martes, 8 de julio de 2014

BRICS y compañía

A continuación posteamos una nota  de David Thomas  aparecida recientemente en el sitio web: Bric Expansion (www.bricexpansion.com). Particularmente interesantes relsultan los gráficos que la ilustran. Sobre todo, en nuestra opinión, el primero y el último. Acá va todo, nota y gráficos. A ver qué opinan.

Título: Surf where the big waves are! – by BRIC Expert David Thomas

Texto: In the next decade or more, and certainly within this century, multi-national companies will become increasingly engaged with the “BRIC” countries (Brazil, Russia, India and China).
These ambitious and large countries, with big populations, rapidly growing economies and low levels of debt, offer a ray of hope and optimism amongst the gloom and doom being experienced within the economies of Western Europe and the USA.

If you re-draw the world map in terms of the availability of land, population and capital, the natural advantages of the four BRICs paint a dramatic picture which, if not already, will soon be occupying the minds of Board Directors, Business Leaders and Entrepreneurs

The challenge for companies is measuring these opportunities against the risks associated with capitalising on them. This article considers three types of risk particular to all companies seeking to do business in the BRIC countries.


Corruption Risk

The risk that garners the greatest amount of media attention is corruption. The chart below is Transparency International’s Corruption Perceptions Index (CPI) 2010. The index ranks countries accord to the perception of corruption in the public sector with consideration of the frequency and size of bribes.

While the BRIC countries are perceived to be more corrupt than more developed markets, this is not an indication that corruption is better tolerated in these countries. On the contrary, some countries have stricter penalties and broader laws.

China, for example, prohibits bribery in a commercial and official capacity. It is also a jurisdiction which practices capital punishment. So, before doing business with any foreign country, it is essential for the board, managers and employees to become familiar with the local laws of that country.

Introducing policies to ensure that local managers and staff are familiar with the company’s expectations in terms of compliance and self-regulation is therefore crucial. If not, the company and employees could face criminal and civil sanctions, as well as irreparable damage to the company’s reputation.

The company’s anti-corruption code should be broad and cover a range of issues including gift giving and receiving, donations, support for political parties, accountability and reporting requirements, and the expectations on employees and joint venture part.


Credit Risk

Another challenge for company secretaries is managing credit risk. The chart on the right (click to expand) is the Coface Payment Incident index, which compares the BRIC countries against each other.Coface is a credit risk insurance agency which provides advice and support to companies who seek to understand and mitigate the financial risks involved in doing business around the world.



The Payment Incident Index illustrates how frequently Coface’s credit risk insurance services are used in relation to a base figure. What is clear from this graph is that all BRIC countries have been affected by the global financial crisis (post 2008) but not in a consistent manner.
As a general conclusion, it is fair to say that the likelihood of a payment incident occurring is affected by the general economic and business conditions of a country.

The BRIC recovery was a little shaken by a contraction in international trade in 2010, butexpansionary macroeconomic measures, growing numbers of new middle class consumers, and a reduction in their dependency on exports means that domestic demand, and new intra BRIC trade (ie one BRIC country and other emerging markets trading amongst eachother) is driving economic growth within these countries. This is likely to continue to provide a buffer from a fall in US and EU demand for imports.

In the following ways you can mitigate your credit risk in the BRIC countries:

1)  Conduct due diligence before engaging in new business relationships in unfamiliar countries. This includes not only researching the other party in the transaction, but also understanding the debt recovery mechanisms available to your company as a foreign corporation doing business in any particular company.

2)  Insure against customer insolvency, bad debts, overdue accounts and other problems through a credit insurance agency such as Coface.

3)  Learn the art of asking for an overdue account be paid in a culturally sensitive and appropriate manner. A debt is easier to recover if your staff understand how to communicate effectively with people from diverse backgrounds, cultures and nationalities, and are aware of the more subtle messages that the other party may be communicating.


Cross-Cultural Risk

Unfortunately, effective cross-cultural communication is often strained by language barriers, variations in business etiquette and inconsistent interpretations of the same actions. To say that such differences can lead to conflict is obvious, but cross-cultural challenges do not immediately spring to mind as a form of business risk. In fact, it is often considered a ‘soft’ subject and is therefore overlooked or underdeveloped within a company’s global strategy.

Failing to implement an appropriate and effective cross-cultural strategy can be hazardous for various reasons, for example poor cross-cultural understanding can lead to the souring of international business relations.

A classic illustration is ENRON’s embarrassing experience in the mid-1990s. Its subsidiary entered into a contract with the Maharashtra state government of India but it was cancelled because of their desire to conclude the deal as soon as possible. Their actions and communications were interpreted as “unseemly haste” by their Indian counterparts and resulted.

In much of the western world, “time is money” but many other cultures, particularly those in Asian countries, are less time sensitive and value relationship building over completing the contract itself.

Examples of cultural differences are well illustrated in “The Cultural Mirror”, a model developed by Tom Verghese in his excellent book “The Invisible Elephant”. Each of the nine rows identifies the differences in the behaviours and attitudes displayed by people of different nationalities and clearly demonstrates a wide range of differences between the four BRIC countries.

The reasons for these differences is a subject on its own (and Tom’s book is well worth reading) but the contrasting and diverging lines at least demonstrates why people of different nationalities and cultures have challenges to overcome when communicating with each other.

From an operations perspective, expanding into one of the BRIC countries could be assisted by appointing and empowering  a team which is already familiar with local customs and regulations, and understands the complexities and challenges of the local environment

Many Scandinavian companies, notably IKEA, Nokia and Maersk, have successfully globalised their operations by empowering locals wherever possible and allowing them to manage the local operations. This means giving them meaningful management roles and decision-making responsibilities.

Multi-national companies usually discover that empowering locals can be a challenging experience because it requires both parties to adjust their practices and expectations.

These adjustments may be cultural, for example many Chinese employees may prefer to follow orders and so will be reluctant to make decisions without guidance, but this is a show of courtesy to those in more senior positions and should not be mistaken for an inability to lead.

Micro-managing local operations, tempting as it may be, prevents the company from utilising the staff’s local knowledge and experience. Adjustment must occur on both sides: staff members need to understand that they are valued for their local expertise, and head office needs to be willing to relinquish some control. But such relaxation of control can only occur when the local staff is properly trained and are aware of the company’s expectations and policies.

Conclusion

The Boards, Management and Staff of multi-national companies need to prepare carefully for the complexities and challenges involved in doing business in the BRIC countries.

Developing a culture of cross-cultural communication, understanding and acceptance takes time and deserves special attention, including the development of a company-wide cross-cultural training program, including regular market visits, in-house training and individual mentoring sessions.

This is an area of growing importance and will increasingly determine the success or failure of companies in their attempts to expand their businesses and operations into new emerging markets.

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