such as population size, income levels, growth and recessions, and so on – are definitely factors you have no control over. And yet, when you’re considering doing business internationally, you have to examine those conditions closely because they may affect the attractiveness of the market. If you want to export goods, a potential market must have enough people with the means to purchase your products. If you want to import goods, you need to understand the country’s labor costs.
Considering geography and other physical factors
The impact of geography and natural resources is an important factor to consider. You need to be aware of the country’s location, size, topography, and climate. The location of a country also explains many of its trading relationships and political alliances.
Paying attention to political and legal conditions
When you’re importing or exporting, the primary political considerations are those having to do with the stability of the governments and their attitudes toward free trade. A friendly political atmosphere permits businesses to grow even if the country is poor in natural resources. The opposite is also true: Some countries blessed with natural resources are poor because of government instability or hostility.
Regulations in other countries can be quite different from those in the domestic market. When you’re evaluating business opportunities around the world, determine whether the country is governed by the rule of law and eliminate countries that are political dictatorships. Look at a country’s laws and how the country interprets and enforces them. You can find more information at www.export.gov and in Chapter 10.
When you conduct business in the United States, domestic laws cover all transactions. However, questions of the appropriate law and courts of jurisdiction may arise in cases involving different countries. When a commercial dispute arises between individuals from two different countries, each person would prefer to have the matter adjudicated in his own courts and under his own laws. Insert a clause in any agreement stating that each party agrees that the laws of a particular country govern – preferably, the United States.
Considering culture
If you’re reading this book, you have at least some interest in doing business in a country other than your own. But importing/exporting isn’t just about business – you also need to study the cultures of the countries you want to work with.
Culture affects all business functions, including marketing, human resource management, production, and finance. Culture is the total of the beliefs, values, rules, techniques, and institutions that characterize populations. In other words, culture is the thing that makes individual groups different. In this section, I cover the aspects of culture that are especially important to international businesspeople.
Aesthetics
Aesthetics is a society’s sense of beauty and good taste. In particular, you want to pay attention to color and the messages that different colors may convey. Color can mean different things in different cultures. For example, black is the color of mourning in the United States and Mexico, white is the color of mourning in Asia, and purple is the color of mourning in Brazil. Green is the color of good luck in the Islamic world, so any item featuring green is looked upon favorably there.
Attitudes and beliefs
Attitudes and beliefs include predispositions – either favorable or unfavorable – toward someone, someplace, or something. Attitudes and beliefs influence most aspects of human behavior because they bring order to a society and its individuals. The better you understand differing attitudes and beliefs, the better you’ll be able to work with people from other countries.
Here’s an example: Although Americans tend to think that time equals money, people from the Middle East, Asia, and Latin America may feel just the opposite – they’d rather get to know you before discussing business. Arabs typically dislike deadlines, and when faced with one, an Arab may feel as though he’s being backed into a corner.
Religion
Religion is one of the most important elements of culture. An awareness of some of the basic beliefs of the major religions of the world can help you understand why attitudes vary from country to country. As an importer/exporter, keep in mind that religion influences all aspects of business. If you don’t understand and adapt to a culture’s religious beliefs, you’ll fail – that’s the bottom line.
For example, a company called American White Cross manufactured a variety of first-aid products and sold them throughout the United States and around the world. Because its corporate logo and packaging included a cross, it was unable to market its product line in the Islamic world because the cross is a symbol representing Christianity.
Material culture
Material culture consists of technology (how people make things) and economics (who makes what and why). The aspects of technology and economics apply not just to production but also to marketing, finance, and management. If you want to do business with other countries and you’re using new production methods and products, that may require changes in people’s beliefs and lifestyle – and change is never easy.
Language
Language is probably the most obvious cultural distinction that newcomers to international business face. Even though many businesspeople throughout the world speak English, your ability to communicate in the local language gives you an advantage and conveys a sense of respect to your potential associates.
Nonverbal communication is often as important as written or spoken language. Gestures can have different meanings from one country to the next. For example, Americans and most Europeans understand the thumbs-up gesture to mean that everything is all right; however, in southern Italy and Greece, it conveys the message for which Americans reserve the middle finger. Making a circle with
