Author Article List

Ex-Im Bank and Others Can Help You Expand Globally

Published on Sunday, April 01, 2001

Several organizations can give you the financial support you need to expand internationally. But which programs should you consider, and how much paperwork do you have to wrestle with? We can help.

Export-Import Bank

The Export-Import Bank of the United States (Ex-Im Bank), an independent U.S. government agency, facilitates the financing of exports of U.S. goods and services.

Ex-Im Bank guarantees the repayment of loans, makes loans to foreign purchasers of U.S. goods and services, and provides guarantees of working capital loans for U.S. exporters. It also provides credit insurance. Ex-Im Bank does not compete with commercial lenders, but assumes the risks they cannot accept.

Overseas Private Investment Corp.

The Overseas Private Investment Corporation (OPIC) is an independent U.S. government agency that facilitates direct U.S. investment in emerging democracies with fledgling free-market economies for the benefit of U.S. firms.

OPIC helps U.S. investors to mitigate related risks through direct loans, loan guarantees, and political risk insurance. Plus, it provides a variety of investor services.

U.S. Trade and Development Agency

In an attempt to promote U.S. technology abroad, the U.S. Trade and Development Agency (TDA) helps U.S. companies in the initial stages of project development. It provides grants for feasibility studies, orientation visits, and conferences that demonstrate U.S. technology and equipment capabilities.

Inter-American Investment Corporation

The Inter-American Investment Corporation (IIC), an affiliate of the Inter-American Development Bank (IDB), provides financing for private sector investment projects in Latin America and the Caribbean. IIC provides loans and makes capital investments designed to facilitate local private development.

International Finance Corporation

The International Finance Corporation (IFC), a member of the World Bank Group, invests in developing country private ventures by offering equity financing and loans without government guarantees in collaboration with other investors. Always a minority partner, IFC seeks project sponsors from around the world with which it can form joint enterprises.

Understanding Your Overseas Customer’s Culture Can Pay Dividends

Published on Sunday, April 01, 2001

When doing business abroad, how well you understand your customer’s culture can give you a competitive advantage. But just what is your level of cultural awareness, and is it benefiting or hurting your business?

The Definition of Culture

Culture is defined as a collection of values, beliefs, behaviors, customs, and attitudes that distinguish a society. It is learned and interrelated, defines group membership and differences, and can’t be ignored. A society’s culture reflects its values and attitudes.

Today, cultural perspectives are at work in just about every endeavor, including hiring, firing, compensation, etiquette, negotiating, office setting, strategy, and personal and business relationships. And, in short, if a foreign customer’s culture is not respected, your business relationship is likely to suffer.

What’s Acceptable Here May Be Disastrous There

Attitudes and societal values differ considerably throughout the world. In fact, acceptable behavior in one cultural setting may be viewed as immoral, unethical, or rude in another. For example, “kickbacks,” while expected in some developing countries may land you in jail in others. And nepotism, while prevalent in some areas of the world, is frowned upon in others, since it may result in incompetence and inefficiencies.

Many cultures have specific customs worth noting. In India, for instance, since the left hand is considered unclean, the right hand should be used for eating, giving and accepting. In Malaysia, pointing with the index finger is considered impolite; it is more appropriate to point with the thumb of the right hand with the fingers folded under.

Furthermore, in France, a firm and pumping handshake is considered uncultured, while in the Middle East, you should not point your finger at someone or show the soles of your feet when seated. The soles are considered unclean and offensive.

Time Is Relative

Many cultures also view time and status very differently. For example, Germans tend to be very punctual, paying much attention to the small hands on a clock. To the contrary, Latin Americans and Italians tend to have a more relaxed sense of time.

This means that a German business person may arrive at 3:50 for a 4:00 appointment, while a Latin American business person may arrive at 4:15. The problem: the value of the meeting may come into question.

Work and Relationship Building

Work standards or ethics also are relative. Generally, U.S. and German business people are considered driven and deterministic. Yet, this can lead to poor results.

When abroad, U.S. business people generally prefer to get right down to business. To others, this is considered premature and does not help establish a friendship — a prerequisite to doing business in many countries. In Saudi Arabia, for example, the initial business meeting is designed to establish a relationship and build mutual trust. As such, business usually is not even discussed.

Pay Attention to Status

For those doing business in Japan, it is imperative to know that Japanese culture is defined in hierarchical terms with the good of the group reigning supreme. In this case, emphasis is placed on seniority and group well-being instead of individual performance and needs. As a result, seeking a decision from an individual without a group consensus is extremely difficult.

Similarly, status, which can identified by titles on business cards, signifies much importance throughout Asia. When deciding who to address or determining the level of formality to use when speaking to an individual, definitely consider his/her status.

Body Politics Matter

In addition to specific expressed customs, nonverbal communication is also very important because the meaning behind gestures and facial expressions can vary significantly. For example, nodding “yes” in the United States is equivalent to “no” in Bulgaria. Overall, body posture, positioning, and eye contact may influence how one is perceived.

Take for instance the following example: the joining of the thumb and forefinger in a circle while extending the other three fingers means “OK” in the United States. However, in Malta, this symbol signifies homosexuality; in Japan, money; in France, inadequacy; and in many parts of Eastern Europe, vulgarity.

When Yes Means No

In many cultures, employees sometimes will say yes to their ability and willingness to complete a task even though they have no intention of doing so. Why? In the employees’ eyes, saying no to a manager may be considered disrespectful or rude. Or, the employee may feel compelled to say yes for fear of losing face.

Thus, the employee would rather lie than seem incapable of performance. Understanding the motive behind the yes may help improve a poor working relationship.

The Importance of Speaking Their Language

One typical obstacle to building a successful international business relationship is ethnocentric behavior. This often is perceived as arrogance with little desire to accept or adapt to the host country’s culture, including communicating in the host’s country’s language.

When U.S. firms establish foreign subsidiaries, some tend to implement a policy of “one size fits all,” and don’t consider different cultural modes of doing business. This ethnocentric behavior is often regarded by host country employees, managers, and suppliers as rude, and is perceived as an unwillingness to respect the host country’s culture and standards.

To counter this behavior, it is extremely wise for U.S. business people to speak the host country’s language whenever possible. Even simply attempting to communicate in the host country’s native tongue can work wonders in demonstrating mutual respect and a willingness to work together.

Be Culturally Sensitive

U.S. corporations operating in foreign countries often act as agents of change, bringing new operating standards, state-of-the-art technology, values, and best business practices — which in turn, may contribute to the improvement of the host country’s social, labor, and environmental conditions. This, no doubt, can generate very positive public relations for U.S. firms, and go a long way toward building positive and long-lasting relationships.

However, not being culturally sensitive can certainly result in missed opportunities. In summary, a sound understanding of your foreign customer’s culture will help maximize your business successes, and minimize your business failures.

New Trade Pacts Would Help Area Economy

Published on Sunday, March 18, 2001

Western New York's economy has not always kept pace with the rest of the state or nation. And, when the national economy slows, our region usually feels the consequences earlier, more severely and for a longer period of time.

To improve our local economy and shelter it from economic slowdowns, Congress needs to forge new trade agreements that further open foreign markets so our exporters can sell more goods and services abroad. This will create higher-paying jobs, strengthen local companies and farms, and improve our tax base, while sending export revenue to local restaurants, retail stores, etc.

U.S. exports account for almost one-third of real U.S. economic growth and a very large portion of our economic development. Consequently, the income of local workers and farmers and the growth prospects of New York-based businesses are pegged to international trade.

These are the key findings released on March 9 in a new Business Roundtable report, International Trade Benefits New York, which I authored. Other findings in the report:

International trade is a primary generator of business and job growth in the Buffalo-Niagara metro area.

The highest manufacturing employment sectors in the Buffalo-Niagara metro area also are among the state's top merchandise export industries, including electronics, fabricated metals, industrial machinery, transportation equipment (the auto industry) and food and food products. Consequently, as exports increase, employment in these sectors also will increase.

A staggering 71.5 percent of Buffalo-Niagara metro area exports were shipped to Canada and Mexico in 1998, much more than other metro areas.

The North American Free Trade Agreement has created a net increase in jobs in New York. Plus, from 1993 to 1998, Buffalo-Niagara merchandise exports to Canada and Mexico rose by 134.2 percent - significantly higher than the overall Buffalo-Niagara export growth rate.

Less than 2 percent of non-farm workers are at risk from imports, which offer consumers greater choices at attractive prices. Imports allow families to purchase more goods with more disposable income available for education, health care, home mortgages, etc. And lower-cost imported components help local producers to be more competitive worldwide.

The business community and political leaders agree that access to foreign markets is key to local economic growth. Erie County Executive Joel Giambra said: "Erie County companies and workers are very competitive internationally. If Congress can forge new trade agreements that bring down foreign barriers, our local businesses will be able to sell more goods and services abroad and create additional higher-paying jobs. In turn, this will generate greater economic growth for Erie County."

Rep. Thomas Reynolds, R-Clarence, said, "From family farms to high-tech start-ups to established businesses and manufacturers, increasing free and fair trade will keep our economy going and create jobs in our community."

Rep. Amo Houghton, R-Corning, noted, "Opening up markets to U.S. exports is critical to creating jobs in the Southern Tier."

Joe McMahon, president of Oxygen Generating Systems, said, "If the U.S. can negotiate new trade agreements that bring down foreign tariffs on our products, we'll be able to sell more abroad and create new jobs here in Western New York." And Francis Chen, president of Mentholatum International, remarked, "International trade certainly has helped us contribute to the growth and employment in the region."

Buffalo-Niagara ranks within the top quarter of fastest growing and largest merchandise export metro areas in the country. Gov. George E. Pataki noted: "New York has created a business-friendly environment by cutting taxes, controlling spending and eliminating red tape. This strategy puts New York companies in a very strong position to compete globally, as well as positioning New York State as an attractive location for international investment. Our aggressive economic agenda reinforces the Empire State as the center of global business marketplace."

Numerous Western New York businesses are succeeding internationally, but more needs to be done. For almost three decades, the U.S. service trade surplus has consistently reduced the trade deficit. In 1999 alone, it decreased the trade deficit by 25 percent. And since 1980, U.S. exports of services have grown 130 percent faster than exports of goods.

New York's private service-producing industries accounted for 75 percent of total gross state product in 1998, a larger percentage than any other state. And in the Buffalo Niagara metro area, 80 percent of non-farm workers are employed in the service sector.

To improve our local economy, companies need greater access to both foreign goods and service markets. To achieve this, we need Congress to forge new trade agreements that further open foreign markets.

As the European Union Expands, Will the United States Retain Existing Influential Position?

Published on Thursday, March 01, 2001

The European Union (EU) is currently negotiating with 13 countries to have them become full members of the European trade bloc. As this process continues and additional countries are admitted, the EU’s level of global influence will increase. What does all this mean for your business?

The Big Kid on the Block Has Company

Since World War II and throughout the Cold War period, the United States has been unquestionably the world leader in terms of trade and economic policy. In fact, the Cold War provided much of the glue that held the American-Western European alliance together. However, since the end of the Cold War, and in light of the EU’s expansion plans, the U.S.’s position of dominance is being challenged.

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