Parifornia

Original insights in international business and marketing

Why International Business is Different

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Doing business internationally is one of life’s great joys and challenges.  It is immensely enriching but it is neither for the faint of heart nor for those who are by nature inflexible or who can’t look at the world from more than one perspective.  It is impossible to capture all the intricacies and subtleties of international business in a single blog post but here are a few key considerations when doing business abroad:

Languages – It goes without saying that international business is very often synonymous with different tongues being spoken.  This is especially true in large countries like China and India where a number of different dialects are spoken but also in smaller countries like Switzerland and Belgium where there are more than one official language.  Although recognized as the international language of business, English is not universally known or spoken well by others.  Best to have 1-2 other languages to fall back on in case English doesn’t cut it.

Regulatory Systems – Almost all countries have regulatory systems which govern – to various degrees – what can and can’t be sold and how it can be sold.  This is especially true for healthcare products where regulations can vary wildly from one country to another (e.g. China SFDA approval can take 18+ months in addition to FDA/CE marking whereas emerging markets like Vietnam and others have few, if any enforced requirements)

Communication Styles – Almost every country has its own particularities on how people communicate with each other or with outsiders.  Some like the Dutch or Israelis can be more direct and blunt while others like the Japanese are very formal and avoid conflict at all cost.

Business Practices – Accepted business practices are a significant factor to consider.  In the Middle East, for example, the workweek is from Sunday through Thursday.  Meanwhile, in some regions the workday starts early while in others (e.g. Spain) it can last past 8 PM.  Some countries tend to be hierarchical while others are more open and consensus driven (e.g. Scandinavia).

Trade Barriers – It’s no secret that countries often impose quotas or tariffs on imports in order to protect domestic industries.  One chief example is Brazil, but many others, including highly developed countries, rely on the same practice.

Currencies – International business is often subject to multiple currencies and their natural fluctuations.  Doing business with one country, does not necessarily mean using that nation’s currency.  Much international business is done in dollars or other currency.  Emerging countries who wish to acquire foreign goods often need to have credit letters and guarantees to support a transaction.  This often adds considerable time and complexity to international deals.

Customs – Shipping goods inside (and outside) a country can be an exercise in frustration.  Things get lost or held up for any reason.  If the paperwork isn’t quite right, you could be looking at weeks or even months to get things through. I’ve actually had products completely vanish in customs, never to be seen again.

Religion – Believe it or not, religion does have an impact on how business is conducted in a country.  In the Middle East, for example, a business woman has to be covered, she cannot drive and she cannot be left alone in the company of a man who is not her husband.  Other religions also impose (more subtle) restrictions on what business people can do.

Holidays and Vacations – It is important to be aware of a nation’s holiday schedule.  For example, the Chinese New Year is a busy travel period in Asia during which people will be less available than at other times during the year.  In Europe, you can almost forget about getting anything major done during the July/August summer holiday period.

Government’s Role – When working with other countries, you should never under-estimate the role and prevalence of the government in the economy.  Even in a highly developed country like France, 47% of the entire economy is funded by the public sector!  In other centrally run nations, understanding the  government and its policies is absolutely essential.

Politics – The type of government and its policies can weigh heavily on how hard or easy it is to do business there.  Take Iran, Syria, Cuba and you can easily appreciate how doing business with these countries can be challenging, especially if there is an embargo or trade restrictions in place.  Less extreme examples are European countries where the right to strike and social policies are regularly re-affirmed.

Infrastructure – The state of a country’s infrastructure can heavily influence how and where products get sold/distributed.  Many emerging countries still do not have a reliable road or transport system.  Similarly much of Africa and other small nations do not have a reliable communication (think high speed Internet) network.

Educational Standards – It’s important to remember that titles, degrees and educational backgrounds can vary significantly between nations.  Technical, medical or business degrees cannot always be compared as there can be wide divergences in their length, focus and quality.  For example someone with a medical degree in Russia may not have the same qualifications or competencies as a physician from Europe or the US.

Time Zones – Time can make a big difference.  Russia for example has nine (down from 11) time zones while massive countries like China and India officially only have one.  It is important to know when to reach people for best results.

Climate – Much of the developing world is in hot or tropical climates where there can be wide variations in temperatures.  It is important to keep in mind the potential impact heat and humidity can have on certain products, just as cold and dryness can have an impact on others.  Rainy seasons like the monsoon in Southeast Asia can also affect business decisions and activities.

Social Protocols – Small things like referring to people by their title or degree can be important in certain countries.  In Germany, Herr Doctor Schmidt, for example, is the common way to address a physician.  In Italy, Ingeniere Turolla would be used for Mr. Turolla if he is an engineer by training.  You generally don’t shake hands with women in Muslim countries and you look at people in the eye when you toast them in Europe.  It is still common for people in France and Germany to refer to their bosses (and colleagues) in the third person.

Labor Laws –  Many countries have complex and widely divergent laws governing employment practices.  Some countries/industries are also heavily influenced by trade unions.  Between hiring and firing, many countries in Europe for example, have literally thousands of individual practices which govern the rules of engagement between companies and their employees.  While some nations have very pro-business legislation, others tend to heavily favor or protect the employee.

Visas – Many countries won’t just automatically let you in.  Depending on the country and on your nationality, you may have to apply for work or entry visas.  These can be fairly complex, costly and time consuming.  For example, Americans wishing to do business in Russia, India or China will need to apply for entry visas.  They will in some cases require considerable documentation (Invitation letters, travel itinerary, birth certificates, etc…). They can also take several weeks to get processed, may require a visit to the nearest consulate and can cost up to several hundred dollars.  Expedited service through 3rd parties can help streamline the process but they come at a price.

Geographies – Countries are profoundly influenced by geography.  Understanding this relationship can help explain how and why people behave a certain way (e.g. Island nation, desert nation, mountain nation, etc…)

Photo Credit:   Genista via Photopin

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One comment on “Why International Business is Different

  1. Abhiram
    February 26, 2013

    Excellent information,useful for all who are planning to enter international business.

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Andrew Hyncik

Andrew Hyncik

Parifornia is the creation of Andrew Hyncik, an experienced International Marketing executive who's lived and worked for over 20 years in both Europe and North America.

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