IF THE HOMEWORK YOU DID FOR THE LAST chapter shows you have a marketable
\nand profitable product that will sell in sufficient volumes, you now are ready to commit
\nresources (time and money) to the project ( help with nursing paper writing from experts with MSN & DNP degrees). But before you do, make sure you address the
\nnext six commonalities of the import\/export transaction:
\n\u2022 Develop a market plan.
\n\u2022 Prepare for negotiations.
\n\u2022 Understand the tips and traps of culture.
\n\u2022 Consider intellectual property rights.
\n\u2022 Learn about communications.
\n\u2022 Get ready to travel.
\n64
\nTHE MARKET PLAN
\nYou have determined that your project ( help with nursing paper writing from experts with MSN & DNP degrees) is viable. Now write a long-range market plan, then
\nexecute it.
\nA market plan is simply a process recorded on paper that allows you to think through
\nthe many logical ways to reach buyers and convince them to say yes to a sale. It is important
\nto integrate the international market plan with the firm’s overall strategic business plan. (See
\nChapter 6 for details about how to write a business plan.)
\nUse the following logical, step-by-step process to write your market plan:
\n1. Objectives
\nExamples:
\n\u2022 Sales of $XXX,XXX by the end of the second year.
\n\u2022 Expansion into countries A and B by the end of the third year.
\n2. Specific tactics
\nExamples:
\n\u2022 Radio advertising in two cities.
\n\u2022 Three direct mailings to each company or person on a specific list.
\n\u2022 An Internet Web site that advertises the address.
\n3. Schedule of activities or action plan
\nExamples:
\n\u2022 A list of trade shows indicating which you will attend, including dates and duration
\nof trips to visit overseas distributors, with their names, addresses, and phone
\nnumbers.
\n\u2022 Specific assignments of responsibility (an essential feature of an action plan).
\n4. Budget for accomplishing the action plan
\nA list of every conceivable cost associated with marketing the product.
\nDon’t scrimp on the budget, because this is where most startup firms underestimate. Initial
\nmarketing costs will be high.
\nSegmenting the Market
\nMarketing segmentation enables an import\/export organization to choose its customers and
\n65
\nfashion its marketing strategy on the basis of (1) identified customer wants and
\nrequirements and (2) the response to the firm’s specific desires and needs. You should
\nvisualize segmentation on both a macrolevel and a microlevel.
\nMacro: From the Greek makros, long. It is a combining form meaning large.
\nMicro: From the Greek mikros, small. It is a combining form meaning little, small,
\nmicroscopic.
\nMacro segmentation. Macro segmentation divides a market by such broad characteristics
\nas industry shipments, location, and firm size. An import macrosegment might be the
\ndividing of a city into marketing segments. On a larger scale, it might involve dividing the
\nUnited States into regions, prioritizing those regions, then developing a microplan for each
\nregion.
\nExport macrosegments might include prioritizing continents or countries within a
\ncontinent; better yet, export macrosegments might sort by language, purchasing power, or
\ncultural preference.
\nMicrosegmentation. Microsegmentation finds the homogeneous customer groups within
\nmacrosegments. Microsegmentation therefore seeks to find out who makes the decisions for
\neach homogeneous group. It pinpoints where (by address) potential customers (by name) can
\nsay yes to a buying decision. From this analysis, a promotional strategy can be designed to
\ntarget the decision-making units (DMUs).
\nAn import microsegmentation might take the data from your market research effort and
\nidentify where the wholesalers are located. If you list and prioritize these decision makers by
\nname and address, you will have a very logical specific plan of attack for your marketing
\neffort.
\nYour marketing plan and schedule should cover a three-to five-year period, depending on
\nthe kinds of products you market, your competitors, and your target markets. Be sure to write
\nthis plan no matter how small the import\/export project ( help with nursing paper writing from experts with MSN & DNP degrees). Only when the plan is in writing will
\nit command proper attention and receive adequate allocation of funds.
\nExecuting the Market Plan
\nNext comes the fun-putting the plan into action by actively marketing the product through
\ntrade shows, advertisements, television promotions, and direct mail, all in accordance with
\nyour budgeted plan. Remember, nothing happens in a business until something is sold.
\nPersonal Sales
\nThe two basic approaches to selling internationally, for both imports and exports, are direct
\nand indirect sales. In the direct sales method, a domestic manufacturing firm has its own
\nmarketing department that sells to a foreign distributor or retailing firm and is responsible
\n66
\nfor shipping the goods overseas. In the indirect sales method, the firm uses a middleman,
\nwho usually assumes the responsibility for moving the goods.
\nThis is where your import\/export business fits into the picture. You may sell directly to
\nretailers or to distributors\/ wholesalers. Regardless of where your targeted DMU is in the
\nmarket channel, keep in mind that international sales are just like domestic sales: someone
\nmakes personal contact and presents a portfolio, brochures, price lists, and\/or samples to
\ndecision makers (potential buyers) who can say yes.
\nHOT TIP: Making sales requires persistence and determination. Follow up, then follow up
\nagain.
\nTrade Shows (Fairs)
\nIf you are attending a trade fair or show for the first time, consider using it as the keystone
\nof your sales trip. Allow time afterward to visit companies you meet at the fair.
\nThe international trader attends trade shows for five basic reasons:
\n1. To make contacts
\n2. To identify products for import or export
\n3. To evaluate the competition (often done without exhibiting) 4. To find customers and
\ndistributors for import or export 5. To build sales for existing distributors
\nHOT TIPS ON TRADE FAIRS
\n\u2022 If you are exhibiting to sell, don’t overcommit. You may get more business than you
\ncan handle reasonably.
\n\u2022 If you are searching for products to import, don’t buy until you have done your
\nhomework.
\n\u2022 Take more business cards to the trade show than you think you will need. Have your
\nfax number, Web site, and e-mail address on your card.
\n\u2022 Obtain translation\/interpreter Helpance from a local university or college.
\n\u2022 If you are exhibiting to sell, consider prior advertisement to let potential customers
\nknow you will be there.
\nTrade Missions. Trade missions are trips made for the express purpose of promoting
\nand participating in international trade. State and local governments organize several kinds
\nof trade missions for exporters.
\nSpecial Missions. These are organized and led by government officials with itineraries
\ndesigned to bring you into contact with potential buyers and agents. You pay your own
\nexpenses and a share of the costs of the mission.
\n67
\nSeminar Missions. Similar to the specialized trade mission, seminar missions add
\nseveral one-or two-day technical presentations to the trip by a team of industry
\nrepresentatives.
\nIndustry-Organized, Government-Approved Trade Missions. Though these missions are
\norganized by chambers of commerce, trade associations, or other industry groups,
\ngovernment officials often provide Helpance prior to and during the trip.
\nCatalog Shows and Video\/Catalog Exhibitions. These are the least expensive ways to
\ndevelop leads, to test markets, and to locate agents-because you don’t have to be there. You
\nsimply send along product catalogs, brochures, and other sales aids to be displayed at
\nexhibitions organized by government officials and consultants.
\nVideo\/catalog exhibitions are ideal for promoting large equipment or machinery, which
\nis costly to ship.
\nTrade Show Central. This free Internet service (www.tscentral.com) provides
\ninformation on more than 50,000 trade shows, conferences, and seminars as well as 5000
\nservice providers and 8000 venues and facilities around the world.
\nAdvertising
\nAll companies advertise to communicate with customers. Exporters and importers must ask
\nthemselves whether advertising is both important to sales and affordable. The Helpance of
\nan agency familiar with the market environment you wish to target could be critical to the
\nsuccess of your advertising campaign. Some countries do not carry television and radio
\nadvertising. In addition, cultural differences often require more than a simple translation of
\npromotional messages.
\nIn countries with low literacy rates, you may prefer to avoid elaborate print vehicles
\nsuch as magazines, concentrating instead on outdoor advertising such as billboards, posters,
\nelectric signs, and streetcar\/bus signs. These reach wide audiences in most countries.
\nDistributors
\nA distributor is a merchant who purchases merchandise from a manufacturer at the greatest
\npossible discount and resells it to retailers for profit. The distributor carries a supply of
\nparts and maintains an adequate facility for servicing. The distributor buys the product in
\nits own name, often arranging payment terms on a credit basis. A written contract usually
\ndefines the territory to be covered by the distributor, the terms of sale, and the method of
\ncompensation (see “Avoiding Risk” in Chapter 5). The work is usually performed on a
\ncommission basis, without assumption of risk, and the representative may operate on either
\nan exclusive or a nonexclusive basis. The contract is established for a specific time frame
\nsuch that it may be renewable with satisfactory performance.
\nAs with domestic sales, foreign retailers usually buy from the distributor’s traveling
\nsales force, but many buy through catalogs, brochures, or other literature.
\nImporters and exporters seldom sell directly to the end user. The practice is not
\n68
\nrecommended, because (1) it is timeconsuming and (2) it leads to goods being impounded or
\nsold at auction when the buyer doesn’t know his or her own trade regulations.
\nOverseas Trader’s Checklist
\nHere’s what you want from a foreign representative:
\nQ A solid reputation with suppliers and banks.
\nQ Financial strength.
\nV Experience with the product or a similar product.
\nQ A sales organization.
\nQ A sales record of growth.
\nQ Customers.
\nQ Warehouse capacity.
\nQ After-sales service capability.
\nC~( Understanding of regional culture and business practices.
\nKnowledge of both English and the language of the country.
\nQ Knowledge of marketing techniques (promotion, advertisement, etc.).
\nTrading Partner’s Checklist
\nHere’s what the foreign representative wants from you:
\nV Excellent products.
\nQ Exclusive territories.
\nQ Training.
\nV Parts availability.
\nQ Good warranties.
\nQ Advertising and merchandising support.
\nQ Credit terms, discounts, and deals.
\nCommissions on direct sales by the manufacturer in the distributor’s territory.
\nQ Minimum control and\/or visits.
\nQ Freedom to negotiate price.
\n69
\nQ Ability to deal with one person.
\nSecurity that the product will not be taken away once it is established in the territory.
\nRight to terminate the agreement when the representative pleases.
\n70
\nNEGOTIATIONS
\nBargaining is a custom in many societies. But culturally nothing comes less naturally to
\nAmericans. The United States operates on a fixed-price system, and most buyers have
\ngrown up with the notion of purchasing off the shelf at the offered price or not buying at
\nall. Of course, comparative shopping is native to everyone’s buying psyche, so when the
\ninternational stakes increase and foreign competitors (often born cultural negotiators) begin
\nto force your hand, your instincts should give you some basis for taking the right action.
\nYou can make the right moves if you prepare.
\nPreparations
\nUnfortunately, too many people wander into international bargaining situations with no
\nplan and no idea how to proceed. For them, it’s an ad lib and ad hoc operation all the way.
\nFor some, lack of preparation is the result of a sense of superiority, but for most it’s pure
\nignorance of the number and competence of the ferocious competitors out there scouring
\nthe world for scraps of business.
\nThe first step in preparing for international negotiations is to develop a complete
\nassessment of your firm’s capabilities. Analyze your strengths and weaknesses, particularly
\nin terms of managerial skills, product delivery, technical abilities, and global resources.
\nNext, analyze your target-the company or country you intend to sell your product to.
\nKeep in mind that the human and behavioral aspects of your negotiations will be vital.
\n\u2022 Understand the place in the world where you will be traveling.
\n\u2022 Know the target area’s culture, history, and political processes.
\n\u2022 Pay particular attention to the importance of face saving to the people of the country
\nwhere you will be negotiating.
\n\u2022 Assess the host government’s role in country negotiations.
\n\u2022 Determine the importance of personal relations.
\n\u2022 Learn how much time you should allow for negotiations.
\n\u2022 Be sure the final agreement specifies terms for the cost, quality, and delivery of the
\nproduct. Quality can be assured only by seeing the product, but cost and delivery
\nterms are the result of a quote agreed to by the seller.
\nIn Japan, young executives role-play negotiations before they make an initial quote.
\nThey form teams, sit around a table with a chalkboard nearby, and pretend to negotiate the
\ndeal. Each team has a set of negotiating alternatives related to the country it is pretending to
\nrepresent. Sometimes the players cut their offer price by 10 percent; if that doesn’t work,
\nthey cut it another 5 or 10 percent. Other ploys are (1) offering lower-interest-rate loans than
\n71
\ncompetitors, (2) offering better after-sales service warranties, and (3) providing warehouses
\nfor parts. Sometimes, even the cost of advertising can make the difference in the sale.
\nAgreeing to a Contract
\nAfter you obtain the initial quotations as explained in Chapter 2, the next step in any
\ninternational business arrangement is to reach an agreement or a sales contract with your
\noverseas partner.
\nNegotiating is integral to international trade, and an importer\/exporter should be ready
\nto offer or ask for alternatives by letter, fax, or e-mail. In the highly competitive
\ninternational business world, a trader’s ability to offer reasonable terms to customers may
\nmean the difference between winning and losing a sale.
\nExporters are finding it increasingly necessary to offer terms ranging from cash against
\nshipping documents to time drafts and open accounts, and even installment payments spread
\nover several years. More sophisticated business arrangements such as countertrade-which
\nincludes barter, product buyback, counterpurchase, and after-sales serviceare also
\nnegotiable. Figure 3-1 illustrates the concept.
\n72
\nFig. 3-1. Countertrade
\nCountertrade: A general international trade term for a variety of methods to conduct
\nreciprocal trade in which the seller is required to accept goods or other instruments of trade,
\nin partial or whole payment for its products.
\nBarter: Trade in which merchandise is exchanged directly for other merchandise without use
\nof money.
\nProduct buyback: Principally applicable for the construction and supply of plant and
\nequipment. The major characteristic is its long-term aspect.
\nCounterpurchase: A common form of countertrade in which the seller receives cash but
\ncontractually agrees to buy local products or services as a percentage of cash received and
\nover a stated period of time.
\nThe trader must have a list of alternatives ready. Keep negotiations open and don’t firm
\nthem up on paper until a general agreement has been reached. The following is a partial list
\n73
\nof alternatives and conditions you may wish to consider during negotiations:
\n\u2022 Quantity price breaks (don’t offer just one price)
\n\u2022 Discounts for cash deals or even down payments
\n\u2022 Countertrade offers to those countries short on foreign exchange
\n\u2022 Guaranteed loans
\n\u2022 Low-interest loans
\n\u2022 Time payments
\n\u2022 Home factory trips for training
\nLet your banker, freight forwarder, or customs house broker review the final offer or
\nquotation. A second pair of experienced eyes can save you money. (See Chapters 7 and 8
\nrespectively for an explanation of the freight forwarder and customs house broker.)
\nForeign Corrupt Practices Act (FCPA)
\nDuring your negotiations make sure you stay on the right side of the Foreign Corrupt
\nPractices Act (FCPA) of 1977. In essence, this act makes it illegal for companies to bribe
\nforeign officials, candidates, or political parties. Make certain that everything is in the
\ncontract and has a price. Don’t get caught making illegal payments or gifts to win a contract
\nor sale. The penalties are severe-subject to a five-year jail sentence and a fine of up to
\n$15,000.
\nThe law does not address itself to “facilitating payments,” those small amounts used to
\nexpedite business activities. These payments are euphemistically referred to in various
\ncountries as “mordida,” “grease,” “bakshish” (small amount of money), “rashoa” (big
\namount of money), “cumsha,” or “squeeze.” Nevertheless, great care should be exercised in
\nthis regard as well.
\n74
\nTIPS AND TRAPS OF CULTURE
\nThe very thought of doing business in a foreign culture can be a major barrier to
\nnegotiations, but it shouldn’t be. After all, traders are known for their spirit of curiosity,
\ninquisitiveness, and risk taking.
\nDeveloping overseas alliances does present new elements of risk and due diligence,
\nalong with the inherent challenges brought by distance, differing cultural motivations and
\npriorities, and effective integration of differing approaches and objectives. But that’s what
\nbrings the rewards.
\nCan one culture be superior to another? Political systems, armies, navies, and even
\neconomic systems may be superior, but cultures are not.
\nThe best way to appreciate another culture is to “walk in the other person’s shoes”-that
\nis, visit or live in the country and get a feel for the similarities and differences. Short of that,
\nthis section of the chapter is the next best thing, because its purpose is to help you break
\nthrough cultural barriers. You are cautioned that to be effective in your business dealings it
\nis essential to be prepared. Do your homework before you interact in a new country, and
\nthen get on with doing business.
\nDoes understanding foreign cultural values really make a difference? You bet it does!
\nOne person who had traveled overseas regularly and had made friends in many
\ncountries, said, “They’re more like us than they’re different.” What the visitor meant was that
\nthey like kids, they want children to be educated, they understand business, and they work
\nhard. What he didn’t say was that the differences are what affect attitudes-so much at times
\nthat some managers won’t even consider entering the market to do business with “them.”
\nWhat Is Culture?
\nCulture is a set of meanings or orientations for a given society, or social setting. It’s a
\ncomplex concept because there are often many cultures within a given nation. For an
\ninternational businessperson the definition is more difficult, because a country’s business
\nculture is often different from its general culture. Thus the environment of international
\nbusiness is composed of language, religion, values and attitudes, law, education, politics,
\ntechnology, and social organizations that are different.
\nWhatever a nation’s culture is, it works for that society. In order to function within it,
\nyou must get on the bandwagon.
\nThe Japanese do it very well. They learn how to penetrate foreign markets by sending
\ntheir managers to live and study in “the other person’s shoes.” Their mission is to develop
\nrelationships with contemporaries that will last for years. The Japanese don’t try to change
\nthe way of life in the other country; they learn about it. When they go home, they are
\nspecialists in marketing and production in the country that they researched.
\nIt’s a country’s culture that regulates such things as sexuality, child raising, acquisition
\n75
\nof food and clothing, and incentives that motivate people to work and buy products. All
\nthese things are of course major factors in marketing products.
\nThe Nine Elements of Business Culture
\nBusiness culture is secondary to a country’s general culture, but it provides the rules of the
\nbusiness game and explains the differences and the priorities.
\nRelationships. Mistrust is reduced when relationships are developed over a long period
\nof time. To meet this challenge, you need to understand the countries, people, and cultures
\nwhere you intend to do business.
\nLanguage. Ask international traders what language they speak, and they will say the
\nlanguage of the customer.
\nLanguage is the thing that sets humans off from other forms of life. It is the way you tell
\nothers about your history and your intentions for the future. Language is the means of
\ncommunicating within a culture. For people in a given culture, their language defines their
\nsocialization.
\nBody Language. Body language is the subtle power of nonverbal communication. It’s
\nthe earliest form of communication you learn, and you use it every day to tell other people
\nhow you feel about yourself and them.
\nThis language includes your posture, gestures, facial expressions, and costumes, the
\nway you walk, and even your treatment of time, material things, and space.
\nReligion. Religion plays a major part in the cultural similarities and differences of
\nnations. In itself religion can be a basis of mistrust and a barrier to trade.
\nReligion is often the dominant influence for the consumer of products. Such things as
\nreligious holidays determine buying and consumption patterns. Knowing what is forbidden
\nand what a society expects as a result of various religious beliefs affects market strategy.
\nValues and Attitudes. The role of values and attitudes in international business is
\ndifficult to measure, but vital to success. Work ethic and motivation are the intangibles that
\naffect economic performance.
\nThe values of a society determine its attitudes toward wealth, consumption,
\nachievement, technology, and change= and you must evaluate all of them in terms of the
\nhost culture. Researching attitudes about openness and receptivity to new technology is
\nessential to marketing.
\nLaws and Legal Environment. The laws of a society are another dimension of its
\nculture. They are the rules established by authority and social interaction. On the one hand,
\nlaws provide an opportunity to handle the mistrust of doing business across international
\nboundaries; on the other hand, they can become barriers and constraints to operations. The
\nlaws of nations are often greatly different. About half the nations of the world are under a
\nform of either Napoleonic code or common law; the other half are under Muslim,
\nCommunist, or indigenous laws. None of the world’s legal systems is truly pure. Each nation
\n76
\nhas its unique laws; nevertheless, similarities and mixtures abound within each
\nclassification.
\nFor most dealings, you will be chiefly interested in the law as it relates to contracts, but
\nyou should always consider litigation as a last resort. Settle disputes in other ways if
\npossible. Litigation is only for the stupid or the rich, because it usually involves long delays,
\nduring which inventories are tied up and trade is halted. Lawsuits are costly, not just because
\nof the money, but also because of the broken relationships that result. Most international
\ncommercial disputes can be solved by conciliation, mediation, and arbitration. The
\narbitration service provided by the International Chamber of Commerce can often be written
\nright into a sales contract, just in case the unspeakable should happen.
\nEducation. Culture shapes your thoughts and emotions. Motivation is influenced by
\nyour education as well as by other things such as values and religion, as already discussed.
\nThe biggest international difference is the educational attainment of the population. The next
\nbiggest difference is the educational mix. In some countries such as the United States there
\nis little difference in the mix. Practically all Americans are educated through twelfth grade,
\nmaking education no longer a function of wealth. This is not so in many other countries. It is
\nnot unusual to find only the elite of some nations educated to the levels that Americans
\nassume for all people. The impact of education is therefore profound for marketing products
\nas well as for establishing relationships, because good communications are often based on
\nrelative education capacities and standards.
\nTechnology. The most recent change in technology is our growing control over energy
\nand information. The word technology begets concepts such as science, development,
\ninvention, and innovation. Some languages lack precise words to express these concepts.
\nUnderstanding the technological gap among nations is an essential element to exporting
\nproducts across borders. Wide gaps still exist between the most advanced nations and those
\nwe call “traditional societies.” It is clear that training is needed to transfer technology, and
\nthe impact of that transfer on social environments must be considered. You should always
\nlook at technology from the importing country’s point of view.
\nSocial Organization. Social stratification is the hierarchy of classes within a society-the
\nrelative power, social priorities, privilege, and income of those classes. Each class within a
\nsystem has somewhat different and distinct tastes, political views, and consumption patterns.
\nMany countries have a socioreligious ideology that allows rank to be intrinsic and inherited
\nbiologically. This implies that different categories of humans are culturally defined as if
\nconsisting of different worth and potential for performance. Regardless of how you react to
\nsuch noncompetitive socialization, such ideas are predictable in some countries. Faced with
\nsuch a system of socioreligious rank, you need to learn how to deal with it-not attempt to
\nchange it.
\nPractical Applications
\nNow that you have an appreciation of culture, let’s take a look at the practical side.
\nIt’s important to understand as much about the culture of a country as possible, even
\nwhen just visiting on business trips. To begin, let’s look at some generalities-ideas that will
\nhelp you make a good impression no matter where you’re doing business.
\n77
\nSaving face is not just an Asian concept, although it is particularly sensitive in those
\ncountries. Avoiding embarrassment to others, particularly ranking persons, is essential
\nwherever you are in the world.
\nPeople of any country like to talk about their own land and culture. If you ask questions
\nthat show genuine interest, you will cultivate people’s respect. But no one likes critical
\nquestions, such as “Why don’t you do it this way?” Or “How come you do it that way?”
\nAbove all, people don’t want to hear how much better it is where you come from.
\nFirst impressions do count, and the wrong first impression can stop your business deal
\nin its tracks. Bad first impressions are all but impossible to overcome.
\nTips for Business Travelers
\n1. Smile! It’s the universal business language and overcomes many problems.
\n2. But smile right. A tight smile with lips parted in an ellipse around the teeth comes
\nacross as phony and dishonest. Smile easily-with your full teeth exposed and the
\ncorners of your mouth pulled up. This kind of smile says, “Hi, I’m sure pleased to
\nmeet you!”
\n3. Look the part. Grooming is important all over the world. Studies indicate that most
\npeople are more attracted to others who are neat, well groomed, and crisply dressed.
\n4. Flash your eyebrows. In most cultures raising the eyebrows almost instinctively in a
\nrapid movement and keeping them raised for about half a second is an unspoken
\nsignal of friendliness and approval.
\n5. Lean forward. Liking is produced by leaning forward.
\n6. Look for similarities. People tend to like others who are like them, so common
\nexperiences and interests are often a starting point for producing liking.
\n7. Nod your head. People like other people who agree with them and are attentive to
\nwhat they are saying.
\n8. Open up. Closed hands and arms crossed in front of the chest may give the
\nimpression that you’re resisting the other person’s ideas. Open, frequently outstretched
\narms and open palms project ( help with nursing paper writing from experts with MSN & DNP degrees) the opposite.
\nTips for Women
\n1. Never give a man a gift, no matter how close the business relationship. A small gift
\nfor his family might do.
\n2. Give gifts from the company, never from you.
\n3. If you are married, use Mrs. when overseas, even if you don’t at home.
\n78
\n4. Avoid eating or drinking alone in public. Use room service, or invite a woman from
\nthe office where you are doing business to join you at a restaurant.
\n5. If the question of dinner arises and is useful to cement the deal, avoid any doubts by
\ninviting your counterpart’s family.
\n6. Make a point to mention your husband and ask about your male counterpart’s family.
\nSome businesswomen who are not married invent a fiance or steady back home.
\n7. Try not to be coy about flirtations. Turn them off immediately with a straightforward
\nno.
\n8. Be aware of the culture, and dress to fit as closely as your wardrobe will permit.
\nConservatism works.
\nAbout Jokes
\nThe people of every country enjoy humor and they all have their funny stories, but
\nexplaining complicated jokes to businesspeople who don’t share your culture can be very
\ntricky. Here are a few tips and traps:
\n1. Do remember that each culture reacts differently to jokes.
\n2. Don’t tell foreigners a joke that depends on word play or punning.
\n3. Do be careful of the subject of your joke. It could be taken seriously in a culture
\ndifferent from your own.
\n4. Do be informed about the sensitive issues in the country where you are visiting.
\n5. Do ask to hear a few local jokes. They will give you a sense of what’s considered
\nfunny.
\n6. Do tell jokes. Everyone enjoys a good laugh.
\n79
\nINTELLECTUAL PROPERTY RIGHTS
\n“The Chinese stole our stuff! They just drove down the road, passed our factory, and
\ncopied our trademark. It took us two and a half years and $5000 to get it back,” said one
\nexecutive. On the other hand, because this company had the trademark registered, no one
\nelse in the United States could use it, and the litigation against the guilty Chinese firm was
\nconsiderably easier than it would have been without proper registration.
\nIntellectual property is a general term that describes inventions or discoveries that have
\nbeen registered with government authorities for sale or use by their owner. Such terms as
\npatent, trademark, copyright, and unfair competition fall under the domain of intellectual
\nproperty.
\nYou can obtain information about patents and trademarks from: U.S. Patent and
\nTrademark Office, Crystal Plaza 3, Room 2C02, Washington, DC 20231; phone: (800) 786-
\n9199; Web: uspto.org.
\nThe booklet General Information on Patents can be ordered from the Government
\nPrinting Office, Washington, DC 20402. Table 3-1 summarizes the basic elements of
\nintellectual property in the United States.
\nYou should recognize that registration in the United States does not protect your
\nproduct in a foreign country. In general, protection in one country does not constitute
\nprotection in another. The rule of thumb is to apply for and register all intellectual property
\nrights in each country where you intend to do business. Because registration can be
\nexpensive, several multilateral organizations have been formed to make registration possible
\nin all member countries. Your first step is the World Intellectual Property Organization
\n(wipo.org).
\n80
\nPatent Registration
\nPatent registration is covered by the following agreements.
\n1. The European Patent Convention (18 European area countries).
\n81
\n2. The European Patent Organization (19 EC countries).
\n3. The Patent Cooperation Treaty, which gives by far the greatest international coverage
\n(more than 25 signature countries, including Russia).
\nTrademark Registration
\nTrademark registration is less costly and time-consuming than patents and is covered by
\nthe following agreements.
\n1. The International Convention for the Protection of Industrial Property. Better known
\nas the Paris Union, this organization is 90 years old, and it covers patents as well as
\ntrademarks. Under this convention, sixmonth protection is provided the firm, during
\nwhich time the trademark can be registered in the other member countries.
\n2. The Madrid Arrangement for International Registration of Trademarks. With 46
\nmembers, this agreement offers the advantage that registration in one country
\nqualifies as registration in all member countries.
\n82
\nCOMMUNICATIONS
\nAlthough nothing substitutes for personal contact when developing an international
\nmarketing structure, this may not always be possible. Therefore, the tone of initial written
\ncommunications is critical. It often makes the difference between a profitable long-term
\narrangement and a lost opportunity.
\nThe Introductory Letter, Facsimile (Fax), or E-Mail
\nYour introductory letter, fax, or e-mail most often can be written in English. Outside Latin
\nAmerica, English has become the language of international business. Even so, always use
\nsimple words. If your message must be translated and transmitted into a foreign language,
\nmake sure you have it translated back to English by a third party before sending it.
\nHowever proficient a person is in the other language, funny things can happen in
\ntranslation.
\nFrom the beginning, establish your company’s favorable reputation and explain the
\nrelationship that you seek. Describe the product you want to market (export) or to purchase
\n(import). Propose a personal meeting and offer the buyer a tour of your firm during the
\nperson’s next visit to your country. Ask for a response to your letter. Figure 3-2 shows a
\nsample letter of introduction.
\nFollow-Up Communications
\nAs technology improves, alternative forms of communication become available, and
\nchoosing the best alternative may result in the competitive difference. Successful importing
\nor exporting depends on reliable two-way communication. It is critical in establishing and
\nrunning an import\/export marketing network.
\nTelephone
\nSpeech is the fastest way to convey ideas and receive answers. Voice communications
\nallow for immediate feedback-quick response to fast-breaking problems or opportunities.
\nMost countries can be dialed directly, and the rates for international telephone service
\ndepend on the time of day. Although international telephone can be expeditious, it can be
\nexpensive if you have a lot to say.
\nFacsimile
\nFacsimile (fax), or telecopier service, is one of the fastestgrowing means of business
\ncommunication. The advantage of fax is that any image up to 81\/2 X 14 inches can be
\ntransmitted directly to the receiving unit. Letters, pictures, contracts, forms, catalog sheets,
\ndrawings, and illustrations-anything that will reproduce in a copy machine-can be sent.
\n83
\nFig. 3-2. Sample letter of introduction
\nHISTORY NOTE: Facsimile is not new. It was invented over a century ago, in 1842, by
\nAlexander Bain, a Scottish clockmaker. His device used a pendulum that swept a metal point
\nover a set of raised metal letters. When the point touched a letter, it created an electrical
\n84
\ncharge that traveled down a telegraph wire to reproduce on paper the series of letters that the
\npendulum had touched. Wire service photos were transmitted by fax machines as early as
\n1930. The U.S. Navy used them aboard ship during World War II for the transmission of
\nweather data.
\nThe earliest fax machines were very expensive clunkers, costing more than $18,000 and
\ntaking more than 10 minutes to send a single page. Today, there are more than 5 million
\nmachines, and dedicated facsimile terminals now cost as little as $150. Their speed equates
\nfavorably with telex. Fax transmits over the ordinary voice-phone network. Several private
\nbureaus manage the worldwide service. On the downside, there is no effective proof of
\ndelivery of a fax document.
\nThe Internet
\nIt wasn’t that long ago that the Internet was just a public, amorphous collection of computer
\nnetworks-a techno-fad made up of blending a few personal computers and citizens band
\nradio enthusiasts.
\nToday the Internet is the fastestgrowing and most exciting place to do business (see
\nChapter 4). Dedicated servers and high-speed circuits, combined with new cross-indexing
\nsoftware and imaginative services, have connected the home computer masses to electronic
\ncommerce through the World Wide Web.
\nAs the concept matures, the linking of buyers and sellers and elimination of paperwork
\nwill drive down the cost of transactions. The Internet has become the low-cost alternative to
\nfax, express mail, and other communications channels such as 1-800 telephone sales.
\nThe Internet knows no international boundaries. Internauts are logging on from
\nBangkok to Broadway. Already the network extends to all countries, and the most
\ninteresting part is that nobody owns the Internet. It is not guided by a single company or
\ninstitution. The Internet Protocol (IP) allows any number of computer networks to link up
\nand act as one.
\nHISTORY NOTE: The Internet is not a new concept. It began in the late 1960s, when the
\nPentagon asked computer scientists to find the best way for an unlimited number of
\ncomputers to communicate-without relying on any single computer to be traffic cop. That
\nway the system would not be vulnerable to nuclear attack. The outcome was the decision to
\nfund an experimental packet-switching communications using a Transmission and
\nControl\/Internet Protocol (TCP\/IP) called ARPAnet that quickly expanded to dozens of
\nuniversities and corporations. Programs were written to help people exchange e-mail and tap
\ninto remote databases. In 1983 ARPAnet was split into two networks-ARPAnet and Milnetand the Pentagon mandated TCP\/IP as the standard protocol. These two networks evolved
\ninto the Internet.
\nHOT TIP: Though print lacks speed (compared with voice), it provides written
\ndocumentation that can be read and reread at the reader’s pace and schedule.
\nCables and Telexes
\n85
\nInternational mailgrams, telegrams, or cables can still be sent anywhere mail goes and
\nrequire a complete mailing address, including postal codes.
\nCables are sent electronically to the major city nearest the recipient. There, the message
\nmay be telephoned and mailed, mailed only, or (in a few locations) delivered by messenger.
\nCables don’t offer proof of delivery the way a telex message does, and because of the extra
\nhandling, cables are significantly more expensive than telex messages. But a cable can be
\nsent to anyone, anywhere.
\nThere are still some telex terminals in government and business offices around the
\nworld, but with the advent of facsimile and Internet the process is becoming obsolete. Their
\nadvantage is they can receive information automatically, even when unattended.
\nCommunications Equipment
\nElectronic data transmission grew rapidly throughout the 1990s. In the new century data
\nmust flow back and forth among the import\/export business and agencies, distributors, and
\ncustomers. Electronic mail is now commonly delivered over international phone lines.
\nPractically any computer can be interfaced by a modem via a cable, ordinary telephone,
\nsatellite, or microwave to any other computer or word processor anywhere in the world-so
\nlong as the receiving country does not restrict or prohibit transborder data flows. If you
\nhave a personal computer, a modem and software package can cost you less than $300 for
\ndata communications.
\nHOT COMMUNICATIONS TIPS
\n1. Write out your message and check it by reading it aloud.
\n2. Some situations in international business can be frustrating, so take care not to lose
\nyour temper and send a “zinger” that you’ll regret later. Develop a cordial and
\nprofessional style, and stick to it at all times. Try to draft replies in the morning when
\nyou are fresh. Whenever possible, let a second party read each message.
\n3. Send messages earlier in the day and earlier in the week to avoid the heavy calling
\nperiods and possible delay of your message.
\n4. Keep your messages brief, but avoid any abbreviation that might not be understood.
\n5. Try to reply to every fax\/telex\/Internet message the same day it is received, even if
\nonly to give a date when a more complete reply will be sent.
\n6. Use “ATTN: Name” rather than “Dear Name.” Almost all fax\/Internet messages, by
\ncustomer, end with “Regards,” “Best Regards,” or occasionally “Cordially.”
\n86
\nTRAVEL
\nMistrust across international borders can be a barrier to a successful import\/export
\nbusiness. Therefore visiting the country and the people who offer goods for your
\nimportation or the agents or distributors who market your export products is essential.
\nThese personal contacts remind you that you have more in common with people from other
\nnations than differences. Travel to exotic places is not only fun; it is a tax-deductible
\nexpense of international trade as well.
\nHOT TIP: The Internal Revenue Service will look closely at travel expenses to make sure
\nyou are actually doing business, and not indulging your travel hobby. For this reason, keep a
\ngood record during your travels and make sure you profit from your trips.
\nPlanning a Trip
\nYou alone know your itinerary, how long you can stay in each place, and what you expect
\nto accomplish, so lay out your own trip before turning it over to the travel agent. Make
\ncertain your local arrival time allows for time zone changes and scheduled business
\nmeetings. Factor in time for rest prior to negotiating.
\nAfter you have laid out your trip, take it to the travel agent for booking. Allow three to
\nfive days, and expect some changes. You may need to go through country B in order to get
\nto country C.
\nForeign Travel Information
\nTo stay alert to any possible danger areas in the world, contact: Citizens Emergency
\nCenter, U.S. Department of State, Washington, DC 20520; phone: (202) 647-5225.
\nPacking for a Trip
\nTravel light. The usual arrival sequence is immigration followed by customs. Be ready to
\nopen your luggage and sometimes declare each item.
\nTransportation
\nRequest business class to most countries; it’s more comfortable than coach and less
\nexpensive than first class.
\nHotels
\nUnless you are familiar with the better hotels in a country, you are usually better off
\nstaying at one that is internationally recognized. Most major travel companies, agents, or
\nyour local library can supply the names of the best hotels.
\nFood and Drink
\n87
\nAre you a bit overweight? Now is the time to drop a few pounds. The food may be the best
\nin the world, but eat light and drink only sterilized water.
\nTime Changes
\nPlan for the changing time zones. Think ahead and figure the local time of arrival for the
\nplane you have booked. Remember that time is reckoned from Greenwich, England, and
\nwatches are normally set to some form of zone time. Time is changed near the time of
\ncrossing of the boundary between zones, usually at a whole hour. If you know the time
\nzone, you can calculate the local time. Figure 3-3 depicts international time zones as they
\nappear at noon Eastern Standard Time.
\nPassport
\nA key travel document, the passport identifies the holder as a citizen of the country by
\nwhich it is issued. In the United States, the Department of State issues passports. You can
\napply at your local U.S. post office. The cost is about $60. You should allow two to three
\nweeks for processing.
\nVisa
\nThe visa is an official endorsement from a country that a person wishes to visit. You must
\nreceive it before entry into that country is permitted. Some nations don’t require a visa.
\nCheck with your travel agent or local consul\/embassy. You may prefer to give your
\npassport, and three photos, to a “visa service” and let the agency make the rounds of
\nembassies. Count on waiting a week for the completion of this service.
\n88
\nFig. 3-3. International time zones
\nArrival\/Departure
\nWhen you arrive in a country you have never visited before, ask the airline crew or counter
\npersonnel for such tips as normal taxi fare from the airport to the hotel, sights to see, and
\nlocal travel problems. Exchange your currency at the best rate. On departure, use any
\nexcess local currency to pay your hotel bill. Be sure to save enough local currency for taxi
\nfare and airport departure tax.
\nSmile and be cheerful as you pass through immigration and customs. A smile can head
\noff a lot of problems.
\nCarnets
\nIn some countries you can transport goods duty free and avoid extensive customs
\nprocedures if you have an ATA (admission temporaire) carnet. The ATA carnet is a
\nstandard international customs document used to obtain duty-free temporary admission of
\n89
\ncertain goods on an annualized basis into the countries that are signatories to the ATA
\nConvention. Under the ATA Convention, commercial and professional travelers may take
\ncommercial samples, tools of the trade, advertising material, and cinematographic,
\naudiovisual, medical, scientific, or other professional equipment into member countries
\ntemporarily without paying customs duties and taxes or posting a bond at the border of
\neach country to be visited.
\nApplications for the ATA carnet are made to the Council for International Business in
\nyour country. In the United States, contact www.uscib.org or call (212) 354-4480. Since
\ncountries are continuously added to the ATA carnet system, you should contact the Council
\nfor International Business regularly to learn if the country to be visited is included on the
\nlist. A list of nations where the ATA carnet can be used (current as of 1998) may be found in
\nAppendix A.
\nThe fee charged for the carnet depends on the value of the goods to be covered. A bond,
\nletter of credit, or bank guarantee of 40 percent of the value of the goods is also required to
\ncover duties and taxes that would be due if the importer of goods into a foreign country were
\nnot a carnet holder. Typical processing fees are:
\nFurther information can be found in the informative book published by the council titled
\nCarnet: Move Goods Duty-Free Through Customs.
\nIf you don’t get a carnet, check your samples at the airport with customs, but allow
\nplenty of time to get them before the next flight.
\nThe next chapter is new with this revision. It explains how to do international business
\nover the Internet, including how to get started, how to establish a home page presence, and
\nhow to find foreign markets.
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