As the focus on trade at the recent G20 summit in Argentina revealed, economies are now more globalized than ever. Companies based here in the US have interests all around the world; with supply chains in places like the Far East, colleagues in cities like London and research bases everywhere from Australia to the Middle East, there are plenty of connections between each node in the global economy.
But there are also downsides to global trade. Obvious issues, such as language barriers, can often pose problems (or at least create inevitable hold-ups) even if you’ve got translators or other professionals in place. And while exchange rates and other currency-related dilemmas can sometimes be a boon depending on how the market looks, they can also come back to bite you if the market reverses. This article will explore all those issues and more – and explain how your global deal can go as smoothly as possible.
Currency transactions
A major problem facing entrepreneurs and business leaders who are getting ready to strike deals abroad is the question of currency transactions. Whether you’re buying a product or service and need to change dollars into another currency or you’re the recipient of the money and need to complete the process in reverse, it’s inevitable that cash will have to be converted at some stage. If the dollar’s exchange rate is in your favor, there’s no issue,but if it’s not, you may have to either wait until the market recalibrates or simply swallow the cost. It’s worth looking at different brokers for your forex transfers, too, as sometimes you can be charged a high amount in commissions and fees. Shopping around for the best commission deal is one way to control the cost, so it’s well worth doing.
Rules and regulations
Every country around the world has a slightly different regulatory structure, and this can easily affect how your business deals play out. If you’re dealing in physical goods, for example, you may need to look at import and export rules. In the US, for example, there are rules around licenses: if you’re a broker you’re likely to need a license, but if you’re directly importing on your own terms then you won’t usually need one. And if you’re importing items regularly and systematically, you may want to seek professional advice from a lawyer who can ensure that you’re going about it in the right way.
Language and culture
Given that global business is obviously a cross-border experience, meanwhile, it’s no surprise that language and culture can come into play. The language of international business might be English, but that doesn’t mean there’s any guarantee that everyone you will speak to or come across will be able to converse in that language.
And with many emerging markets such as India and China growing in influence, it’s likely that as time goes on English may become less and less popular. As a result, you may need to factor in the cost of an interpreter (or even a team of interpreters) in order to ensure that there is no miscommunication. While this can be a significant upfront cost (especially if you require a translation service for a relatively specialist language, such as Russian), the costs of putting right any language-related breakdown in communication are likely to be much higher.
Political changes
Even the world of politics can impact on your global business experience. Take the most recent high profile example: US President Donald Trump has spent this year launching rounds of tariffs on China, and China has responded in kind. As either a Chinese or an American business leader, this could significantly affect your ability to import goods. And it may alter where you choose to go for supplies.While China may have once been cheap, for example, tariffs now might make it more expensive. So every time there is an election going on, it’s worth monitoring what the candidates say and making plans for a trade policy which might not represent your interests. Remember: forewarned is forearmed!
Striking deals with foreign firms aren’t something that’s simple or easy. You’ll need to take into account everything from foreign exchange transactions to regulations, for example, while even cultural and political factors can come into play. But by getting the right information and giving yourself some time, you can ensure that your deal goes through smoothly to the benefit of both parties.
