According to a recent report released by Moody’s credit rating agency, among the world’s top 20 economies, China, India, Indonesia, Saudi Arabia, and Turkey will be the fastest-growing economies of 2014. At the very least, they offer a starting point for exporters and investors with little experience in expanding their business abroad to begin searching for new opportunities.
The following suggestions will help you avoid wasting valuable time and money:
- Be proactive not reactive. The key to your success is finding the right local partner or distributor. Your long-term success depends on the relationship with this party. Therefore, you must actively research and investigate potential partners. There are cost-effective ways to do this research to reduce your risk
- Make sure you understand export “dos and don’ts,” including the export licensing requirements of each relevant government agency, U.S. economic sanctions, and your liability regarding the end-use and end-users of the items you export.
- Make sure you have a written agreement. This sounds simple but many companies skip this step and there are contract terms that can minimize your liability in the local country.
- Screen your foreign distributors, agents, and third-party business partners. With U.S. sanctions changing so often (sometimes weekly) it is best to screen these parties at least twice: once just before you sign the contract and again right before you ship your product. Manually checking government lists is one option, but screening software packages provide a quicker, more cost-effective and comprehensive check.
- Ensure that you and your partners have an up-to-date anti-corruption program that includes policies and training. This is vital to remaining compliant with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and the growing body of parallel foreign anti-corruption legislation that may apply in the new market where you are doing business. Relationships between government officials and the private sector in foreign markets may not always be easy to parse, so having a system in place to vet and clear each relationship and transaction is key, as is maintaining clear records of your accounting practices and compliance efforts.
- Avoid opportunities that seem too good to be true. Clients receive an opportunity to participate in a foreign project that is not what it seems. In the long run making a commitment to a country and building trust with a reputable local partner will protect you and your company, make your management confident, and create viable economic growth.