13 minute read
4 Expert Tips to Internationalize* Your New Business
Digital Trade from page 13
pandemic. These goods include soaps and other germ-killing products. The heads of state have agreed that these products must be given priority transit across borders, particularly in the case of landlocked countries. And second, the ministers of trade are exploring the possibility of
reducing customs duties on these essential
products so that they are more affordable to African populations across the continent. This would be a temporary measure to ensure that we have access to the tools we need to protect public health.
In terms of the long-term tools, it is our view that accelerating Africa’s industrial development objectives and Africa’s industrial development action plans is key to reconfi guring our supply
chains, establishing regional value chains, and manufacturing the essential goods that
we need now. This would also boost Africa to a higher value-added product and manufacturing capacity. The second point is a review of our intellectual property rights. We aim to assess whether our intellectual property regimes enable Africa to have a generic drug industry, which would ensure that we have access to affordable health care. This is also linked to whether a vaccine is found in the next 18 months or so. It goes through to the heart of questions around intellectual property rights. Finally, we are looking at the AfCFTA agreement itself (https://au.int/en/ cfta). As you know, many countries in Africa do not have the monetary policy space or the fi scal policy space to provide large bailouts that go in the trillions and trillions of dollars for economic recovery. Therefore, for Africa, the stimulus package is the AfCFTA, the implementation of this agreement. This is what will enable Africa to drive economic growth and economic development post COVID-19, by increasing intra-Africa trade.
www.un.org/africarenewal/magazine/july-2020/digitaltrade-next-big-thing-africa
Image credits: mastersofmedia.hum.uva.nl, World Economi Forum
4 Expert Tips to Internationalize* Your New Business By Bryan Janeczko
INTERNATIONALIZATION IS AN
AMBITIOUS but attainable step in any startup’s lifecycle. Once considered to be at the tail-end of a business journey, companies nowadays have the luxury of being able to internationalize relatively soon after they launch. The internet has been the biggest accelerator of startups establishing an overseas* presence faster, while the recent COVID-19 crisis has proven that there is even greater scope for small ventures to successfully branch into new markets.
According to a survey from Wells Fargo (www. wellsfargo.com), 87% of US companies are optimistic about expanding internationally for long-term growth. However, having the tools to expand, and knowing how to do it properly—without falling into legal trouble, failing to understand consumer culture or ignoring technological diff erences—are two separate things. If you rush into foreign waters unprepared and insensitively, you could jeopardize your existing success and reputation.
Here's how to internationalize your startup, with insights from founders who have done just that:
1. Size up your home market.
First things fi rst: Assess when to enact your internationalization strategy.
Conventional wisdom says you need to dominate your home market before you consider establishing a presence elsewhere. Previously, most investors considering funding your international expansion would fi rst ask you to prove that your company was successful in its current location. If you couldn't, you'd struggle to get the funds.
Nowadays, there is no longer a standard linear format to internationalizing. There are a number of startup hotspot countries and cities that make it easier to take a leap without necessarily dominating your domestic market beforehand.
Oswaldo Trava, Founder of InstaFit (https:// instafi t.com), notes that a key step is to "identify the
largest, ripest market." This especially rings true for founders from smaller local markets, like Israel or Sweden. Because the population size is relatively low and therefore limited, it can be worthwhile focusing on European or U.S. markets from the get-go. It essentially comes down to momentum— if you can get enough traction where you are now, focus on domestic growth. If where you're operating is too contained to make a big enough splash, consider going international from day one.
2. Get your legal, language, and logistics in order.
Some of the most common pitfalls when internationalizing are also some of the easiest to avoid.
On a practical level, you have to have a sound legal framework set up. Compliance should be one of your top priorities: you need to know and adhere to the local tax, data handling, and labor laws to ensure you don't face heavy penalties further down the line. There are plenty of useful online resources like Remote (https://remote.com) that can help you prepare for the legal regulations as you internationalize, however, speaking with a legal professional is most eff ective. The initial fee may dip into your startup's internationalization funds more than you'd like, but it's worthwhile to guarantee that you're growing a business on a secure foundation.
Gabe Zichermann, chief executive of Failosophy (https://failosophy.com), notes that almost every country has a foreign trade investment arm where foreigners can get extremely useful about internationalizing. These arms can be part of the consulate or a separate institute, and may have a number of locations. A quick search online should reveal the closest relevant arm to you*.
Another consideration is language. English is the dominant language when internationalizing, but of course, this can vary according to your majority audience. Whichever language you will be working in, you have to be extra sensitive about using native speakers to write your product or service description, UX, copy, onboarding, and general messaging. More than ever, users are hyper-sensitive to grammatical errors and if you merely copy and paste your content from Google translate (https://translate.google.com), you risk losing customers who may think that your brand is a
4 Expert Tips from page 15
scam. In fact, poorly-written websites and emails are known signs of cybersecurity threats.
Beyond legality and language, you also need to scope out the infrastructure of your new market. Assess what internet penetration is like, the level of digital literacy, and have a fi rm grasp of online user behavior in the country. For example, if you try to launch a video conferencing startup, you need to be certain that as you internationalize, your servers can support the surge of additional customers.
3. Match your pricing and payment options to your markets.
A big part of internationalizing is recognizing patterns in markets and accommodating them. Having a customer base and a valuable off ering can only be successful if you pave the way for people to seamlessly pay for your product. As Zichermann, puts it, "people have diff erent levels of ability and willingness to pay for things in diff erent countries."
Your pricing strategy has to therefore account for two things - appropriate pricing and appropriate modes of payment. While some markets may think $10 per month for a service is reasonable, other markets will fi nd it too expensive. Zichermann recommends using the purchasing power parity (PPP) tool (https://data.oecd.org/conversion/purchasingpower-parities-ppp.htm) to judge how amounts translate in other countries and understand, for example, what a basket of goods costs in the United States compared to Mexico.
Likewise, modes of payment should be dependent on what your target market is already familiar using. For instance, Latin America is predominantly cash-driven, China prefers Alipay and WeChat, the United States opts for credit cards, and Europe is weighted towards debit and credit cards. If you're serving small, niche groups, it'll be easier to tailor payment solutions to them, but if you're focusing on larger segments of the population, following local payment customs will remove possible friction at an especially crucial point in your user journey.
4. Internationalize your team.
Building an internationally-renowned business starts at home. If you want to make a brilliant impression as you grow, you need people on your team who are from a variety of backgrounds, with a variety of skills and local knowledge. These people don't have to be solely responsible for your internationalization strategy, but they can support your cultural bridge into new markets.
Ideally, bring people on board who are culturally competent in the places you're targeting - meaning, they speak the language, have worked in the location, and know local practices inside and out. For customer service roles in particular, these qualities will establish positive customer interactions and contribute to longer-term relationships because people feel that they are being understood. If you're a small venture with a restricted budget, internationalize your team using freelancers from LinkedIn (www.linkedin.com) and Upwork (www.upwork.com). These platforms are actually great to pin down people in your preferred markets, and if they prove to be valuable, they can become full-time employees at a later date.
Internationalizing your team should foster a more diverse culture in your startup, and encourage you to recognize diff erent norms and national celebrations from around the world. This type of openness not only increases your creative and innovative potential, it also puts your company in a stronger position to attract diverse talent and business partners, and continue growing across the globe.
A huge part of internationalizing is earning the trust of customers in new markets. Every location you enter should be treated as a separate and unique challenge, and you should be prepared to reset your business clock every time you branch into a diff erent area. What went well in a previous market won't necessarily jibe for another, but researching and reacting to those variations will make you a multi-faceted, successful brand. *African continental trade resource - African Continental Free Trade Area (AfCFTA) www.africancfta.org www.entrepreneur.com/article/356031 Image credits: www.amazon.com/wall-decor
World Trade Organization: How an African Head Could Make a Difference
THERE IS A GROWING feeling among African diplomats that someone from the continent should be at the helm of one of the world's top economic institutions.
Whereas an American has always led the World Bank and a European has always been at the head of the International Monetary Fund, an African has never taken an equivalent position.
But if one from Nigeria's Ngozi Okonjo-Iweala,
Kenya's Amina Mohamed or Egypt's Abdel-Hamid
Mamdouh emerges from the long selection process as the WTO's next director-general, the continent can feel that it is playing in the same league as the rest of the world.
The WTO sets the rules for global trade and adjudicates in trade disputes between nations. It is also, according to its website, supposed to "open trade for the benefi t of all".
The Geneva-based organisation's ability to get global agreements of basic principles that every country signs up to has been hamstrung in recent years but the WTO leader has infl uence and a bully pulpit. The directorgeneral attends G7 and G20 meetings and can broker disputes between world leaders.
But is there more to be gained for the continent aside from the diplomatic profi le?
Though the director-general's role is primarily one of an administrator, an African leader could help ensure that the interests of the continent are taken into account in WTO activities.
Trade talks may seem esoteric and take place behind closed doors, but their outcome can aff ect everyone's lives.
From the small trader who crosses a border several times a month, to the consumer buying an imported item in a market, to someone with a job in a manufacturing Ngozi Okonjo-Iweala - Nigeria
industry: they are all aff ected by the rules of trade.
In Africa, trade is viewed as a driver of growth, a way towards sustainable development and as a tool for poverty eradication. "Foreign aid will not do it for Africa. Like everywhere else throughout history it is trade," says David Luke, head of the trade policy centre at the UN's Economic Commission for Africa. "So ordinary Africans will understand that an African heading the WTO shows we are serious about trade."
Africa-wide free-trade area
Ms Okonjo-Iweala, a former fi nance minister, told the BBC that it was the ordinary African that she was most concerned with.
She said that she wanted to "fi gure out how to get women and youth, who are behind these engines of growth in Africa, to benefi t more from world trade".
She was also keen to make sure that the continent moves away from exporting raw materials and instead "adds value to the goods or products we produce for the global market. "For instance, we import 94% of pharmaceuticals on the continent while we can produce these locally in Africa."
Ms Mohamed, who has served as both trade and foreign minister in Kenya, told the BBC that she can bring a "fresh perspective" that was "broad [and] inclusive" to the job.
But she did not want to be judged "just as an African leader or a woman leader, but as an experienced leader [and] a consensus builder".
Amina Mohamed - Kenya
Abdel-Hamid Mamdouh - Egypt
WTO from page 17
On his part Mr Mamdouh, who has been negotiating on behalf of Egypt at the WTO since 1985, said his vast experience at the trade body will enable him to see how it can help the continent further. "My agenda for Africa would be to integrate Africans more into the trading system," he said. "I will also call upon political leaders in African countries to pay particular attention to their trade policies."
But implicit in this answer is that though the WTO's director-general can lobby presidents, he or she cannot force them to act in a particular way.
Nevertheless, when it comes to helping realise Africa's big trade policy - the African Continental Free Trade Agreement (AfCFTA) - the WTO head could play a role.
The agreement, the implementation of which has been postponed by coronavirus, hopes to establish the world's largest free-trade area. "This will ensure more high quality products out of the continent, thereby, putting more money in people's pockets and helping to eradicate chronic poverty," trade expert Mr Luke said.
The rules and aims of the AfCTA are compatible with those of the WTO, and an African leader of the trade body could help steer it towards more support for the continent. That could be in off ering technical help, trade analysis and policy expertise, turning the dream of free trade across Africa into reality.
But just as Africa is now moving towards a freer trading environment, the rhetoric of protectionism in other parts of the world appears to be on the rise.
Mediating US-China trade row
The trade war between the US and China, and US President Donald Trump's America First policies seem to be turning the tide against the belief in free trade. Restrictions imposed because of coronavirus have also aff ected the free movement of goods.
Furthermore, the US' refusal to approve appointments or re-appointments to the WTO body that hears appeals against the organisation's decisions has thrown this key part of the trade body into crisis. It also threatens to undermine the WTO as a whole.
Its eff ectiveness in establishing new ground rules that all countries can agree on has also been challenged. In 2001, the WTO launched the so-called Doha round of talks, which was supposed to draw up new arrangements to help developing nations.
But the negotiations failed and were essentially killed off more than a decade later.
This is the context in which the next leader of the organisation will take offi ce in November.
Given that, the immediate task of the new directorgeneral will be to shore up the WTO and restore faith in the organisation.
It will need to be a determined fi gure regardless of where they are from. If one of the three Africans succeeds in the race to become WTO boss then eff orts to help the continent may founder if he or she fails to strengthen the organisation. www.bbc.com/news/world-africa-54058640 Image credit: Getty Images
