When doing business in India, you’d best pad your schedule with at least 10 minutes for every meeting and telephone call. In many African countries, hire more people than you need because it will be difficult to train, retain, and replace qualified executives and staff. If you want to do business in China, it is essential to have a partner who speaks Mandarin.
There was a time was when well-capitalized American entrepreneurs could follow a few simple rules and expand their businesses to sell fast food, fashion, entertainment, and computers to a waiting world.
It doesn’t work that way anymore.
As the developing world becomes incrementally richer and governments are making a point to trade with other low-income countries, expanding an American company in a foreign land—regardless of the nature of its business—is increasingly complex. Entrepreneurs who have done it say they learned, often the hard way, that there is no substitute for cultural awareness, patience, and flexible expectations.
“I was [in China] for a year before I made [my] first customer,” said Shawn Sabin, a boyish blond whose company, Sabin Metal Corporation, trades and recycles precious metals. He spent the time learning Mandarin, and eventually discovered why Chinese companies preferred to do business with him rather than with competing multinationals. “The Chinese like to do business at the top”, “All these big companies were sending in their salesmen, but with me, it was only me.”
A subsequent enterprise—teaching foreign businesspeople to speak Mandarin—was more fun and less stressful. But the metal-recycling business was so much more profitable that Sabin is thinking of expanding it to Saudi Arabia. “You know how it is,” he shrugged, “you make contacts.”
Scores of entrepreneurs hoping to do just that gathered Monday for the start of New York Entrepreneur Week, a five-day seminar on raising capital and many other aspects of growing a business. There are lots of reasons of take your venture abroad, but for most businesspeople the lure is often a vast new market. The world’s industrialized countries have been growing at a paltry 2 percent per year, according to the World Bank, while economies in the developing world are expanding by 7 percent or more. Much of this growth is centered in India and China, two markets with more than a billion potential customers each and an expanding, commodity-hungry middle class.
Of all the difficult foreign markets to crack, “Africa takes the prize,” said Tugba Gurcanlar, who works on the World Bank’s private-sector development in Africa. Indeed, foreign businessmen have had to deal with government corruption and instability, poor infrastructure, and cutthroat competition around the shallow labor pool when trying to recruit staff and executives. But the continent offers minerals, metals, and other natural resources, nascent agribusiness, tourism potential, and abundant opportunities to develop alternative-energy technologies from hydroelectric to solar power, Gurcanlar said. It is a market with untapped potential: Africa is growing younger, and by 2050 is expected to boast 20 percent of the world’s 18-and-unders.
Which African countries are safest to invest in? Look to the United Nations, donor countries, and nongovernmental organizations, Gurcanlar suggested. They will not commit to long-term projects unless they are confident the work will be completed. (South Africa, Mozambique, Angola, Tanzania, Namibia, and Senegal are among those with considerable direct investment. Although rich in natural resources, Zimbabwe, the Democratic Republic of Congo, Sudan, and Niger are not. ) Entrepreneurs need to decide “how much risk you can stand, and what kind,” she added.
China might give U.S. businessmen just as much trouble—but for entirely different reasons. Unlike India, which was colonized by the British, the Chinese people don’t generally speak English. American goods no longer confer status the way they used to. Business decisions can take a year or more to reach, or executives may choose to hurtle ahead immediately. And then there’s the time difference from the United States. Meanwhile, India is proving to be “a very go-go-go environment,” according to Amol Sarva, founder of Peek—a mobile device company that sends and receives email less expensively than a full smartphone and is marketed primarily in India. Nonetheless, he said with frustration, expect “meandering business meetings” and lots of personal contact with suppliers, partners, and investors.
“You need your people on the ground. You cannot do this by email and Skype.” He said he is still often bewildered by the business culture, despite his own Indian roots. Peek’s customers are the 99 percent of the world without BlackBerrys or iPhones who still want access to long-distance customers and business associates, market prices, and other business-related information. The devices Sarva sells are cheaper, but the volume makes up for it.
“The richness and the scale surpasses what can be done here,” Sarva told the entrepreneurs’ meeting.
Strategic partnering is one way to gain a foothold in a lucrative foreign market, or at least gain some language and cultural gravitas. One novel approach: Track down recent graduates of American business schools to find someone who can bridge the cultures or even share your entrepreneurial spirit.
From Betsy Pisik, a New York-based Journalist