Small business owners: are you getting ready to go global? Looking to expand your sales beyond the borders of your home country?

One excellent way for small businesses to enter new markets is through the use of foreign agents or distributors. Market entry through established intermediaries generally requires far less initial investment of time and money than establishing and staffing up a company-owned foreign subsidiary.

Instead of starting from scratch in a new, foreign country, reputable local intermediaries already have established expertise and knowledge of their own markets, your competition and potential customers. They speak the local language, understand local customs and business practices, and presumably appreciate applicable regulatory requirements in their country of operation.

The compliance risks of using intermediaries

At the same time, however, intermediaries create risks, including compliance risks. Companies can be liable if their intermediaries violate laws while acting on their behalf, even without actual knowledge or complicity.

If, for example, a company incorporated in the United States sells widgets to a distributor in Mexico, and the Mexico distributor resells the widgets to sanctioned companies in Cuba or Venezuela, the U.S. company may be liable for a sanctions law violation. Similarly, in the U.S. and UK, if a distributor bribes a foreign official in order to increase sales of your product or move your product through customs, you could be liable for a Foreign Corrupt Practices Act (“FCPA”) or a U.K. Bribery Act 2010 (“UKBA”) violation.

In fact, the vast majority of FCPA enforcement actions involve intermediaries, as this chart below from the Stanford Law School FCPA Clearing House depicts (available here):

The U.S. and UK regulators expect companies to design and implement ethics and compliance program controls, including specific procedures to conduct due diligence of prospective third-party intermediaries, with the goal of reducing anti-corruption and trade control risks associated with those third-parties. The regulators recognize that individual companies have different compliance needs and capabilities depending on their size and risks: small businesses are not expected to have the same compliance programs as large multinational corporations. Nevertheless, even small businesses must conduct some risk-based due diligence before hiring intermediaries abroad.

How your business can reduce compliance risks when working with foreign intermediaries

So, what is a small business to do? Maybe you don’t have the financial resources and in-house expertise to evaluate compliance risks. Don’t panic.

It is always best to hire external counsel or a compliance due diligence provider to help you conduct due diligence and evaluate a potential intermediary prior to engagement. You may be surprised to learn that these services are affordable, and it will be well worth the expense. Intermediaries may present a quick and cheap entry strategy, but you can incur a great deal of expense and reputational damage in the long run if you choose the wrong third party.

Even before you engage an external expert, however, below are a few steps that every company can take on its own to recognize and/or mitigate compliance risks related to foreign intermediaries.

1. Screen the entity or individual in the United States Department of the Treasury’s Office of Foreign Assets Sanctions List search engine, available here. This will help you identify whether the intermediary is itself subject to any specific U.S. sanctions.

This alone is NOT sufficient, however, in part because some entities that do not actually appear on sanctions lists may be subject to sanctions based on the ownership or control of the entity. But if you do get a “hit,” that will be a strong sign that you need more information before you engage that intermediary.

Most other countries have their own sanctions list search engines as well (e.g. the Consolidated Canadian Autonomous Sanctions List is available here).

2. Document your business justification for engaging the intermediary. Understand the role of and need for the third party. Ensure that the intermediary has experience in the line of business for which you will engage the company/individual.

3. If you are considering the engagement of an entity, obtain ownership information from the proposed intermediary so you can screen the owners too.

4. Look out for “red flags,” including an agent’s request for commission payments in cash or request for payments to an off-shore bank account.

5. Document your agreement. Use written contracts that describe the third party relationship and payment terms. Obtain representations and warranties that the intermediary will abide by all applicable laws, including the FCPA, UKBA and trade sanctions laws.

6. Obtain a written certification from the intermediary that it has obeyed and will obey all applicable laws and regulations, including the FCPA, UKBA and trade sanctions laws.

7. If selling your products to an intermediary (e.g. a distributor), obtain a written certification from the intermediary that it will not resell or re-export your product to any sanctioned countries, entities or individuals.

The post 7 steps you should take to identify and mitigate compliance risks with foreign intermediaries appeared first on Trade Ready.

Spoiler alert: all 3 involve the British Empire.

War is always an ugly thing, regardless of the causes or the outcomes. Here are the biggest, most famous wars (and some honourable mentions) in modern history fought over the control of trade routes and commodities, and their impacts on global trade.

Peace is the natural effect of trade. –
Baron Charles de Montesquieu

1. Opium Wars

The two Opium Wars were fought between the British Empire and China in the mid-1800s.

Often the first trade-incited wars that come to mind for many, the Opium Wars were all about Britain’s access to trade with China, and China’s conflicting desire to remain isolated and independent from the rest of the world.

First Opium War – AKA the Anglo-Chinese War (1839-1842)

Cause of conflict:

Britain sought to even the imbalance in trade between the United Kingdom and China caused by the increase in demand for silk, porcelain and tea in Britain, and the all but non-existent demand for British commodities in China.

An increasing influx of opium, auctioned by the East India Company to foreign traders, started to find its way into China, disturbing Chinese leaders and causing them to completely shut down trade with Britain as a result.

It all came to a head when Viceroy Lin, acting on behalf of the Chinese Emperor, confiscated 20,000 chests of opium and essentially subjected all foreign merchants to house arrest.

Results:

The British defeated the Chinese at the mouth of the Yangtze and occupied Shanghai. The war officially ended with the signing of the Treaty of Nanking, which resulted in the ceding of Hong Kong to British control.

The treaty also forced five Chinese ports to allow British goods to enter the country: Shanghai, Canton, Ningpo, Fuchow, and Amoy.

Second Opium War – AKA the Second Anglo-Chinese War, the Second China War, the Arrow War, or the Franco-British Expedition to China (1857-1860)

Cause of conflict:

Not completely satisfied by the terms of the Treaty of Nanking, which ended the First Opium War, the British Empire sought war with China once again, with the aims of expanding trade in the region and improving diplomatic relations.

Specifically, the British sought to open all of China to trade with the UK, expand the coolie trade, exempt foreign imports from internal transit duties, and of course, legalize the opium trade.

Results:

Britain was joined by allies in France and envoys from the United States and Russia, all seeking access to trade in China.

After gaining control of several major Chinese cities, signing the treaties of Tianjin and Aigun, and burning the Summer Palaces, the Second Opium War ended at the Convention of Beijing in 1860.

Most notably, the Convention of Beijing opened more than 80 sea ports, guaranteed free passage for foreign traders within China, freedom of religion within China, and of course, legalized the opium trade.

2. First Anglo-Dutch War

We cannot make war without trade, nor trade without war.
– Jan Pieterszoon Coen – Governor General, Dutch East India Company in the Indies

In the first half of the seventeenth century, the Dutch overtook Portugal as the main European traders in Asia, and thus the incredibly profitable trade in spices. They soon had the largest mercantile fleet in Europe, surpassing in size all other European fleets combined.

By the 1650s, Oliver Cromwell, the leader of Britain, had shored up a powerful navy and as tensions built between the two competitive naval powers, the British Commonwealth declared war on the Dutch on July 10, 1652 resulting in the first of four Anglo-Dutch Wars.

Cause of conflict:

Successive English/British states wanted control of all British trade routes and colonies. The Dutch wanted to keep hold of their Portuguese ports and commercial control in Europe.

Politically, tensions had been mounting between the two countries since the English Civil War, which saw Charles I of England, who had strong family ties to the Dutch, beheaded in 1649.

Results:

The English navy was able to gain control of the seas surrounding England, resulting in a monopoly on trade with all British colonies.

However, hostilities between the European naval powers and their commercial rivalry remained alive and well, leading into the subsequent Second and Third Anglo-Dutch Wars.

3. American Revolutionary War

The American Revolutionary War, also known as the American War of Independence, fought from 1775-1783, was about a lot of things to its varying participants.

To those living in America, it was about freedom from British taxes and full independence from Great Britain. The Europeans saw the conflict differently, as primarily a battle over the control of lucrative trade routes and commodities.

The French offered their naval support to the American colonists and joined the battle in 1778. The involvement of the French military added to the European view that the war was simply a new arena in which to fight an existing conflict between France and Britain over control of the resource-rich East and West Indies trade routes.

In fact, many in Britain argued for the abandonment of the fight in the American colonies, to be able to focus fully on their true enemy, the French.

Cause of conflict:

Americans wanted independence from British rule. Both France and England wanted control of East and West Indies trade routes. England wanted to retain control of its American colonies and continue to reap the benefits through taxes, rich natural resources, and access to trade routes.

Results:

As we all know, America won its independence from Britain, marked by the formal British recognition of the Declaration of Independence in 1783 through the Treaty of Paris.

British trade routes, from which they were largely dependent for income, were disrupted and Britain faced mounting national debt and recession.

France was able to threaten Britain’s various shipping routes and territory around the world, pulling them in several different directions at once. France and Britain would meet again only a few years later during the Napoleonic Wars.

Honorable Mentions:

Finnish Soviet War

The Winter War and subsequent Continuation War were fought during the Second World War between Finland and the Soviet Union, primarily due to the latter’s desire to mine nickel in Petsamo. Though the Finns and Soviets fought a series of close battles, the Soviets were able to gain control of the area by the end of the war.

The hostilities incited by the Soviets conflicted with the agreement of the League of Nations (predecessor to the United Nations), and they were promptly removed from the group in 1939.

Iraq invasion of Kuwait

Hostilities between Iraq and Kuwait came to a head in 1990, when Saddam Hussein accused Kuwait of stealing Iraqi oil through slant drilling. Many think this move against Kuwait was simply a means for Iraq to take control of the country’s vast oil reserves.

Another theory is that Iraq, under pressure to pay off the massive debt it accumulated during the country’s war with Iran, wanted oil prices to rise by stoppering production of oil in Kuwait.

Iraq was successful in annexing Kuwait, a move that was unanimously condemned by all major world leaders, the UN and NATO. After repeated failed negotiations, Iraq’s actions in Kuwait eventually led to the Gulf War.

The post 3 of the biggest historical wars fought over trade appeared first on Trade Ready.

The two individuals believed they had clearly communicated the expectations of their respective companies.

The exporter’s sales representative informed management that the importers were looking for pricing that would enable them to give huge discounts during the Christmas sales period.

For two years, the relationship worked well, with prompt delivery and payments between the parties. On the third year, disputes arose around alleged product defects found in a shipment of two containers of products.

Communication breakdown

The manager of the exporting company insisted through an email that payment had to be made under the terms stated in the agreement, as they had delivered acceptable quality for the price charged.

If there were any defects, they would be repaired at the exporter’s expense.

The importing company’s purchasing officer responded that their company refused to accept delivery of the two containers of products, which he insisted the exporter take back.

A series of emails over a couple of months were exchanged between these two individuals that showed a hardening of positions and threatened litigation.

At that point, the correspondence stopped between the parties and the dispute remained in limbo for several months.

Looking at facts instead of feelings

Then, a consultant was called in to suggest a way forward to resolve the dispute.

The consultant examined the documents and email correspondences. He noted the differences in expectations and perspectives of the exporter’s manager and the importer’s purchasing officer.

The consultant guided the two parties away from the emotions of the two individuals who had exchanged emails, towards an objective assessment of the facts based on reasonable expectations under the import-export agreement.

To accomplish this, the consultant restarted communication between the parties by encouraging the exporter’s Chief Executive Officer (CEO) to communicate directly with the importer’s Purchasing Manager.

A settlement proposal, which had been emailed at the early stage of the disagreement, was used as the basis for settling the dispute. This removed the negative human emotions from the negotiations.

A simple solution was there the whole time

The CEO and Purchasing Manager reached a settlement whereby the importer, at its own expense, shipped the two containers of products back to the exporter. This ended the monthly warehousing expenses incurred by the importer.

Upon receiving the two containers, the exporter found that, except for a few items of defective products in one container which were repaired, they were able to resell the two containers of products through an agent of an importer in Europe.

The parties should have established transparent communication channels to address issues and resolve disputes in a timely manner when initially negotiating the import-export agreement in Hong Kong. This could have sustained the business relationship.

4 international business negotiations lessons we can take from this case:

1. Transparent communication channels

Negotiations are not just about getting to an agreement, but also a process that establishes a working relationship reflected in an agreement.

Establish communication channels for conducting the relationship in a way that enables individuals working for both the importer and exporter to find amicable solutions to disputes that arise.

2. Dispute resolution mechanism

Designate an independent negotiator or mediator that the parties can turn to for trusted guidance on how to move forward once a relationship becomes strained.

The emphasis should be on avoiding litigation by either helping to re-establish sufficient trust and re-build a working business relationship, or arriving at a dispute resolution with an amicable settlement.

3. Focus on business relations

Focus on the business relations and not on the personalities involved in the relationship. Business interest dictates acting on facts and not mere opinions.

It is important to monitor communications.

A well-managed dispute resolution mechanism should guide parties away from the personal interest and ego of individuals.

Open communication channels should be monitored by senior managers who can intervene early enough to prevent toxic relationships from developing between individuals in direct communication at the operational level.

4. A positive exit strategy

Not all business relationships can be salvaged. In such an event, there should be mechanisms built into the agreement on how to calculate and allocate cost; as well as on how both parties can terminate the agreement and exit the relationship in an expedient manner.

In our case of the North American importer and South East Asian exporter, there was a lack of the above mechanisms for dispute resolution, amicable settlement and exit that could have saved them time and money.

Both the importer and exporter have moved on to doing business with other parties.

Hopefully their experience becomes a lesson on the importance of negotiating international business agreements that establish relationships based on performance, quality standards, open communication and mechanisms for dispute resolution.

The post 4 lessons to improve your global business partnerships appeared first on Trade Ready.

While these companies are undoubtedly a part of the equation, focusing on them often comes at the expense of equally important stories: farmers able to buy new equipment after selling their crops in new markets, women in developing countries earning their independence as international entrepreneurs, and business professionals accessing the internet for the first time to turn their small business into an e-commerce exporter.

With a focus on micro, small and medium enterprises (MSME), the International Trade Center at the University of Texas, San Antonio is working to help the latter kind of international businesses succeed on a daily basis.

Advising and assistance are key to helping businesses thrive internationally

The Center is not only a very successful trade assistance group in its own right, but also a part of the wider Small Business Development Center (SBDC) network, which has over 1,200 centers spanning the U.S., Mexico, Central America and South America.

Julio Mestas, a Senior International Business Advisor, explains that he and his fellow advisors “help small and medium-size companies become globally competitive by providing free and customized one-on-one trade advising, market research, innovative training and global connections through SBDCGlobal.”

One of his key arguments is that international trade is good for everyone, but that trade policies are often formed with major corporations in mind.

The key for all trading businesses, of every size and shape, to benefit from trade policies is equipping them with the knowledge, advice and guidance to succeed.

“We are promoting free trade agreements as a way to enhance countries’ economies, but we are subject to the interest of powerful corporations. Current international trade agreements are unbalanced, since some countries have the road paved to move the merchandise forward, while others get nothing but barriers.

“Creating international trade opportunities for the micro and small businesses in the region is our response to that issue.”

Giving a helping hand to MSMEs

The organization’s focus on MSMEs is of the utmost importance to them.

To help them better, SBDC is increasing its number of counselors through the region to grow their capacity to assist more clients, and launching a free online trade platform called SBDCGlobal to link clients with new counselors.

The MSME sector of any country is the true engine of sustainable economic development since the sector provides opportunities and engages the talents of its entrepreneurs,

Julio explains.

“Our goal is to help small businesses grow their export sales, reduce risks and lower costs, and help them to uncover and capitalize on new market opportunities within their own region with the assistance of a qualified SBDC counselor.”

With such a vast network, and collaborations with the U.S. State Department, USAID and others, the push towards building MSME assistance programs from the International Trade Center and other SBDC network members “has consistently created the conditions to produce economic impact for the micro, small and medium business sector in the region.”

Combatting poverty and inequality across the Americas

SBDC’s expansion into the rest of the Americas, Julio says, has been crucial in their mission to use international trade as a tool to alleviate economic imbalances.

“If we make international trade accessible to the world’s poorest countries, we will not only promote prosperity locally, but also increase a continued growth pathway for prosperity. Assisting micro and small business to become successful is the goal of every SBDC professional, as it benefits individual entrepreneurs and their families.”

“Linking programs in the U.S. with those in Mexico, or elsewhere in Central and South America, will lead to increased small business competitiveness and connectivity in the region and will result in the creation of sustainable economic impact that includes new business starts, expansions, increased access to capital and the creation of new jobs.”

Along with the increased wealth and success for the individuals assisted, giving a hand to micro and small businesses across the region can also have wider socio-economic implications for everyone in North and South America.

Doing this in multiple countries in Central, South America and other regions for tens of thousands of clients over the span of many years is creating a tremendous public benefit as it is generating thousands of new jobs and helping to formalize thousands of new businesses that will improve the overall economy.

“This results in lower unemployment, decreased poverty, lessens the need for illegal immigration, reduces the incentive to commit crimes, increases the tax-base of the Central American governments and promotes greater regional economic integration and stability.”

Taking a stand for small businesses and developing countries in FTAs

For the most part, Julio says that business professionals across different countries and sizes of enterprise aren’t as different as some people may think.

“At the end of the day, businesspeople all have pretty similar worries and challenges: how am I going to pay my payroll this month, how can I find new clients for my product/services, how can I pay less taxes, etc.”

With that in mind, he hopes that in the future, the same opportunities can be ensured for all professionals who want to engage in international business, regardless of what country they’re from or their wealth.

“Access to international trade has a major impact on the economy of developing countries, so let’s promote a shared participation, including trade facilitation.”

If we consider it fair to grant access to government procurement for small business, why not do it at the international level?

“Negotiating trade agreements in the open, with a minimum percentage for the SMEs, could make a huge difference and will give legitimacy to agreements that otherwise are difficult to swallow.”

Do you think international trade currently decreases or increases economic inequality around the world? What can or should be done to use trade as a tool to decrease the gap between the world’s wealthiest and poorest people?

The post How helping businesses grow can decrease economic inequality worldwide appeared first on Trade Ready.

Yatarō Iwasaki started his business with three rented steamboats as a small, local trading company.

Accordingly, he named his company “three water chestnuts”, or better known in Japanese as “Mitsubishi.” More than 145 years later, it is one of the world’s biggest and most-well-known conglomerates.

But Iwasaki’s business activities were not all about the money. He strongly believed in Japan’s growth and welfare opportunities as the country opened itself up to the world, and especially to the United States (after the 1854 Convention of Kanagawa).

This growth and opening was an extreme change for the country, and ended 220 years of self-imposed national seclusion.

Take good care of the business and stay true to your vision

Besides this, Iwasaki used his business success to re-establish the honor and Samurai-status of his family. Years before, his grandfather had made the difficult, but necessary, decision to sell that status in order to cover existing debts.

The combination of honor and trade has a long tradition and can be found in many different cultures, as the examples of the German Fugger or the Italian Medici families show.

Both houses started with trading activities and later became even more respected because of their banking businesses. This natural development can also be found in today’s Mitsubishi conglomerate.

Knowing this history, it is understandable that Mitsubishi meant more than a source of income for Iwasaki. It also makes sense that this entrepreneur would ask his employees and successors to:

Take good care of the business and stay true to my vision.

Such wise advice continues to guide the company today, as well as the business philosophies behind some of today’s most well-known companies.

As I explained in my previous article, “How corruption spreads like a virus and what you can do to stop it from infecting your company,” losing discipline in production, and in all other aspects of business life, starting with low scale violations to internal guidelines, affects the long-term quality of production and project execution.

Never sacrifice the integrity of your products or services

Enzo Ferrari made his vision clear:

What we do here is elite work.

Ferrari lived discipline throughout his life.

Into his old age he never gave up this value – even if it meant the termination of key employees, including engineers and race-car drivers, who violated verbal or written guidelines.

All of these cases had only temporary effects. But, in the long run, the company became even stronger through these difficult decisions. Additionally, basing employee development on performance gave two young, inexperienced engineers the motivation and opportunity to design one of the company’s most iconic creations: the 1962 Ferrari GTO.

Don’t fear failure, enable growth

Twice, General Electric employees won the Nobel Prize – the first went to Irving Langmuir for Chemistry in 1932, and second to Ivar Giaever for Physics in 1973 by. This was by no means an accident.

One of the company’s co-founders had been the famous inventor Thomas Alva Edison. Besides his scientific reputation, he always had an interest in capitalizing on his discoveries. This resulted in 1,093 patents in his name.

One of Edison’s credos had been:

I have not failed. I’ve just found 10,000 ways that won’t work.

If we agree that this motto is not only valid for technical inventors, but also for managers and all other employees, it sets a positive corporate culture that allows employees the possibility of failure – and the opportunity to learn from it.

Many examples show that an atmosphere where employees are more afraid to fail than they are motivated to win leads to a downturn of the whole organization.

Edison shared one value with all the aforementioned entrepreneurs – respect. He had respect not only for employees, society and clients, but also for his competitors. The most well-known of his competitors was Werner von Siemens, as General Electric and Siemens competed in many sectors against each other.

Nevertheless, both had a mutual respect for each other. In 1889, von Siemens had even invited the Edison Family to visit him in Germany and stay at his private house. There had been healthy competition but, based on this friendship, the two companies also cooperated in matters of mutual benefit.

Take long-term sustainability over short-term profits

By saying “I won’t sell the future for short-term profit”, von Siemens defined a concept that much later would become known as “sustainability.” A hardworking man, he knew that success did not come overnight.

He also believed that short-term actions without a long-term strategy can bring even a healthy organization down. It is an omnipresent risk, as managers tend to overestimate opportunities and underestimate risks.

Sustainability covers three parts: the proper long-term development of environment, society and business. In other words, sustainability is the maximization of profit over the long-term.

With these few examples, it’s clear that a company’s founder – even 100 years later – still has a tremendous impact on the company’s perception and its culture. So it is no surprise that these companies present their founders prominently on their websites and/or dedicate whole museums in their honor.

A company is more than just about earnings; it is the dream and vision of its leaders and employees. We have to take good care of it.

The post Let these visionary business leaders guide us to global sustainability appeared first on Trade Ready.

The people you know in the industry are not only potential partners, clients, suppliers or other connections, but also resources of information, and sometimes even friends.

Since October 2014, the Vancouver Global Trade Enthusiasts Meetup group has been an ideal place for professionals in the city and surrounding area to get together and learn from each other’s experiences, network, and to share common interests for business growth and development.

The meetings have now become a monthly tradition which give the group’s 141 members the chance to regularly connect and, most recently, participate or listen to panel discussions on topics we’re interested in.

We aim to give people an opportunity to share their knowledge in business and learn from each other, and we’re glad to see a lot of enthusiastic and self-driven people joining us.

David Smythe, Export Liaison with W.A. Grain & Pulse Solutions continues to be an active co-organizer for the International Trade Enthusiasts group and actively promotes a balance of students & professionals at each event.

Great discussions about Canada-EU trade

Most recently, Dr. Michele Vincenti, CITP|FIBP, President and CEO of Alvana Business Consulting Inc., chaired a panel on January 5th about the updated status of CETA (European Comprehensive Economic and Trade Agreement) at the Ascenda School of Management.

Since the European Union is Canada’s second largest trade and investment partner, after the U.S., we wanted to give our members a chance to learn more about this important issue, as it could have immediate and significant benefits to their businesses.

We were also fortunate to have several notable experts involved, who were able to speak in-depth about the most crucial issues.

Alex Martyniak, Executive Director EU Chamber of Commerce in Canada–West, opened the panel discussion by presenting new tendencies regarding current and future activities of the EU Commerce Chamber and trade relationships with Canada.

Afterwards, Celso A. A. Boscariol, Partner, Watson Goepel LLP and the President of the Italian Chamber of Commerce of Canada West, and of the European Chamber of Commerce – West, highlighted legal issues and business law updates pertaining to international trade and CETA such as investments, public procurement, intellectual property rights and sustainable development.

Juan Angel Berecca, Partner at Calderon Gonzalez and Carvajal SC, kept the attentive audience on the edge of their seats as he tackled the issue of international taxation systems and legal regulations in Europe and internationally.

Finally, special guest panelist John Treleaven, CITP|FIBP, a longtime member of FITT’s Board of Directors, shared his own experiences with participants and gave valuable advice on how to engage the world to become a successful entrepreneur.

Meetups are an excellent chance to learn, meet new people and grow in your career

While we always hope that each event is successful, the feedback that we receive from group members has been helpful and encouraging.

One of our members who attended this latest event, João Paulo Zanchet Vilela, posted on social media that it was a “Great experience! I met good people and shared useful information.”

Olga Zykova, a Master’s student in Administrative Science and Leadership and one of the assistant organizers for the event, says that “I came here as a student, and for me is it a good opportunity to meet and learn from people with outstanding career achievements, along with solid experience in trade and business. I hope this society will grow and develop, and more people will join.”

It’s been a wonderful opportunity to see people of all levels of experience, from student to mid-level to high level executive, come out to our events and learn from one another.

We’re always happy to welcome new members, but if you’re not in our area, please contact marketing@fittfortrade.com to find out whether there is a group near you, or to start a new group in your area.

The post How being part of a Global Trade Enthusiasts Meetup group can grow your career prospects appeared first on Trade Ready.

The horrific events in Paris were very much in the hearts of participants, and even in that sadness there was a palpable sense of determination, particularly among several French delegates with whom I interacted over the summit weekend.

One gentleman, whose wife is a medical professional at a hospital near one of the hardest hit areas, reminded us that it was France that brought the aspiration of “Liberté, Egalité, Fraternité” to the world.

The heartfelt comments of IMF Managing Director Christine Lagarde on a panel at the B20 session were equally moving in their reminder of the value of even an expression of support and concern for friends and colleagues across France.

The words to inspire us all

The parallel tone of the event, and the privilege of being “in the room” at the B20 was brought sharply into focus for me in Frankfurt, just before leaving for Turkey. It transpired that a woman behind a cash register whom I spoke with briefly had just been to Antalya.

Her parting words, “do your best for the rest of us,” echoed in my mind several times over the next few days, even though I did not have the opportunity to express to this citizen approaching her retirement that my involvement was very narrow, peripheral and limited.

Her words should, however, resonate with those leaders in Antalya in the business community, and certainly in the political leadership, as well as various complementary streams of activity.

The privilege of true leadership should come with a compelling sense of duty to ‘do the best for the rest of us’ and a determination to deliver substantively, even on the toughest issues.

Today’s strong leadership is looking at the bigger picture

As an unabashedly proud Canadian, it was excellent to see our new Prime Minister make his international debut at the B20 session in Antalya, very warmly received by top business leaders and the heads of various international organizations who shared the podium with Prime Minister Trudeau.

It was good to hear Financial Stability Board Chair and Governor of the Bank of England Mark Carney (another fellow Canadian) speak with focus and authority on the efforts underway to assure long term stability in the global financial and economic system.

And from the perspective of the work of our Task Force, it was inspiring to hear Governor Carney specifically mention trade finance in his remarks.

Trade finance is an esoteric domain, the critical importance of which is increasingly appreciated in business and political circles today.

Business leaders, including the CEOs of Coca Cola, Nestlé, SEB Bank, Sabanci and numerous others, were in attendance, as were the heads of the IMF, the WTO, the OECD and the International Chamber of Commerce. One striking undercurrent in the formal remarks, and in the exchanges which followed, is a sense among even the most hard-core business leaders that we need to start thinking more, and more seriously, about the bigger picture.

Numerous interventions reflected notions around the social responsibility of business, the role of commerce in international development, poverty reduction and peace and security. Chief among them was the imperative for executives to think long-term, and to think strategically about issues like sustainability and climate change.

This discussion is crucial, even as some sectors struggle with post-crisis regulatory issues, inconsistent legal standards across borders and issues like skills gaps and labour mobility.

Critical role of international trade in economics and sustainability a common thread

A cynical view might suggest that such musings are shaped by the context, and by the high visibility of the B20/G20 event. However, the sincere non-verbal cues – of certain speakers in particular – were undeniable, and the global nature of the gathering ensures a wide range of perspectives, reference points and ideological leanings.

All of it was underpinning a far-reaching exchange of ideas, even for the business-focused stream of the B20.

Several senior business leaders advocated directly and energetically for ratification of the WTO Trade Facilitation Agreement, and WTO Director General Azevedo, also a promoter of the importance of trade financing (as shown in his remarks at the Conference for Financing and Development in Addis Ababa last July) invited business leaders to engage more directly with the WTO going forward.

The crucial role of trade in the creation of economic value, reflected in part by the growth of global GDP, was specifically addressed by OECD Secretary General Angel Gurria.

Financial and economic inclusion, as well as the importance of small business, were also recurring themes, addressed directly or through advocacy for the Trade Facilitation Agreement by delegates like Guler Sabanci, Chair, Sabanci Holdings and Sunil Bharti Mittal, Chairman and CEO, Bharti Group, and Vice Chair, International Chamber of Commerce.

The critical role of small business in underpinning economic growth was widely acknowledged, not only at the Antalya Summit, but in the year-long work of the various B20 Task Forces, and the reports and recommendations produced by each task force.

Turning ideas into action

The dialogue and deliberations of the B20 Summit touched on numerous important points, and reflected a high degree of alignment on several major business-related themes, even those with wider and more complex implications, and a focus on the tag line “Business Diplomacy at its Best”.

The Turkish Presidency explicitly sought to maintain continuity with the efforts of the B20 Australia summit in 2014, and directed task forces to focus on the generation of implementable ideas and implementation.

Even with this focus and alignment, it is understood that one of the objectives of the business stream – gaining the attention and support of the most senior political leadership of the G20 – is a very difficult task, given the many highly sensitive priorities vying for attention.

The channel is very narrow, and demands a short, focused message, even with the support of organizations like the International Chamber of Commerce and many others actively and strongly supporting such efforts.

While reaching the G20 is an important objective of the B20 (and other parallel) processes, in the end, the research, analysis and recommendations of a series of task forces with world-class chairs and knowledge partners, stands on its own merits.

The year-long work of task force members serves as an excellent global basis for the development, sharing and dissemination of transformational business policy and practices.

Preparations are already underway for the next G20 and B20 events under the Presidency of China in 2016, with the official handover completed in Antalya.

It is incumbent upon all of us, however, to ensure that the work completed over the past year becomes part of an iterative, evolving process and contributes meaningfully to doing “the best for the rest of us”.

What else does Alexander do?

Learn more about the intricacies of Trade Finance from one of the leading subject market experts on the topic. His critically acclaimed book Financing Trade and International Supply Chains will give you deeper insights into nature of trade finance at its core, and of the versatility of this discipline in enabling trade flows involving businesses of all sizes.

The post Reflections After the 2015 B20 Summit: “Do Your Best for the Rest of Us” appeared first on Trade Ready.

Encouraged by his comments, I asked if he had always been a taxi driver and he laughed.

No, I was a construction engineer, and then the general manager of a chain of stores in Europe…. but when I came here I could not get a job and had to start all over again, so now I drive a taxi.

He laughed again and shrugged philosophically, adding “at least my kids will do better here, I hope.”

A couple of days later my wife’s Russian hairdresser told her she was taking some trade courses in order to re-qualify for, and hopefully return to, her original career as a freight forwarder that she enjoyed before emigrating to Canada.

A week after these exchanges, an article in the Canadian Press claimed that our post-secondary institutions are not producing enough graduates with the right skills to drive future economic growth.

The president of one of Canada’s leading banks, CIBC CEO Victor Dodig, said that we graduate students who are over-qualified but do not have the skills needed by industries.

He added that Canadian post-secondary education is not producing the types of skills needed by our industries, and that a lot of people are under-qualified for the jobs that need to be filled.

It’s a problem with an obvious solution

How can we complain that we do not have people with the skills to help our economy, while bringing in educated and qualified immigrants who are screened for their potential, who bring their innovative and entrepreneurial ideas, and yet have to do menial jobs because businesses won’t hire them?

It will take time for our educational institutions to listen and understand Dodig’s plea.

In the meantime we should be taking advantage of the expertise that is here now.

While we wait for any new educational programs to be put into effect (if Canada’s post-secondary institutions are to take heed of Dodig’s message), it is very likely that Canada’s economy will contract and global competition will affect us negatively.

The opportunities outweigh the challenges

As we read about the imminent arrival of yet more newcomers in the next few months, we are told that the screening process seeks to attract individuals with business skills and expertise.

But the Canadian life experience of people like the taxi driver and the hairdresser shows that once many former business people are here, they cannot find jobs that take advantage of the knowledge and experience they had before they came to Canada.

There is no doubt that integrating other cultures, foreign languages and different ways of doing business into our economy is not easy, but companies should be seeking ways to harness newcomers’ former business experience in real terms.

Canadian businesses cannot ignore that world competition is increasingly fierce, and that international markets are evolving continuously. We therefore need to take advantage of our new Canadians’ practical business expertise to help us compete globally in today’s markets, while waiting for our graduates to learn the business skills needed to succeed.

We need to change our mindset to change results

Newcomers’ willingness to come to a new country and live “the Canadian dream” should not be stymied by the temporary difficulties of integrating them once they are here.

Every newcomer makes an incredible personal and professional investment when leaving their country to come to Canada.

Businesses have to find ways to make a similar commitment, and accept (and take advantage of) new Canadians’ skills and willingness to work.

We want newcomers to adjust to us, but do not seem able to adjust to them by giving them a chance to work for us. As Dodig says, other countries like the UK and Germany, for example, help and support innovators and newcomers – why can’t Canada do the same?

It seems, however, that Canada is missing the opportunity of harnessing the real skills of hundreds of thousands of immigrants, while waiting for our graduates to get up to speed. And that’s something that cannot continue if Canada wants to remain competitive on a global scale.

The post We have to do better at maximizing international trade opportunities for new Canadians appeared first on Trade Ready.

In a recent conversation with a Canadian company wishing to expand internationally, I learned some of the questions that potential exporters face.

In this case, an expert in automation has two very successful automated tooling systems: one used in the automotive industry, and the other in the nuclear industry.

In both cases, he enjoys domestic success, differentiation and the support of his local customers to go abroad.

While he can successfully grow sales for both systems through exporting, he nonetheless faces an interesting dilemma.

This is because, while both products can be successful, the plans required for each product to do so must be very different from one another.

Choose the best path – single or multi-country approach

The automation tooling system for the nuclear industry has certain advantages that make it very attractive for export.

Firstly, the technical and regulatory requirements in the nuclear industry provide a huge barrier to entry, allowing for higher margins to fund global expansion.

A second advantage is that, as a niche industry, the potential number of competitors is limited when compared to other industries.

In this particular case, a single country approach may be more difficult to implement. Mexico, for instance, has only one nuclear power generation plant, and one research facility. The reactors in the existing nuclear plant are not of the same CANDU type used where the tool was originally designed.

A multi-country approach is therefore more suited to expand sales leading with this automation tool.

The export plan in such a case should look first into the usability of this tool in other types of reactors, as it will expand the potential for export. It should also look into the installed base of CANDU reactors in the world (South Korea, China, India, Argentina, Romania and Pakistan).

A proper market entry study must review in detail the economic effects of export regulations, tariffs and importing duties, issues that are non-existent when exporting to Mexico or countries that signed free trade agreements with Canada.

Go local with boots on the ground

Additionally, the variety of countries with potential customers requires different kinds of in-house resources.

A local approach, relying on the use of independent, on-the-ground sales representatives with established business networks in nuclear power plants, is the best way to enter the market.

In the case of the automotive industry, the automated system is used by car manufacturers in Canada. Aside from expanding into the U.S., this represents an opportunity in Mexico, where the automotive market is booming as more assembly plants are opening up, including a new Audi plant in the state of Puebla.

A recommended approach would be to complete a market entry plan to sell the automated tooling system to all the assemblers in Mexico, which would include some big names like Ford, GM, Nissan, VW, Honda, BMW, etc.

A further refinement would also show that all these plants are located in three distinctive zones of the country, allowing for a single country approach.

Due to the low number of potential customers and the high value of the tooling, it is better to sell either directly or through a local representative.

Understanding the tradition in the auto industry to drive costs low will be an important factor in determining the feasibility of one approach versus the other.

Make the extra effort to build trust with your local partners

Selling directly may also mean hiring a local sales or business development manager to work exclusively for the exporter.

Finding an independent representative is not easy; it requires building trust and that takes time. The representative usually carries other non-competing lines that dilute the sales efforts and the exporter has limited control on the sales function.

However, there is a low initial cost, and you gain immediate access to the professional network of the representative.

Recruiting a professional locally also has the advantage of complete control of the sales functions, 100% of the sales efforts and a better personality match between the exporter and the local manager.

It could furthermore include a lower sales commission if the compensation package includes a base with a higher upfront cost until the sales revenue increases.

In either case, new market expansion requires exhaustive market research, a good understanding of the cultural aspects of each market, and a refined export plan. An experienced international trade professional accredited by FITT is always a good start.

Have you ever marketed two similar products using very different strategies in separate markets?

The post Two very different approaches successful exporters use to expand internationally appeared first on Trade Ready.

“Schwinn” had a magical name in the 1960s that became synonymous with bicycles. The brand had developed a great reputation for quality and durability.

I was fortunate enough to work in the OEM (Original Equipment Manufacturing) Purchasing Department in this era, which later became the Materials Division.

Everything was done by hand, except for phone calls, and an antiquated pre-dated fax system that actually smoked when a message was sent overseas!

Over the intervening years, the processes and technologies have changed the industry, but in modernizing let’s not lose sight of the key principles every successful business is founded on – quality, collaboration, integrity, and a customer focus.

Ahead of their time with a focus on quality

The company I worked for practiced a strong “Zero Defects” policy for the quality of all components and completed bicycles. This was long before the AQL or Six Sigma quality processes of today.

All bicycles had a lifetime warranty for the frame. We purchased the best bicycle componentry that was available, worldwide, to support our bicycle assembly line.

Today, typical dealers do not have lifetime warrantees on their products. We took pride in quality, and were able to closely manage manufacturing by doing it in-house, and doing checks and double checks before frame completion. Processes were done carefully, by hand, not by machine or robot like the manufacturing world of today.

Today, businesses have replaced top quality with the Six Sigma approach. This means limiting defects to 3.4 or less per million units.

This sounds great, but even operating under Six Sigma, Toyota, GM and other large manufacturers have had significant quality issues.

Is it the different pride and culture of today, or just better business?

Though most larger companies have lost that hands-on touch through automated processes and robotics, closer monitoring, inspection technology and IoT data tracking may help ensure high standards of quality in the future.

Let’s not lose sight of quality products for the sake of more efficient production.

Operating in the true spirit of collaboration

Every supplier in the United States and Europe wanted to do business with our company. We would meet in different cities yearly to collaborate. We invited our overseas and domestic suppliers, dealers and administration to talk about how we could improve, and what the next phase of our business relationship would be.

Collaboration was a key word in the company, long before “synergy” and “strategic alliances” became the buzzwords they are today.

Nowadays, collaboration is coming “alive” again. There is collaboration software, and even competitors are working together to innovate and push industries forward. That was unheard of a generation or two ago.

Back then, we truly partnered with our suppliers. Word of mouth and handshakes “sealed the deal” in the 1960s.

Of course, we used hard copy purchase orders, and there were terms and conditions of doing business on the back side of the P.O. Our suppliers sent their acknowledgments to our P.O.s and they had their own terms and conditions. We called this “the battle of the forms.”

But, it never wound up in court. Back then, if there were ever any issues, we resolved them in the spirit of cooperation and fairness.

Can we bring back this element of cooperation and genuine relationships with our suppliers and distributors?

Integrity and reliability pay off

Schwinn paid on time, every time. Generally, back then the terms were 1%-10-30 and Schwinn took advantage of the 1% discount. If you pay on time and are credible, suppliers wanted that kind of business relationship.

There were some deep negotiations in those days, but there was never any “fists pounding the table” asking for cost reduction. Collaboration and trust resulted in the optimum price per unit of what you purchased. We believed in value, not cheap prices.

The word ‘cheap” is used too much today. It is all about the best price possible. If you do get “cheap”, however, you will also get “cheap” service, quality and delivery. Value is coming back slowly today as consumer demand for “sustainable” products with ethical sourcing increases and supply chain and delivery gets more complex.

We can get the best value out of the supplier/exporter these days by partnering with companies that match our ethics, quality and integrity standards, and not settling for those that will merely give you a better price.

You’ll pay for cost-cutting in these areas in the end, anyway.

Bridging legacy systems with new advances in supply chain technology

During my time with Schwinn, my goal with the suppliers overseas was to meet the delivery date in Chicago, to keep the bicycle assembly line constantly moving. Once the materials were ready, they were given to forwarders of my choice in various countries. We shipped “break bulk”. All parts were put in wooden crates, pre-containerization.

There was no way of tracking these shipments other than by telephone. I would have to give updates to our inventory/production control team if the shipment was needed faster than normal and had to be expedited.

I had a map of the Great Lakes in my office when the lakes were open for vessels. I would mark locations of these vessels daily on the map by calling our broker or forwarder, and inventory/production control could check the map to see where the vessel was at any point.

Contrast that hands-on tracking system to the technology used today. We use an entire array of still emerging technology such as RFID, GPS systems, and software tracking systems to monitor shipments coming from overseas.

The in-transit time shipping “break bulk” from overseas sources was typically six to eight weeks. Yet, the assembly line never stopped.

We did what we had to do to keep our supplies coming in and our products into the hands of our customers.

During an east coast dock strike, I went to Halifax, Nova Scotia, to expedite our crates to keep the bicycle line moving. The crates were everywhere. I worked with the dock workers. I even gave them Canadian cigarettes to keep them motivated.

I looked around and saw large containers and I was curious. I asked, “What are those containers?” The dock workers said the crates were put in containers for ease of use, and for consolidated shipments. They were much easier to work with than wooden crates all over the dock.

Upon return to Chicago, I suggested a containerization program to my boss, the VP of materials. We agreed to a trial shipment.

I alerted my suppliers, forwarders, and customs broker about this new program. We consolidated shipments from our French suppliers and put them in one container.

Once the shipment left France, the container hit Schwinn, Chicago in only three weeks! This was half the time of break bulk shipments. Needless to say, we switched to containers for all of our overseas suppliers in Germany, Switzerland, Italy, and England.

We sold 1,000,000 bicycles in one year and were sold out of production the first day of that new year.

This container program made tracking easier, with less inventory and shorter lead time. Today, 20’ and 40’ containers are standard in overseas purchasing and importing.

Imagine, working with no e-mail, internet, ERP, TMS, WMS, EDI, tracking systems, or iPhone. But, it worked!

Teamwork, quality, a handshake, collaboration, trust and openness was very effective.

Improvements in supply chain management processes, tracking technology, manufacturing and transportation are a great thing. Schwinn was always looking for ways to improve the way things were done.

But in those days taking a hit on quality to make an extra dollar was not an option. And our key focus was always customer satisfaction.

If you can do both, you will always be a success.

Do you think things like collaboration, trust and good old-fashioned handshakes have a place in today’s business world? 

The post Is there a place for old-fashioned values in today’s tech-driven supply chain world? appeared first on Trade Ready.