ACT Exporters

Local knowledge key to international business success

B2B Editor24 April 2014

Local knowledge key to international business success

The Export Council of Australia (ECA) with the support of Austrade and Export Finance and Insurance Corporation (EFIC) recently published the results of Australia’s International Business Survey (AIBS) 2014.

An interesting part of the report is the survey outcome on barriers to exports and international business. In the survey, respondents were asked to identify the most significant challenges of doing business in the market they currently find most difficult.

Barriers cited by respondents included:

* Lack of information on local culture, business practices, language and consumers (selected by 59 per cent of respondents).

* Lack of information on local regulation and tariffs (cited by 49 per cent).

* Customer payment issues (45 per cent).

* Tariff, quotas and import duties (34 per cent).

* Regulatory issues including operating permits, licenses, and foreign company regulation (34 per cent).

As indicated by the survey, significant knowledge gaps and information scarcity persist as a significant challenge for Australian businesses with international interests.

Cultural differences.

We have all probably been confronted with cultural differences at some point, which often lead to amusing misunderstandings but can also have a serious impact on business dealings. One example is the way we communicate during business meetings. In some cultures, particularly in Asia, people are generally soft-spoken, indirect and tend not to interrupt others during a conversation. Furthermore, hierarchies may also have an important factor and failing to acknowledge the senior person’s status or to greet that person with due respect can leave a bad impression. It is therefore important to keep an eye at these differences and try to adjust to the way your business partners communicate.

Another cultural difference is the concept of time. In many African, Middle Eastern and South American countries, scheduled appointments are often treated as a general guideline rather than something which is set in stone. The key is to take advantage of this situation and not show signs of agitation or frustration as it will have a negative impact on your business partner. It is always best to be punctual at first and then adopt a more relaxed attitude towards time management if required. In this way, you will learn to adjust to your business partners’ concept of time.

It is important to remember that our business partners will always appreciate our efforts to make a good impression, regardless of cultural differences.

The importance of having a local contact

One of the most successful and proven ways to achieve success in an international market is to work with an experienced local partner, which could be in the form of a local representative, agent or distributor.

Having a local partner is critical as they provide you with knowledge of the local regulatory framework, introduction to key local business contacts and Government officials as well as language assistance.

In the AIBS report, respondents were asked to identify sources of advice in overcoming information barriers. The top 5 sources of advice include:

1. Existing customers/suppliers – 58%

2. Other companies – 25%

3. Australian Government agencies – 24%

4. Industry associations – 24%

5. Business consultants – 13%

As can be seen from the survey findings, local contacts (in this case existing customers and suppliers) remain an important source of information for companies doing business overseas.

There are many free resources available online to help you understand the business cultures in various export markets as well as tips in identifying a good distributor/agent.

The ACT Exporters’ Network is also well positioned to assist exporters as it provides a forum for exporters to network, share knowledge and insights and expand their export activities.

Should you require further information about the ACT Exporters’ Network, please contact Larry Fisher at[email protected]. au or call (02) 6247 4199.