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Dos and Don’ts of Doing Business with Foreign Companies
Go Global with Rubby A Golo, CEO Global Trade Consult
Many more companies are crossing boundaries than ever before. It is obvious that international trade and globalisation are today’s most exciting opportunities. As an international trade expert with about two decades of advising foreign businesses on doing business in Ghana, I would like to share some few tips on the dos and don’ts of doing successful business with foreign companies.
You must first of all have the courage, ambition, confidence, inspiration and ideas on how to start this new business relationship. Ask yourself which country hold opportunities for your product/service and look further than the more popular countries abroad.
Not to mention any particular western countries that is gaining popularity for a number of reasons, including their ‘diverse and dynamic economy’, could this be comparable to the differentiation your product or service might be able to offer there?
… get prepared
For me, going international requires serious preparation by the entire workforce of your company. Your company must invest time in things like learning new languages, culture, regulations and legislations, and the impact of time zones on communications. A must for you is to plan visiting the country in mind and position yourself. Talk to people who are already trading there and try to document some success stories as your business case studies. Tell yourself you are well prepared for the adventure without having the needed experience and then go out fully for it. Doing business means taking risks - at a certain point you will have to just take the plunge.
Collaboration is the future. The focus area for recovering shrinking business margins is to work together with other partners. You do not have to go international on your own, plan to use distributors or agents, have local sales presence or a local warehouse etc. Whatever approach you finally adopt, successful international business is largely dependent on the right network, business partners and contacts you build. Initiatives like joining export clubs, chamber of commerce or other entrepreneur groups can be a great starting point.
…plan and communicate
Set yourself goals. The question you must ask yourself is what exactly is it that my company want to accomplish in what timescale? What are your planned KPI’s for measuring progress? And perhaps most importantly, how and when you are going to communicate with potential partner in different time zones? Plan your visits well in advance. Do not underestimate the importance of personal contact and seeing how it works on the ground in a new country with your own eyes. For example, visit a factory, a warehouse, farms, etc. A sure way is to get your company sign up to any international trade shows/exhibition organised by foreign chamber of commerce operating in Ghana and any other government agencies such as the GIPC.
Be fully aware of all the relevant rules and legislation of the country you are interested in trading with. For example, does the Food and Drugs Authority (FDA) of that country have the same export or import regulations for your type of product? Do you have knowledge of customs procedures and requirements on handling imports and exports of goods? Or are you going to outsource and if so with whom? What about rules for labelling your products? What are the regulations on quality? Go in search of expert advice to ensure you’re covered on business critical issues. To export Ghanaian products, a sure place to get some useful information will be to talk to the Export Promotion Authority and other related agencies. Getting good legal advice is key and so make sure you discuss draft business agreements with your lawyer and get them to understand your plans and the type of business relationship you are planning on signing with your potential partners.
…take the risk
Entrepreneurship is all about taking risks. That said, for some risks, you might prefer not to take if it involves managing challenges over long distances. It is therefore important that you perform appropriate risk assessments for new activities. What exactly are the threats and how can or will you react to them if they become a reality?
…assume you can just do business like you do at home
You have to embrace the fact that you’ll be working with different cultures. Take a deep dive into what that involves, how that influences business etiquette, manners, and other cross cultural communication.
Think about demographic factors too. Age, for example, affects the demand for your service and the availability of labour. Think also about technology. Is the country as progressive and innovative as yours? Is mobility a trend or..? It could be something as ‘simple’ as meaning of colours that causes an issue. Is it the same as in your home country?
… don’t be late
Please remember there is no ‘Ghana time’ when doing business with foreigners. You must be punctual to meetings, acknowledging correspondences on time and deliver on your promise. Punctuality to foreign business partners is a sign of your seriousness and readiness to do business with them. Don’t take it for granted!
… don’t forget other costs are involved
Working toward sustainability is about quality and innovation. Running a responsible international business is about more than looking at the profitability figures. It is about finding the balance between people, goods and profit. When doing international business, sustainability should be a key driver.
Social issues such as child labour, environmental and human rights have become a constant attention point for international businesses. As such, guidelines have been created for doing business internationally, including OESO, International Labour Organization (ILO) and UN Guiding Principles on Business and Human Rights. Take the time to make sure you are aware of what is required and familiarise yourself with it.
… don’t ignore politics
The political situation regarding some countries in recent time has escalated with trade boycotts. Some have announced a ban on various commodities including vegetable imports while others have pronounced sanctions. As you cannot predict the future, keep in mind that the political situation anywhere in the world will always remain relevant and can change rapidly in some countries.
…think your product won’t be duplicated
The idea of creating imitator businesses is almost universally derided, whether or not it’s a small company ripping off a larger one. That said, imitators are sadly inevitable – with some countries more likely to present problems than others. For example, some countries are known for ‘imitations’. It is best to protect your innovations by going for intellectual property rights.
…don’t think logistics does not matter
Think about international commercial terms. Think about which transportation is most suitable from a cost/time perspective. It could be air transport when you have import specialties, perishable food or other products. But you could also profit from sea freight or a hybrid model – a combination of sea- and airfreight. Closer to home you can make use of trucks or rail to transport freight. The transportation you choose mustn’t be only about direct costs or product type though. Think carefully about knock on effects for your inventory. Long transportation time impacts your safety stock levels, makes you inflexible and eats your working capital.
Ready to make a start
Hopefully, with these dos and don’ts you are on your way to making a successful step over the border. And as I previously mentioned, if you want to go international, do your homework first, and go for it! Chances are you may land a good deal that can turn your business around.
Getting professional help to advice you on internationalizing journey
You may contact us here to receive more guidance and advice on how to reach out to international markets with your product or service. Global Trade Consult representatives will be happy to support you throughout your export journey abroad.