Friday, March 26, 2010

O Canada! Great Market to the North

Today I'm writing about America's most important and strategic trading partner. Not only is Canada our largest export market, but the US-Canadian relationship is the higest volume trading relationship between two countries in the world ($535 billion last year).

For American readers, here are a few facts you should know:

- Canada's GDP and population is roughly 1/10th of that of the U.S.

- Most of its population lives within 100 miles of the U.S. border.

- Canada has solid governance, with relatively low corporate tax rates, a low cost healthcare system, and have their national debt under control.

- Many industries in Canada are clustered in cities with university programs and local infrastructure to support local companies. For instance, the biofuels industry has a cluster around the city of Guelph in southern Ontario.

- The Canadian government has many grants for companies in industries it tries to cultivate. If your US-based company is lucky enough to be in one of these industries, then I recommend seeking out a Canadian partner to help finance innovation to keep on top of competition in your field.

- Canada has a progressive immigration policy that has attracted professional talent from all over the world. This talent pool may be particularly appealing to technology sector companies.

Entrepreneurs, I wish you the best success in Canada and any other markets you enter!

Wednesday, March 17, 2010

How to Keep Overseas Partnerships From Failing

Everyone has either experienced or heard of an overseas business partnership that fell apart. I find that most people I talk to tend to blame the foreign partner for the demise of the relationship. The typical story goes something like this:

We started the partnership to take advantage of opportunities in the local market. But they had issues that they never resolved. Eventually we lost trust in them. Finally we just ended it.

Partnerships Need to be Mutually Beneficial
In the best partnerships, each partner has taken the time to understand the other's business and finds ways to help the partner be successful. That means open communications when the partnership is being formed about needs, expectations, priorities, etc. And the more important the partnership is to the overall success of the company, the more that partner will invest in the success of the partnership.

Sign the Contract, Then be Ready to Re-Negotiate Many Times
Anyone who has managed a project of any size can tell you that one of the most important roles of the project manager is issue tracking and resolution. Too many times especially Western companies expect that a detailed contract specifies the roles of each partner. The reality is that once the contract is signed, the negotiations don't stop. Roles need to change based on changing business conditions in country. That doesn't mean that the foreign partner should dictate new terms, but that both partners need to work together to address issues as they arise to ensure a successful ongoing partnership.

There May not be a Messenger
In the US, we say "don't shoot the messenger" - meaning you shouldn't hold bad news against the person delivering the message. In many places, they just won't give you the message that there's a serious issue. Instead they'll try to fix it themselves. By the time the partner hears about it, the issue could jeopardize the project! This is where individual relationships are important. During periodic trips to the partner, talk to your counterpart in private (never in a group) about any issues you can help with. These informal chats could save the partnership.

I wish you all great success with all your partnerships!

Tuesday, March 2, 2010

How to Fail Miserably in Chinese Business Ventures

China represents so much opportunity for most industries, yet few business environments are as risky for many foreign-based business professionals. In this post, I'll focus on the biggest mistakes that I think entrepreneurs need to avoid in order to take advantage of the world's fastest growing market.

#1 Mistake: Underestimating Relationship Building

In China (& most of the world), relationships between individuals and organizations are the foundation of the business environment. A Chinese businessman will spend a significant amount of time getting to know their counterparts before making a sale or forming a partnership. Chinese will be judging you based on your behavior, your appearance, etc. Don't underestimate the importance of business cards, business dinners and sightseeing organized by your host and know the cultural rules. Many Westerners feel that "time is money" and their goal is to get a signed contract as soon as possible. This approach will sink your deal. Take your time and you should be rewarded.

#2 Mistake: Assuming the Deal is Done When the Contract is Signed

Many deals between Chinese and Western companies fall apart in the implementation stage. Contracts in China are more of a memorandum of understanding. They are rarely enforceable in the same way as in the West. That may scare the lawyers out there, but deals built on the foundation of a relationship instead of the law are normally more durable. Chinese companies are used to a rapidly changing business environment. They expect their business partners to be flexible to deal with changing conditions on the ground. When the Chinese business comes back to their foreign partner to ask for adjustments to the original agreement, the typical Western response is to point to the contract and take an inflexible position. This has been the beginning of the end to many business relationships in China.

#3 Mistake: Fighting for Intellectual Property Protection

This issue has kept many technology companies from wanting to do business in China. There is a real possibility that Chinese competitors will copy a Western product and nullify the patent or other intellectual property that is protected by law in the home country. The assumption is that the company's competitive advantage lies with patent-protected technology. I challenge this assumption. The strength of a company cannot rely on the borrowed time of a patent, but on the innovation and talents of its development team. The threat of copycats acts as a motivator to stay ahead of the competition with a better product. This improves the company's competitive standing in other markets, as well.

The most unconventional approach I've heard of was when an American software company operating on the Eastern coast of China actually tracked down the hackers that had been infultrating their system and talked them into joining their team as security experts. Talk about turning a threat into an opportunity!

China's high growth rate and large population make it an important market for many industries. Before engaging the Chinese in business, it will be important to prepare. If done right, the Chinese market could catapult your business to new heights!

Good luck to all your business ventures.

Monday, February 22, 2010

Where's the Hardest Place to Negotiate? the Middle East

I was recently asked in which culture I thought was the most difficult to negotiate a business deal. The most difficult I could think of would be to negotiate with the Roma (gypsies) of Europe. But that really doesn't come up much in international business. The Russians would be a strong candidate for most difficult, but a sharp wit and enough vodka can often help bridge the gap. No, my vote would go to Middle Eastern cultures as the hardest to navigate in negotiations.

Before I explain why, I think it is important to point out that in my experience Middle Easterners are normally warm and welcoming people. Business partnerships can often be measured in decades, with Middle Easterners showing a strong sense of commitment and loyalty to those who recipricate. Middle Easterners I have known have a wonderful sense of humor and are dedicated to their family and friends.

Now here is why the Middle Eastern cultures get my vote. Long-term business relationships depend on each side benefitting from the relationship. But when Middle Easterners (& Russians) negotiate, culturally they want to win at the other side's expense. There also can be a lot of drama (emotional displays) in the negotiation that negotiators from other cultures are not accustomed to seeing. But the final reason is that it is easy to offend a Middle Easterner and very difficult to regain the trust. This happened to me last fall. I was building rapport with a young professional Middle Eastern person. Over a period of three months, this person repeatedly offended a group of people. Instead of understanding or admitting her role in the group, this person blamed everyone but herself. In the process of complaining to me, I indirectly inferred joint responsibility for the situation. The result - an emotional volcano errupted and ties severed.

Does that mean that the rest of the world should not do business with Middle Easterners? Absolutely not. There are ways to compensate for any challenging aspects of Middle East negotiations. First, always come prepared with what you can give to the other side and what you can't. Most importantly, inflate your price to allow for deeper discounts and a perceived win-lose that is actually a win-win. Second, instead of dreading an emotional display in the attempt for deeper concessions, enjoy the show! It's for your benefit. Your role is to stay calm and focus on the long-term relationship. And finally, never directly or indirectly accuse your counterparts of any wrongdoing. Instead, focus on the negotiating issues at hand. Remember, well negotiated business relationships with Middle Easterners can be some of the strongest and most enduring to be found anywhere.

Sunday, February 7, 2010

Are You an International Entrepreneur?

People have asked me what defines an international entrepreneur. The answer might seem easy - someone who starts a company and then takes it into global markets - but that's not the answer. Here is my definition based on various academics and practicioners in the field of International Entrepreneurship:

An International Entrepreneur is someone who strategically leverages international opportunities, relationships and learning in order to improve business outcomes for their organization.

Here is what an international entrepreneur is NOT:

- Someone who reactively sells goods or services to a buyer outside of their home country.

I have talked with entrepreneurs who, when it comes to international opportunities, leave their entrepreneurial spirit behind. These leaders are normally quick to point out their international sales. But these foreign sales are mostly order taking. There is little if any effort to research foreign markets to find new market opporunities. Value chain activities are almost always exclusively based in the home market with little thought to competitive advantages that could come from foreign operations. And there is no attempt to identify foreign business partners who could help bring alternative funding sources, customer lists and other advantages to the organization. Finally, reactive international sales missed the chance to learn from foreign markets and become more competitive from that newly acquired knowledge. International entrepreneurs develop business strategies that incorporate these new sales, operations, and financial opportunities from overseas markets.

- Someone who started their own company recently.

An international entrepreneur who impresses me is Rob Joyce, CEO of The Wheelabrator Group (TWG). This company is one hundred years old - hardly a young start up. Yet TWG has gone through many changes and is now looking at how to leverage international markets for competitive advantage to serve manufacturing companies all over the world. Mr. Joyce did not start this company, but he has crafted business strategy that will ensure this medium-sized company's continued growth in mature markets like the U.S. as well as growing markets like China and India.

- An international entrepreneur must be their organization's leader.

Not true, but this person should be in a position that can affect the company's international business direction. It could be the head of sales, international sales, global ops, or the company's COO. There is a local company (Denver, Colorado, USA) with an enterprising young international sales manager. This manager developed a distributor network reaching over 90 countries worldwide, and has increased the portion of international sales from 10% to 30% of the company's revenue and a slightly higher percent of profits.

- An international entrepreneur must work for a for-profit company

Not true. Social entrepreneurs can be international as well. The International Development Enterprise is a not-for-profit organization focusing on bringing subsistance level farmers out of poverty in developing countries. Entrepreneurs from IDE have developed in-country relationships with partners in places like Bangladesh to produce irrigation equipment from local materials by local workers.

I hope this explanation helps to clarify the term International Entrepreneur. If you aspire to be an international entrepreneur, I hope these examples help spawn ideas as to where you can look for your next opportunities. Good luck to all!

Thursday, January 28, 2010

Recycled International Ideas Contest Extended - per Request

The Entrepreneur Community Online (ECO) has asked me to extend the International Entrepreneur Recycled Ideas Contest deadline to February 15th. This will give their members time to retweet and allow time for twitter followers to send in their best recycled entries. I look forward to reading everyone's ideas!

Friday, January 22, 2010

International Entrepreneur Contest - Recycle Your Unused Ideas!

It's time to bring your unused entrepreneurial ideas out into the light!

The person who sends in the best international product or service idea will win the first ever International Entrepreneur Recycled Ideas Contest. I will be giving the contest winner a US$100 gift certificate to Amazon.com (or other controversial on-line store or charity of the winner's choice). I will be posting new internationally-viable product or service ideas that are submitted so that entrepreneurs around the world might be able to use some of them.

Here are the contest rules:

1. The product or service needs to be one that is currently not developed (or in development) by you or anyone else that you know of.

2. Describe your product or service idea including the problem is solves in 100 words or less in English. Post your product idea as a comment to this blog or send a link to @intlentreprenr.

3. Please include your name and a twitter address if you want it to be included with your idea.

4. The whole idea of recycling is that by sending in your unused ideas, you are relinquishing your legal rights to the idea.

5. Technological product ideas are welcome, but please describe your product in non-technical terms.

6. You can post more than one idea, but the most you can post is three ideas, so please make them you best!

7. Entrepreneurs from around the world are encouraged to send entries! For non-native English speakers, ideas will not be discounted in any way for grammar or spelling errors.

8. Deadline for entries is midnight, January 31, 2010. The winner will be announced February 3rd and all viable ideas will be posted within the week following.

So let the brainstorming begin!

Becky DeStigter
The International Entrepreneur

Thursday, December 10, 2009

Market Opportunities in Surprising Places

The last time Brazil played in the final World Cup football matches, there was a surge of large flat screen television sales in Brazilian cities. That shouldn't surprise any marketer. What was surprising was who was buying them. The urban poor living in favelas (shantytowns) of major cities were the main consumers of these high-end consumer products. But how is that possible? Groups of neighbors pooled their money together to buy one TV for several families.

Those business professionals trained in industrialized countries often look for similar market characteristics when we expand our companies into overseas markets. If I sell cars to a certain segment of the domestic market, I look for the same segment in overseas markets. That may initially lead me to markets in Canada, Japan, and the European Union.

Entrepreneurs always need to think smarter than their larger competitors in order to survive and to thrive. One market opportunity that should not be overlooked is the possibility of selling into lower income markets overseas.

Wait a minute - with limited resources I should try selling my product into markets with LESS disposable income? Depending on circumstances, yes. I'm a big fan of C.K. Prahalad, who has researched and written extensively on serving the world's poor without sacrificing profits.

Here are some reasons why:


Group Buying Power
Many cultures are more collectivist and may be comfortable buying as a group of neighbors or as a village. This pools together buying power, like the favela flat screens. In China, families often pool several incomes together to buy the highest status car that the family can afford.

Gotta Have It Products
Cultural values can affect buying behavior. China's one-child policy has created families where one child is supported often by two working parents and up to four working grandparents. That child's future, especially through education, is the entire family's priority. Any product or service that helps to improve a child's academic performance even slightly would be very marketable in China regardless of the country's lower GDP per capita.

Repackaging Can Be the Answer

In my culture (U.S.), buying products in bulk is practically a sport. The reasoning is that the bigger the package, the better the value. In most other countries, products are sold in smaller quantities. Instead of a package of 10 men's razors, a consumer would buy just one razor at a time. Instead of buying a computer, a consumer might pay per use at a computer kiosk near their home.

According to Dr. Prahalad in his HBR (9/02) article, there are approximately 100 million people on the planet with annual income over $20,000. There are 2 billion people with income of $2,000-20,000 and another 4 billion with incomes under $2,000. Is your product or service one that could be altered to profitably serve the majority of the world's consumers?

If you have questions about overseas marketing strategies, including how to sell into developing countries, please send me an email: intl.entrepreneur@gmail.com

Wednesday, November 4, 2009

Think you know American values?

I took a course last year on Cross-Cultural Management from Dr. Kang-Rae Cho at the University of Colorado Denver. It covered all the theories on cross-cultural studies from Hofstede, Trompenaars, Farmer-Richmond etc. But what I found most interesting was the following description of mainstream American cultural values. Like most readers of this blog, my focus is outward towards the rest of the world and not closely examining my fellow Americans. I've also lived outside the country, so I thought I would have known all of these traits. There were a few surprises.

Quick note: as with all cultural descriptions these are generalizations and all traits to not necessarily apply to all Americans and may be more or less pronounced in specific regions of the country:

Mainstream American Cultural Traits
(per Dr. Kang-Rae Cho)

1. A high value on "Material well-being". For some, this can also be materialism.

2. 2-fold judgement based on principle. Think of our Presidential elections and political parties

3. Tendency of moralizing. Americans know what I'm talking about.

4. Distinction between "work" and "play"

5. Special attitude towards time. "Time is money." "Time management", etc.

6. High value on Individual Efforts and Optimism.

7. High value on Individualism and Individual Freedom.

8. When it's man vs. nature, man wins

9. Avoid uncertainty through legal process (courts, contracts, etc.) and goal setting

10. Egalitarianism and Fairness

11. Importance of "belonging" - membership

12. Humanitarianism and generosity

13. Nationalistic and patriotic

14. Religiousity (very religious)

I'll be interested in reading your comments!! - Becky

Tuesday, October 27, 2009

Can you be TOO culturally intelligent?

I recently read an article that has got me thinking - is it possible to be too culturally sensitive? Author Dr. Bob March describes his friend who had learned Japanese language and customs so well that he actually offended his Japanese counterparts by acting too Japanese. Here's the article: http://www.negotiations.com/articles/appropriate-behaviour/

This has happened to me too. I was an exchange student 20 years ago from the U.S. to a village near Nijmegen in the Netherlands and still regularly speak Dutch (with a little Nijmegese accent) with friends both in the Netherlands and also in Denver where I now live.

Dutch (and Flemish) people are often grateful when a foreign visitor learns even a word or two in their language, and even more so when someone has taken the time to become fluent. But perhaps people have gotten too comfortable with my language that they've categorized me as in some way as Dutch. So... when I can't quite think of a word or mix up grammar a little, the person often looks at me like something's not quite right.

There's a Dutch group that meets in Denver. It's a great group of people, who mark major Dutch holidays together (Queen's Day, Sinterklaas, etc.) along with showing Dutch films and eating Indonesian food. I've participated many times in the past 4 years and enjoyed the group's company. But there's always a little hesitation by certain group members to say - you're not really Dutch, are you? No matter how much I know about the Dutch culture, it's never quite enough for some I think to feel comfortable with me.

So now that you know my perspective on this topic, I'd be very interested to hear about other people's experiences after cultural immersion. And... is there such a thing as being TOO culturally intelligent?