Common mistakes businesses make when entering a new country

Bruce Alan Johnson

Bruce Alan Johnson is regarded as one of the world’s leading authorities in global business strategy. Alongside his time served in Washington, DC, and in diplomatic roles in Geneva and Nairobi, Bruce has served as Director for the Washington International Trade Association, Senior Fellow at the Hudson Institute and Vice President of Worldwide Affairs for Hill & Knowlton, whilst his consultancy firm, BAJ Associates, have helped some of the world’s largest brands develop their global strategies for entering new markets. Bruce is fluent in 5 languages, has been a keynote speaker in 25 countries and is frequently featured in the media for matters relating to international business strategy.
As the world becomes smaller and technology enables growth at an unprecedented speed, it’s easy to forget that successful global strategies are still based on an understanding of people and culture. We spoke with Bruce to find out about some of these key traditional principles and to understand how important they are in 2016.

How difficult is it for companies to enter new markets in 2016?

About 75% of attempts to enter new global markets fail. That tells you how difficult it is. Some of these failures are perhaps inevitable, but most arise because the company has made simple mistakes in the planning and execution of their expansion strategy.

What are some of the most common mistakes these companies make?

1. A tendency to undervalue human relationships

In this world of technology, it’s easy to forget that business is still fundamentally about people. This is particularly true when you are attempting to enter a new market and need to build the necessary relationships with local partners and government.

“In this world of technology, it’s easy to forget that business is still fundamentally about people.”

2. Failure to respect the local culture

Companies stick their flag on their back and march into their target country expecting everything to be done the way they’re used to. They invest far too little time in learning about the cultural and social complexities of the country, and then they pay the price. Even within the western world there can be significant variation in what’s acceptable, but in Africa, the middle East and Asia the cultural differences are vast. You simply must invest time learning about these differences before you get on the plane.

3. Neglecting the government

Most companies want to avoid government but that’s the first connection you should be looking to establish. After all, it’s either going to be either a great help or a great hindrance so best that the relationship is managed proactively from day one.

People often neglect the government as they believe they don’t have the necessary contacts but it’s really not that complicated. You just need to pick up the phone, call the high commission or a local minister and explain what you are doing. Nine times out of ten they will be only too pleased to help you secure the right appointments, but you have to focus on why it’s of benefit to their country. Will you be creating jobs or transforming one of their sectors? Always keep your explanation succinct and avoid technical jargon.

4. Attempting to get everything their own way in negotiations

A mentor of mine once told me that in every negotiation you should always leave some money on the table. Be truly fair minded. I actually think this is great advice for business in general, but it’s particularly pertinent when entering new markets. If you insist on getting everything your own way then it will leave a bitter taste in the other person’s mouth and they will have no interest in offering further help when you later need it. Business is all about trust. And, through your attitude and actions, showing respect for the other side is how one establishes this trust.

“A mentor once told me that in every negotiation you should always leave some money on the table.”

5. Discussing inappropriate subjects

Many cultures are far more sensitive to certain topics than you may be used to, so just don’t take any chances. Definitely avoid mention of religion, sex and alcohol, and also be careful about discussing the history between your countries. What may be of casual interest to you could be of deep sensitivity to the other person.

6. Failing to let the local partner take the lead

This is one of the most common and significant mistakes of all. No matter how much you attempt to learn about the target market, you will never be able to create and execute the strategy alone. You need a partner within the country who can help identify your target market, design a strategy to reach it and help navigate you through the day to day cultural and legal complexities. This partner should be telling you what to do, not the other way around.

7. Not bothering to learn any of the local language

It is an absolute falsehood to say the entire world speaks English. Even if someone does it’s going to be their second, third or fourth language. You must therefore speak slowly and clearly, and ensure you learn something of their language, too. Words can bridge human hearts. Just the attempt to say something in the other party’s own language, no matter how simple, will make the person smile inside. The fact you went to the trouble tells them that you respect them and respect transcends everything.

“It is an absolute falsehood to say the entire world speaks English.”

If you had to sum this all up in one word, what would that be?

It would be humility. When you enter a new country you have to assume that you know nothing. Build relationships with all the people that can help, both within government and industry, make them know how grateful you are and show that you’ve making an effort by learning some of their language and culture.

What are the best ways to find local partners?

You can speak to the high commission or local government, but ultimately this is where you may need some help. It is an area where my firm assists lots of companies but there are lots of great advisors out there. It may require an investment but they will eliminate so much of the guesswork and ensure you find the right local partner.

Which are the most exciting countries and sectors that you feel ambitious companies should be looking at?

So much of the developing world is perfectly placed for innovative companies to enter and make their mark. Almost all of Africa is hungry for technology, and the same can be said for the likes of Myanmar and Vietnam. However, it isn’t all about technology. I would argue the most neglected sector is agriculture and anyone that is able to help countries boost food production or conserve water will find governments lining up to do business with them.

“So much of the developing world is perfectly placed for innovative companies to enter and make their mark.”