Trade Missions are international trips organized by government entities or private groups for the purpose of allowing the mission’s participants (typically companies & investors) to explore [geographically] foreign business opportunities. A primary trade mission benefit is that it provides a risk-free, streamlined opportunity for companies to assess and explore international business expansion and investment. By giving interested companies a detailed introduction to a country’s markets and business professionals, guided by and customized to each company’s interest, the companies can explore the business possibilities of new markets without first committing to a large investment.

The possibilities of profitable international business ventures are endless, particularly in developing countries where the markets are  underdeveloped. Industries that are growing rapidly in markets of developing countries include but are not limited to energy, IT and communications, transportation, construction and consulting. The statistics show that developing countries offer some of the most diverse and profitable opportunities for foreign investors. In addition, there is a trend in developing countries to adjust policies to be more friendly to western investment. Since 2012, Sub-Sahara African countries have notably made the most reforms to their local laws and policies making it easier for foreign companies to enter their markets.  This adjustment has made Sub-Sahara African countries very attractive to foreign investors.

Thus, there is plenty of incentive to explore international expansion and trade missions are a low-risk and low-cost way to investigate potential opportunities.  But how does a company decided which trade missions they should attend? What countries are worth exploring? Most importantly, how do companies make sure that there is a tangible return on the time and money put into a trade mission?

Any company looking to participate in a trade mission should be asking these questions. The best way to find answers is for a company interested in attending a trade mission to invest in the following: Due Diligence Review, Team Development, and Business Strategy Development for the target market.

Due Diligence

The first and most important thing that any company should do is research doing business in the intended country. Fortunately, there is a lot of good information about most countries available for free online.  For example, the U.S. Department of Commerce’s International Trade Administration website, www.export.gov, has country-specific commercial guides that provide information on exporting and doing business in most countries in the world.  This resource allows any company within the United States to verify that the products or services they are interested in exporting can be exported to the country of interest.

Even if a company is not necessarily looking to export a product or service the statistics and data provided on the website give insight into the local economies and into the areas that are experiencing growth and those that are not.  The website also provides information on other secondary and impactful considerations like political risk and currency exchange regulations.

In addition to this resource, the World Bank publishes profiles for “Doing Business” in 190 countries online at www.doingbusiness.org. This is an invaluable resource that provides information on international investment in the 190 countries surveyed. The information includes how to set up businesses, the acquisition and transfer of real estate, and contract enforcement for each of the 190 countries.  In some of the countries the reports available break down this information by city and rank each city in different “Doing Business” categories. In addition, the website also ranks each of the 190 countries in each of the different “Doing Business” categories and publishes documents like Doing Business 2019 Training and Reform which give overall insight and trends in the economies and markets of each of the 190 countries.

Outside of these online platforms, it is also advisable to connect with the local consulate or delegate for the country that the company plans to visit.  Often the consulate has additional cultural and economic resources that will assist in adapting products or business services to international markets and they also have individuals dedicated to specific industries who can sit down with your company and discuss nuances unique to your company’s profile.  In addition, if there are local business associations or chambers of commerce who have an expertise or focus in the country of interest, they should also be contacted as they can provide additional insight on how to make a successful investment in the country of interest.  These organizations also often have private sector contacts and insight that supplement government contacts and information.

Due Diligence is important because it gives a company the practical framework from which a business strategy for successfully entering the intended country’s market can be developed.

Team Development

Team development is foundational to the success of a trade mission, but it is often an overlooked preparatory element.  Companies that are presented with international opportunities tend to put more time trying to assess the opportunity or realize a profit from the opportunity than they do preparing their company to adequately manage and service the opportunity. As above indicated in the Due Diligence section, there is a lot of information and market analysis that should be done prior to entering an international market. In order to successfully complete due diligence, a company should be prepared to invest the necessary resources to internally develop a dedicated group of individuals who will be responsible for doing the necessary research, analysis and strategy development to make the trade mission successful.  Without a dedicated team focused on the international opportunity it is unlikely that enough preparatory work will be achieved to get the most out of a trade mission.

Going into a trade mission, it is very important to understand how your company can and cannot operate within the country of investment and that your company is aware of tax or corporate structural implications that need to be considered for a successful venture.  This information will be an important factor in the terms the company negotiates with potential foreign partners and for the cost the company attributes to the product, services, or investment of the opportunity.

Although team development for international opportunities often starts internally, it should also involve engaging practitioners and experts outside of the company. Subject matter experts in international trade and development are essential to making sure the details and documentation of any investment or export are addressed.  In addition, the United States has a lot of different laws and regulations that apply to US companies doing business abroad and that also have extraterritorial application to foreign companies and individuals with which a US company investing abroad will need to engage.  As such, in order to make the business venture viable, the company will need to make sure that its business plan and strategy for the international market take into account these considerations.  If your company is not sure where to look to find local practitioners who have the expertise required, it is recommended to reach out to business associations, chambers of commerce and consulates for the intended country. As previously stated, these organizations are all good ways to identify the requisite professionals needed for your company’s international venture. In addition, most likely, the organization hosting the trade mission will be a resource for practitioners with an expertise in doing business in the intended country.

Business Strategy

Once a company’s team is identified and the research has been done, it is time to craft a business development strategy for entering and being profitable in the foreign market. This strategy will help the company identify what it needs to get out of the trade mission by narrowing down who it needs to meet with and what business terms it needs to negotiate in order to make any potential deal viable. The business strategy should take into account what limitations the company might have and, in an effort to overcome those limitations, list the resources necessary to find or engage during the trade mission that can help the company address the limitations. For example, perhaps your company wants to manufacture a product in Tunisia because there is a previously established relationship and the new market it wishes to enter is South Africa. However, the company does not have the resources or contacts to move the product from Tunisia to South Africa and it also does not know how to identify applicable import and/or export duties between the two countries. Subsequently, a key part of a trade mission to South Africa would be to meet with an government individual in the South African trade office to find out about the requirements for import and the company might need to identify a local customs broker and/or a local attorney who is knowledgeable on the trade agreements between the two countries.

Essentially, the business strategy is the point at which the company takes all the information it has collected about the intended country during the due diligence process, the knowledge on the intended country’s market strengths and weaknesses, the information the company knows about its products and services, the information it knows about what it needs to make an international market expansion profitable, and combines them to develop a step by step implementation process. Part of that process will be the identification of goals, objectives, and connections that are necessary to bring back from the trade mission. The business strategy will guide the company’s representatives during and after the trade mission and assure that the company gets the most out of the trade mission by helping the company’s delegates achieve the objectives and goals that are central to the company’s success in the international venture. Conclusively, a well-developed business strategy is essential for the trade mission yielding a valuable return for the company.

Summary

Trade missions are wonderful business expansion tools that allow companies to familiarize themselves with business opportunities and the business landscapes of foreign markets prior to making significant investments. Although the cost is comparatively low compared to the undertaking of an international venture, every company still needs to assure that the resources invested into a trade mission provide a beneficial return to the company, even if that return is only the knowledge that the international venture is not in the company’s best interest.

In order to make sure the opportunities presented during trade missions are fully vetted or that good opportunities ever come to fruition, it is important that any company planning to attend a trade mission due its own due diligence on the country, invest and develop a team for the international market, and have a detailed business strategy that will make sure that the company identifies and meets with the necessary foreign counterparts during the trade mission. By doing these three things a company can assure that its investment in a trade mission will be worthwhile and they can assure that, if the international venture is in the company’s best interest, the trade mission will yield a tangible and profitable business opportunities.