„I don’t know, Mr. Lange… Do you really want to keep it on for the meeting with the Americans?“

Confucius spoke of three ways for people to act in an intelligent manner: the first and noblest is to take the time to reflect; the second and easiest is to imitate; the third and most bitter for being the most expansive is to act according to one’s own experience.

Human beings are surely capable of learning but are we also ready to learn from our experiences?  I do have my doubts when I see what is going on in everyday business.

That is why I invite you to take at least a short look at the following ten glocal game rules, which I have always tried to keep in mind in my many years of experience. More than ever, the most successful international companies are the ones which enter the exporting country with a global vision while also using glocal strategies. Bear in mind that potential clients increasingly wish for individual products and services as opposed to a product which is sold everywhere and does not meet their local perceptions.

1. Think global but act as local as possible. Take therefore enough time to work on the target market:
   Nothing is more dangerous than letting yourself get blinded by your success in your home market; the export market will require time before you gain an understanding of it. A shopping center is not a shopping center right away and consumers’ shopping habits are not the same everywhere.
2. Act as glocal as possible:
   To act as an internationally successful company is not necessarily wrong, yet without the right local touch with, for example, local employees, you will not be able to achieve a successful market entry. Expatriates are in my view no longer up-to-date as fierce competition requires having a deep understanding of target markets, and target markets are in the end people. Or would you actually want to reach trustful agreements with the Polish city administration in Spanish (universal language)?
3. Surround yourself with local partners:
   Speaking foreign languages is a good thing but you will not get the between-the-lines nuances if they are not a native speaker. With a 1.500-word English vocabulary, one comes across as limited, and therefore trust will be very slow to build.
4. Sell your products and services as if they were local products:
   Even globally-operating car manufacturers adapt their products locally. Just think for example of which side of the street people drive on, or if the honk has to meet higher requirements in India than in the German home market. All the same, the Berliner beer Schultheiss will not be marketed in Southern Europe with the advertising slogan “Dit is n Einkoofserlebnis!” (“What a shopping experience”, in Berliner dialect).
5. Consider the regional, cultural environment and the local conditions:
   Whether a matter of mini-skirts, alcohol or pork, a blunder is just around the corner! But success lies sometimes in very small details: just an inappropriate speech or greetings to clients can quickly lead to misunderstandings: informal or formal address or a simple bow?  When in Asia, have you thought about paying your respects to the entrepreneur’s father in order to get his consent to the business relationship?
6. Respect local laws:
   Not only labor legislation can make your life difficult or plain impossible, the legal foundations for franchises in Europe also greatly. Without thorough knowledge, nothing can be done.
   Contracts with agents must be concluded according to local requirements. The risk for you to suddenly have an employee and therefore unknowingly evade taxes and social security contributions is simply too great.
7. Take your local competition into account:
   Look closely at your local competition and their sales strategies and you will start to understand the market. For instance, why can the balance sheet of a Portuguese company only be dealt with by a certified accountant (TOC)?
8. Don’t do it alone:
   Why doesn’t the competition in Spain sell tobacco in supermarkets? Watch your competitor. He will gladly explain how things are done. Even better: if you cannot beat him, work with him. Both “never walk alone” and “if you can’t beat them, join them” are very valid in my view.
9. One market at a time:
   Just to mention two classical misleading statements: 1. “Spain and Portugal are for us one single market, which we serve from the same office” 2. “Prepare a list of the African countries we want to start working in next year”.  Each market has its own game rules and more than one assignment of this kind should not be expected.
10. Don’t look for instant success, think long-term:
    Rome was not built in one day, and I’ll add to that: I have nothing against quick successes and profits but the likelihood is still as high as winning the lottery. In the beginning, investments are inevitable, necessary and important, and if you start getting profitable after three years, I will congratulate you profusely.

Whether you have just browsed over the article, scanned it, read it with a colleague or thoroughly read through was your decision. I would hope for the latter one in consideration for your future success.

Africa’s improvement is due, among other reasons, to better governance; as opposed to what people imagine, currently only 5 out of 54 African countries are dictatorships.

In November 2012, the Institute of International Finance (IIF) reported that the African growth is not a dream but a reality due to the fact that the African economy has been in constant growth for a decade. All studies show that this year’s growth rate will be 6%.

According to the World Bank’s report Doing Business 2014 published in October 2013, ten African countries are among the “Top 100” countries with the best economic perspectives and facilities to invest (four of them are among the top 50). It should be noted that according to the report, no European Union country are among the top 10.

Other reports (BAD, PNUD, CEA) highlight the youth of the African population, market growth, the necessity for services and products for a growing middle class and the need for innovation for a new model of inclusive and sustainable economy.

There is much value to these macroeconomic markers, as one should not forget that most Western countries -considered until recently the engines of the world economy – are currently weak.

Africa’s improvement is due, among other reasons, to better governance; as opposed to what people imagine, currently only 5 out of 54 African countries are dictatorships. The African economic unity is still far from the European one but plans have started to shape, as for example, the Africa 2063 plan for the improvement of the connections among African countries.

Western countries keep subsidising programs to help development, which in five decades have served all purposes except development. China and generally all Asian countries – especially Korea, Taiwan, Japan and India, but also countries like Bangladesh – strive for an egalitarian relationship with African countries and businesses, something the Anglo-Saxons call a win to win.

On the other hand, sociocultural barriers and administrative hindrances are nowadays a big obstacle for African entrepreneurs and their new world partners. We should ask ourselves whether these obstacles are insurmountable. The answer is absolutely not. Communications between Europe and Africa have improved substantially, countries are much more stable and the previous study and knowledge of the country give managers a less traumatic adaptation. In addition, executive training in European business schools allow the creation of local teams, which facilitate business with local companies. Moreover, for a Spaniard, the selection of countries in the Portuguese area of influence will make for a much faster adaptation.

Another common mistake when analysing Africa’s potential is to put all countries in one bag. Today, Angola, Ghana, South Africa, Cameroun, Ivory Coast, Benin, Botswana or Namibia are stable countries and with GDP growth similar to China or India. So much so that in 2011, Jim O’neill included South Africa in the group of emerging economies, coining the acronym BRICS. In these countries, sectors like agriculture, education, healthcare or infrastructures hold a very important development potential.

In some countries, certain sectors are already mature such as for example tourism in Kenya, Tanzania and, since recent times, Sudan. Why would Africa not take off in other sectors and other countries? Why can far away China negotiate in Africa and the close-by Europe cannot? The decision lies in our hands as in Africa everything is up for proposals and ideas.

Divaika Kiemba Dina
Coordinator for African in Adminex and President of Centre Euro Africa

Taxes: like a sword of Damocles, they hover over companies

Taxes: like a sword of Damocles, they hover over companies; like snakes, business leaders freeze when faced with their complexity; like disasters, their avoidance is often declared as one of the central business objectives!

Indeed, we don’t have to pretend: the tax burden is increasing, as is the complexity of tax regulation. Tax competitiveness between states does the rest, in particular since national laws have been and are being adjusted according to international tax optimization options (read: tax avoidance).

As a result, one can see increases in uncertainty, in grey area tax avoidance strategies and in tax evasion. These consequences are being accompanied by a cost explosion for tax firms which often have to explain to out of their depth fiscal authorities what the international tax situation is like. Even when no taxes are due, the costs for those advisory services are born by the company. Politicians and fiscal authorities are never held accountable for their mistakes after all! Certainty for investors looks different!

However, to me the most depressing aspect seems to be the situation of the large mass of mid-size businesses that are the back bone of business after all! According to my estimates, these represent over 90% of all companies (with up to just 10 employees). These firms are not only simply unable to cope with the complexity but are also unable – unless they are set up internationally – to even participate in the international tax competition.

Of course I could “just” demand the simplification and harmonization of at least corporate income tax, wage tax and value added tax inside the European Union. But I am fully aware that, on the one side, I cannot change anything and that “only” Europe is not enough, and that, on the other hand, politicians won’t accept such a perceived disempowerment.

What remains for me and entrepreneurs, who never participate in demonstrations, is to point out those glaring problems more or less loudly, but certainly with insistence. Harmonization and simplification of the tax system will, in my opinion, not only improve transparency, decrease costs for both companies and the state, as well as increase tax honesty, but will also increase the credibility of the taxation system.

To me, this basic message is most accurate as, generally speaking, much more can be achieved by pooling diverse strengths together than by operating alone. And a most important one as well because as a business owner, that way, you send out the clear message that with team spirit a lot more can be achieved than with single, genius soloists. And to remain in the football field: why does FC Barcelona or FC Bayern Munich generally offer much better football than the Spanish or German national teams respectively, despite the fact that the majority of the players is the same. The reason is that they are not just a well-integrated TEAM, they stick together and have to do so every day.

Let me describe my x-ray vision and have a closer look at internationally active businesses. Why are some growing more than others and why are some a lot more profitable than the rest?

First, it is clear to me that companies that work on the basis of a consistent brand approach, team work and a multinational cooperation are a lot more successful. And let’s be realistic: it is just as clear to clients who are 10.000 km away, and with the same consequences.

That brings me to another factor, profitability. In my view, the most profitable internationally active businesses are the ones with the best local setup in the export country. When I really want to inform myself about another country, direct local knowledge is necessary to remain competitive. It sounds admittedly somewhat martial but the information value of my respective local network (whether Aleksey in Ukraine, Gabriel in Sao Paulo, Keisuke in Tokyo, Iwona in Warsaw or Vikal in New York) is almost always a lot more compact, realistic and to the point than what the Internet can tell me.

Going back to the FC Liverpool anthem, with just hope in the heart you cannot achieve anything, or as my father would keep telling me:  you can’t get something from nothing.  That is why everybody should build his own glocal network. Our glocal Adminex partners meeting in Cologne at the beginning of April will give us such an opportunity. Our partners are welcome to come by, with no strings attached and free of cost, introduce themselves and ask questions.

In this context, my glocal regards to all of you.

In a global world, which is fortunately slowly but surely growing together, there are nevertheless a few recent trends that concern me as they have more to do with separation and distance then mutual understanding and collaboration. Catalonia and Scotland want to isolate themselves, populist politicians are catching votes in Europe using xenophobe slogans, and even Switzerland has just voted in favour of limiting the access to foreigners. And in Germany, the fear of Romanians, Bulgarians and East-Europeans is being fuelled.

In that light, I no longer really understand the world as it seems schizophrenic to me: on the one side, we would like to drive German cars, drink French wine and English whiskey, wear Swiss watches, and eat Chinese or Indian food while also needing care givers for an aging society. And what is the reaction? We keep the barriers in the European Community high so that no work force come in, and impose non-European products with a great amount of separate customs duties while simultaneously subsidizing the domestic industries, which is not an exclusive European characteristic.

I don’t think that I am deluding myself when I think that without my central and East-European colleagues, I can just as well close down our plant in Germany. You can also simply ask around in Novartis or Roche in Switzerland about the percentage of their foreign workers. First you will not believe it and then you will be amazed!

Or just try to obtain a visa for an international colleague for maintenance work or a business meeting. I promise you that, rather than disbelief, you will feel great anger at how much energy is wasted by the states in order not to grant you any visa or only when it is too late. One of my female colleagues got almost stuck in the Middle East because her visa expired due to a late flight arrival. And it was all just for a one-week business stay in New Zeeland! (Here our gratitude goes to the Spanish consular officers for handling the issue unburocratically and at their own risk!!).

In my activities I am always and everywhere a foreigner, and thus RESPECT is definitely my approach of choice. That is why I am a strong supporter of TOGETHER and not of SEPARATE, even when this often means that the pay off will only come in the long term.

In that sense: let us strengthen the TOGETHER.

After six years of crisis, Europe is back; slowly so, but back. The euro has survived, the first structural measures have been implemented, the economic indicators are showing a light growth for next year and trust is quietly recovering. Not that all is now resolved, but…

The situation in the fast-growing emerging countries is not what many businesses from these markets were hoping for either. First, because these markets also need time for their development; second, because they too have to consolidate their growth; and third, there as anywhere else, is not all just about free trade. In short, there as well, all that glitters is not gold.

In the so-called BRIC countries, and for a series of reasons, any kind of production is not exactly made simple: trade barriers, poor quality of produced goods, just-in-time delivery made unrealistic by long delivery channels, some corruption, and last but not least, cultural barriers which greatly raise costs and do not match the immense expectations of the end client. As a result, many businesses are find themselves attracted again by Europe’s relative political and economic stability. On these grounds, Europe is considered the lesser evil.

Simultaneously America’s economy is rising; a country which has always been closer to Europe for cultural reasons, trusts more its institutions and also prefers to build on the long-standing connections with the Old Continent.

Even the Asian economy is leaning more towards Europe, in part conditioned by weakened exchange rates – like in India’s case – and in part by strategic reflections. This demonstrates that some of the old European industries are still setting the standards for the rest of the world. However, Europe also shows a divide, especially in regards to investors.  On the one side, there are solid industries, infrastructures and reliable institutions in Central Europe, on the other side, you see weakening states with less productivity, mostly in the South.

In our context of shrinking margins and higher cost pressure, these arguments weigh twice as much. That leads, in my view, to a London-Frankfurt-Zürich axis, where and which determines the central decisions and which the non-European investors also have to turn to. We will have to face these changes, whether we like it or not.

Yes, I do believe that Europe is coming back but I also think that so will the crisis if we don’t push for more reforms. Unfortunately at the moment, Mrs. Merkel is setting a rather poor example. For all that, and as a precaution, I am preparing myself for a long-lasting crisis, that is, for lasting and quick changes in the market circumstances.

I have had the opportunity to take part in the Catalonian Telecommunications Diada (National Day), organised each year by the Catalonian College of Technicians and Technical Telecommunications Engineers (COETTC), on a talk together with executives of Vueling, LetBonus, Fundosa and Plasticband, where we analyse the company growth method on a complex environment such as the current one.

The rest of the lecturers belonging to different sectors – Internet, aviation, industrial and services — it is outstanding that all of them coincided on the fact that one way to face the crisis is close management, controlling all details, to be able to introduce improvements in all circuits and to adjust costs as a result of the rationalisation and introduction of innovations in production. Quality is the key for a company to leave crisis and to start a growth stage.

Nowadays, internationalisation is a way of escaping for companies.

In Spain, many people believe that only companies from countries in crisis, such as the ones of the South of Europe, have headed for internationalisation, taking advantage of the improvement of competitiveness due to reduction of labour costs. Nothing could be further from the truth, in Germany, companies have launched into the tackling of Russian and Asian markets as a commitment to the future.

Internationalisation is not a cheap process, neither in time, nor in money, and results are not immediate. On the other hand, internationalisation by means of the purchase of companies is not always a success, especially for familiar SMEs. As for the internationalisation by the acquisition of companies, it is complex because it implies adding to the complexity of the process, a merging of different business cultures.

In acquisitions, on most occasions, staff of the acquired company falls into the binomial of discouragement and demand of labour and monetary improvements. Organic growth is much healthier and does not oblige to an extra financial effort by the purchasing company.

Thus, companies that internationalise must go for contracting local staff of the country in which they are implemented, but also staff from the countries with which they are going to have relationships; clients grow and their loyalty is encouraged if you talk to them on their same language. In order for a German, Spanish, Chinese company or company from any other country to triumph abroad, we must have the idea that it is a local company which is going out to the external market.

No, he answered, he hadn’t any experience of those markets, but he had serious inquiries, even if so far he had only been to France for holidays. But without doubt, he added, the future lies in a strategy for internationalization, as wasn’t it true that there wasn’t much to gain in national markets anymore? Correct as his analysis was, I slowly started to realize that I had to carefully explain to the client that he would have to concentrate on just ONE new market first, and for his own good, a relatively close one.

So I started my next question by asking whether he or his management team spoke French, Spanish or Arabic, a fact which he shouldn’t belittle. A further question of who he would contract as regional managers within these countries, brought him back to reality, and now the client asked me with disarming honesty: What do you think: France or Dubai?

No question. Even for a larger European SME, France is an important market not to be overlooked, but the risk can also be easily overlooked, without even thinking about cultural differences. Consider that France is a European neighbour with many peculiarities and endless possibilities for failure, if one does not respect local market characteristics.

Taking into account that you want to avoid the mistakes made by others, you look around for strong partners who are already present in those countries, act globally and have experience in the export market. At the same time you still have to solve the issue of finance, so you consider approaching the international banks, which are present everywhere.

Along those lines let me share with you an experience, which repeats itself like a long-running show at the theatre.

Mid 2005 the first signs of the end of the real state bubble could already be detected in the Spanish Real Estate Market. Some of the bigger players in the market realized quickly that looking towards new markets would be the right thing to do. Eastern Europe appeared underdeveloped and full of opportunities not to be missed. To make it short: quite a number of companies decided to go East and the best place, due to volume seemed to be Poland. They identified the banks as strong partners, for their ability to finance the projects and their Know-how in mortgage products, project finance and currency risk management. So far, so good.

Participating in the “Spanish Day” in Warsaw in 2007 – clearly before the Financial Crisis, you could already note the frustration and disappointment of the parties involved. In fact they had correctly identified the opportunities of the market, but ignored a series of fundamental (soft) facts, which led to a dance with disaster.

1. In Poland like everywhere you have to deal with human beings. Just writing big cheques won’t bring the success

2. The costs in Spain might be divided as 80% for land and 20% for construction, but nobody told them that in Poland the game goes the other way around. In other words:
Spanish Real estate developers spent too much money on acquiring land with nothing left for construction cost itself.

3. Real Estate projects follow other local rules, which means building approval of final projects depend on criteria like hours of sunshine entering the window!

4. The required quality of the construction work as well as differing weather conditions add some unexpected challenges.

5. Negotiations and cooperation often mean another big hurdle to be managed due to big cultural differences.

Talking to the bankers I got the feeling they weren’t really aware of these conditions and that they were selling credit instead of giving relevant information. They didn`t understand it would have been good to do so for their own sakes.

Having said that, I wrongly believed they would have learnt the lesson, but they simply drew the conclusion that Poland was the wrong market.
So we met the same players again in Romania and later in Ukraine, still not surrounding themselves with local specialists. To know that you know nothing seems to me the best way of learning, even if you do need quite a sense of modesty.

But maybe it’s me who is wrong and we are not talking about the construction sector, but simply about real estate speculation in which everybody enjoys participating?