Exporting to the EU or the US is normally the first port of call for a business looking to move into international markets. For some, though, the prospect of uncharted territory is too much to resist as they boldly go where others might hesitate, journeying to danger zones where interest is high but then so too are crime, corruption, wild currency fluctuations and tough customs laws.
Andy Gent’s telecoms fraud detection business, Revector, has taken him to more than a hundred countries as he offers mobile operators the chance to close down criminals who bypass official networks to ‘land’ international calls cheaply and illegally. There is just one obvious problem. The gangs take a dislike to being discovered, as do their associates.
This was brought home to him one day on a Caribbean island well-known for crime and corruption when the police failed to show up as he walked in on a criminal gang with dangerous connections.
“I was there alone without any police back-up and the guys told me exactly who they worked for, how high up it went and they suggested I go back to England. So I took the opportunity to leave on the next flight home,” he recalls.
“They were very serious people, it was pretty frightening and I had no doubt they were well-protected and that I was better off walking away.”
It was the only time Gent was concerned enough for his safety to leave immediately, despite having business dealings in Iraq, Haiti, Sierra Leone, Afghanistan and Sudan.
“I’ve done business in a lot of countries that people would normally consider dangerous,” he says. “I’ve had armed guards in several African countries supplied to me by clients. You have to accept they know best and that you need to take some sensible precautions.”
“There’s an upside to dealing with developing countries which some may see as risky. You at least get to chat to decision-makers rather than go through meeting after meeting which go nowhere. When I was in Cameroon I had to make a flight but the prime minister wanted to talk about our services, so he picked me up and took me to the airport in his cavalcade. We whizzed through all the traffic and I was on the tarmac catching a flight within an hour.”
Mafia links
A similar concern over crime and corruption are what keep Peter Westerman, founder of welding equipment supplier Westermans International, from conducting business in Russia. He’s virtually given up on the country and recently had a pretty sticky situation in neighbouring Latvia.
“There are just far too many mafia trying to act as a middleman between every deal,” he says.
“It can be quite worrying. When I was in Riga some guys were trying to sell me welding equipment. I went with them to a premises but I only had to ask a couple of questions to realise that they were just criminals either trying to be middlemen or simply selling someone else’s stock. I had to be very diplomatic and found out who actually did own the equipment and bought it direct.
“Selling and buying welding equipment takes me to some wonderful places but my golden rule is to keep safe. I always stay in the hotel if I’m not too sure of how safe it is outside.”
His other word of warning is that many countries that are considered risky for business have a tendency to be very strict with customs, particularly Nigeria, the Democratic Republic of the Congo, Kenya, Mexico and Saudi Arabia.
This has certainly rung true with Neil Westwood, managing director of Magic Whiteboard.
“We find, particularly in the Middle East, that customs can be very slow and picky,” he says.
“Paperwork has a habit of going missing and so you have to get new certificates and forms filled out and then sent out by courier because they generally won’t accept copies. It can be time-consuming and costly.”
Currency crashes
Another unforeseen cost to a small to medium-sized enterprise (SME) can be having to respond to massive currency fluctuations by either slashing prices or ceasing to do business in a danger zone. That was the decision facing Cumbrian candle and incense exporter Wax Lyrical. Last December the EU placed trading restrictions on Russia in response to its invasion of Crimea and its intervention in Ukraine. The rouble plummeted overnight and is still today only worth half its value two years ago.
“It was devastating for our Russian distributor,” says Wax Lyrical’s international sales manager, Karen Williams. “We knew he was having real problems and so we relaxed our prices for him. It was either that or stop doing business in a market we hope will provide lots of future growth.”
So why bother?
If crime and corruption can be rife, customs are more pernickety and the ever-looming danger that sanctions could sink a country’s currency, it begs a question. Why would SMEs bother to take the extra risk of doing business overseas?
Gent has a philosophical attitude that crime can happen anywhere in the world – not just in the trouble hotspots. He has only ever been pickpocked once – in Barcelona.
For Westwood the decision is simple. “In the EU we’ve found that markets are saturated and, in our opinion, they can act in an anti-competitive way,” he says. “It’s very different in emerging economies where some brands or distributors don’t have a stranglehold so there’s room for SMEs to get a foothold.”
The crucial advice he passes on, though, is to mitigate risk by picking a distributor in the region and asking for payment upfront. That way, goods only leave when you have been paid and, from that moment on, the distributor is responsible for a shipment.
Official business advice on exporting to individual countries is published by UKTI, which lists useful information such as locals laws, tariffs and challenges other British companies have faced entering a specific market. For personal safety, the government’s foreign travel advice service offers detailed tips, country by country, on how to conduct business safely.
Depending on the country, advice can range from picking a reputable hotel with good security and avoiding public demonstrations, to warnings that business people should only enter particular areas if they have the protection of a private security company.
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