessary to control one’s own emotions and prejudices

3. Assuming the other party is “unethical.”
The US “cards on the table” approach is seldom used overseas. Many negotiators have additional points or concessions they wish to discuss after the large, basic framework has been agreed upon. Many negotiators may move from point to point without necessarily agreeing on previous points, whereas US negotiators like to finish points, sign off on them, and move on.

The Japanese non-confrontational style often involves changing a contract and submitting it their counterparts, without any verbal discussion. This behavior often infuriates Americans, who feel that altering the document implies subterfuge.

4. Assuming the negotiations has “rules.”
Many foreign negotiators will not necessarily abide by agreed upon agendas, timetables, or protocols. When we negotiate overseas, we need to remember that we are guests in their country. Americans often feel that negotiation takes place at set places and set times. Japanese, Chinese, or Greeks may prefer to continue informal talks over Sake, food, or Ouzo. Russians can shake hands in a meeting, and expect the other party to abide by what has been stated, well before anyone writes it down and puts the agreement in writing.

5. Perceiving that whoever has more money, will win the negotiation.
Certainly Americans must have heard of union negotiations in the USA. Labor negotiations overseas are even more difficult, and the almighty buck does not hold the same clout in most markets. Asian factories can be difficult to work with, as those factories require finessing and nurturing as well. The one liner: “you may have the money, but they have the market.”

6. Sending in the wrong negotiators
This error takes many forms. “Meyer the buyer” who has been making coffee mugs in Asia since 1975 is not the correct person to negotiate market access in China. A Spanish speaking engineer should not be chosen to spearhead an acquisition in Venezuela. The greatest Mergers and Acquisitions specialist who needs to speak entirely through an interpreter and can only look at the financials of a deal should not solely be representing a firm in Malaysia. Americans often send in three teams to enter a market; a research team, a negotiation team, and an implementation team. This approach is also confusing to many Asians and Eastern Europeans, who seek one “champion” of the project.

7. Not getting your counterparts to buy into the process
So rarely do we actually “frame” a negotiation; whereby we discuss how we would like to proceed, what obstacles may exist, what the likely outcomes may be, and what strategies we may employ to solve differences. For example, are we using market rate to determine the value of a piece of real estate, or the building costs? And if we use market value, how will that be determined?

8. Not establishing a personal relationship with your counterparts
Business isn’t business. Business is personal. Most cultures don’t look at the deal as the end result, but the relationship which will last for many deals. Americans often find questions about family, friends, experiences, and hobbies somewhat offensive. These probing questions are asked so that the other party can get to know the people involved, and personal questions are meant to bridge, not to pry.

9. Time
The biggest difference between cultures is the perception of time. American s refers to time as no other culture does (overtime, spend time, waste time, time is money). And if we are to build personal relationships and iron out differences, then we need to be prepared to spend a lot of time; dedicated, executive time, in working together. A quick rule of thumb…if one is going overseas to negotiate, never plan on going for less than a week, and be sure to leave dates of the next meetings confirmed.

10. Assuming the contract is “holy.”
Americans place undo importance on the written contract as the binding document. But even in America, contracts are constantly broken, and renegotiated. Many cultures refer to a contract as an “outline.” The one liner: “1st a contract, then a negotiation.”

Technorati Tags: international market entry, international business, global business, international marketer, Obama

The trend is obvious: U.S. firms, crushed by a credit crisis and fear in the private equity and capital markets, need to look elsewhere for money. Many are looking overseas for Chinese, Japanese and European investment.

Hat in hand, our executives travel to these far-off capital markets in search of money to survive and grow. Many come back empty-handed.

How can a U.S. firm position itself to get foreign investors?
• Follow the first rule of sales: Make it easy to buy — Put your literature, marketing materials and website in localized forms for overseas audiences. When using English, simplify it. When selling a piece of your firm to Germans, have the courtesy to remember that English isn’t their first language.
• Commit or forget — Partnerships are harder than marriages. If you take someone else’s money, you take on their demands, curiosity and compliance requirements. You will need to cater to them, not the other way around. You may have business and social demands placed upon you.
• Be flexible — People from various cultures handle money differently. They may have meetings at times of the day or week that are unusual for outsiders. They may spend much more time getting to know you than you’re accustomed to. If you can’t bend, you will break.
• Forget the rush — When I hear things such as, “We need Chinese money and we need it now,” then we know we have a recipe for disaster. Most countries move more slowly than we do. And our emergency isn’t their problem.

There’s nothing more ridiculous than an American CEO telling a Chinese venture fund that they need the money in 30 days. Save the plane fare if that’s your approach.
• Make a safe haven for them — Investors need to know that they (and not just their money) are welcome. Make sure you have an appropriate place for them to stay when they visit, with the proper meals and activities. Bring them translators and culturally sensitive people from this side of the ocean.
• Ditch your nondisclosure agreement and noncircumvent agreement — That’s like starting a meeting and saying, “Hello. I don’t trust you, but need your money.” And you won’t enforce them anyway, because you can’t.
• No power point — No canned presentations. You’ll be better off asking your investors about themselves, their goals, fears and frustrations in foreign investing. If you need to present something, use creative words and communicate to a partner, not an audience. Remember, business isn’t business. Business is personal.
• Plan your investment meetings as you would sales calls — Have a schedule of meetings, a follow-up program, a customer contact program, information sessions and frequent get-togethers. It’s hard to sell Wall Street with a one-call close. How can you sell Hong Kong with that approach?
• Listen, listen and listen — Too many presentations (money-raising or any others, for that matter) are presentation-focused. It’s better to ask than tell, and better to show you’re listening than to be the best pitchman in history. Many cultures are indirect. Hence, you may require listening lessons.
• Offer a menu of options for amount of funds needed — It’s best to offer more than one way to participate. Successful money-raising deals utilize a menu of options. “If we get X, we can do Y and you, the investor, get Z. If we get X+2, we can do Y+3, and you get Z+4.”
• Offer an array of options for the investment vehicle — Loans, equity, warrants, stock options and combinations of them all should be utilized to increase the investor’s comfort.
• Don’t meet without “deal authority” — Nothing will be more infuriating to an overseas investor than someone who’s representing the opportunity, but doesn’t have the authority to change or close a deal.
• Be prepared to do favors — These can range from helping the investor’s other business interests (for example, carrying their products, structuring their export departments or training their staff) to helping the investor’s personal interests (helping their children find housing in the United States, for example).
• Consider opening a bank account in the investor’s country — Why should someone who’s helping you have to deal with currency conversion, exchange rates and wire transfers? Remember that first rule of sales?
• Consider opening a subsidiary of your firm in the investor’s country — This allows the investor a chance to recoup losses, have local presence, and add or subtract funding as needed, while learning more about your business. It also shows a major commitment by you to the country and the culture.

These methods should be used in combination with each other. None of them guarantee you’ll get your funding. Omitting most of them probably will guarantee that you won’t.

Technorati Tags: international business, international advice, international strategy, foreign trade, market entry, funny business

What the world told me about Tuesday’s election.

Who am I?
As a regular global business columnist for the DBJ, many have read my thoughts and tips on global business. My field is international market entry, and my firm specializes in taking firms into foreign markets through sales, distribution, acquisitions, and strategic alliances. I only mention this to demonstrate that I am in touch with people from overseas regularly, often daily. The magnitude of work my firm performs forces long term, intimate relationships with my clients and business associates. We are able to speak directly, and no issue is considered taboo. I’ve been at this for over 25 years, and worked on 6 continents in 72 countries.

Disclaimer
As a disclaimer, I cannot begin to speak to or surmise what 6 billion people think of the US Presidential election. My knowledge is limited to my own span of attention, and much of the reading comes from my own Outlook in-box.

Oddly enough, this weekend I was raking leaves at my home, when a woman from England came to my door to campaign for Obama. She and several other Europeans had flown in for election week. How many times have we heard of that? We all knew that the world has been watching this campaign, but this is the first I have heard of Europeans campaigning on US soil, for an American election!

This morning I woke to hundreds of emails congratulating me on our new President, and expressing cheer in my being American. The emails received from my colleagues expressed gratitude, relief, enthusiasm, optimism, and of course, curiosity. When companies allow you to build markets for them in unfamiliar territory, trust becomes the most important issue. Hence, I trust what I have read and heard this morning.

Some noteworthy examples (with names omitted for obvious reasons):

“Bill, it’s about time the world’s most powerful nation did something for itself….”
- CEO, French petroleum company

“You took your country back”
- CEO, Irish Media company

“I can’t begin to tell you how happy we are in London about America’s great success. We look forward to a different kind of soldier and a different kind of way to relate to each other”
- Chief of International Development, British Real Estate Development firm , one of the world’s largest property managers

“Maybe this guy will speak TO us and not AT us”
- Executive, Dutch Trading (import/export) company

“Dear Bill, The rumors that Obama is Muslim are outrageous. As a devout Muslim, it is difficult when Americans think that all Islam is bad, and therefore the best way to slander an American is to call him a Muslim. I do think that Obama will be the first American President not to hate all Muslims. Allow me to buy you dinner next time you are in Dubai.”

- CEO, Dubai and UAE investment firm

“I guess all Americans aren’t ugly”
- Secretary, Polish TV station

“Now we don’t have to hate you, or pretend to hate you”
- CEO of several Canadian companies.

“Does this mean we are safer now?”
- Japanese “salaryman” (middle manager at an electronics firm).

“With a man like Obama in charge, this is probably good for women.”
- Swedish commercial airline pilot (female)

In the past, my firm’s experience has been that many deals originating from the US carry a stigma. We are often shunned in business due to military, economic, or foreign policy issues. (All over the world, these issues are related to business. Most countries don’t “segment” them the way we do in the US. The Ford Motor company knows this, and conducts all international export and licensing activities through Ford Canada, a Canadian company.

Several years ago my firm had scheduled a 13 country sales trip through central Europe. Due to US foreign policy, most of the CEO’s had cancelled my meetings. Only the Poles met with me and enlightened me about the marriage between US foreign policy and US products selling in Poland.

“The door is now open”
- Polish entrepreneur and industrialist

Now it seems many of our cooling relationships with our allies can warm up, creating larger and better markets for US products and services abroad. We may even thaw the ice with some of the countries who have hated us the past, creating brand new opportunities for US firms. We have learned that the more we are entrenched with other country’s economies, the less likely we are to have war with them.

As the Polish entrepreneur said so succinctly,
“The door is now open”

Technorati Tags: international market entry, international business, global business, international marketer, Obama