By Guest Blogger, Patricia Molinaro
The international business environment requires companies to have a well-planned market-entry strategy in order to avoid common pitfalls and be successful doing business outside the United States borders. The following are six items for companies to consider before doing business overseas.
1. Do a thorough risk analysis. Be realistic about how much risk you are willing to accept in your business venture. Make sure you use several reliable sources for this assessment. Use more than news media sources or your immediate partners to evaluate the market and industry environments. Industry and country-specific data is available through many online databases, although some of these databases are fee-based. Export.gov is one government resource that offers such data at no cost.
2. Know your partner. Do your due diligence through internal and external sources. Many private companies and government agencies offer background check services on potential international partners. After a formal background check, engage in a series of conversations to make certain your partner is able and willing to do all they say they will do in the contract. Check the reliability of the data from independent sources. Choosing the wrong partner can be a very expensive mistake, in time and money!
3. Have clear contract terms. Having legal assistance is key to creating an international contract that will cover many common global business occurrences in addition to the uncommon occurrences. Anything is possible so you will want to proactively plan for all reasonable contingencies. Using an experienced international lawyer will ensure you specify key contact items such as exact terms of payment, performance standards, time lines, and other critical details that are needed in international contracts. Spending money up front to create a sound contract can save you both time and money down the line if issues do arise.
4. Know the rules. Do your research and be prepared to obey all laws and regulations within the market(s) you plan to do business. Use reliable sources for your research as any false information can be detrimental to your success! Also ensure your potential partner overseas knows all relevant American laws, such as the U.S. Foreign Corrupt Practices Act-FCPA, will be applicable to them if they are doing business for an American company.
5. Getting Paid. How you will get paid and under what terms should be negotiated with the buyer during preliminary business conversations. Keep in mind that each country and each customer is different and seldom does a ‘one-size fits all’ approach work; for instance, payment in advance may work for some foreign buyers but it is not an option for others. It is important to devise a strategy that minimizes your risk of non-payment while maintaining your competiveness. Learn your options by seeking advice from peers, private sector banks and government agencies such as the Small Business Administration and U.S. Export-Import Bank who have experts in international financial transactions. Learn more at: export.gov/finance.
6. Watch Your Intellectual Property Rights (IPR). Although the United States provides many ways to protect intellectual property through avenues such as the registration of trademarks, service marks, patent protection, copyright protection, and trade secrets, these federal protections extend only to the territories and possessions of the United States. Our IPR laws have little or no protection in other countries! To secure full patent rights in another country, you must apply for a patent in that country. To learn about the specific intellectual property laws and requirements of individual countries, visit the World Intellectual Property’s Organization at www.wipo.int.
For more advice and resources regarding doing business overseas, the New Jersey Export Assistance Centers, field offices of the U.S. Commercial Service, has a team of International Trade Specialists available to counsel New Jersey-based businesses. These offices, a division of the federal government’s U.S. Department of Commerce’s International Trade Administration, work with export ready companies to assist in selling their U.S.-made goods and services overseas. They are directly tied to the Commercial Sections of the American Embassies and Consulates in over 70 countries. For more information and contact information, visit www.export.gov/newjersey.