10.31.07

I need to finance more inventory for an export order that I have. Are there any financing resources?

Posted in Finance at 10:31 pm by Administrator

For US exporters there is one excellent product: the working capital loans of the US Export-Import Bank. The program allows existing small and medium sized businesses to finance 75% of the inventory and 95% of the accounts receivable. You would work through your local banker or other banks that deal with EXIM Bank products. As usual there are various restrictions but for many businesses this is a great and inexpensive way to finance inventory or accounts receivable. See the US Export-Import Bank web site for more information on this topic: http://www.exim.gov/smallbiz/work_cap.html

In addition, more and more commercial banks are providing this service. Let me know and I’ll post the information.

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10.30.07

I’m asking one of my employees to translate for me for a client from Argentina. Any Tips?

Posted in Cross Cultural at 10:13 pm by Administrator

There are a lot of warning flags here!

First, is your employee up to translating? Speaking another language and being able to translate are two very different skill sets. Most translation is what is called “sequential” — that is one person says a short sentence, the translator puts it into the other language. This requires some training as well as skill. An untrained translator will tend to summarize rather than translate what is actually being said. (Hint when the translator starts off “He said that…” you’ve likely got troubles.

Secondly, is your translator knowledgeable about your field in the other language? Many people who grew up in the US speaking another language at home never were formally educated in the language. They may not have a full command of the grammar and nuances of the other language.

Third,  Is your translator aware of the nuances among the various Spanish speaking countries? Argentina and Mexico have lots of idiomatic expressions that don’t translate. (Think about British humor that goes over the head of US audiences.) More importantly, be aware of national frictions. I once worked with a consortium that was led by a great Puerto Rican sales person. His approach clashed badly with an Argentine woman who headed up our partnership with an Argentine company. I had to intervene, unsuccessfully as it turned out.

Save yourself the trouble and embarrassment - get a pro translator. It’s worth the money. (I’ll include another installment on how to evaluate the work for the professional translators.

Post of comment or send me an e-mail: info@clynchinternational.com

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10.29.07

How do I adapt my marketing brochures for Asia?

Posted in Marketing at 7:57 pm by Administrator

Before you start, you’ll have to get some expert advice on if your corporate marketing approach will work in a particular country. This could be a locally-based consultant, marketing agency, contact in the industry. You as the outsider should not do this analysis unless you understand the other culture in-depth. Some questions to ask:

• are you using the appropriate marketing channels?
• are you answering a local need? - for example a water purifier in a developed market would address concerns about trace elements in the water while in a developing country the concern is about health.
• are you addressing the appropriate decision maker? - This may be very different depending on the country
• are you using appropriate colors? - the meaning of colors varies from country to country.
• English or the target-country language(s)? If you do have it translated, does it read properly?

What is your experience?

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10.26.07

I’ve been invited to a formal dinner on my next trip to Germany - What do I do?

Posted in Cross Cultural at 11:52 pm by Administrator

First off, some general advice - Before going to any country, consul the “Kiss, Bow or Shake Hands” series of books by Terri Morrison and Wayne Conaway (http://www.getcustoms.com/2004GTC/index.html). EVERY international business person should have a copy of this book readily available. Read it before every business trip to cover issues like meals, protocol, etc. Based on my experience living and doing business in Europe, Latin America and Asia, this book is almost always spot-on. I have minor quibbles but it’s an invaluable guide.

Now to Germany. German formal dinners are mercilessly formal. First off, you should bring  a gift. It could be something from your home area (for example wine from Californians). If you don’t have that consider flowers - always an odd number.
When you sit down, you should introduce yourself to you neighbors. (Men - be sure to help the ladies, particularly on your left, with their chairs.) You will start off with sparkling wine (Sekt as it is referred to there). The host will introduce every person at the table and make a (short but occasionally overly-long) speech why the event is taking place. The host will make a formal introduction toast. You should look into the eyes of all of the people around you and point your glass toward them (actual clinking of glasses is not that common). Only after you have looked everyone in the eye, may you take a small sip.

You will find lots of tableware and glasses. The same general rule applies as everywhere - work in from the outside. My personal advice is to watch what everyone else does and copy that. There will be multiple courses - so pace yourself. Table talk should be uncontroversial - you can talk about family, weather, etc. Stay away from politics (and sports if you are into European soccer).
If you are the guest of honor or if you are seated to the left of hostess, you should make a toast at the end of the meal. In the toast, you should profusely thank the hosts for their hospitality, compliment them on the food and make some comment on the evening (why the dinner was held). Again you raise your glass, look at  everyone in the eye and then drink.

Most of the time, after dinner drinks and coffee will be served after the table breaks up. Don’t rush out - it is rude. Most of the time, the groups break down into men and women. If you’re a woman and you don’t want to be excluded from “boys” club, just join them. But be aware that most people will start smoking afterward and the men will often break out the cigars.

Somewhere around mid-night, the dinner will break up. Remember if you have had a lot to drink (quite probable) ask your hosts to call you a taxi. German drinking-while-driving penalties are quite severe.

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10.25.07

Are there any (US) export controls on my product?

Posted in Export Controls, Government Resources at 11:53 pm by Administrator

Most products, except for certain very high tech products and munitions, don’t require any special license. Here’s a ink to a general discussion of the issue: http://export.gov/regulation/exp_reg_home.asp.  There are a dizzying list of  US agencies involved: http://www.bis.doc.gov/about/reslinks.htm, but again few products are actually affected. Read over the referenced information but IF IN DOUBT, contact the closest US Commercial Service office (http://www.buyusa.gov/home/us.html). They can get a definitive ruling for you and if there is a point of contention, they can act as your advocates through the process. Use them as an ally.

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10.24.07

How do I figure out the tariffs on my product?

Posted in Taxes & Tariffs at 7:34 pm by Administrator

This used to be a complicated task, but for most products it is now simpler. Most logistics providers should be able to provide you with the information using their websites or databases.

If you want to do it yourself, the first task is to find the Harmonized Tariff Schedule number for your product (also known in the US as the “Schedule B” number.  The best link is from the US government website Export.gov  (http://www.export.gov/logistics/exp_logistics_schedule_b.asp). The process may take some word association but you should be able to find the number.

Second, you need to find the desintation country tariff schedule (see: http://www.export.gov/logistics/exp_001015.asp). In that schedule, you may need to drill down further than the HST number as each country puts specific products in different categories. That should give you the specific amount plus an indication if there are other taxes (like VAT) or quotas that might apply to the product. But remember, the destination country will have the final say on the classification.

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What are some warning signs of a change in the economy and exchange rate?

Posted in Economic Analysis at 4:07 am by Administrator

One of the most common international business mistakes is to underplay the economy of the target country. You can have a great product, marketing strategy and local partners, but, if the exchange rate changes against you, the product becomes too expensive and nobody buys it.

How can you protect yourself? Having had to quickly become an expert in various economies around the world, I give particular attention to the following:

(you can find this information in the Economist Intelligence Unit country reports or the IMF statistics.)

• changes in commodity prices for the country’s principal exports
• sharp increases in the country’s budget deficit
• increase of inflation rate (and in certain cases an abrupt deflation)
• high levels of debt service (interest payments to exports)
• sharp increases in domestic interest rates.
• an increase in assets held by nationals outside of the country

What indicators do you follow?

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10.22.07

Do I have the right agent or distributor?

Posted in Agents & Distributors at 11:48 pm by Administrator

Unless you are selling direct (including direct Internet marketing), you will need someone to represent your product or service. This has to be a person you can trust will act aggressively in youR interests. Here are some points to consider:

• Use your networks (colleagues, bankers, lawyers, etc.) to give you names to consider. For US exporters, you can also use the US Commercial Service (www.export.gov) — they have great on-the ground contacts with no axes to grind.
• Interview them - Find out:
• Experience
• Connections to the appropriate customers (and government agencies if that applies)
• Other products/companies represented - especially competitors
• Do your “due diligence” on the companies - Internet, credit checks, your contacts and references provided.
• Keep in regular contact and give them incentives to act in your interests.

Also remember that in the the European Union, agents have many of the same rights as regular employees so firing them may be expensive.

What are your tips?

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10.21.07

Why Approach International Business Strategies By Asking Questions?

Posted in Strategies at 5:43 pm by Administrator

Think of international business like playing three dimensional chess. For domestic business, the two axes are business culture and the country’s legal system. You know the moves, what is allowed and how to create a winning strategy. Going international immediately moves you into new business cultures and legal systems. You can develop new strategies but it requires careful calculation.

Adding to the challenge is the fact that international business is changing daily. Having a fixed reference is no longer adequate. Think about visiting your doctor - s/he can’t possibly keep up with the tsunami of new medical discoveries. You, as the patient have to be proactive and learn to ask the right questions to ensure you are getting the right answers.

This blog is predicated on the belief that the way to approach international business strategies is by knowing the right questions to ask. Once you know what to ask, you can use the resources of the web and networkign to find the best answers and experts. I want to use this blog as a platform to not only pose questions but also to suggest resources by drawing on the resources of the professionals in the field.

I encourage you to post responses to the topics and to send me suggestions for topics to be covered. E-mail me at questions@clynchinternational.com

Best regards,

Chris Lynch

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