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.

What is a Monte Carlo simulation?

Monte Carlo techniques were developed during World War II. To create atomic weapons, complex mathematics related to probability distributions were used. Several decades later this technology was refined and is now used by the largest corporations and institutions in the world for different purposes.

The 21st century business environment is complex and rapidly changing. To succeed requires a ‘telescope and microscope’ approach: seeing the big picture but also being able to zoom-in on small details when needed. Monte Carlo simulations can provide business with sophisticated tools to master business planning, and maximize profitability.

Taking its name from the world-renowned casino town in Monaco, Monte Carlo is not a product. It is a collection of techniques that allows businesses to view all possible outcomes of a venture through statistical simulations.

Casinos, being filled with games of chance, were an excellent application of the mathematics for modelling and assessing uncertainty in the outcomes of these games. Monte Carlo simulations work by creating thousands – sometimes millions – of trials and seeing the outcomes that emerge from them. This is in contrast to an earlier and simpler method that required very restrictive and often unrealistic assumptions on its input parameters.

An everyday example

As an example, consider the time it takes for a car to travel between two cities. The model would have two inputs: the weather and time-of-day (peak and off-peak demand). In addition to these variables, two other parameters are distance and average speed. For the weather variable, a probability distribution of various weather states (rain, snow, fog, clear skies) and for traffic, its own probability distribution (low, medium, high traffic).

Generation of these probability distributions stem from historical data and/or objective expert measures – meteorologist and civil engineers. Combining all these inputs, Monte Carlo simulations generates a range of travel times and the corresponding likelihood of each time between the cities.

A Monte Carlo simulation would run through various scenarios covering all the different cases. For example, one case would be rainy weather and high traffic. Another case would be rainy weather and medium-level traffic. The travel time from these outcomes and the probability would then be computed.

All this information culminates in a full spectrum of possibilities for the decision-maker, and any one of these scenarios can be analyzed more closely. For example, observing the combination of holiday season and weather may produce unusual results and require closer investigation by the model design team.

Monte Carlo and the bottom line

There are many innovative uses of Monte Carlo simulations to generate additional revenue and differentiate products in the market. As an example, we developed an application that featured Monte Carlo analysis for a U.S. health insurance client to improve the effectiveness of their customer’s health coverage.

The client sells insurance products such as critical illness, long-term disability, medical, dental, and vision coverage through their agent network. One of the most important concerns for critical care coverage is the risk of personal bankruptcy in the event of a sustained medical condition. A customer will have a budget in mind but won’t know how much insurance they need to manage their risk.

The application we developed asks simple questions from the customer such as their age, weight, smoking history and other health factors. They also provide their current budget and expenditures with each insurance coverage area.

A Monte Carlo simulation can be run that simulates thousands of possible probabilities and paths to determine the potential health outcomes and the associated costs depending on different levels of coverage, to determine their risk of bankruptcy. The customer gets an easy-to-understand report that shows them the risks of their current product mix and suggests ways to optimize or increase their coverage to minimize potential financial hardship, resulting in increased revenues and lower risks for the insurer.

Although it requires millions of calculations, this simulation can be completed in just a few seconds. Just a few years ago, this type of system would be too costly to implement, but with the advent of Cloud Computing platforms, such as Amazon Web Services or Microsoft Azure, high-performance servers can be accessed nearly instantly and the calculations can be completed quickly with low cost.

Monte Carlo: the ‘Cook Book’ approach

Consider the following scenarios:

• A change in minimum wage
• A change in corporate tax rate
• A change in depreciation or accounting rules
• A disruption to your supplier network

Consider the familiar adage, ‘failure to plan is planning to fail.’ Any of the above scenarios could happen and understanding the full impact on your operations will be imperative to your success. Risk management for small and medium-sized (SMEs) business does not need to be guesswork. Monte Carlo simulations provide a scientific approach which has been proven useful to many organizations.

While modelling complex situations may require outside expertise, SMEs can use common office programs like Microsoft Excel and the widely available @Risk application to add structure to their risk-management.

The first step is to identify what key variables affect a risky situation. Next, consider the likely values that these variables could take. Formally, in statistics, this is called a probability distribution. Some examples of distributions are below:

The final step is to have a program calculate all the different combinations the variables can take and the interaction of these different combinations across variables.

As part of ongoing human capital growth, SME executives should explore the benefits of adding Monte Carlo simulations to their business planning.

The post Why SMEs should consider Monte Carlo simulations for business planning appeared first on Trade Ready.

A UK-EU divorce will affect corporate taxes, foreign exchange, labour laws and immigration requirements, cross-border trade regulations and more.

Despite the Brexit information overload and all the scaremongering, it’s important to remember that once Article 50 of the Lisbon Treaty on the European Union is invoked, there will be a two-year transition period for the UK to exit from the EU.

Like it or not, it’s time to start planning to do business in a post-Brexit world

So what now? Well, for companies of all sizes (especially small and mid market companies), it’s time to take a measured approach to how your business will likely operate in a UK that won’t be part of the EU. What we do know for certain is that major industries like technology, banking, and financial services will be greatly affected.

In the technology sector, the way UK-based companies process, store and manage the personal data of employees and customers on the European mainland will be affected. The UK’s Data Protection Act will have to be reformed. Additionally, the UK will miss out on being part of the EU Digital Single Market Strategy that is under construction. This will impact consumers and businesses that will face barriers to cross-border e-commerce activity.

In the banking sector, EU “passporting” arrangements currently allow banks established in the UK (or any other member state) to provide services across the 28 member states. Canadian and American banks like CIBC World Markets, RBC Capital Markets, Scotiabank, JPMorgan Chase, Citigroup, and others have been able to operate across all EU member states from their UK subsidiary.

Brexit would put an end to the right to “passport” across the EU, so any bank operating from the UK would now need to establish a new presence in another EU member state to provide services across the EU, unless a special arrangement can be negotiated.

From a financial services standpoint, this will likely weaken London’s position as a major global financial service hub.

Now that the Brexit’s happened, what should I do?

To help you cut through the noise, here is a three-step process that can help your business manage the risks of Brexit and its implications for your future commercial success:

1. Mapping: First, companies need to identify the main economic, social and political risks of Brexit on their core business. The key question at this stage is: “How can Brexit directly affect our business objectives in the UK and cross border trade across the EU?”

Companies need to develop a list of risk types, ranging from foreign exchange, immigration, increased taxation and costs of doing business, to strikes and protests, in order to understand the potential Brexit risks. Some situations may weaken a company’s financial position, while others may, in fact, present an opportunity for companies to gain market share.

2. Evaluate: Second, when your company is equipped with a very specific set of economic, social and political risk scenarios, you need to assess and measure the potential impact of each scenario on your business operations in the UK (and elsewhere in the EU and overseas).  For example, to estimate the financial impact of Brexit against your company’s commercial and investment objectives, you can use a discounted cash flow model. This tool helps companies understand tolerance levels.

There are other tools out there like the organizational network analysis. This can help determine the estimated operational impact of specific Brexit risks. For example, a technology services company might have their executive management team based in Toronto, R&D, sales and marketing in Ireland, and customer service and technical support in London. One of the most important measurements is how these risks translate into easy to read and understandable metrics. Using different metrics, companies can assess whether the Brexit risk level you assign surpasses your risk appetite or tolerance.

3. Manage and Implement: Once Brexit risks have been identified and measured, you will need to determine “how do we get there?” and “what needs to get done?”

It’s never too soon to start preparing for the future

Every company with interests in the UK and the EU will need to assess the impact of a Brexit on their commercial operations and international strategy. If you don’t act now, you risk losing a lot of money and running your business into the ground.

International trade experts, lawyers, and accountants who understand global trading rules and have on-the-ground knowledge of doing business in the region can be a valuable help. These experts can assist you in mapping out and evaluating Brexit’s risks, and devising and implementing your new European strategy. Those companies that make timely and well-informed decisions about their UK operations have the chance to turn Brexit’s challenges into major opportunities.

The post How can your global business manage Brexit risks? appeared first on Trade Ready.

Laura Dorling van der Oord, CITP|FIBP, is an Advisor on the Board of Directors for the World Bank Group representing the Office of the Executive Director for Canada, Ireland and the Caribbean.

Over the course of her career, she has consistently applied her talents to engaging the private sector in international development and to opening up new export opportunities for businesses.

“I’m very committed to harnessing the benefits of trade and investment to support sustainable development, poverty reduction, and long-term socio-economic growth, both in Canada and in developing countries,” she says.

As the chair of FITT’s Certification and Accreditation Committee (CAC), we’ve also benefitted from her experience and leadership, and look forward to working with her in that capacity for many years to come.

The drive to make a difference in people’s lives

Laura grew up in the Niagara region of Ontario, close to the U.S. border, which fostered an early interest in international trade and its importance to Canada’s economy, as well as the quality of life for many Canadians.

She elaborates by explaining that, “From an early age, I always wanted to work internationally. I enjoy making connections across cultures and seeking solutions to address some of the world’s most pressing social and economic challenges.”

Originally, she planned to channel that interest in running a non-profit organization focused on international development. She travelled to Costa Rica with the Youth Challenge International volunteer program to learn more.

While completing her Bachelor of Commerce with Honours at the University of Ottawa, she switched gears. She decided that the private sector also plays a critical role to foster sustainable development and improve socio-economic conditions around the world.

After graduating, Laura took a position as an Export Consultant with Ontario Exports Inc., part of the Ontario Ministry of Economic Development and Trade, and learned a lot during her time there.

Working as an Export Consultant opened my eyes to the importance of international trade in the global economy and the value of Canadian competitiveness.

In 2001, Laura moved to Mexico to complete a Master’s degree in e-commerce, and at the end of her program she received an offer she couldn’t turn down.

The offer was from DFAIT (now Global Affairs Canada) for the role of a Trade Commissioner and team leader of  the International Financing division for Latin America and the Caribbean.

By 2004, Laura had earned herself a promotion to another new role: Senior Counsellor for the Canadian Executive Director’s Office at the Inter-American Development Bank in Washington, DC.

“This was a dream job since I was able to help bridge the role of the private sector with development through targeted investments in Latin America and the Caribbean.”

The role entailed robust responsibilities including the review and approval of private and public sector loans across a wide range of sectors, the negotiation of new procurement policies and procedures, and the development of innovative funds to incentivize increased investment in priority areas such as trade facilitation, sustainable energy, climate change, and debt relief initiatives.

She also partnered with the World Bank to establish the Canadian Private Sector Liaison Network, the first of its kind at the Inter-American Development Bank.

A dedication to continuous learning and international trade training

Laura began taking FITTskills courses in-class in 2002 in order to continue to develop her international trade knowledge and talents. In 2005, Laura completed her FITT Diploma.

FITTskills courses were a very useful way to study the essentials of international trade and complemented my undergraduate degree in commerce and international management. They helped me to further develop my skill set in a very practical way.

Laura wanted to share her international trade expertise with others, so she successfully applied to become an elite Certified International Trade Professional (CITP®|FIBP®). She has found it to be a valuable way to connect with her colleagues and validate her experience.

“I was very excited to earn the CITP®|FIBP® designation. It provides the opportunity to meet and learn from a tremendous network of trade practitioners with very diverse backgrounds and areas of specialization.”

The certification demonstrates trade expertise in a very tangible way and has helped fulfill my commitment to lifelong learning.

“I remain committed to the promotion of the CITP®|FIBP® designation and continue to be actively engaged with FITT as Chair of FITT’s Certification and Accreditation Committee which reviews applications and activities that lead to the awarding and maintenance of the professional designation.”

She continues to seek out opportunities to broaden her skill set in new areas.

Managing risk and developing innovative tools to address complex global challenges

In 2008, she pursued the opportunity to work in a specialized field that addresses one of the world’s greatest challenges.

She began working with the operational teams of the World Bank Group as a Senior Disaster Risk Management Specialist to help improve emergency lending available to developing countries when struck by disaster.

This initial work led to a role with the Global Facility for Disaster Reduction and Recovery (GFDRR) as a Senior Governance Specialist where she worked closely with donors and partners to prioritize increased investment in risk mitigation tools and comprehensive disaster risk management to reduce human and economic losses.

She initially focused her efforts on the Caribbean and Latin America, and she later supported activities in Asia and Africa.

As a member of the World Bank’s rapid response team, I helped to coordinate the post-disaster needs assessment and the initial donors’ meeting to support recovery efforts in Haiti after the devastating earthquakes in 2010.

“I also organized a donors’ visit to Vietnam to promote the importance of disaster reduction and recovery efforts in flood prone areas that happened to be hit by floods at the time.”

“With the GFDRR, I also arranged a donors’ meeting in Sweden that resulted in the announcement of significant financial contributions to support programming for disaster risk management.”

In 2012, Laura returned to her role on the Board of Directors as an Advisor, this time at the World Bank Group, in the Office of the Executive Director for Canada, Ireland, and the Caribbean.

This position entails careful review of both public and private sector investments in developing countries and frontier markets, with billions of dollars approved yearly to reduce poverty and improve socio-economic conditions.

Connecting Canadian companies with global opportunities

A significant part of Laura’s career has involved the promotion of increased engagement of the private sector to support various aspects of socio-economic development.

Multilateral development banks, such as the World Bank Group, make important investments in priority sectors, many of which require qualified firms and individuals to implement these projects and programs.

She is constantly finding ways to better engage Canadian firms and consultants in these projects in innovative ways.

An example of this was the opportunity she identified for the World Bank Group to partner in the Canada-Africa Business Summit, hosted in Toronto, where she led the organization and delivery of the World Bank Group’s participation.

“By promoting opportunities for Canadian expertise in the energy sector in Africa, this helps to implement much needed energy projects that improve economic opportunities across the African continent, while also advancing Canadian trade and investment interests. It is a win-win approach to improve lives in many countries in the region through increased energy access and energy efficiency.”

Some other examples throughout her career include similar efforts to promote Canada’s expertise and experience with public-private partnerships, and the development of new funding mechanisms. These include the Sustainable Energy and Climate Change Initiative at the Inter-American Development Bank, and the recent creation of the Global Infrastructure Facility at the World Bank.

Laura is proud to represent Canada and promote Canadian values on the international stage. From a young age, she helped to organize and lead provincial and federal trade missions to Asia, Latin America, Africa, and Europe.

She was also one of the initial Corporate Social Responsibility leads for the Government of Canada, and enjoys lending a Canadian perspective to her work at the World Bank Group.

She has also worked as an independent consultant and successfully created a consulting firm dedicated to helping companies gain market share and overcome challenges in global markets.

This experience has allowed her to personally understand the needs of small and medium sized enterprises, and the interests of consultants as they pursue work internationally.

Blazing a trail for women in finance and international trade

Laura is extremely grateful for mentors and inspiring leaders who have proven there is a role for women in finance and international trade.  She considers mentorship a fundamental pillar throughout her career and professional development.

I’ve learned a lot from other trailblazers who helped open doors before me and I am committed to helping others on their path to ensure women increasingly have a seat at the table.

“There have been times that I’ve promoted trade and investment opportunities as the only woman in meetings with foreign delegations. For instance, I organized the first virtual trade mission between companies in Ontario and Jalisco (a Mexican state) to advance trade in the automotive sector, which included site visits where no woman had ventured before.”

She is encouraged to see this dynamic shifting and believes Canada has a unique opportunity to demonstrate the value of gender equality at home and abroad.

When asked what new professionals in the industry should know, she advised them to always think of unconventional ways to handle problems and find solutions, regardless of the sector and regardless of how difficult the challenges may seem.

“When there is a will, there is a way.”

“It’s important to challenge traditional ways of doing business to create new opportunities for trade and investment. Have the courage to try new things and explore your passion, even if that means you have to develop innovative solutions or do things that haven’t been done before. Going forward, it will be essential to think more broadly beyond trade to include investment, innovation, and entrepreneurship given the interconnectedness in global markets.”

With so much success already in her career, it will be exciting to see Laura continue to follow these tenets and find new ways to build global growth and long-term sustainable development.

She resides with her husband and two young children in Bethesda, Maryland.

The post Laura Dorling van der Oord, CITP|FIBP – Advisor on the Board of Directors, World Bank Group appeared first on Trade Ready.

However, when you decide to take advantage of the global supply chain to build your business, there will inevitably be challenges along the way. Knowing how to manage your international vendor relationships becomes key to ensuring your international business sails smoothly.

Unlike arm’s length transactions, building international vendor relationships is a long-term strategy that needs to be enriched and maintained on an ongoing basis.

In 2009, my husband and I started our own small international business. Since then we have developed some successful partnerships with our overseas suppliers, yet at the same time we have also had some frustrating experiences.

I would like to share some painful but formative lessons we have learned along the way that could be valuable to your start-up international business.

1. Never underestimate the importance of relationships

First of all, you have to be mentally ready to engage in an international relationship. Being open-minded and understanding of cultural differences is a prerequisite.

As my husband once said:

Understanding culture is not about knowing when to bow or how to eat the food, it’s about appreciating your partner’s worldview enough to anticipate how they might be inclined to perceive you and your actions.

Ultimately you can only put yourself in that person’s shoes if you have some feeling for the life experiences that person has had before they encountered you.

For instance, you don’t have to speak Chinese in order to do business with people in China.

English is an international language and any Chinese companies which trade internationally will have people who can communicate in English proficiently.

The obstacle is not the language; rather, it’s the way people think about business problems and how these ideas influence their conduct.

2. Don’t lose focus as you make your first steps

China is a fast-growing economy and, as such, the rapid pace of business development often brings about problems. Sometimes, people only focus on the final results, while paying less attention to details and quality.

This is especially true for new companies and SMEs that often lack the resources to cope with unforeseen challenges.

So when you first start doing business with Chinese companies, you have to be patient, flexible and forgiving; even though you know the outcome may be less than ideal, you must be willing to give it a try.

It may take multiple attempts to get a product right, but it’s possible for those who are persistent.

3. Take the time to choose your future suppliers carefully

Once you’re mentally ready, it’s time to find the right suppliers for your business. It’s much harder to find the right suppliers overseas than locally.

Sometimes you may need to take an overseas business trip, but even visiting a lot of factories in person will not guarantee success. Conducting plenty of research beforehand is of absolute importance.

Your choice of country shouldn’t depend on your own preference. It should be based on a country’s competitive advantage.

For example, many textile products in North America were produced in China during the 1990s, because of the abundance of low-cost labour and the technological capabilities of China’s textile industry.

However, as labour costs in China have increased in recent years, more and more textile companies have shifted their manufacturing from China to other developing countries such as Vietnam and Cambodia.

This shift means, compared to other countries where labour is less expensive, China no longer enjoys an overwhelming competitive advantage in the textile industry.

When it comes to choosing the right suppliers, it’s important to narrow down your choices and qualify your options based on a set of criteria.

For example, the quality of a company’s website, trade references, product samples, and communication are all important indicators for qualifying a potential supplier.

A third party’s onsite evaluation or factory audit can often save you the expensive costs of an overseas visit.

4. Plan ahead to ensure the quality your customers demand

Finding the right supplier is only the first step towards a successful international vendor relationship. There are also many risks associated with long distance relationships.

One of the biggest risks, in my opinion, is quality control. It’s important to articulate clear specifications and standards to your suppliers.

Equally important is your willingness and ability to foresee and pre-emptively mitigate any problems that might occur.

It’s crucial to insist that pre-production samples be delivered to you prior to production. Hiring a third-party agency to perform a quality inspection during production and/or before shipment is an effective way to ensure products meet specifications.

Be sure to inform your supplier of the inspection before they start production, as this will make them more cautious during production.

5. Reduce risk by diversifying your suppliers, but not at the expense of building trust

As mentioned earlier, building successful international relationships requires a long-term commitment. At the same time, it’s very risky if you only have one supplier for your key product lines. Don’t put all your eggs in one basket.

It’s necessary to have more than one supplier, especially in an unstable economy. Your key supplier could go out of business in a year or even a month.

This has happened to us several times over the years. Each time we had to start all over again to find and qualify a new supplier. Therefore, it’s smart to have at least one other supplier as a backup.

Although having multiple suppliers is important in managing risks, reducing the number of suppliers and focusing on your key supplier will help you build and manage a long-term relationship.

Just as you evaluate your suppliers, your suppliers will evaluate you as a customer. Overseas suppliers often assess their customers based on the importance to their business.

If your business is of significance to your supplier, they will value you as an important partner.

Keeping your promises, such as consistently paying on-time, is one of the ways you prove to your supplier that you are a good customer with whom it’s worth building a relationship.

Although it takes a lot of time and effort, developing and building trust is not only worthwhile ­­­– it’s absolutely critical to your success.

6. A strong contract can help prevent expensive legal disputes

The reality is that disputes can and will happen even with your best suppliers.

To resolve an international dispute through legal means is much more complicated and expensive than with domestic disputes. Most of the time, it’s easier to negotiate and settle disputes privately rather than through legal action.

That said, you should always have some sort of contract in place in order to set clear expectations.

Once a purchase order (PO) is accepted, it becomes a simple but effective form of contract between a buyer and a seller. Any terms and conditions should be stated clearly in your PO to your supplier to avoid the possibility of a dispute.

Again, an understanding of cultural differences plays an important role in avoiding and settling disputes. Sometimes, there is a way to find a win-win solution to minimize the harm for both parties.

There are many more strategies and tactics in managing international vendor relationships which you will learn through experience.

All in all, having an open-minded and understanding approach is essential for small businesses interested in building relationships with international vendors.

What have your experiences with international vendors been like? How can you apply these lessons to your current or future vendor relationships?

The post Six ways you can effectively handle your SME’s international vendor relationships appeared first on Trade Ready.

No doubt, based on your own experiences and area of specialty, you’ll have strong feelings on the subject.

But if you sit and think about it for a minute or two, is there one aspect that you would elevate above all others, or it is too hard to choose?

There are strong arguments for many aspects of importing and exporting, with each presenting many valid points. However, even when you set them all side by side, it seems almost impossible to narrow down the list.

Over the course of our International Trade Competency Standards (ICS) Project, we had many international trade experts share their wisdom and knowledge on their particular area of specialization.

Through discussion and debate, document reviews, surveys and webinars, they’ve had opportunities to talk about what they think is important in international trade, and why.

As a result, we’ve been able to gain significant insights into this question, and see what international trade professionals like you think is most important in their work.

While we can’t name all of them, here are seven areas that generated particularly high amounts of interest, discussion and debate. Will your top choice be on the list?

1. Conducting a meticulous situational analysis before you go global

Initiating business in another country is not something to be done lightly. It requires a lot of preparation, research and strategic re-orientation.

Deborah Youden, CITP, an Export Consultant with the Newfoundland and Labrador Organization of Women Entrepreneurs, stated,

“We want to ensure that companies who look at international markets are ready to do so, or understand and identify what needs to be done and how they can do it before they launch globally.”

It’s significant because until you examine all aspects of a business and are aware of investments needed from the company, you could be putting the company in jeopardy.

Finding the right pairing of business and market involves taking a look at both halves of the equation. If your business isn’t prepared for expansion, entering a new market could overstretch resources, cause major supply chain disruptions or leave employees overworked, among other issues.

On the other hand, businesses need to know whether there is a demand for their products or services in a new market, and whether they are legally able to do business there without overcoming significant obstacles.

Deborah says that having consistency and standards for the process, as defined by the ICS project, will be a great benefit for any company looking to go international.

2. Impeccable analysis and mitigation of all types of trade risks

There’s always a lot of risk in any element of international trade. If you don’t know what they are ahead of time, and plan for them, your business could be in big trouble.

Currency exchanges, political instability, intellectual property rights, cultural differences, economic issues – the list of risks seems to never end.

That being said, risk shouldn’t stop you from doing business internationally. When properly managed, it is simply one aspect of many incredible opportunities.

The key is to identify those risks, create backups and margins of risk, and keep both the best and worst case scenarios in mind as you broaden your international horizons.

3. Managing financing and payment for trade transactions with confidence

While the payment methods and processes of international trade are very important, there are a lot of steps that companies need to take before it occurs.

Getting financing and credit before the transaction takes place is a crucial component of any deal, as most companies do not have the liquid assets to pay to purchase international products or services out of pocket.

Having a firm sense of the skills needed to acquire that financing, secure insurance on trade deals, and negotiate the details of payment will eliminate confusion, and streamline the process.

Once companies are on the same page as to how the entire financial process occurs, negotiating the best deal can then take centre stage for your company and its business interests.

4. Master research and planning to effectively manufacture goods for export

It’s one thing to produce a product for export; producing one that meets customer demands, operates exactly as expected and is packaged to meet specifications is quite another.

Before the manufacturing process starts, companies must conduct market research to make sure that the proposed product meets market expectations and consumer demands.

Once the product comes off of the assembly line, it also needs to be tested for quality and safety assurance, and then packaged and labelled in such a way that all of its features and uses will be clear to consumers.

With such a diverse skill-set required, it’s no wonder that manufacturing has become one of the most dynamic and in-demand career paths in international trade.

5. Handling the many variables involved in the international transportation of goods

In transport, the number of variables a company has to manage are simply staggering. As Audrey Ross, CITP, Logistics and Customs Specialist for Orchard International Inc. lists:

Costs are dependent on location of pick up,   port of departure, port of destination, destination of final delivery, INCOterm contract, mode of transport, type and size of product, customs cleared or in bond for customs deferral, and remote or popular location or destination.

“Timing is also dependent on location, destination, mode of transport, type and size of product, etc.”

While it can be difficult to standardize the differences in transporting all kinds of goods, Audrey says companies can agree on the variables involved, the differences between domestic and international transportation strategies, and the types of hiring and training needed for the staff involved, among other topics.

6. Implementing effective international sales and marketing plans

As Melanie Abdel-Malak, Director, Foreign Market Development for Quebec International reminds us, “You can have a great plan, know all the customs rules and comply with all regulations, but if at the end you don’t sell anything, your project is a fail!”

She also, however, identifies that the sales process poses significant challenges to SMEs newly entering international trade because of the many skills and processes needed to ensure success.

“There is an array of aspects that one must take into considerations before getting into international sales. The main problem is that, especially for SMEs, the concentration will be more in developing the sales network rather than planning, analyzing and getting feedback.”

At the end of the day, you do not only need sales but also profits, which means there is more to sales then just selling.

With this in mind, she added that standardizing the skills needed for sales allows even experienced professionals to assess their own abilities, and gain training to fill in any competencies they may need to address.

7. Recruiting the best talent for the job

Time and time again, we hear that having the right people in the right roles can make all the difference in global trade. But how can you make sure you get the right people in place, and manage your staff across international borders?

It starts with establishing HR, recruitment and training strategies. From there, companies need to decide on key issues like compensations, benefits and performance reviews, as well as developing guidelines to send domestic employees overseas and bring them back afterwards.

Though HR professionals in global trade companies might have differing opinions as to what the best way to do each of these would be, it’s important to make sure each step is covered in the way that works best for your company’s needs.

Did any entries on this list surprise you? Is there one you would add on, or want to take off?

The post The top 7 most important skills that global trade professionals need to master according to industry experts appeared first on Trade Ready.

From what I have learned in my travels and dealings in the region, the growth strategy is three fold from a sectoral development standpoint:

1. Grow existing sectors
2. Build new sectors, new sub-sectors, and new functions and hubs
3. Move key sectors up the value chain

Apply your business’ expertise to foreign development plans

As Asia continues to develop, various jurisdictions may have gaps and deficiencies along the value chain that can be filled by a foreign solution.

Some of these jurisdictions may lack the knowledge, capabilities and advanced processes in order to move their economies forward. I believe Canadian companies can stand to benefit from these gaps and deficiencies by being part of the development process.

For example:

• China is building their aerospace, life sciences and clean-tech capabilities.
• India is moving up the value chain and transforming its Business Process Outsourcing (BPO) sector into Business Process Management (BPM).
• The Philippines is building a bustling Business Process Outsourcing (BPO) hub in Asia and has overtaken India as the call center capital of the world, due to its highly educated workforce that can speak fluent English.
• Singapore and Hong Kong aim to be Renminbi, international education, medical tourism, and cultural hubs of the world.
• Thailand and Malaysia continue to build infrastructures and eco-systems that are conducive for manufacturing.
• Vietnam is vying for low cost manufacturing as China begins shifting to high value manufacturing.
• And finally, Indonesia is focused on natural resource development and building its financial services, ICT, and aerospace capabilities.

I have found that the following three high-growth sectors in Asia possess a number of gaps and deficiencies, and thus opportunities for trade and investment.

Foreign companies can fill gaps in Asia’s finance and technology areas

I had the opportunity to work on a market assessment and lead generation project in early 2011 with a Southeast Asian financial center that was planning to enhance its regional standing.

When examining the jurisdiction’s Financial Services, clusters/sub-segments and its capabilities together with complementary and supplementary sectors, many gaps in the eco-system were found.

This jurisdiction had very limited venture capital and start-up financing to support its growing tech start-ups. Being a developing economy, this Southeast Asian financial capital lacked risk management and IT workflow capabilities.

Local companies could not provide the solutions, thus foreign companies with the right technologies and processes were needed to address the gaps.

This assessment project had many dimensions. But, for the purpose of this opinion piece, I will only focus on the gaps and deficiencies in functions and sectoral capabilities.

Figure 1 below shows a graphic representation of the process used in this project, which can also be used for other sectors.

Figure 1: Financial Services Sector and Sub-Sector Assessment

Energy and clean-technology

The development of Asia’s clean-tech sector and the limited depth and breadth of Asia’s energy mix are areas in which Canadians can play a strategic role.

The International Energy Agency’s 2013 World Energy Outlook report expects the energy demand in Southeast Asia to increase by more than 80 percent in 2035. The report also states that Southeast Asia will be the fourth largest oil importer after China, India and the European Union.

Based on my interactions with subject-matter-experts, key stakeholders that work in the energy sector, and the Asian Development Bank, there is a strong push to reduce the region’s dependence on imported oil, develop and grow its clean-tech sector, and diversify its energy mix.

The Canadian clean-tech sector is highly innovative and internationally oriented. Canadian clean-tech companies can stand to benefit by offering their products and services to jurisdictions that are developing clean-tech sectors as well as for those that have yet to start development.

Also, as the region’s appetite for energy grows, Canadian energy companies can benefit from this opportunity by building supply chains to Asia, and supplying energy products to the region.

Asian travel boom and Aerospace sector opportunities

Aerospace is another area where Canada can lend its expertise.

Personal and business travel is booming in the Asian region due to the lack of VISA restrictions, increasing disposable income and yearn to travel among the middle class, growth in regional trade, and the region’s geographic makeup of archipelagos and vast terrains.

During my last trip to Southeast Asia in 2013, I learned that Brunei, Malaysia, the Philippines (Manila Bay, Clark and Cebu) and Singapore are adding airport capacity and vying to become aerospace centers.

At present, I believe Singapore is ahead of the game due to the presence of the Seletar Aerospace Park—its two airports which act as airport hubs in the ASEAN bloc—and support from Singaporean government.

The travel boom in Asia coupled with the move by these Asian jurisdictions to become aerospace centers will potentially add new functions including maintenance, repair, and overhaul (MRO), re-fueling, flight training and simulation, parts manufacturing, and research and development (R&D).

Canada being a global key player in aerospace can stand to benefit from these developments by lending its capabilities and investment, and by supplying aerospace components and aircraft.

Tracing gaps and deficiencies along the value chain is a technique that has allowed me to find trade and investment opportunities in Asia.

As various Asian countries continue to develop their economies, I believe Canada can stand to benefit by taking part in the development process.

I hope this technique will add value to your market research, assessment, and expansion activities.

How is your company using similar techniques to seek opportunities for trade and investment? Share your comments below!

The post Tracing gaps and deficiencies along the value chain to uncover business opportunities in Asia appeared first on Trade Ready.

Global trade veteran and one of our newest board members, Alexander Malaket (CITP), will soon be moderating our first #TradeElite discussion on Twitter (Twitter chat). This offers all participants a great opportunity to network with professionals and businesses in the international trade community.

It’s our pleasure to invite you to take part in this casual discussion on Risks and risk management in international business.

Topic: Risks and risk management in international business

Date: Feb 6th 2014

Time: 2.30 p.m. – 3.30 p.m. EST (you can jump in and out at any time during the chat)

Chief Moderator: @ARMalaket_OPUS

Alexander Malaket (CITP).

Alexander is a globally recognized specialist in international business, trade and trade finance. He is President of OPUS Advisory Services International Inc. (Canada), and the Founder/Managing Director of Trade Finance Associates Pte. Ltd (Singapore).

Supporting Moderators: @FITTNews
Your friendly FITT Twitter sidekicks Daniella and me.

Special Guests:

Sarah Cogliati, Account Manager at Export Development Canada @SarahCogliati

Sarah works with Canadian companies across Western Canada. EDC helps support Canadian exporters with Bonding guarantees, Financing programs and Risk Mitigation solutions (Accounts Receivable Insurance and Political Risk Insurance).

Doug Taylor (CITP). @globethoughts

Doug is a creative, results-driven lateral thinker with a wealth of international business experience. He’s the Managing Director of Pacific Business Intelligence Ltd. (Canada).

Craig Atkinson (CITP). @craigaatkinson

Craig is a rising star in international trade and development who has been living and working abroad for the past two years. He founded his own consultancy Lexmerca International Trade in 2010, and he is currently consulting in Geneva, Switzerland with the International Trade Centre (ITC).

Sarah Barnes (CITP). @icecorplog

Sarah has been in the logistics industry for over 17 years, and currently works as the Director of Marketing and Client Partnering at Icecorp Logistics. Through her extensive experience and knowledgeable insight into the movement of freight, customs clearance and warehousing, she is focused on helping her clients through the complexities of the industry.

How you can take part

Alexander will be posing a few questions and observations around the chat topic.

E.g.:

These will be discussed and answered by the international trade community, including our special guests and you.

E.g.:

Please do use this opportunity to provide your perspectives on questions, have your own doubts addressed, and engage with the moderator, special guests, and each other.

Find someone’s answer or perspective to be particularly helpful or insightful? Go ahead and retweet (RT) it! This is a common method of supporting other participants while sharing the value with your own networks.

You can also simply observe (lurk), but we’ll miss your participation. The idea is to get involved; learn and share valuable information with each other.

New to Twitter chats? What you should do:

Login to Twitter (www.Twitter.com) and follow these very simple rules.

1)   It is NOT OK to use the chat to blatantly promote your products. Instead, add value to the conversation and help others gain confidence in your knowledge.

If your product is highly relevant to the topic at hand you can position it as an option AFTER you provide other valuable tips.

Blatant promotion is often ignored and considered low in credibility.

2)   Always, always use the hashtag #TradeElite when you ask a question or reply to a tweet related to this Twitter chat. If you don’t, the other participants probably won’t know that you’re part of the conversation.

E.g.: If you’re asking a question.

Note: The special guests will prioritize replies to your questions after they answer the main moderator’s questions. Depending on the level of activity, your questions may remain unanswered. Don’t be discouraged, and continue to take part in the conversation.

TIP: Cut the #TradeElite hashtag into the clipboard or your notepad so you can easily insert it into relevant tweets.

3)   Track the conversation by using the ‘search’ option in Twitter to isolate tweets relevant to the chat. Use #TradeElite in your search box.

We recommend that you use a Twitter client like Hootsuite (free version available) to make it easy to track the chat in a dedicated area.

TIP: Refresh your browser often so you’ll see the latest tweets.

TIP: If you come in late, when you join the chat spend a few moments scanning the tweets around the hashtag (#TradeElite). Who’s talking? What are the hottest topics being discussed?

4)   If you’re answering a question posed by the moderator, preface the answer appropriately.

E.g.: A2 (Answer 2) to answer question Q2

There can be multiple answers and perspectives for the same questions. You’re encouraged to provide your own answers and insights or add value to the perspectives of our special guests and other participants.

5)   You can use other relevant hashtags along with the main chat hashtag

E.g.:

6)   DO NOT use the hashtag unless it’s relevant to the chat topic and the ongoing conversation.

7)   Do let your current Twitter followers know you’ll be participating in a Twitter chat about 2-5 minutes before the chat. This will warn your network to expect a high volume of tweets from you during that time.

8)   Participate with a positive attitude. Present your views, even if you dissent, in a respectable manner. Negativity will only isolate you from the community.

9)   The chat may extend past the designated time period. Feel free to continue with the conversation beyond the time when the moderators announce the end of the chat. After the chat, do follow up on the conversations by visiting and following Twitter profiles that can add value to your existing network and developmental goals.

As you may have deduced, this free-flowing chat will be held in the spirit of learning from each other, sharing valuable tips, and establishing valuable connections with our peers in the international trade community.

Let’s help each other thrive in global trade! We hope to see you there!

The post You’re invited to the #TradeElite Twitter discussion on global trade: Risks and risk management appeared first on Trade Ready.