Congratulations! You received your first order from a foreign customer. You want to fulfill and deliver it as soon as possible to encourage repeat business. But before you package and slap on the shipping label, you might want to consider exactly what you are shipping, what its possible uses are, and which countries it will travel through en-route to its final destination.

Recently, a small U.S. manufacturer and exporter of metal alloys posed the question: “Are there any specific re-export controls of a U.S. sourced zirconium alloy used as a component in a finished product manufactured in Canada which in turn is exported to its ultimate destination in China?” If your jaw hit the floor as mine did, you might be thinking they would only be asking such a specific question for one reason. It already happened.

The root problem in the above scenario is the U.S. supplier was asking the wrong questions at the wrong time. Before fulfilling the order, they should have asked whether zirconium is controlled by any U.S. export regulations.  They would have discovered that zirconium is controlled by the International Trafficking in Arms Regulations (ITAR) as a Category V item (Explosives & Propellants) and by the Missile Technology Control Regime (MTCR) Annex to the ITAR as a Category II item when it is granulized to a certain size. They also would have discovered that zirconium is controlled by the Export Administration Regulations (EAR) when it is in a form that can be used as a component in a nuclear reactor.

Every country and region has unique challenges and risks that can significantly impact business operations. Africa is arguably the most complex continent with at least 1,000 different languages, 400 major ethnic groups, 54 countries, and nearly all the major world religions represented within. It has the greatest disparities in income between demographic groups and countries, and it is also the poorest continent in the world as measured by per capita GDP. Doing business in Africa can be challenging to say the least, but for those already operating in the country or planning to do so, this week’s lessons learned provides some sources of information that business planners, traveling teams, and logisticians may want to consult for information about Africa.

As mentioned above, African countries have complexities that other countries do not. When preparing to do business on the continent, planning and research must be more extensive than if doing business in more developed countries in Europe and Asia. Not only should planning be more extensive, but your plans will also likely be significantly different compared to non-African countries.

How will environmental conditions, low literacy rates, lack of infrastructure, human health problems, and widespread disease impact your business plans in Africa? For example, if your company will be operating manufacturing equipment or diesel machinery in the dusty conditions of the Harmattan-affected countries in West Africa, maintenance costs and downtime will be significantly higher than almost anywhere else. Also, literacy rates below 50% in most sub-Saharan countries will require user manuals and training materials that include more graphics and pictures when the audience is local.

The factors mentioned above may also affect business in non-African countries too and sources of information listed below can be helpful outside of the continent.  For simplicity sake and to offer sympathy for those confronted with planning a new venture in Africa, the sources below will direct readers to information specifically on Africa when possible.

Resources for general country information:

Library of Congress – http://www.loc.gov/index.html
The Library of Congress website provides access to video, sound recordings, maps, manuscripts, newspaper articles, and other publications that can provide a genuine understanding of African art, culture, geography, politics, and other information.

U.S. Department of State’s Bureau of African Affairs – http://www.state.gov/p/af
The State Department’s website provides general country information that you can search by topic or bureau.  It includes information from the Overseas Security Advisory Council (OSAC) on crime, safety, and current travel warnings.  It also provides historical information and fact sheets for specific countries.

Central Intelligence Agency’s World Factbook – https://www.cia.gov/library/publications/the-world-factbook/index.html
The Factbook is very user-friendly, and its database allows for instant cross-comparison of statistics by country.  It is an excellent source for general information regarding the history, society, government, economies, infrastructure, militaries, and transnational issues of individual countries.

U.S. Department of Commerce website – http://www.commerce.gov
The U.S. Department of Commerce provides economic data on their website, and they post information on existing and pending foreign trade agreements, guides on how to conduct business transactions in various countries, and economic statistics and forecasts on both countries and regions.

Country and Regional Travel and Logistical Information:

Lonely Planet Guides – http://shop.lonelyplanet.com/africa/
The Lonely Planet Guides are usually updated every few years and are available for the entire African continent, specific sub-regions (i.e., the East Africa Guide), and some individual countries; these feature cultural and language tips, information on local and seasonal weather patterns, brief country histories, hotel recommendations, country and city maps, and a wide range of other information.

Michelin Series Maps – http://www.michelintravel.com/maps-cat/africa-country-maps/
Michelin Maps often provide the most detailed information on African road networks for many countries.

Socio-economic, health, disease, and country assistance program information:

U.S. Agency for International Development (USAID) – http://www.usaid.gov/where-we-work/africa
USAID provides country program data linked to particular assistance programs, and it has wealth of information about socio-economic issues impacting specific countries.

United Nations – http://www.un.org
The UN provides mission reports and statistics on past and ongoing peace support operations in Africa.

African Union – http://www.africa-union.org
The African Union provides mission reports and statistics on past and ongoing peace support operations in Africa.

Joint United Nations Program on HIV/AIDS – http://www.unaaids.org/en
The Joint UN Program on HIV/AIDS publishes statistics, descriptions, and other data concerning the effects of endemic African diseases that may be useful for developing or justifying humanitarian assistance programs or Defense Health Program efforts.

Centers for Disease Control and Prevention (CDC) – http://www.cdc.gov
The CDC provides detailed information on various types of African diseases such as Trypanosomaisis and Ebola, and they provide information on countermeasures used to treat and prevent such diseases.

Learn more about The Country Intelligence Group here

Making the right in-country contacts is probably one of the first things you consider when you want to enter a new overseas markets. Making those connections can certainly be a major barrier to entry, and many companies rely heavily on international trade shows and trade missions to promote their products to potential buyers and distributors. However, if you rely too heavily on international trade shows to make contacts, you could be wasting a lot of time and money chasing down unfruitful leads.

For most CEOs, the primary sticking point with trade missions should be that there are no concrete statistics showing that trade missions actually increase the amount of trade between countries. This is important to consider when maximizing your return on investment for international business development. In fact, it is just as likely that a rising prevalence of international trade shows and missions are a symptom of increased trade between countries rather than the cause.

This is not to say that businesses do not make contacts that lead to future business deals during trade shows, but you must remember that you are just as likely to walk away with a bunch of “promising” new contacts that in reality can do little to help you establish a foothold.

If you want to increase the odds of breaking into a new market, you must make the right in-country contacts and build a meaningful relationship with them. Needless to say, it is difficult to make that type of connection during a trade mission, especially if you go overseas without someone who knows the dynamics of the target country.

Rather, it is better to be personally introduced to the right in-country contacts by someone they know and trust.  Enlisting the services of a seasoned foreign area expert with on-the-ground business experience in the country you want to do business is more productive than trying to make your own appointments during a trade mission and will lead to more business deals.

Besides introducing you to contacts, a foreign area business expert will also know the details of the market and business environment that you cannot find in off the shelf market research reports. An expert can quickly help you determine the needs and concerns of the in-country contacts and identify the best strategies for you to close deals with them.

Moreover, if you are only looking at countries that have trade missions on the schedule, you are missing opportunities in other countries. There is no need to allow the schedule of a trade association or government bureaucracy decide when is the best time for you to seek out in-country contacts. As with most business decisions, timing is key, and making the right contacts at the wrong time is simply not helpful.

If you have an overseas market in your crosshairs, we would enjoy hearing your thoughts and experiences with making meaningful contacts at trade shows (or otherwise).  Please reach out to us if you would like assistance finding a foreign area business expert in your target country. We are happy to leverage our network to make connections that will help grow American businesses.

I’m increasingly amazed how the world is coming together, but still so far apart. Technology has transcended geography and the unique problems of overseas operations. We can now talk, communicate, work together, and work for people thousands of miles away. It happens at the speed of electrons (in most cases). It’s easy and getting easier…If you’re willing to keep pace…and pace is both important and necessary.

However, with all the technology available today there is still a barrier to engaging in overseas activities. Cultural differences, for the most part are a very real encumbrance to anyone seeking to enlarge the scope and scale of operations into the international arena. The most obvious hurdle is language. While computer translators have come a long way toward eliminating the language gap, there are still numerous problems that any corporate professional must overcome to both open a business venture, and keep it open. Digital translators do indeed help us with the written word for correspondence and contract writing and development, but they do very little with the “last three feet” of any deal. Typically, this is the hardest and probably most important part of any transaction where your potential customer doesn’t speak the language(s) that you speak. Therefore, having someone readily available who is well versed in both languages is necessary, but that still might be insufficient. Being able to speak the language doesn’t mean that the person understands or comprehends the cultural meaning and nuances of the language.

Let me give you an example. A while back I had the opportunity to sit on a National Security Council committee which had a mission to develop strategic messages for deployment in Iraq, and specifically in Baghdad. At one of our committee meetings I had a Joint Staff desk officer for the Middle East accompany me. He happened to be born and raised in Egypt and was fluent in Arabic. At the meeting State Department representatives wanted to present a brochure listing the positive outcomes of our presence in Baghdad, which in turn would be distributed to the residents in and around the city. They had copies of the brochure in both English and Arabic for us to review. As they came around the table, I reviewed the English version and just glanced at the Arabic. The brochure looked high quality. The text and the pictures looked fine from my standpoint as well. My friend, who was not only a desk officer, but a skilled Middle East Foreign Area Officer (FAO) from the Army ignored the English version and scrutinized only the Arabic brochure. He turned to me and said, “This will absolutely not work! It reads like a Coke commercial and is just another American marketing piece being spread across an Arabic community which right now they abhor. While the language is Arabic it doesn’t read like people of Iraq would talk nor write, and there are no references to Allah which is offensive to omit in their culture. This simply just won’t work.” I was more than floored since the brochure was the product of the State Department, the very people who were supposed to be the most culturally aware in the Government. I asked him to address the committee with his concerns. Of course, the State Department developers were disappointed and said they would go back to the drawing board…a good decision.

This is a simple illustration where knowing the culture is a must when dealing in the international arena. The ability to speak the language of the customer is always a positive, but not always sufficient. Having someone who truly knows and understands the culture is the best alternative. Keep this in mind as you search out new opportunities overseas, interact with foreign partners, and develop strategic marketing campaigns and you will bridge the “last three feet” of any international venture. Good luck.

Very Respectfully,
Col. Steve Huffman (USAF, ret.)

Allegations of bribery and corruption are a deadly threat to any company regardless of size, and knowing the reach of the law and how it can affect your business is a must. Unfortunately, the Foreign Corrupt Practices Act (FCPA) is not on the radar of many companies who do business overseas, and the authorities can relentlessly prosecuting at even the slightest hint of violation. Simply having a formal policy will not protect CEOs and business owners from prosecution or absolve them of their employees’ actions. Companies must take the FCPA serious and company leaders must actively involve themselves in complying with the law.

Bruce Alan Johnson is the foremost expert when it comes to spotting FCPA violations and when recently asked, he said that FCPA is especially tricky, for two reasons. First (as if this is going to surprise you), lawyers have leapt forward to claim the territory and convince companies that they need to hire them for FCPA protection. This is like hiring an arsonist to teach you fire safety. With very few exceptions, lawyers have little experience in the international arena, and they usually do not have the required first-hand experience to understand how foreign business operations lead to FCPA violations.

Just as it takes a very skilled diagnostician to find a small tumor, it takes someone who has decades of on-the-ground experience in the international arena to know what to look for in terms of FCPA violations or how to even spot the yellow flags when present. Mr. Johnson calls FCPA a “hydra-headed monster,” and most lawyers do not know how to spot a phony invoice or a ‘referred’ consulting fee—or a quiet relationship between the CEO’s driver and the daughter of the Minister of Defense (a red flag if there ever was one).

The second reason that the FCPA violations can seek up on companies is because most companies are thoroughly self-deluded when it comes to compliance. When speaking of FCPA compliance the most common responses Mr. Johnson hears from a CEO is “Our VP of international business assures me we’re compliant…” or “Our general counsel says we’re covered…”  I’m sure Mr. Johnson would love telling them how many CEOs have gone to prison in the past 24 months or had their companies fined into insolvency after making those statements!

Let’s add one more common response from CEOs: “Oh, we’re fine—we’ve got a compliance policy, and we’ve made every employee sign it.” Just ask the Department of Justice and the SEC about that line! A case in point is the recent indictment of ITT (once the world’s largest conglomerate) who were fined for numerous FCPA violations. The comments from the SEC during prosecution included, “ITT has one of the finest, most comprehensive FCPA compliance policies we have ever seen.” I’m sure it was a wonderful ‘policy’ that lawyers and HR professionals put together, but it did not save the company from FCPA prosecution.

Just as none of us are qualified to diagnose our own bodily crises, most executives from inside a company are not equipped to diagnose their own FCPA compliance issues.

The only way for a company today to know if it is complying thoroughly with the FCPA is to have a seasoned expert with carte blanche authority from the CEO or board to examine, roam through, and probe everything from supply chains to billings. That may not seem easy to swallow, but neither is prison or a hundred-million-dollar fine, not to mention the destroyed reputations that are now crippling companies like Eli Lily, Pfizer, Avon, and Smith & Wesson. Just ask those companies how they feel for deciding that everything was “just fine…”

One of Country Intelligence Group’s goals is to make American companies more competitive against foreign businesses in the international realm while minimizing their risk.

Lately, we have been doing a lot of research on why companies of all different sizes fail when they do business overseas. There are myriad of factors that impact the outcome of an overseas business venture, but there is one thing that is always present in each case. Business decisions are always made by people. Therefore, the people sent to conduct your business overseas matters just as much as, if not more than, all of the other factors in play. This conclusion is one of the main premises of Bruce “Baj” Johnson’s and R. William Ayres book titled, “Carry a Chicken in Your Lap: Or Whatever it Takes to Globalize Your Business.” Below is a cliff notes tribute to their book’s conclusion of what a company should (and should not consider) when they select people to do their business abroad.

People are considered a company’s greatest asset, but a star performer can quickly turn into your company’s biggest liability when you send them abroad. In addition to logistics, finance, currency conversion, strategic planning, and compliance, choosing the right person to conduct your overseas business should also be at the top of the list for things to consider when opening a new office overseas. All of the time spent conducting market analysis and formulating a strategic plan will be for naught if the “right” person is not sent to look after your company’s best interest overseas.

There are a few guidelines that you can follow to make sure your company is sending the right person overseas:

• Know that operating in a foreign culture is NOT for everybody. Do not assume that anyone can be successful overseas if they simply get the right training or are properly briefed. Although extremely important, there is much more to setting your employees up for overseas success than giving them a thorough briefing. If the person you select to send overseas is not cut out for the demands of operating in a foreign culture, no amount of training or briefing will make a difference.

• Know your employees. You must get to know your employees beyond what is on their resume before you can determine if an overseas assignment is a good idea for them. Are they flexible? Are they tolerant of differences? Do they have an aptitude for foreign languages or are they at least able to pick up a few basic phrases? Can they deal with time zone differences effectively? Also, consider the impact to their families. If they are bringing their spouse with them on an extended assignment, is the spouse able to cope with the cultural differences too?

• Know the subtleties of the culture your employee is entering. Some people will excel in one foreign culture and fail miserably in another simply because of cultural bias and discrimination on the part of the host country. For example, many countries in Latin America, Asia, and especially in the Middle East may exclude women from business entirely while countries in Western Europe welcome women in business with open arms. Unfortunately, many countries do not have the same anti-discrimination laws that the United States has, and an employee could be doomed as soon as they board a plane to leave on their business trip. In “Baj” Johnson and Dr. Ayres’ book, they give a first-hand account of an American businesswoman en route to an unnamed Muslim Country who was asked by the flight crew to put on a Burqa before landing. She adamantly refused, and when the plane landed she was quickly detained, received a lashing on the backs of her legs while the authorities shoved her along, and was put on the next flight out of the country. Obviously she was not the right person to send to that country.

• Do not send idealists who want to change the world. Make sure the people you send overseas do not have ulterior motives for going abroad. When you pay an employee to represent your company overseas, they should keep the company’s best interest in mind at all times—period. Sending someone overseas who has a personal agenda to change the world or to impart the “American way” on their foreign counterparts will at best make the locals suspicious of your company’s true intentions. This is especially true if your expatriates will be supervising foreign employees of your company.

• Do not build overseas assignments into your company’s career path. Making a foreign assignment part of the process to get promoted is a horrible idea because your employees will volunteer to work overseas for the sole purpose of getting promoted and not because they truly want to work and live abroad. Overseas positions should be coveted by employees who have the qualities to be successful in a foreign culture and who have a true desire to work overseas.

• Do not reward good performance at home with overseas assignments. Your best employees may excel at what they do because they are great communicators, have great charisma, have deep understanding about what motivates your domestic customers, or maybe they have name recognition and a large network of old friends, former colleagues, and fellow alumni. Maybe they also know your product and business processes so well that they are the expert in their functional area. However, none of these factors can guarantee success when you put this person in a foreign culture. The worst thing you can do to reward a star performer is to set them up for failure by sending them overseas without considering whether the overseas assignment is a good fit for them.

As you begin to think about whom should represent your company overseas keep the above guidelines in mind, but above all remember that going overseas is not for everyone. Some people should simply not be sent overseas, no matter how well they perform at home. Remembering this one simple fact can help prevent foreign business disasters and can make sure you are not setting up your best employees for failure.