Lessons in international business – negotiations

17 10 2006

Observations on how to create trust, effective meetings and excellent negotiations with overseas customers, suppliers and partners.

  • Whenever you are involved in international negotiations or global meetings keep in mind that you might be working with the same person for the next 10 – 20 years.
  • Negotiations should be open and straightforward.  Hidden agendas will eventually be discovered and make the next meeting very difficult.
  • Negotiations should involve creating value for both parties.
  • Meetings are important moments where trust is being built and confirmed.  Be honest and clear about your desires.
  • Never agree to something you cannot deliver or perform.
  • Listen, understand and evaluate what your partner is requesting.   What are they saying, and what does it mean.
  • Be certain of what you are negotiating and agreeing to.  If not 100% sure, stop and request clarification.
  • Prepare for the meeting several weeks before it happens.  Refresh and add information weekly.  When you reach the meeting, you will be in control of the information and feel comfortable during the talks.
  • At the end of the meeting, write down the most important points or agreements, with names and dates, and have it signed by those present.  This little tip will save lots of time and trouble for everyone involved.
  • Any agreement must have 100% follow-through.  If for any reason problems arise in the follow-through, immediately contact and communicate the situation to your partner.

Related Links

How to negotiate with Mexican business people

Great international business trip results

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Great International Business Trip Results

16 10 2006

In any international relationship communication and understanding are critical for success.

Problems created by; language, stereotypes, misinformation, lack of information, and cultural misunderstandings combine with normal business problems to create a complicated scenario for anyone involved in international relationships and global business.

Prepare your international meetings and business presentations using the following questions as a guide to organize your ideas and focus on actions that will produce positive results for everyone involved.

6 Questions – Create Great International Business Trip Results

  1. What does this organization know about me, my company and my country?
  2. What do they think they know about me?
  3. What can I tell them that they do not know?
  4. What do I know about my international partner, culture and country?
  5. What do I think I know about this business, culture and country?
  6. What can they tell me that I do not know?

1. What does this organization know about me and my company. When you walk in the room an opinion has already been formed about you, your organization, and your ability to perform in the future. These ideas are based upon facts, information and past experience.

  • What has been the history of our relationship in their country?
  • Who has been involved in our mutual business, and why?
  • What promises have been made and kept by both?
  • What promises have been made and not delivered upon?
  • What have the major problems and success been in the past?
  • Press and media, our organizations promotional material.

2. What do they think they know about me. Clarifying the unknowns or presumed realities in a relationship is crucial to success. These ideas may be very damaging and limit your ability to trust one another. What stereotypical behaviour can you avoid or prevent? What can you clarify or refute through information or actions?

  • Behaviour and reacts based upon past experience with your organization.
  • Rumour and innuendo, press and media reports.
  • Negotiation styles.
  • Business objectives.
  • Behaviour, goals and methods of doing business based upon country and cultural stereotypes.

3. What can I tell them that they do not know. Today’s business world requires trust, information and solutions. Reinforcing your need to work with your international partner, providing important information or solutions, and clarifying misunderstandings can only help the relationship.

  • Clarify or destroy cultural stereotypes.
  • Clarify business objectives and why they are important in order to reach these objectives.
  • Provide solutions and alternatives to existing situations and challenges.
  • Provide information of value for their business and strategy.
  • Clearly identify current or potential business problems.
  • Predict and have answers ready for their questions.

4. What do I know about my International partner, culture and country? What do I know is true and not innuendo or interpretation? The numbers, facts, information, agreements and past performance history of the business. Information about the country and the business culture.

5. What do I think I know about this business, culture and country? What preconceived ideas and stereotypes are you working with? What are you assuming and what has been proven?

6. What can they tell me that I do not know? What questions do you need to ask in order to verify information or create plans. What pieces of your information puzzle are missing? This is the time to get your questions answered, what are they?

Related Links

Cultural misunderstanding it can happen to you

Stereotypes and global business

Create great international business relationships

16 Essential questions – the international business traveller’s quiz

Lessons in international business





20 ideas – how to avoid major problems with your export business

29 09 2006

Exporting is an extremely difficult process as compared to selling in the local or national market. Exporting is not easy, and it’s not inexpensive. It takes planning and requires people that are open, flexible, problem-solvers, and quick at adapting to new situations.

A smart organization that desires to export their products will invest time and money building the proper administrative and sales structure before they begin operations.

20 ideas – how to avoid major problems with your export business

1. Say no to customers. When you can’t do it, say no upfront, before you make an agreement.

2. Create an export strategy before you begin to export. Don’t get sucked into exporting by “accident”.

3. Samples should be equal in quality to the actual production that will be shipped.

4. Make everything perfectly clear with customers. Don’t assume anything, don’t work with suppositions.

5. Learn and understand the business culture of your export market and customers before you begin.

6. Provide detailed price lists and price quotations to the customer. Understand your Incoterms (if you don’t know what these are, stop know and click here)

7. Contemplate what problems might possibly arise (internal and external) that could affect shipment or delivery. Prepare alternatives or take preventive action.

8. Understand that there is a learning curve that affects the organizations ability and performance when exporting to new markets. Calculate the time this will require, and it’s cost.

9. Write down and sign all agreements with the customer (dates, specifications, changes, time, everything). Verify everything with an email or fax if unable to physically sign the agreements and changes.

10. Use caution about exclusivity agreements. Everyone wants exclusivity, will that exclusivity support your entire export production? Will it limit your ability to grow?

11. Develop a quality control system throughout the company.

12. Never send poor quality products, especially in order to meet a shipping deadline.

13. Research the transportation, temperature and climatic conditions that the product will be subject to prior to arrival at the export destination.

14. Create an export price strategy. Know where you are going, and how you want to get there, your costs and required profit margins before you begin to quote prices.

15. Clearly define the costs of production and separate them from the costs of the sales required for exports. Give the sales department a base price to build upon, and make sure they clearly identify the costs related to sales and promotion in the export markets.

16. Always have at least 2 customers in the export market. This will provide protection and stability for your production and for the customers in the export market.

17. Customers who provide the research, development and design for the product may bring samples to you. Assist in the development and manufacture of the samples. Your production know-how (turning ideas into product) is fundamental and important for all involved.

18. Research and investigate fashion, trends and tendencies. In order to survive, you have to create, not pirate and copy.

19. Quality complaints and suggestions must be addressed and implemented immediately. This has to be part of the understanding of every worker, from production to sales to executive suite.

20. Discipline, planning and order. Production planning, raw material purchasing decisions, financing, infrastructure investment, human resources, sales and marketing all must be planned and coordinated, at all times.

Added Oct. 1, 2006 – Bonus legal reminder:  Know the law of the country to which you are exporting concerning:  retention of documents for litigation, product quality and manufacturing and product safety before you begin sales and shipping.  Understand your responsibility and liability for recalls, retrofitting, refunds or destruction of the product.  Learn about your legal responsibility and relationship with brokers, agents and distributors and your products.

Related Links

7 tips for doing business internationally

Maquila and Maquiladoras in Mexico

Why you should pay attention to free trade treaties

Mexico and international free trade treaties





Maquiladoras in Mexico

28 09 2006

An Internet search for the definition of the terms maquila and maquiladora will turn up quite a variety of ideas and interpretations.

The maquiladoras have created quite an emotional and political reaction on both sides of the US and Mexico border. They have been accused of stealing jobs from the US, promoting sub-standard working conditions, lowering wages, exploiting workers, and not contributing to the Mexican economy.

Despite the controversy, the maquiladoras are growing and thriving in Mexico. They offer attractive benefits to organizations that are seeking competitive production and assembly costs, skilled labor and Mexico’s proximity to the US market. Recently many transnational organizations that moved manufacturing operations to China in the 1990’s have moved back to Mexico due to cost and logistic advantages.

Maquila and Maquiladoras – definitions and activities

  • The term maquila comes from the Spanish term that refers to the portion paid (in grain, flour or oil) to a miller for milling a farmer’s grain.
  • Maquiladoras are legal entities under Mexican law, with special tax privileges, they provide service, assembly or manufacturing operations.
  • Maquiladoras are able to import raw materials or semi-processed materials from foreign countries, in order to service, process or assemble them in Mexico, and then export the finished product back to that country. These activities take place without the collection or payment of import, export or V.A.T. (value added tax) taxes.
  • The maquiladora program was created by Mexico in order for foreign organizations to take advantage of low labor costs in Mexico (primarily the USA), and to provide employment to Mexican workers in Mexico. Initially the maquila operations were located close to the US border. Currently maquila operations can be found throughout Mexico.
  • Maquiladoras can be 100% foreign owned, 100% Mexican owned, or a joint venture between Mexican nationals and foreign investors.
  • Maquiladoras are also known as twin plants, in-bond industries, export assembly plants and offshoring.
  • The maquiladoras in Mexico suffered from a crisis of plant closings in the 1990’s and early 2000’s as many companies moved operations to China. Since 2004, Mexico has seen a resurgence of the maquiladoras.

  • Check with your attorneys and accountants in Mexico about the specific benefits of the maquila program. As of September 2006, there were important legal changes (simplification and consolidation of government compliance and monitoring programs) that will affect current and future maquiladoras.

Related Links

Why you should pay attention to free trade treaties

Industrial and business parks in Mexico


Official government websites of the 32 Mexican states

Maquila and Maquiladoras in Mexico





Why you should pay attention to free trade treaties

27 09 2006

Globalization, transnational companies, global sourcing and outsourcing, free trade, do any of these terms sound familiar?

Obtaining products and raw materials for the lowest price possible is a fundamental concept in business. Today organizations are looking for manufacturers and locations worldwide where they can find lower costs of production in order to remain competitive.

Combine the factors of: quality control, low cost production, logistics costs, and the time involved to get the product to market from the factory, and you understand the challenge of doing business and sourcing products in today’s global economy.

To truly determine the final cost of the product, all these factors must be calculated. This will determine which country offers the best competitive advantage. Make sure you are analyzing any existing free trade agreements when you are seeking suppliers globally.

Free trade treaties between countries have a significant impact upon the final cost of goods. These free trade agreements eliminate the tariffs and taxes on imported and exported goods between the countries involved, depending upon their concentration or percentage of “local” or national raw materials (including labor), as specified in the free trade agreement.

Free trade agreements between countries are of great importance and value only if are exclusive and not accepted by all trading countries. The more free trade is embraced by the international community (through treaties or elimination of import and export tariffs) the less impact the current free trade agreements have in determining competitive advantages for a single country.

Here is a simple example of how the NAFTA (North American Free Trade Agreement) free trade treaty between Mexico and the USA, would favor the US supplier over a Chinese supplier.

Example of free trade agreeement competitive advantage:

US supplier to Mexico. If I want to purchase paint made by a US paint manufacturer and have it shipped to my warehouse in Mexico, my total cost to bring the goods to my warehouse in Mexico would be the cost of the paint, plus freight and customs clearing costs. There is no import tariff on this product due to the NAFTA free trade treaty. It would take 4 – 6 days to arrive in my warehouse in Mexico once the product has been shipped from the USA.

US paint $ 20.00 + Freight $ 4.00 + Customs $ 1.00 = $ 25.00 total cost of the US product in my warehouse in Mexico

Chinese supplier to Mexico. If I purchase the same product, from the same transnational company, but it is manufactured in China. Transportation time is 40 days from date product is shipped from China.

Chinese paint $14.00 + Freight $ 8.00 + Customs $ 1.00 + Import tariff (13% of CIF value) $ 2.86 = USD $ 25.86, total cost of the Chinese product in my warehouse in Mexico.

In this example the final cost of the product is $ .86 lower from the US supplier as compared to the Chinese supplier, despite a lower initial product cost. Factor in the financial cost and time required to move the product from the factory to my warehouse, and the lowest final cost in this case would clearly come from purchasing product from the US supplier.

Mexico’s aggressive free trade strategy

Since the 1990’s Mexico has bet heavily on international free trade agreements as a method to improve their competitive advantage and increase their manufacturing base and attract foreign investment.

Mexico has signed 11 existing free trade treaties and 2 complementary economic agreements with 42 countries. It is the only country in the world to have standing free trade agreements with North American and the European community.
The free trade agreements have greatly increased international competition (imports) in Mexico (good for the consumer).

Free trade agreements have allowed Mexican exports to increase and reach destinations and markets that were closed before due to tariffs and costs. There has been increased foreign investment from countries that desired to use Mexico’s free trade competitive advantage for international manufacturing and export projects.

The Mexican manufacturers and suppliers of the national Mexican market were given a “sink or swim” option. Virtually overnight (many of the treaties were phased in over a period of 3 – 10 years), their previous protected market was filled with imported goods (more competition, lower cost, higher quality).

Those that have survived the “invasion”, have had to improve their efficiency, quality and costs. Making them much more competitive in todays global economy.

Britannica’s Definition of free trade:

“Policy in which a government does not discriminate against imports or interfere with exports. A free-trade policy does not necessarily imply that the government abandons all control and taxation of imports and exports, but rather that it refrains from actions specifically designed to hinder international trade, such as tariff barriers, currency restrictions, and import quotas. The theoretical case for free trade is based on Adam Smith’s argument that the division of labour among countries leads to specialization, greater efficiency, and higher aggregate production. The way to foster such a division of labour, Smith believed, is to allow nations to make and sell whatever products can compete successfully in an international market.”

Related Links

Mexico and international free trade agreements





Current Resume – Lee Iwan – March 2007

27 04 2006

 

Lee Iwan

International Business Development

Sales & Management Executive

Accomplished bilingual and bi-cultural executive with broad based domestic and international experience in business discovery and development; sales, marketing and operations for start-ups, growth and mature organizations.

Results oriented, proven success in new market identification, strategic thinking, negotiations and pragmatic problem solving. Track record of “hands on” leadership increasing communication, sales, efficiency and profitability.

Thrive in dynamic and fluid environments requiring enthusiasm, creativity, communication skills and organization.

Core competencies include:

Relationships and Communication

Team Leadership

Cross Culture Liaison

Innovation and Change Management

Global Focus

Entrepreneurial Focus

Contingency Planning

PROFESSIONAL EXPERIENCE

QUIMICA CENTRAL DE MEXICO S.A. de C.V. Leon, Gto., México July 1998 – Present

Business Manager, Strategic Business Discovery & Development May 2005 – Present

Serve as independent executive working directly with CEO and Board of Directors. Fully responsible for the visualization, research, creation, communication, follow-through, analysis, planning and implementation of new business development and corporate strategic diversification projects.

Key Achievements:

  • Project Leader, pharmaceutical joint venture (Swiss-México), manufacturing and commercial operations .
  • Spearheading strategic alliance negotiations to increase long-term market share and global positioning.
  • Ongoing negotiations with India and China for product representations, agencies and toll manufacturing.

Business Manager, International Business March 2000 – May 2005

Served as Business Manager, responsible for global sales and marketing, distribution and logistics, and all corporate international negotiations with clients and suppliers.

Directed export sales and market development, international supplier strategic alliances; leadership of export sales distribution and agency networks; cross-functional team participation; business intelligence; sales and marketing strategy and leadership for the Asia Pacific and Latin American regions; sales implementation and market development; logistics and supply chain management, cross cultural communications, “globalization” of company culture and corporate special projects.

Key Achievements:

  • Created and implemented commercial entrance for Asia-Pacific market, first 3 years revenue $ 5 M (US), projected annual sales growth of 200%.
  • Initiated and maintained strategic alliances with international suppliers, raw material cost savings of $ 2 M (US) fortified long term strategic positioning.
  • Negotiated exclusive agency representations in Mexico for South African and US specialty chemical manufacturers.
  • Increased company global competitiveness utilizing the export department to drive corporate cultural changes in strategic planning, production, time to market, supply chain and logistics, sales, marketing and administration.

Export Manager July 1998 – March 2000

Served as Export Manager, responsible for sales, distribution and marketing strategy and management for 20 countries including Latin America, US, Europe and Taiwan.

Key Achievements:

  • Created new commission and base price structure for agents and distributors resulting in increased loyalty and increased revenue of 8%.
  • Re-engineered department systems to increase revenue and customer loyalty through increased efficiency in communications, administrative processes and product shipping.
  • Managed international sales force in Latin America and Asia Pacific regions (18 distributors / agents).

NUVIDA S.A. de C.V., León, Guanajuato, México January 1993 – July 1998

Owner–President–Entrepreneur

Served as President for start-up specialty service business, corporate and government clients.

Key Achievements:

  • Alliance between private industry, State and Local government to create and maintain 100-acre interactive ecological area – Parque Explora.
  • Managed workforce of 45.
  • First workforce in the State to receive State Certification (training and operations procedures).

FLOWERS FLOWERS INC., Evanston, IL, USA March 1986 – August 1993 Owner–President-Entrepreneur

Served as President for start-up innovative luxury consumer goods and service business.

Responsibilities included: strategy and planning, management, sales and marketing, purchasing and operations.

EDUCATION

Bachelor of Science Agricultural Economics * University of Illinois – Urbana, IL 1980

PROFESSIONAL ACHIEVEMENTS

Board Member, State Chemical Industry Export Committee, COFOCE, February 2007 – Present

Weblog: Business South of the Border August 2006 – Present

Weblog: Lee Iwan Accumulated Experience April 2006- Present

Business Development Mission, Chennai, India, February 2007

Chromium Industry Conference, Cape Town, South Africa, February 2006

Commercial Mission, New Delhi, Mumbai India, November 2005

Course: Finance for Non-Financial Managers, 2005

Business Development Mission: Buenos Aires, Argentina, 2004

Board Member, State Leather Industry Consulting Committee, COFOCE, 2000 – Present

ANPIC, Mexican Leather Industry Fair, Leon, Gto., Mexico, 1999 – Present

ISO 9001:2000, Certification Process, 2003 – 2006

Business Development Mission: Geneva, Switzerland & Moscow, Russia, 2004

Business Development Mission: Istanbul, Turkey, 2003

All China Leather Exhibition (ACLE), Shanghai, China 2002 – 2005

Guangzhou Leather Fair, Guangzhou, China, 2002 – 2005

Business Development: Geneva, Switzerland, 2002

Commercial Mission: Mexico – Central America, 2000 – 2002

Asia Pacific Leather Fair, Hong Kong, 1999 – 2005

Linneapelle, Bologna, Italy, 1999 – 2005

Commercial Mission: Mexico – China, 2000 – 2001

Business Development: Amsterdam, Holland, 2000

Business Development: Guatemala, El Salvador, Honduras, 2000

Miami Leather Fair, Miami, FL, USA 1999 –2001

Business Development: Uruguay, Brazil, Argentina, 1999

FENAC, Leather Fair, Novo Hamburgo, Brazil, 1999

Course: Mexican International Commerce Legislation, 2001 – 2004

Diploma: Modifications in the Mexican Customs Legislation, 2003

Diploma: International Commerce – Logistics, 2001

Diploma: International Commerce, 2000

Course: The Strategic Salesperson, 1999

Periodico AM, Newspaper Columnist. 1994 – 1996

Society of American Florists, Editorial Board, 1990 – 1992

Chicago-Dempster Merchants Association, Vice President, 1988 – 1990

Lee.iwan@gmail.com