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March 16, 2009 

 Should You Hire Uncle Sam or Not For Your Firm to Grow Globally? 3/16/2009
The mission of Going Global, which appears on MidwestBusiness.com on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO – The U.S. Department of Commerce blows me away. They do more to prepare their trade officers for promoting American companies abroad than many other organizations I know. They provide extensive language, cultural and business training, which is much more than most businesses do.

In some ways, I wish I would have pursued a foreign services career to take advantage of all those benefits. Instead, I’m afraid I’ve disqualified myself. Since I’ve worked for a foreign government (regardless of how foreign Canada is), I can no longer aspire to that career path.

Governments do their best to help their constituents, and in some ways, they provide some real value. But beware because too many uninitiated and aspiring international businesspeople have depended on them too much and have been very disappointed.

I was working a number of years ago with a sportswear manufacturer that wanted to expand internationally.

The client heard from a friend that the U.S. government programs were great and was told he should use them. For some reason, my client was hellbent on following his friend’s advice. We decided to exhibit at a trade show abroad, and against my advice, they contracted with the U.S. government for them to arrange meetings with potential distribution partners.

After many assurances that they were fixing us up with potential partners who met the exact descriptions we’d specified, we narrowed it down to a (by this point former) distributor. After meeting him and then follow-up conference calls after we returned to the U.S., it turns out that all this supposedly best-qualified partner ended up wanting to do is design hats.

The lesson is that the government organizers have little accountability for their programs. They don’t share in the success if they make a good match and they suffer few repercussions if it doesn’t work out. They rustled up some warm bodies who were tangentially related to what we were seeking and let it go at that.

A few months ago, I was on the phone with a prospect from another state who informed me his firm was participating in a government-organized trade mission as their first foray abroad. They are a HR technology services provider and the government was taking them to Saudi Arabia. I was somewhat taken aback because Saudi Arabia is not one of the first destinations I would choose to recommend for many clients.

If you’re simply seeking prospective clients or partners with lots of money, then you can probably find them there (especially with oil and hence gas prices where they were in 2008). But doing business in the Middle East is vastly different from doing business in the rest of the world. Many markets are much better cultural fits. Decision making is very dissimilar to that with which we are accustomed.

Translating user interfaces into Arabic can be much more challenging than other languages. The mission organizers have spots to fill. They’re not organized with the best interests of all the participants in mind. Their interest is in simply making America and the particular politician leading the trade mission look good. They’re not concerned about making any long-term connections.

Their role is to just create the opportunity. Does that mean companies should always go to English-speaking countries first? Not necessarily. But jumping on the bandwagon just because it’s leaving also doesn’t always make sense.

I contacted another government bureaucrat on behalf of a client and explained about this particular client’s technology. While she knows little about technology solutions, she wasn’t impressed. Though we requested her help in making some introductions, we were in effect stonewalled. She made an arbitrary and uninformed decision about the viability of this client’s product.

Based on that decision, we were denied the use of the services of the U.S. government.

We pay taxes. We’re entitled to just as much support as the next guy. Still, she created a barrier denying us access that should have been open to us. They make these decisions because they can. They’re in a position to assist those they choose to assist and not serve those they don’t choose to serve. Sure, you can ask for their help, but that doesn’t mean they’re going to answer.

Governmental organizations can be very inconsistent as well. The state of Illinois has had a virtual amoeba of a foreign service organization that expands and contracts on the whims of the current head of the state. When he was governor, Jim Thompson expanded to many cities throughout the world. His successor (Jim Edgar) dismantled most of that network.

It has vacillated back and forth a couple times since then. If you ask for the services of an office in one country in one year, you might not be able to go back to them again the next year.

On the other hand, there are some great benefits to working with governmental organizations to help your business grow globally. Some foreign-based trade officers are very connected and can make introductions to great contacts. Some locally engaged workers know their industry sectors very well and can be a great source of information and connections.

In most of the rest of the world, government officials are more highly respected than businesspeople.

Introductions with their help can be doubly advantageous. As their programs aren’t expensive, they’re therefore less-risky investments. In some cases, though, you still get what you pay for. The dilemma is you don’t know who is good to work with until you’ve worked with them. That takes some trial and error. You are often restricted to only approaching one market at a time, which takes more time.

The difference in the level of service offered by foreign officers based in different countries varies greatly, and unfortunately, there are no standards. Some work long and hard and focus on making connections for their constituents. Others punch the clock, write some semi-informative reports and call it a day. The only way to figure it out is to give it a try.

Some Americans are under the impression that foreign governments can be helpful in helping us export to their countries.

Perhaps in product-starved countries (of which there are fewer and fewer these days) they will, but in my experience, that’s usually not the case. Foreign representatives are happy to take your money in foreign direct investment in their lands and give you many reasons why their country is the best place to put it. Their role is to help their countrymen and women export their wares here rather than to help us sell our wares there.

By simply building these relationships and helping Americans export to their countries, I’ve met a few enlightened foreigners who recognize that they will gravitate up to investments (starting with sales offices that grow into distribution centers, etc.) as sales of U.S-based companies in their country grow. These far-sighted individuals are the exception rather than the rule.

Foreign trade officers are government workers. This means what they do is political and politics is different from business. While they may be some of the best-educated, well-spoken and polished individuals you’ve ever met, don’t expect them to be well-versed individuals in business. Most have no experience and still think they could excel at it if they so chose. But they can’t.

They fall into the same traps as our government workers do in protecting jobs at home. They need to touch a lot of people in a small way and they can’t work with you deeply. Leverage their resources to your benefit as best you can. The bottom line is don’t put all of your global eggs in their basket and trust all your business in new markets with people who don’t have the same interest in it as you do.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at muth@midwestbusiness.com.
Click here for Muth’s full biography.

Previous Columns in 2007:
Q&A: World Trade Center Illinois Chairman Neil F. Hartigan, Director Bilal Ozer (3/3/2009)
Recession: International Causes, Effects of Today’s Global Financial Crisis (1/19/2009)
Q&A: Ex-Chicago Tribune, ‘Caught in the Middle’ Writer Richard Longworth (1/5/2009)
Q&A: Midwest Regional Director Michael E. Howard of Export-Import Bank (6/17/2008)
Q&A: Intetics Managing Partner Alex Golod on Belarusian Economy (4/15/2008)
Q&A: Intetics Managing Partner Alex Golod on Protecting Intellectual Property (4/9/2008)
Q&A: Intetics Partner Alex Golod on Being a Jack of All Trades (3/31/2008)
Q&A: Motorola WiMAX Director Tom Mitoraj on Unstoppable Freight Train (11/26/2007)
Q&A: Motorola WiMAX Director Tom Mitoraj on Global WiMAX Differences (11/20/2007)
Q&A: Motorola WiMAX Director Tom Mitoraj on Widespread WiMAX Growth (11/12/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Translation Tools, Costs (9/18/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Globalization, Translation (9/11/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Intercultural Translation Issues (8/7/2007)
Q&A: Madison Capital Partners CEO Larry W. Gies on Specific Country Issues (7/10/2007)
Q&A: Madison Capital Partners CEO Larry W. Gies Jr. on Cultural Differences (6/26/2007)
Q&A: Madison Capital Partners CEO Larry Gies on International Private Equity (6/11/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Foreign Deal Making (5/15/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Middle-Market M&A (5/8/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Middle-Market Firms (4/24/2007)
Q&A: George Filley of NAVTEQ in Chicago on Data Localization, Reach (3/27/2007)
Q&A: George Filley of NAVTEQ in Chicago on Partners, Personal Privacy (3/20/2007)
Q&A: George Filley of NAVTEQ in Chicago on Digital Mapping (3/7/2007)
Click for 2006 column archive.
Click for 2005 column archive.
Click for 2004 column archive.

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