Member Article

Exporting is big business. Think non-executive director...

So, you’ve made the decision to expand your customer base and therefore your profitability by looking to export. A wise move, especially in today’s global market.

A company that exports its goods, services etc is far more likely to grow at a faster rate than if it had focused exclusively on the domestic market. It is also less likely to find itself in difficulties because its client base, along with the financial climate, is international and therefore more diverse.

But for SMEs especially, there’s still much to do. The homework will of course already be done, but what about bringing in the expertise necessary to smooth the way?

For instance, consider the countries you’re thinking of exporting to. Obviously, you’ll need to find out about such areas as trading practices and regulations, and any tax concessions that may be available. But then there are other issues to take into account, things that you’d need to know about, but which perhaps aren’t as easily accessible via the internet or even, horror of horrors, from books! [remember them?]

This is where SMEs should consider bringing in Non-Executive Directors whose knowledge and understanding of potential export markets can be invaluable. Someone, for instance, whose understanding of export minutiae is born of a wealth of experience in dealing with international markets and the various dos and don’ts of doing business with countries you yourself know little about.

Let’s travel to China, first of all. Good place to start, considering its huge potential as an ever-expanding market. A non-exec who’s already well-versed in Sino-UK relations will advise you about the following:

• A handshake in China isn’t a competition to show who has the firmest grip. It is rather the opposite – a non-aggressive handshake is required.
• Be careful with body language. An effusive gesture such as back-slapping or a man-hug will definitely mean your great deal suddenly becomes a busted flush. On first meeting, you should exchange business cards with one side translated.
• You should also note how the Chinese hand over such things as business cards – with two hands to show how much they value gifts etc. You should do the same.

Now let’s fly off to Japan. Your NED will advise you NOT to do the following:

• Shake hands effusively. Many Japanese don’t shake hands anyway, so rattling their hand up and down would hardly be a good start to your business relationship. [It might signal the end of it!
• Ask questions about your host’s private life. Oh no. By all means make polite enquiries about his or her company, but personal questions – avoid!
• Use red ink when making notes during a meeting.

Jetting off to Russia, you’d find things quite different.

• A firm handshake – the firmer the more impressive! – is expected.
• Be prepared for a lengthy period of socialising before the matter of business is brought to the table.
• Never rush a Russian!

Of course, in each of the aforementioned countries, there are many such considerations to take into account. Having someone on your board in a non-exec role, who has hard-nosed experience of the countries you’ll be dealing with, can be an invaluable source of advice. And it isn’t just about researching other countries and making sure you don’t make any faux pas as far as customs and traditions are concerned, even though this is an important aspect of working with international customers.

It’s also about listening to someone – your non-exec – who has experienced other areas, other potential pitfalls, that you need to consider. Logistical and regulatory issues such as

• Transportation
• import/export licences
• any special regulations for your goods
• duty to pay
• VAT to pay
• duty and tax reliefs
• any licence exemptions that exist in certain countries
• customs implications and procedures applicable to your goods

Advice from a non-exec who has trodden this path already will ease the way for your company, and he or she might also have already been involved in the growing field of support provided by the UK Government, including

• UKTI’s Passport to Export Service
• Gateway to Global Growth
• The Export Marketing Research Scheme
• The Export Communications Review
• A few final words of advice.

Remember where you are

For example, if you find your company is looking at Brazil as a potential new market, you need to be aware of such issues as interpersonal contact, which favours a complete invasion of your personal space. Brazilians stand very close to you, and make great use of physical contact while talking. Just don’t back off, though. It’s a sure sign of disrespect!

BUT, let’s say you’ve persevered and want to show your Brazilian host that you agree with everything he or she has just said. DO NOT offer the OK hand gesture [you know the one, with thumb and forefinger forming an “O” shape]. It’s an obscene “screw you” gesture and Brazilians find it grossly offensive.

Just a pity no-one warned Richard Nixon in his pre-presidential days. When he was Vice-President in the 1950s, he visited Sao Paulo in Brazil while on a goodwill tour. On stepping from the plane, he raised his arms offering the OK gesture to an entire nation.

Poor Dick. If only he’d had a non-exec to advise him!

ABOUT THE AUTHOR

Ian Wright is the Founder and CEO of Virtualnonexecs.com - the UK’s leading non-executive director platform that makes it free to hire non-executive directors.

This was posted in Bdaily's Members' News section by Ian Wright .