As an Import / Export businessperson you have the potential of doing business with any country in the world. Out of my experience you will also find that most of your deals will be between third world producing countries and connecting them to clients from first world countries.
I visited a multitude of countries throughout the years of me working on the creation of The Plug and getting acquainted with the “know how” of making connections in different countries. During these years I did business in numerous countries and faced multiple problems that will most probably face successful brokers if they do not keep their eyes open.
Since most of your groundwork and the primary deals that you are creating will be made within third world countries. You should know that third world countries are usually peaceful and loaded with friendly people; however, you should never forget that these are countries that answer to a non-systematic set of rules that you are supposed to familiarize yourself with before getting off your plane.
This is exactly why I decided to write a blog that elaborates on some of the problems that I have faced on my travels, and what I think could be done to bypass these problems or take the least amount of mental and financial damage from them. Due to clear reasons, I will not be explaining how these problems personally happened to me, as I would not want to be a factor in ruining a country’s reputation, at the end of the day, we are all here to do business.
The Problems that could face you as a Competing Visitor
Remember that you are not only visiting this country as a tourist, but as a competitor. This means that you will meet numerous friends and will more than probably create an equal number of powerful enemies, who could be able to harm you.
These are some of the problems that may face you in the countries that you will be regularly dealing with and visiting:
Corruption: Let’s set an example, you are a smart broker that was able to make a lucrative deal with a farmer instead of another less malleable broker, and you had a better smile anyways, so the farmer chose you as their partner. Congratulations! You have made a new friend and a successful business deal; however, the competitor that you won over -if they are local- is now a threat.
How are they a threat? It is important to note that especially in third world countries the amount of power that you have is directly proportional to your net worth. This means that if that competitor is a sore loser, he could use his monetary authority to put you in a negative situation starting from jail, to having you removed from your hotel. This is why you will have to take all the assurances to keep yourself and your entourage safe.
Local inexperience: Customs clearance, unexpected quotas and tariffs, and a review of conformity with local norms and regulations are just a few of the issues that could arise before the goods even reach the market. You may prevent the agony of having your exports held up at customs by exercising sound judgement and using the services of trade compliance and customs law advisors to assist you transport items across the border promptly and safely.
Understanding the legal rules of each country: To help you carry things across the border quickly and safely, you will need to study and comply with the rules and regulations of import and export of the markets. This is why it is always said that business plans are not supposed to be a single document; but you will need to tailor them to each market you deal with. Moreover, regional planning may be required in large, varied countries like China and India. The following are some specific considerations to take into account:
Infrastructure: In countries with insufficient transportation or information technology infrastructure, budget for unexpected expenditures or shortages.
Trade barriers: Research the impact of tariffs and taxes on exports. Special trade zones and other options to reduce red tape exist in some nations.
Finance: Domestic banks may be hesitant to lend money to a foreign endeavor.
Currency exchange risks: While the cost of manufactured goods is more predictable, there are risks associated with exchange rates, which can result in a loss of profits or earnings. While exporting from a country with more stable enterprises is more likely to have more stable or predictable financial systems, there is still a significant amount of risk to consider. Manufacturers must consider the changing currency exchange rate, which might be unpredictable due to economic and political changes, especially when as a broker you will most likely be dealing with two different currencies in the same deal.
Need for Diversity: Although the product has arrived at its final destination, your work is far from over. Once the commodities start to circulate in the region, issues like charges of malfunctioning equipment may occur. Intellectual property (IP) laws may also be unstable or non-existent. While IP rights are formally recognized in China, there are still concerns about shaky legal frameworks and copyright breaches.
Doing business with countries on the other side of the world necessitates a certain level of trust and a certain level of efficiency. Therefore, you will have to find regional specialists, consultants and invest in a diversified, experienced workforce to better protect your competitive edge in an abroad market. If some of your team members have cultural ties to your target market, it will be easier to break into the market, increasing your sales and your trustworthy connections.
As I always say: starting a business is always a hard adventurous move, while deciding on opening an Import / Export business will offer you an extra dose of the adventure and the problems as well. However, I will always believe that going through all of these problems and challenges is worth it, no other job will make you experience all of these adventures at once, and while making money.