On April 17, 2014, the U.S. Department of Commerce said it would increase its overseas resources to help more U.S. businesses export goods and services to customers across the world, particularly in Asia.
The Department’s decision, which involves opening new International Trade Administration offices in five countries (including its first in Burma), reflects the fact that 95 percent of the world's consumers reside outside of the U.S., according to a release. Other analysis also reports that emerging markets now account for over 40 percent of global GDP. However, while there are opportunities for rapid growth, there are also pitfalls to avoid.
So what key areas should you consider before taking the plunge? Here are five.
1. Take care of personal and employee wellbeing. As a responsible employer, the first thing to consider is health and safety for you, your family and your employees. In the excitement of considering profitable opportunities, it is easy to overlook the simple fact that U.S. Medicare doesn’t cover you when you are abroad. Yet accidents happen, so you need to have insurance to pay medical costs outside the U.S. and repatriation costs if necessary, and you must carry your insurance policy identity card and a claim form at all times.
Choosing a reputable provider is obviously essential, but so is choosing one with the scale to help you, whatever the circumstances. For instance, when Typhoon Haiyan devastated the Philippines in 2013, Aetna International was quick to reassure its international employee assistance clients they were covered and extended the deadline for affected members to file claims. As Richard di Benedetto, Aetna International’s president, said: “We understand the enormous difficulties many customers are facing. We want them to get the care and medications they need, without delay.”
2. Ask for help and advice -- before you leave. Due diligence is vital if you are to avoid falling foul of some of the complex regulations governing international trade. Obviously it pays to take professional advice from your own accountants and attorneys, but you can also get plenty of support from federal agencies and other sources. For instance, the CIA World Factbook provides detailed country information, while the State Department will explain the level of Consular support you might expect.
Naturally, you will want to consider the economic risks in these new markets. The U.S. Treasury has details of countries, companies and individuals subject to financial sanctions. At the same time, you need to consider the geopolitical risks that might affect your business, (see Aon’s interactive Political Risk Map ), including the threat of terrorism in certain regions.
On a brighter note, businesses can often secure attractive financing through the official Export-Import Bank of the United States (Ex-Im). This includes pre-export financing, loan guarantees and buyer financing. According to Ex-Im’s website, more than 85 percent of its transactions “directly benefit U.S. small businesses.”
3. Determine the right country for your business. The country you choose will partly depend on your business goals, experience and expertise – and partly on the way you need to structure the business. For instance, do you want a trading office, a new production facility or a franchised distributor? How will this affect tax issues, such as the repatriation of profits, deductibility of expenses and personal liabilities? (Remember: you have to report your worldwide income to the IRS.)
For example, Raof Latiff Abdul, Head of JP Morgan Treasury Services for ASEAN, pointed out in a recent report that foreign companies often “struggle to build their operations in China” (not least because of the need to establish local partnerships). Whereas, many countries in the Association of Southeast Asian Nations (ASEAN) have regulations to help companies operate independently. These countries also allow companies to grow through acquisition more easily than elsewhere.
4. Get help in candidate countries. Trusted business partners and professional advisers (accountants, lawyers, HR consultants, marketeers and translators for instance) with expert local knowledge are critical to developing a successful overseas business strategy. They can help you navigate complex issues such as local workers rights, protecting your intellectual property rights, and dispute resolution.
Finding these people can be difficult but there are three obvious places to start: existing contacts, U.S. businesses already in the region, and Inward Investment agencies (e.g. chamber of commerce, economic development agencies)
5. Understand cultural differences. Working abroad can be stressful, not least because of feelings of isolation and disorientation. Aside from language issues, even basic things can seem unfamiliar, whether it’s attitudes to personal space, using the subway or simply finding everyday grocery items. So, if possible, get to know a country and its people before deciding to stay long term.
Consider where you will live and how you will cope with changes in climate and diet. Will your family come with you – and if so, what will your partner do (will they be able to work in their chosen profession), where will children go to school? On top of this are regional health concerns, such as pollution and tropical diseases, and human rights issues.
Understanding local culture, both business and social, is a whole topic in itself but the golden rule applies: Treat others with respect and remember you’re a guest.
Copyright © 2013 Entrepreneur.com, Inc.