How Competitive Intelligence Can Help You Expand to the Global Marketplace
Global markets can offer both sales and sourcing opportunities. The competitive intelligence team can help your organization’s leaders by being aware of some key issues through the following ongoing tasks:
Track barter sales. Often, a country has a cash shortage but significant capabilities in producing a product (often a raw material resource or a food product). Recognizing a barter situation — for example, one company trades vodka for a foreign company’s computer systems — may give your company the opportunity to be the first to profitably enter an entirely new market before your competitors know about it.
Barter sales can be difficult to track, but they can reveal golden opportunities for your company to wisely open new markets.
Maintain comprehensive intelligence information about political trends, legislative trends, joint-venture laws, and other areas that can involve very high levels of risk. For example, some countries have laws that require 51 percent ownership by a national if a U.S. company wants to expand to the country.
Sometimes, the U.S. company puts $50 million into the new company, and the 51 percent partner seems to disappear and end up retired and wealthy in Mexico. The U.S. company has no way to get its money back because its partner owned 51 percent and had the final decision-making power.
Avoid the technology licensing nightmare
When doing business abroad, beware of patent flooding — the practice of other companies in a particular country filing patents on every part of your product when you import it into their country (for example, the on/off switch, the handle on the side of the product, the metal enclosure, and so on) and then suing you for patent infringement.
In many cases, the courts never allow you (the foreign company) to prevail in court. The only option you’re given is to license your product to a company in that country and have them pay you a commission for every product sold.
There’s just one problem: By the time your licensed product rolls off their production line, their copy of your product is simultaneously rolling off another product line, and they have no interest or intent in paying you a royalty or licensing fee for those products.
The only way to avoid the technology-licensing nightmare is to be aware that it exists and avoid doing business in countries that have a bad reputation for patent flooding.
Acknowledge that if it sounds too good to be true, it probably is
Be careful setting up shop in a foreign country that requires 51 percent or more domestic ownership. History is loaded with stories of joint-venture opportunities involving millions of dollars in which the domestic partner simply took the money and ran.
Numerous companies have been willing to take on large financial risk due to the financial opportunity that a market in a particular country offers. Regardless of political connections and assurances, giving up a majority ownership of the organization abroad rarely turns out well for the company. Taking such risks where others before you have consistently failed isn’t prudent.