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The International Entrepreneur – Keeping America’s Global Competitiveness

biz meetingThis week I am focusing on globalization at a national level. To be honest, I am concerned about my country’s sustained ability to globally compete. That probably sounds a bit drastic given that I live in the United States and we have the largest economy of the world. The U.S. is home to top universities and has billions of dollars in early-stage company investment. But given where the forces of technology, entrepreneurship and globalization are taking us, I foresee my country’s global economic relevance fading over the next few decades.

Those of you who have visited my site before know that I always try to frame an issue and then offer practical advice. I write with my own country in mind, but I hope these ideas can be used in any locality.

Stop Living in the Past

The world is changing at a faster rate than ever before. Technology is changing. The rules by which we conduct business are changing. In 1960, the United States was at the top of almost any economic indicator list: largest economy, best universities, best secondary schools, best healthcare, largest foreign direct investment, highest government investment in technology development, etc. Today, only the first two are still true, though maybe not for long. Here are some examples of myths that are common in American society. They may have been once true, but times have changed:

  • The U.S. has the best healthcare in the world (34th when last ranked by the WTO).
  • The U.S. has the best secondary education (17th behind countries like Finland & S. Korea).
  • The U.S. is the most entrepreneurial society in the world (Uganda & many other countries are higher).
  • China is a communist country (true on paper, though nowadays capitalism reigns supreme).
  • Mexico is a third-world country (actually, it’s considered a 2nd world country with a growing middle class).
  • We should teach Spanish, French and German in our secondary schools. (Spanish is a world language, but students would be better served learning Chinese or Arabic as an alternative. This original mix reflects languages important post-WWII. And we need to teach language starting in elementary schools instead of middle and high school).

Tomorrow’s globally-competitive knowledge worker will need to be multilingual. They will compete for jobs directly against workers in other countries who are often better educated. And they will need to have a better understanding of foreign markets to better sell American goods overseas.

Support Efforts to Build Local, Regional and National Competitive Advantage

Every country has certain economic competitive strengths. It might be low cost labor. Or it could be a long agricultural growing season. It might be a cultural value like resourcefulness. My country has many strengths, but I do worry that some may be fading. I live in the beautiful state of Colorado. We are 49th out of 50 states for spending on higher education. This financial shortage is now being felt at the undergraduate university level. An entire generation of students graduating from Colorado public universities will suffer from shortsightedness. The cost of this education has also been rising, leaving advanced education out of reach of poorer students. As a citizen in my state, it is important to support university funding.

Ignorance is Out of Fashion

When the U.S. still held the highest economic influence in the world, it was easy to expect that others would learn our culture, our language, and our way of doing business. Today’s companies do not have that luxury. For instance, to be successful in China, a company needs to know how to do business there. The same holds true in other parts of the world. There are several ways to gain knowledge needed to succeed. First, do your homework before a meeting or business trip overseas. Second, ask questions of your host or counterpart in order to show genuine good will. And third, be aware of rapid changes that can occur. For instance, most books on the Chinese business environment are out of date by the time they are published. If doing business in China, be sure to recruit Chinese resources who are following the changes.

For more information about global competitiveness, please order my International Market Entry Checklist.

The International Entrepreneur: Technology in Global Markets: an Interview with Sean Hull

This week, I was fortunate enough to catch up with globetrotting enterprise project manager, Sean Hull. Sean trouble shoots some of the most interesting and complex enterprise technology implementations on any continent. He was kind enough to answer a few questions about IT markets from his highly-internationalized perspective.

Sean, what’s your background as a global IT project management / implementation consultant?

I’ve been managing technology implementations in some capacity for over 10 years. Lately much of my work is at the international level, with a lot of time spent in-country. I find it makes a great deal of difference communicating face to face v. Skype. What makes this exciting for me is the fact that I spent a lot of time through the early college years living all over the world, so applying my professional skills at that level is coming full circle for me.

If your company is in technology markets, why think global?

Never mind the very real arguments of expanding your customer base, spreading risk, leveraging international currency, tax and/or incentive benefits…etc., smart, young technology is beating you to the punch if you’re not at least considering international markets. For proof, Google the nominee list for the 2012 Tech Crunchie Award. I was having lunch with some project colleagues in the U.K. They insistence that technology producers in Europe needed to internationalize their product and business models seem to be as ingrained as every kid having to learn several languages. It’s seen as a necessity. I think we tend to feel somewhat invulnerable in the U.S., economically and otherwise, but can’t imagine why one would not want partake in the global market.

What do you see as some of the key differences between implementing enterprise systems in the American market vs. other markets?

It’s probably worth it to mention that all my experience has been with enterprise solutions, (Here’s an attempt on the definition of enterprise) The key – and most obvious -difference is working with international / cross cultural teams and customers, where not only the language, but the dynamic and motivators can be vastly different from country to country. The Indian development team is not only in a different time zone than the German project team, but also approaches the work differently. This cultural level is on top of the many moving parts of a technology implementation.

Do you see any fundamental differences between American software/system design and those designed by non-American vendors?

It might be something seemingly innocuous as mailing labels or something more integral, such as the processing of foreign currency or VAT taxes, but internationalizing a technology solution can be a complicated affair. It’s more than just toggling the language of the labels in the software. But if the solution is solving a real problem, it doesn’t matter where it’s made. I think some of the best opportunities for technology right now are in healthcare – a problem (in some form or another) shared by countries the world over.

How much cross-cultural background and language skills does a project leader need to lead a technology implementation overseas?

Maybe somewhat playful, but I’ve caught a lot of “nuances” (for a lack of a better term) in situations where English was being spoken and I did not advertise the fact that I understood the native language or lived the culture. For me that would be German. The point being that English truly is the language of international business, but the networking, feedback…etc. might not be. It certainly does not hurt to walk and talk the talk.

Are there dangers of coming into a project unprepared?

Besides wanting to be prepared, here is where I invoke my gray man theory. Put another way; fly under the radar…in the beginning. No one likes the new guy who comes in with guns blazing (cue images of a Wild West saloon shootout.) No matter how much is put in print on the science behind the black art that project management is, it’s still an art with its many subtleties. Then layer different project methodologies, cultural differences and languages on top. Watch, listen…your time will come.

One tip for taking your technology international?

Taking anything international takes consideration and planning. Just like any other important strategic initiative, don’t do it part time. As this Fast Company article suggests, assign a dedicated resource(s) to lead the charge.

Thank you, Sean, and safe travels to you!

The International Entrepreneur- China’s Talent Shortage May Become Your Issue Too

When international companies doing business in China are surveyed about their greatest operational challenges, the highest ranked issue is not protecting intellectual property or repatriating profits. For six years, #1 business issue in China is the ability to recruit and retain good employees at every level in the organization. With 1.4 billion people, you wouldn’t think that there could possibly be a shortage. And yet job hopping is common for competent managers, some of whom can see as much as a 30% increase with a single job change. The problem is most acute on the East Coast of China, where migrant workers from inland have poured in by the hundreds of millions. And yet, there is still a major shortage of trained laborers. This problem is not expected to subside any time soon.

The implications from China’s talent shortage stretches farther than most companies care to admit.

  1. For companies doing business in China, this means constant increases in labor costs. Companies also have losses in productivity to retrain any replacement workers. At this point, companies are still reporting profits in China at or above international averages. But this may eventually change and jeopardize Chinese in-country operations.
  2. Higher labor costs drive more industry from China and slower economic growth puts at risk the political stability of this economic giant. Some, especially in the West, might welcome an abrupt regime change in China, but those who study Chinese history will tell you that China’s political instability usually means bloody conflicts on a major scale.
  3. Even if your company never enters the Chinese market, the demographics that have brought China to this talent shortage can be found in North America and Europe. It may be hard to believe when so many Europeans and Americans are still unemployed. As baby boomers on both continents retire and economies resume their normal growth, we will see talent shortages emerge for specific skill sets. If you look at job boards today, you can already see this starting. And according to a Manpower survey this year, 84% of 1,000 surveyed American and Canadian workers planned to leave their jobs.

What can be done at your company to attract and retain great employees in China or at home? Here are some ideas:

  • Market and Sell Your Company and Open Positions to Prospective Employees

In the current economy, it is not unusual to have hundreds of people applying for a posted job. That may seem like more than enough to fill an open position. Since your company needs to find best-fit employees who are more likely to stay, the larger the potential pool of applicants attracted to your company, the better. This is true even if it takes longer to sort through applications and resumes.

  • When it Comes to Training, Learn from the Japanese

Jobs that go unfilled are often very narrowly defined. The strategy is to find someone who can walk in the door with the exact skill set and knowledge base that allows them to “hit the ground running”. This will become less and less realistic as time goes on. Instead, plan to train your new employee for not only their role, but to cover other roles should someone else in a related job leave the company. The Japanese are known for training generalists. A Japanese employee often spends years in a department or function before being transferred to a completely different function. While few non-Japanese companies take this cross-training to this level, it is important to note that a function never goes uncovered in a Japanese company.

  • Tie Incentives to Longevity with the Company

Most companies already offer either stock options, college tuition or some other way to build incentives into staying with the company. Be sure to revisit your company’s incentive packages and even query employees for their feedback on ways to strengthen this critical motivator.

  • Make it Passionate and Personal

Employees are much more likely to stay with a company if they feel a personal connection to its mission and leadership. As a company leader, you will want to foster a company culture that reaches out to employees to find out what matters most to them. For instance, in China workers often live as well as work on company property. Workers not only switch companies for a wage increase, but for better living conditions including food. Hire the best cooks available. In Mexico, workers want to be able to take time off to visit and care for a sick or dying family member. Such extended family-related absences need to be incorporated into employee leave plans. In the U.S., there is a large, untapped talented labor market that prefers to balance work and family by working from home. Companies like Southwest Airlines have already discovered this attractive labor market. This home-based labor pool may be one to consider for certain types of jobs as competition for talent heats up.

I hope this helps your company when considering global labor shortage issues. For more information about specific labor markets, please feel free to contact me

The International Entrepreneur ? What You Really Need to Know to Ship & Finance Exports

The International Entrepreneur ? What You Really Need to Know to Ship & Finance Exports

There was once a large, expensive customized motor that was being loaded onto an ocean freighter. As it was being loaded, the crane holding the motor?s crate swung back out over the rail and accidently dropped the crate into the water. The Incoterm (shipping term) was FOB (freight on board), so who was responsible for the lost shipment?

Ocean Freighter

I think this may have been a test question in my International Trade and Finance grad school class. The answer is: the Buyer. The reason is that with FOB, the responsibility for the shipment passes from the seller to the buyer when the shipment crossed the railing of the ship. Now hopefully the buyer insured his shipment. Otherwise this would be a costly lesson in international trade. Here are some basics that will help keep you out of trouble in


There are 13 Incoterms that help define where responsibility passes from seller to buyer. They range from Ex Works (EXW) where the buyer picks the product up from your loading dock?to Delivered Duty Paid (DDP) where the seller takes full responsibility for the shipment up to the door of buyer. A lot of first-time exporters assume that EXW is the best Incoterm choice because it shifts responsibility to the buyer immediately. But that is rarely the best choice based on how much control you need to have over the delivery of your product. Please also keep in mind that several Incoterms, including FOB, cannot be used in air freight (FAS, FOB, CFR, CIF, DES, & DEQ). A great book on this topic is Managing Exports: Navigating the Complex Rules, Controls, Barriers, and Laws by Frank Reynolds. Another excellent resource is International Trade and Banking Consultant, Roy Becker (http://roybeckerseminars.com).

Payment Terms

There are four main financing options for exports. First is for the buyer to pay cash up front. This is more common for highly customized products in high demand and for first-time buyers with no credit history in your company. Many exporters use the second option: Letter of Credit. But LOCs are very expensive and if written incorrectly can cause all kinds of complications to the sale. International bankers normally draft a LOC. They are best used for large item purchases and are less frequently used today because of their cost. The third option is Documentary Collections. In this option, the buyer cannot obtain the shipment until they have certain documents. The documents are sent to the buyer?s bank and instructions are carried out to pay the seller. Instructions usually include payment conditions. Finally there is the Open Account payment term. Open Account means that you?re extending credit to your buyer. This is a good payment term for long-time customers with good credit and fairly stable currency. Payments can be made through the SWIFT electronic payment system.

So which Incoterm and which Payment Term should you use? As with most questions in international business, the answer is? it depends. It depends on the type of product, the mode of transportation, how well you know and trust your customers, the level of involvement you have in installing the product, and your ability to repurpose your product to another customer should the original customer change their mind. To navigate these choices, I highly recommend talking with your international banker or your freight forwarder, if these are professionals you feel you can trust to act in your best interests.

Additional words of?advice:

  • Match your Incoterm, payment term and insurance coverage (yes, insurance!) so that the point that responsibility for the shipment passes between buyer and seller is the same point that payment is triggered (even if it?s to be paid in the future by the buyer?s bank) and seller insurance takes over.


  • Find an experienced freight forwarder with small-enough operations to take your account seriously. A good FF can save you a lot of shipping expenses and help you navigate the documentation needed.


Best of success to you in all of your international business!

The International Entrepreneur: Born Global or No?

baby techIn many parts of the world technology start-ups are expected to become global companies from their inception. Companies like Skype launched into international markets right from the start. The reason why these ?Born Global? companies are a worthy topic in start-up technology circles is that they?

  • Grow faster than domestic-only companies
  • Hire more local staff in their home markets
  • Succeed in greater rates than their domestic counterparts.

But is Born Global a realistic expectation for most tech companies?

As is the standard answer for most international business strategy questions ? it depends.

Here are circumstances that make Born Global a more likely choice:

  • Small Domestic Market. If your company is located in a country like Uruguay (3.3m), Finland (5.4m), or Israel (8.2m), everyone expects you to plan for international expansion right from the start. It is no surprise to see small country tech companies competing effectively in world markets. Entrepreneurs have already cultivated their international market connections. Government and industry resources support this Born Global expectation as well.
  • Small Global Niche Market. It is much easier to globalize when your market is small. With fewer potential buyers there is pressure to find the customers no matter where they are located. For instance, if your company develops some measurement device specific to copper mining then you?ll quickly want to expand to places like Peru and Zambia.
  • Differentiated Product. If your product is valuable enough compared with the available in-country alternatives, local customers can overlook your product and company?s ?foreignness?. They also are more likely to pay a premium, which helps defray any exporting-related costs.
  • Internationally-Minded Company Leaders. This is probably the biggest factor for Born Global companies. I?m not talking about the leader who likes to take his or her spouse occasionally to Paris for a holiday. These are professionals with deep connections in another country. Often they are either immigrants or former exchange students or both. IT outsourcing started with Indian, Pilipino and other immigrants connecting developers in lower-cost markets with software development needs in high-cost markets. An international orientation brings a completely different set of solutions to a start-up.

Going Global Criteria

To be effective in global markets a company needs to have a competitive product, financial stability, and infrastructure that support a global reach. I?ve spent the past decade in and around start-up companies and it?s a rare company that has even two out of these three criteria in its earliest stages. So rarely will there be a company that can start its business ready to be completely global.

On the other hand, all young technology companies should be planning for how they will enter and compete globally. This focus should influence hiring decisions, building capacity and potential partnerships. The timing on when the company actually enters international markets will depend on when international opportunities are worth spending the time and energy to make the final adjustments internally for global launch. At that point, the company can finally take advantage of the vast opportunities in the global marketplace.

Advice for Big-Country Tech Start-Ups (U.S., Brazil, Japan & China)

I often hear particularly in the U.S. that international markets come later in the company?s plans. I rarely hear one of our technology industry gurus touting the benefits of early international market preparations. Instead of having the domestic market act as a benefit to growing the company, it can actually slow down long-term growth. For tech markets, often 80-95% of total markets are outside of the home market. To delay preparing for the whole potential market will slow growth. Even if you delay international market entry, start preparing by making connections and researching your market.

(?Born Global or No?? is a play on Walter Kuemmerle?s famous Harvard business case published in 2001: ?Go Global or No??)

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