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International business Logistical Considerations When Conducting International Business 060 AUSTR A LI A N Business Solutions
International business
Logistical Considerations
When Conducting International Business
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AUSTR A LI A N Business Solutions
| By Barry Thomas | T here are vast opportunities for Australian entrepreneurs seeking to engage
| By Barry Thomas |
T here are vast opportunities for Australian entrepreneurs seeking to engage in
business across borders. In 2011, the value of exports increased to $313.3 billion which
is the first time that figure has reached more than $300 billion during any 12-month
period. China was Australia’s largest two-way trade partner ($121.1 billion), followed by
Japan ($72.5 billion) and the United States ($54.2 billion).
When considering trading with other markets, be they established or emerging,
the logistical considerations concerning the approach to distribution, market entry
requirements, customer and stakeholder engagement and technology solutions
remain the same.
Ensuring you’ve done the research and surrounded yourself with sound local
resources, will put you in the best possible position to navigate the potential minefield
of international business.
Here are some practical, logistical considerations to factor into your business plans:
Be Flexible
First and foremost, when it comes to the logistics of international business, it is crucial
to be flexible in your approach. I t will work in your favour to embrace the local ways of
doing business, rather than impose your existing business models.
I t will take time to uncover what works best in each market and the only way to do
this, is by asking a lot of questions and never presuming to know the answers. I t is
also important to note that, as an outside entity, you will be competing against local
businesses that understand the market you are venturing into more than you do. S o,
if you do not conform, you will be putting your business at a distinct disadvantage.
Understand Local Distribution Models
One fixed business model will not work across all markets. When deciding on
a distribution model for your product or service, you will need to assess each
country independently, accounting for local regulations and terms of trade. Logistical
considerations will differ, based on your distribution model. That applies whether you plan
to distribute goods directly or go through a local distributor.
Having the appropriate product configuration for each market is also incredibly
important. You will need to research how the market prefers to package and purchase
products or services. For example, some countries will prefer single packaging,
whereas others prefer to purchase in bulk.
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International business Whether it be with your local distributors, suppliers, customs officials, government representatives or other
International business
Whether it be with your local distributors, suppliers, customs
officials, government representatives or other local companies,
building a strong network of trusting relationships is vital to
conducting business overseas.
Manage Compliance And Risk
Ensure that you are familiar with local market,
shipping, customs clearance and labelling
requirements. When it comes to labelling, legal
requirements and local expectations will differ from
country to country, so be clear as to whether it is
you or your distributor that will take responsibility for
product labelling, and that it is compliant from both a
regulation and language standpoint.
You will also need to put in place market-
specific systems and processes to report, track
and trace goods.
investment that will put your business in the
best position for success.
These connections will not only help you to get
established in the local market, but will also help
to build your reputation locally.
Avoid Bribery And Corruption
As a foreign organisation, you will be under greater
levels of scrutiny and a target for criticism. Before
commencing business in another market, ensure
stakeholders are aligned with your business
policies. For example, stipulate in contracts your
organisation’s code of conduct, particularly with
regard to bribery and corruption.
I n some countries, bribery and corruption are
common in business circles, so be prepared
to walk away if distributors and suppliers take
issue with your business practices. T here are a
number of recent cases where severe penalties
have been imposed under the Foreign Corrupt
Practices Act and Bribery Act.
Access Resources
Utilise Market Relevant Technologies
T here is a wealth of resources available to
guide entrepreneurs through the logistical
considerations of doing international business.
Get in touch with trade organisations such as
AusTrade and AusIndustry, as well as government
departments and country-specific delegations. It
is useful to tap into as many organisations and
networks as possible so they can be accessed for
advice and introductions.
With less verbal interaction occurring between
suppliers and customers, businesses need to
ensure that the processes and technologies
they have in place reflect local market needs and
expectations.
For example, never assume local IT
capabilities because they will vary significantly
between each market. I n some countries,
Electronic Data I nterchange (EDI ) is common
practice while, in others, businesses still rely
solely on manually-faxed orders.
Adopting flexible IT systems and practices
will enable you to adapt more easily to local
needs. T he more you work with the local market
to best suit their needs, the more you will find
that they will be willing to do business with you.
Address The Language Barrier
Embrace People And Culture
Steer Clear Of Short Cuts
S hort cuts may be tempting but, in the long-
term, are likely to come at a cost. As the saying
goes, there is no such thing as a free lunch. So,
if something seems too good to be true, the
chances are, it probably is.
For example, choosing low-cost suppliers of
local goods and services is a risky strategy. You
need to be wary of quotes that appear to be
under market value, because there is probably
a good reason for that. I t is also wise to engage
multiple providers, such as two accounting
firms, two regulatory consultants and a number
Embracing local culture, traditions and
employment practices will help to position your
business as an employer of choice and will foster
business relationships. Conditions of employment,
including leave entitlements and union
representation, will differ greatly between markets.
You will need to have a sound understanding of
local laws and policies and that can be gained by
investing in the advice of experienced consultants.
Don’t be surprised, for example, if employees in
some Asian countries sleep at their desks during
their lunch break, a practice that would be viewed
as unusual in Australia.
Planning for local-market festivities is also
critical. For example, prior to Chinese N ew
Year, the longest and most important festival
in the Chinese calendar, customers habitually
purchase additional stock which, as a supplier,
you will need to take into account.
It is fortunate that many foreign professionals
speak English as a second language. This
makes international business dealings much
easier for Australians, but it is important not to
take this for granted, and to understand that
miscommunication is often unavoidable.
Having access to a network of high-calibre
translators is indispensable. You will likely find
that most business people in non-English-
speaking countries have had experience
communicating via translators and will not be
fazed by engaging in this way. I n fact, in some
circumstances, it is beneficial to encourage
stakeholders to host meetings in their native
language when you are in attendance, because
it will avoid disrupting the flow of the meeting.
Be aware that business concepts can also be
lost in translation. For example, the term, long-
term business strategy, may refer to something
entirely different across various markets.
Expectations of distribution and delivery
timeliness may also fall short in translation.
Build Relationships
Whether
it
be
with your local distributors,
of translators, to provide you with a rounded
view. Consider it as making a small, upfront
suppliers, customs officials, government
representatives or other local companies,
building a strong network of trusting relationships
is vital to conducting business overseas.
Barry Thomas is the Vice President and APAC
Managing Director of Cook Australia. Barry
has recently been awarded a 2012 Export
Heroes Award from the Australian Institute
of Export and has more than two decades of
international leadership and expertise in the
pharmaceutical and medical device industries.
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AUSTR A LI A N Business Solutions