By Juan Jose Rosas, Co-Founder of Rose Hill, a Special Purpose Acquisition Company targeting investments in Latin American companies.
As the economy becomes increasingly globalized each year, you might consider expanding your products or services into the land of emerging markets. Doing business in emerging markets gives you the opportunity to participate in an economy that is still in development, and if done properly, establish yourself as a market leader in your field. If you are managing an innovative business model or idea, the scarcity of your product in these markets can also make it easier for your brand to become a status symbol and gain the market share you seek.
But what is exactly the best way to accomplish this expansion? The answer often lies in partnering with the right people in the countries of your interest, but more importantly, doing business with them in a way that maximizes your chances of success.
Here are three suggestions you should consider when engaging in business communications with individuals in emerging markets.
1. Do your research.
How is the economic and political landscape in the countries you plan to do business? No one wants to work with someone who is not up to speed with recent developments or basic facts about their local economy, history, geography and culture. A quick way to do this is by reading publicly available research reports or yearly economic outlooks from the major financial institutions that cover those countries, but not forgetting to also perform the old-school Google search for any latest relevant news. When you gather the research, it is important that you integrate these findings as part of the pitch or message you are conveying to your potential local partner. This will show interest and keep engagement levels up on both sides.
Besides the country basics, you should also be very aware of the local competitive environment of your industry. It is not uncommon that they try to test your knowledge about the common industry players, so you must be prepared to give a thoughtful and knowledgeable answer. Study the competitive landscape not only in that single country but also in neighboring ones and even in the region as a whole.
2. Hire local people.
If feasible, consider bringing a person to your team from the same nationality or raised in the country you are interested in. Approaching a potential partner with a member on your side who speaks the same language and follows or is familiar with the local cultural norms can improve interactions and lead to more mutual trust. If you are based in the U.S., you can find plenty of seasoned professionals from emerging markets who would be willing to do business in their home countries.
When it comes to the business plan, materials or information you present, make sure you keep a copy translated into the local language. You can either hire a professional translator or ask the local hire you made to assist you in this process.
Lastly, consider hiring a local advisor or counsel to check the regulatory and tax implications of your business plan. Every emerging market has a different political environment and varying degrees of strength for their foreign investment laws, so an expert opinion will save you any unpleasant surprises that might come up when you are too far into the game.
3. Be patient.
While successfully entering an emerging market can come with outsized returns, it also involves a higher degree of risk and time compared to other developed markets. If you are an early mover in a certain product or service, you should expect some upsets and setbacks along the way that are part of the price of entry. Remember that most emerging markets still have significant levels of under penetration for technology adoption, so completely changing consumer behavior is not something you will achieve overnight. The best advice is to execute your business plan incrementally with a long-term mindset, but always deliberately.
While these suggestions might not guarantee your success into these new arenas, they certainly provide a good starting point for achieving a well-informed and comprehensive strategy to enter the attractive land of emerging markets.