TALES FROM THE ROAD 17 - HI-TECH BOATS FOR THE GULF OF ADEN

There I was happily driving back to Manchester from the Holyhead ferry after a few days helping a client in Ireland, when the phone rang. It was 2003 and I had just set up my own International Trade Consultancy. Leaving the world of employment was a tough thing to do but the timing had been right because by then I had 16 years of international selling experience and qualifications to go with it. The guy on the phone was from RBS. I had met him at a number of Export Club events where we had talked about business and football, and he had been kind enough to refer me to one of his clients, a manufacturer of Hi-Tech speedboats that were used by coastguards and security services.

So I followed the lead. The customer was concerned that they might need an Export License for four such vessels that were due to patrol oil platforms in the Gulf of Aden for a Canadian oil company. So I took them through the process, examined the purchase order, and agreed that we should send a Rating Enquiry Form to the Export Controls Organisation (ECO). Rating Enquiry Forms are simple documents used by ECO to establish the status of an export consignment, and to decide whether a license is needed. So we filled in the form with the key details of the proposed shipment and two weeks later received the decision that ‘no export license was required’ because the boats were for Civil use.

Manufacturing continued, and the company began to make arrangements for the sea trials, with the Canadian company ready to pay the balance for the goods upon successful trials. With six weeks to go until completion, we received a revision to the Purchase Order which just about changed everything. The customer details had changed, and we were no longer supplying to a Canadian Oil company, but to the Ministry of Defence for the Republic of Yemen. The specification had changed to include ‘hard points’ on the bow and stern of each vessel, which were clearly for mounting guns. Therefore the Civil status of the consignment had changed to either Dual Use (Civil and Military) or to plain Military use.

There was no option but for the company to make another Rating Enquiry, and after two weeks we received the predictable response that the consignment would need to be covered by an Export License. By this time the company had already agreed sea trial dates and officials from the Ministry of Defence for the Republic of Yemen were making arrangements to observe the trials and rubber stamp the deal. It can take up to four weeks to receive an Export License and the sea trials were scheduled for five weeks time, and the fact remained that the boats were going nowhere without one!

You have to bear in mind that even for Civil Use in the Gulf, it is likely that patrol vessels will need to be armed to some degree. It is an incredibly volatile region, and Yemen continues to have its own specific problems. The Export License was granted after four weeks for Dual Use and the Yemenis visited and observed successful sea trials. Had a license not been granted then £800,000 was at risk, and while the boats could have been sold eventually to another organisation, that is an expensive amount of stock for a small company to carry. Failure to obtain a license could have bankrupted the company.

However we achieved everything within a very tight timescale, and the boats were prepared for shipment to Manchester Airport where the Yemenis has commissioned a huge Antonov aircraft to collect all four once payment had been cleared through. That was my very first job as a freelance International Trade Consultant and covered every emotion from severe stress to elation! It illustrates how Exporters need to be aware of procedures that they may only need to perform once in a blue moon, and why regular International Trade Training updates are required for relevant staff. Non-compliance can cause bankruptcy, and failure to obtain the right licenses for equipment that might have a military or security use can result in imprisonment for company directors. Tread carefully.

TALES FROM THE ROAD 16: YOU DON’T ALWAYS HAVE TO LIKE WHO YOU WORK WITH, BUT IT DOES HELP!

Charlie Bates. That was his name. It has taken me about six months to remember the name to the (rather red) face that I am not likely to forget! Relationships are everything in business, and I am glad to have a reasonably good instinct when it comes to forming and developing key business relationships. I have achieved that in multiple countries and across cultures, making many good friends along the way. And where friendships have not developed there has generally been the kind of connection and mutual respect that leads other people to actively want to do business with you. 

One of my longstanding clients once had a need to locate a very specific type of woodworking machine and asked for my help.  I had been out of the business for some years but said I would see if I could find one through any of the machinery dealers I used to work with. As part of that process I phoned a dealer in St. Louis USA. I had not spoken to him for about eight years, yet he still had my name in his phone and answered with a warm “Hey John! Good to hear from you!” It taught me a lot about communicating and making your connections work. It’s something that doesn’t happen overnight.

Conversely, it was poor communication and an inability on my part to connect which ultimately caused my relationship with Charlie Bates to break down! Charlie was a Sales Agent for one of our US distributors. He took a commission on machines that he sold on their behalf. The woodworking machines that we manufactured in Windermere were complex machines, albeit based on simple principles. Charlie had understood enough to sell a machine line to a woodworking company in Johnstown Pennsylvania. It was a high speed spindle turning machine linked to an automatic sander.

The machine had developed a teething problem and after several telephone conversations with both the distributor and Charlie, I felt the best thing was to take an engineer with me to resolve any issues. That went down very well and Charlie said to me that he felt it would ‘take the heat off the situation’, which has something of an ironic ring to it! Everything was very cordial, polite and positive and we had agreed to meet Charlie en route from Pittsburgh Airport to Johnstown. It was late in the day when we arrived, and being British we managed to get lost on straight roads. This all happened pre-mobile phones, and as there was no way of contacting Charlie we drove directly to the hotel, imagining that he would put two and two together and find us there.

My only direct communication with Charlie regarding the hotel had been to pass on details through the distributor of where we were staying, and we knew that he had received that information. So we assumed he would eventually meet us there. After an hour or so of settling into the bar, we started to get a little peckish, and as the restaurant was scheduled to close at 9pm we ordered. Still no Charlie, so we pressed on. About half way through our meal, this incandescent, red-faced ball of fire appeared at the end of our table bombarding me with accusations of giving him the wrong directions, with a peppering of expletives thrown in! So I let Charlie rant on for a while before eventually pointing out that actually he had been to Johnstown before, he had been to see the customer to complete the sale, and he would have had to drive past the hotel en route. Furthermore, I was British and had never previously been to Johnstown yet I managed to arrive at the hotel several hours before him. Poor Charlie wouldn’t let it go, and carried on with this endless and illogical public attack for so long that by the time he had finished the restaurant had stopped serving. When he realised, I offered him a French fry. I expect that wasn’t entirely helpful.

Although we then didn’t share a table for breakfast the next morning, we seemed to work well enough as a team to resolve the customer’s technical problem and had the machine line running perfectly by the time we left late in the afternoon. Yet if Charlie and I passed a dozen words between us that day, it is probably an exaggeration. At least we were both professional enough to know that the relationship that each of us had with our customer was paramount, and hatchets can be buried whenever a job needs to be done.

These two extremes demonstrate that while people do business with people, sometimes people just don’t get on. There have been instances where I have visited customers and made a good impact where previous salespeople have failed, and there have been others where I have failed where others have succeeded. Relationships are everything in business.

SETTING UP A DISTRIBUTOR NETWORK IN THE USA A Case Study

After trading successfully in many parts of the world, my company decided to enter the US market. Whilst this market offered the obvious benefits of size it is also fraught with many commercial dangers. Potential issues ranged from controlling this vast market through to addressing the numerous legal barriers both at Federal and at State level. We exported consumer products and our target market in the US was primarily the Asian-American consumer. Demographically the main areas of population were found in the ‘Chinatowns’ and ‘Little Vietnam’ neighbourhoods in prime cities such as San Francisco, Los Angeles and New York. A number of secondary cities such as Chicago, New Orleans & Atlanta were also identified. California was by far the key state by not only possessing the highest share of this consumer group but was also the first point of entry for successive generations of  immigrants. Of the many issues to be resolved when entering this market, distribution was a key factor. A number of options were considered. Agency arrangements were quickly dismissed as we required stock inventory to be placed in-market and to be freely available for trade purchase. Our main competitors were US and we could not afford to be out of stock. We required a distributor arrangement where our products were purchased, stored and supplied in-market. We then had to decide upon the most effective distribution arrangement. We considered and discarded a state by state appointment of distributors. We believed a high number of reporting lines into our UK head office were undesirable and difficult to control. In particular there would be a danger locally of ‘range wars’ where one party sells into another’s designated territory.  US anti-trust laws place a particular pressure on distributor/principle relationships in that the exporter cannot, in any way, directly influence the distributor’s price or his margin. Yet pricing is, in itself, a key issue in successfully marketing consumer products so the only solution was to develop very strong relationships with the distributor to ensure both parties were working to the same end. This would be very difficult to achieve if working with a number of partners in the same market. So the conclusion was to appoint a national distributor wholly responsible for all US business. This decision then raised other potential issues such as how to ensure all major priority areas received the same degree of attention and focus locally. This was not just in terms of product supply but in sales and marketing effort to ensure there was appropriate market development. There was the additional matter of ensuring that we capably handled the ethnic requirements locally. We therefore decided that we would set up sub-distributor arrangements in each key location, each being managed and serviced by our national distributor. The basics of such an arrangement are: Each sub-distributor is in contract with the national distributor Each sub-distributor purchases stock from the national distributor The price of that transaction is set by the national distributor The national distributor forgoes part of his profit margin in his price by passing it onto the sub-distributor We then set out to locate a suitable candidate for the national role who was based in our prime market of California. Space prohibits discussion on the selection process except that it took over three months from selection to appointment. Our appointee was non-Asian but highly experienced in consumer product distribution and sales. At the outset the idea of a sub-distributor arrangement did not appeal to all but our chosen partner already possessed experience in this process. As important he showed an early willingness to work closely with us and saw our business as an incremental opportunity to both grow his business and develop his influence in other states. He was based in the Bay area of California so we supplied product to him via Oakland port. We agreed a launch plan which consisted initially of the two Californian conurbations to be followed by New York 6 months later. With California being a highly litigious state, the drafting of a contract including the sub-distributor responsibilities was a drawn out-affair but nevertheless was successfully completed... We agreed, as part of our support for the initial launch into California, to run a special training programme for his sub-distributor appointees. This was ultimately carried out in Las Vegas, a highly motivational location for Asian Americans. Once the sub-distributorship arrangements were in place, the launch was initiated. The timing coincided with a West Coast trade show so we jointly hired a stand for ourselves, the national and sub-distributors to exhibit. Generally in the US, attendance at Trade shows is high and much business is done through them. It proved to be the same for our business. Our new direct and indirect business partners were successfully able to promote both their business and our products to existing and new trade customers. Whilst there are many facets to any product launch, focusing on the product supply and trade distribution aspects our launch was successful. Within the target launch period we were able to achieve our distribution targets that had previously been set with our trade partners. During our Las Vegas meeting we had agreed on the numbers of key trade outlets to be sold to such as Asian-American specialists, supermarkets, wholesalers etc. in San Francisco and Los Angeles. Naturally there were teething problems with the launch but the fundamental strategy of using national and sub-distributorships was sound. The main benefit to us, being based in the UK, was the ability to manage the business locally through one contact point After 6 months of successful trading we all agreed to move to the next phase which was New York. In terms of product supply we set up a new arrangement to overcome the logistical problem of servicing the East from the West coast. Once the new sub-distributor was selected and appointed, we would supply their product requirements direct albeit on behalf of the national distributor.

The US remains both an opportunity and a potential problem for many exporters. For us we spent much time at the outset considering the pros and cons of distribution in this market, we found an appropriate solution.

Ye Olde Bill of Lading - A Tale

Bill of Lading in History

This is the condensed, micro-definition...you are lucky:

4th century AD. Rome collapses, Europe is in chaos (well, not much new there), the barbarians approach...

By the 5th century, things were looking up. Coastal towns, which enjoyed high walls on one side and the sea on the other, survived barbarism and offered secure havens, a meeting place for traders to bring their ships and cargo to a protected market. Where east meets west and the coastal towns, south of Rome in particular, offered an excellent union for eastern traders to meet in safety to trade with western traders.

From the 6th century onwards the profitability of these towns spawned imitation and the Mediterranean and much of the coastal north-west continent of Europe grew. In the process these towns offered an informal law – the shipper travelled on the vessel to the port, discharged cargo, sold it, got paid, bought return cargo, re-loaded the ship and went home. The whole of mercantile contracts happened then in one place, in the port-city. Seller met buyer, shipper met carrier and buyer met cargo. If there was an argument at any point, the City acted as the judge and an even-handed uniform law developed (the lex mercatoria) which was also ‘exported’ between the towns to provide a standardised approach over a wide trading area.

From 8th century onwards – part of the City’s role was to provide an “honest clerk”. This lad would record the loading of the ship in a book (the book of loading – or ‘lading’ as the word was then written). What went on, how many, what weight and importantly, under what terms and conditions would carriage be undertaken – a list of liabilities and rights etc. The shipper signed the book, the carrier signed the book and the honest clerk got to travel with the ship to the discharge port. Once there, the clerk recorded what came off the ship...an independent third-party out-turn report: shortages, damages etc, then to be settled based on the terms and conditions in the book of lading.

Are you still there?
Right...

The vessel took many weeks, maybe a month, to discharge. So the shipper – who travelled with the cargo – clicked his heels for a few weeks waiting for his cargo to be brought into the city market. But, thought the shipper, everyone trusts the honest clerk, if he gave me a copy of what was written in the book I am sure I could sell the goods on the strength of his hand written note, his signature and his fine reputation for honesty. If so, if I could sell the goods against that paper, why, then I could buy the return load sooner.

By the 9th century, the shipper is getting the clerk to summarize the loading and the terms and conditions of carriage onto a separate piece of paper...a ‘bill’...(ooh, did you feel that? a light just went off in your head).

10th century– bills have become so popular, the ‘book of lading’ is never used again...

11th century– Europe has calmed down. Shipper have been travelling to safe havens for so long that trade routes are established, carriers run in a sort-of regular manner and the shipper thinks: if I appoint an agent in the destination port for me, I will consign the cargo to him - he knows who to sell to and what I want to buy as return cargo...why must I travel with the ship these days?
So, the vessel loads and the ‘seller’ watches the loading but does not travel with the ship – now only the record of what was loaded, the bill, travels with the ship to be used to verify off-loading and thereafter given over to the shipper’s consigned agent – but our seller wants a record also of what was loaded, for his records (later when the concept of insurance takes off he needs to prove what was on the vessel should the vessel sink...etc). What to do? Why, we will issue TWO identical records. One for the seller/shipper at home and one to travel with the ship for the consigned agent to use to on-sell the goods...

Ye olde ticky – ye olde tockie (that is tempus, fugiting its way through the Dark Ages)

Then some anonymous bright spark has an idea! Actually he/she/it had several but they relate to ‘negotiable’ bills and so on and I won’t bore you with that here.  The bright idea that was had was this:

For centuries now, the buyer in the city-market will buy on the strength of the “bill” i.e. on the integrity of the carrier’s record of loading. With this handover of paper, the sale of goods can be evidenced by the passage of the paper from one to the other party. So the only thing delaying the sale is the arrival of the vessel at the destination port and the handing over – by the master – of the bill to the seller’s agent.

So: what if we send the shipper’s copy of the bill with a fast horse (well, ok, we’d like to send a rider on the horse too: horses are fast, but not that bright). Then, there is a chance that the bill could arrive (holds breath) BEFORE the ship! Then we can sell the goods, get paid and buy a return load even sooner. (at that point another bright individual (but much better dressed) steps in and says “I’m a bank. If your buyer is not yet here in the City, I will buy the paper from you – at a discount, of course – and sell it onto the buyer when he finally arrives. If he never arrives...well that is my risk, hence the discount.” Nice chaps, bankers. This concept actually then provides the funds for research into telescopes, so the banker can ‘see’ the buyer on the horizon a day before arriving, a day before anyone else knows it, hence his willingness to buy the paper and take the ‘risk’ of non-arrival. Hmm, nice chaps, bankers.)

But there is still a problem; what if the ship sinks? Although we have insurance these days (we’re up to the 15th and 16th centuriesby now I think) we can only claim if we have proof of loading, and yet we intend sending that proof with the fast horse.
Bingo! (once again!) Then let us get THREE IDENTICAL copies of loading. One can stay with us in case the ship sinks, one can go with the fast horse to facilitate premature selling and one can go with the ship just in case the rider falls off the horse and the horse wanders off into the medieval distance, never to be seen again.

So, by the 17th century; we have a set of three identical pieces of paper, each of which records the loading of cargo and the terms and conditions of carriage and each of which may be sold in exchange for control of the goods evidenced as loaded on board by that very piece of paper.

Of course, they are not ALL originals. They are all only IDENTICAL. The one that is used to get the cargo from the vessel, that one is the ORIGINAL, the others becoming copies at that moment.

Roughly (wake up at the back) that is a potted history of the bill of lading – ok I missed out the bit about the three bears and the naked magician, but something had to go.
It is also my way of explaining why you have this bizarre concept of multiple ‘originals’.

Some of you may feel very comfortable with this reply as ultimately it describes what passes across your desk daily – and now you can draw comfort from the fact that if you are working with a set of three “original” bills, why you’re empowered to work in the 17th century – and should it ever come around again, you’ll get that job!

Silly you.

IF, and it is a big “IF”, a bill represents cargo, you only ever want ONE. If you have three and all three travel together then you may as well only have had ONE. If you have more than one and they are all identical and yet some simpleton marks them all “original” the one you are holding can turn into a ‘copy’ when the ‘true’ original i.e. the first one from the identical set, is handed in. Look at that for metamorphosis! It went from being a valuable original to a worthless copy, in your hands, without any outward evidence that it had changed. I hope you didn’t buy it?

So why do we still have three ‘original’ bills? Well, why do you have an appendix? You don’t need one, it can be cut out and nothing happens. Ah yes, it is left over from when we were hairy beasts with knuckles trailing along the ground (so, nothing changed there either) a throw-back to some prehistoric age. A totally unnecessary burden.

Bingo!

THREE ORIGINAL bills ? ...just another throw-back to some prehistoric age and a totally unnecessary burden.

I hope you are still with me...you may go and lie down now...

...thus: another step on the road to mercantile enlightenment...

10 Key points UK + USA Export Controls

Strong & Herd LLP offer consultancy, training and helpline advice on both UK and USA Export Licensing Controls here are a few key points based on questions we regularly receive from clients.

1. SPIRE - Shared Primary Information Recourse Environment - UK computerised export licensing system links export licence information with the UK customs computer CHIEF - Customs Handling of Import and Export Freight.

2. Dual-use does NOT mean a commercial item sold to the military. To be controlled as dual-use the goods/technology must be listed in the dual-use list (in the UK/EC known as DUEC; known as EAR in the USA). This list is highly technical and lists the technology levels of controlled goods.

3. Dual-use list, high technology levels are set in the Wassenaar Arrangement by member countries and is common to all member countries. Key members are the 27 EU member states, Australia, New Zealand, Japan, Switzerland, Norway, Canada and the USA.

4. Dual-use controls are known as the Export Administration Regulations (EAR) in the USA and goods caught on the EAR are subject to extra-territoriality controls if re-exported or incorporated into other equipment which is subsequently re-exported. Need to check the rules.

5. The USA extends export licensing controls to the re-export of controlled goods/technology both under EAR and under the military controls of ITAR - International Traffic in Arms Regulations. This denies re-exports to embargoed/sanctioned countries, controls re-export of EAR and ITAR items and controls "re-transfer" (ie moving to another party in the same country) for ITAR goods/technology.

6. EU DUEC and USA EAR - both based on same dual-use regulations and category numbers in both control lists are the same. EU call them category numbers, USA call them the Export Control Classification Number (ECCN). An example of one is: 3A001.b

7. The type of goods named in dual-use regulations headings, eg computers, sensors, etc but which are below the levels of technology specifically listed are not subject to export licence controls - except to embargoed/ sanctioned countries. These goods are known as EAR99 in the USA and LIC99 in the UK

8. Goods/ technology specially (specifically) designed, modified or configured for military purposes are subject to export licence controls.

9. Military goods/ technology are subject to national controls. The USA has the Munitions List (ML) under ITAR. UK has the Military List (ML). Germany, for eg, has the Ammunition List (AL). None of them are the same - though EU looking at standardising military controls. USA ITAR controls are very strict, including re-export and re-transfer of ITAR items/ technology.

10. USA extra-territoriality controls may affect any country buying USA controlled goods/ technology (both EAR and ITAR) whether it is purchased direct from an US supplier or not.

‘Avoidably’ Falling Foul of Customs

A couple of German cases which were sent to the European Court of Justice have highlighted the need for all businesses which import and take advantage of Customs Duty & Import VAT suspension reliefs to be very diligent in ensuring that they fully complete the requirements of the relief in order to enjoy the benefits.

This comes on the back of the decisions in both the Eurogate Distribution GmbH v Hauptzollamt Hamburg-Stadt (2012) C-28/11 case  and the Döhler Neuenkirchen GmbH v Hauptzollamt Oldenburg case — Case C-262/10 whereby both companies were denied the relief they sought due to administrative oversights. In Eurogate’s case they failed to note the records of their Customs (Bonded) Warehouse at the right time and although they re-exported goods outside the EU which should have rendered them non-dutiable, because they didn’t complete the administration correctly the ECJ upheld the German Customs’ view that a Customs Debt arose and duty was charged on the exported goods.

In the Dohler case, the ECJ similarly held that because the company had not sent in the correct paperwork showing the re-export of goods under a relief called Inward Processing Relief at the correct time, German Customs were perfectly correct to raise a bill for import duty on the basis that IPR had not be correctly discharged.

In both cases the assessments were wholly avoidable but they both echo recent experiences with UK Customs (who act on behalf of the EU when administering Customs matters), in that the EU are clearly now taking a less forgiving view where businesses fail to strictly follow the, often complex and confusing, rules and are instructing Customs Authorities EU wide (including HMRC) to either issue assessments or not allow reliefs where the rules are not fully met.

This approach seems to have come off the back of the FG Wilson & Caterpillar case where the ECJ reluctantly agreed to Judge Sir Stephen Oliver’s opinion that whilst avoidable, such errors if punished would significantly affect the UK economy to such a degree that leniency and common sense should apply. However, having reluctantly agreed to this it seems that the EU are pushing through their stated view that the leniency was a one-off due to the unusual circumstances of that case.

Such omissions of the rules are often quite small administrative errors from a ‘doing’ point of view but can have significant consequences for a business as they can involve large sums of money that the business has not planned for. One case of which the author is aware involved a Customs Duty & Import VAT bill in excess of £1.2M which whilst eventually withdrawn did cause so significant problems for the company which could all have been avoided if the business had ensured it understood and met the IPR discharge rules at re-export.

From experience businesses fall foul because they are often unaware of the rules and so do not see through to the end their obligations of Customs Reliefs - when this is added to the backdrop that not only are the rules on Customs complex but the EU’s view is that if something is published, then it is taken as granted that importers should know about the rules, it all adds up to a recipe for errors to occur.

Given the EU’s stance, the moral of this piece is that if you or any of your clients take advantage of a Customs Relief, whatever it may be, please make sure you or they are fully aware of what they should do so that they do not fall foul of Customs on an avoidable administration error.

Trade Fairs – Be ready to work hard and have an adventure

Trade Fairs are a key part of the sales activities of many companies that sell overseas.They are really hard work and you have to be prepared for a bit of an adventure along the way. Until fairly recently most of my trade fair experience had been confined to the Medica Trade Fair in  Dusseldorf.  I remember being amazed at the number of exhibition halls and the crowds of people  who descended on the ‘Messe’ each morning.  An event like Medica really does remind you that  business is global and global business is huge. Medica trade fairs were generally good fun and well  organised.  The greatest challenge was trying to squeeze into crowded trains to get back to your  hotel before setting off again to find somewhere to eat in the packed out restaurants. Hardly a serious matter!

Trade Fairs became a bit more of an adventure for me when I attended one in Saudi Arabia in  January 2010. I must admit I was a bit nervous about this trip as I had heard it would be really hard  for me to be in Saudi Arabia without my husband or another male relative to act as chaperone. In  the event it was fine. I made sure I was appropriately attired, covering my hair with a scarf before I  left the plane and donning my abaya on arrival at the hotel. Although wearing the abaya took a bit of  getting used to, it came in handy when our luggage was delayed. My male colleague had to run out  to  a shopping mall to buy a new suit but I was able to wear the clothes I had travelled in under my abaya and no-one was any the wiser!  

My next trade fair experience was in Libya. We travelled there just after Libya and Switzerland had a major fall out which resulted in Schengen nationals being denied entry to Libya. So it was fun and games at Schiphol airport as officials tried to identify travellers from the banned countries to recommend they didn’t continue with their journey. The trade fair was held in a marquee on a university campus which seemed a reasonable arrangement until it started to rain. The carpet got soaked and started to leech some nasty white chemicals which stained our shoes. Boxes of brochures which had been left on the floor ended up wet and had to be discarded.  The toilets were a ten minute walk from the exhibition marquee and lunch could turn up at any time from 1pm to 4pm. The final straw was when we arrived one morning to find a tramp asleep on our stand wrapped up in our table cover.  He hastily leapt up and made his escape. We could only wonder if he had been availing himself of our table cover all week and had only been caught out as he had overslept  that particular morning!

Trade fairs are hard work and you need a lot of stamina to get through them. Most of us are not used to standing for hours on end or speaking for long periods. Sore feet and sore throats are an  occupational hazard.  That’s why a little light relief in the form of a soggy carpet or a cheeky tramp  are always welcome.

Anne Murphy

www.innovibusinessgrowth.co.uk

TALES FROM THE ROAD 15: SUPPORT YOUR DISTRIBUTORS

Appointing an international distributor can be a tricky business. Most business sectors in most countries have only a few main players therefore finding a new distributor can be a real challenge, especially for companies who are new to a market. And once you have found a good distributor, it is important to hold on to them.

Next week a former distributor of mine, and now good friend, is visiting Manchester from his home city of Prague. There are many reasons why I will remember Mira’s work for me in the Czech Republic, but there was one thing that convinced me his was the right company to be working with. I had inherited a hotch-potch of good, bad, and underperforming distributors from a predecessor, and Mira’s business fell into the ‘not sure’ category. He had not been our distributor for very long, and he also distributed for a competitive brand so I was not sure how that would work. The Czech Republic was not a priority market, but Mira was a trier, and he won a few reasonable sized orders that kept me from looking for an alternative.

One day he phoned me to give advanced warning that he might have difficulty in settling his invoices for a few months. He had not been paid by one of his major customers and his cash flow had been hit hard. Dodgy, you might think! Well that did cross my mind, and his announcement would leave us exposed to the tune of about £10,000. What impressed me is that he immediately suggested a payback period, with interest if necessary. I can’t recall the detail, but we reached an agreement on the outstanding invoices, and actually Mira was able to settle all of them well within the agreed timescale. That relationship lasted for six years, and he became an important distributor. That was an example of a reactive way to support a distributor. I had to take a view or risk losing what business I had in the Czech Republic. There are so many ways in which you can actively support your selling partners, and here are two more examples:

I visited a complaint at Turkcell just outside Istanbul where an open plan 2,000 square metre floor had been fitted with our carpet tiles. All the tiles had been fitted in the same direction apart from one, which stood out like a sore thumb smack in the middle of a large open area! Worse, the installers had used the wrong adhesive to save cost, permanent adhesive rather than release adhesive, so I couldn’t lift the tile and turn it in the right direction. Thus an unpleasant argument ensued where I had the installer bang to rights for not bothering to read the instructions in every box of twenty tiles that we had translated into Turkish. Turkcell accepted my version of events, which left the installer with a rather red face, and I left that installation wondering how we could avoid a repetition.

A few months later we were invited by our distributor to exhibit with them at the Yapi Exhibition in Istanbul, the country’s largest annual exhibition for construction materials. Their stand was a big one, so as our contribution to costs I offered to bring over one of the UK’s best carpet fitters to install carpet tiles in the design of our distributor’s logo. The other part of the deal was that our distributor had to ensure that all of their installers would attend on the two days before the show started to take a master class in creating fabulous floor designs from carpet tiles. That whole exercise probably cost our company about £3,000, but we were known thereafter for the quality of both our products and our installers.

The second example comes from my later days of selling carpet tiles. I was collected from my flight at Moscow airport by our distributors and taken straight to the offices to help present our products to BP, who had then just signed their agreement with TNK. We arrived in good time and were joined in the lobby by competitive sales people who were pulling behind them trolley loads of samples. So I asked our distributor, who was clutching a single blue carpet tile, if we had sent our samples ahead. We hadn’t! So the props for my sales pitch were one blue carpet tile, and a dozen specification sheets. There was simply no way we were going to win that business.

You never want to repeat experiences like that so I put on my creative head again, and after some thought and discussion arranged to invite ten of our distributor’s national sales people to Manchester for a two day training session on How to Sell Carpet Tiles to the Commercial Office Sector. The purpose of the training was to stop these excellent sales people from selling carpet tiles as a commodity – “Our blue tile is cheaper than that blue tile”. By the end of the two days (and vodka nights), they had learned to sell the right product for the right purpose and to achieve an overall profit margin higher than if they were to just sell the one type of tile. The interpreter advised me that she had heard one of the delegates say ‘We have never been taught how to sell like this before!” In the following year, that distributor sold nearly £500,000 of our carpet tiles into projects in Russia and Ukraine, a massive improvement in performance.

The Lessons Learned:

1.      Invest time and a sensible amount of money in your key distributors
2.      Be prepared to demonstrate the qualities of your product versus the competition
3.      Be flexible in the way you work with your distributors, and take calculated risks to help them to achieve their sales targets
4.      Don’t go out too often in Manchester with Ivan from Krasnodar or your liver will be pickled.

TALES FROM THE ROAD 14: STUCK IN GRONAU

Some weeks seem longer than others. In this case, it is a story of traffic queues, extreme roadworks, inclement weather, and to be perfectly honest, gross misjudgement of distances between European cities.  It always looks so do-able on a map!

My judgement was probably clouded by the fact that one day I drove back overnight from Frankfurt to Manchester, through the Channel Tunnel in a record 11 hours, helped by the fact that I arrived in perfect time for the next crossing! It created a feeling of invincibility, and a somewhat casual approach to driving distances on the pan-European journeys that immediately followed. I stopped at a service station in Aachen on the way from Frankfurt to Calais, and decided to eat before changing out of my blazer and slacks into jeans and t-shirt. I sauntered up to the self-service counter and pointed politely at the food I wanted to buy.

The serving lady, realising I was struggling with the lingo, started to gesticulate and direct me away from her counter, which felt a bit odd. But then in her best English said “Coach Driver. You go there!” and pointed to a square silver badge on the lapel of my blazer. It was actually the Gaskell Textiles badge, but she took it to be some kind of British coach driver emblem and I was ushered into the drivers’ lounge where I was fed royally, and served extremely quickly, for very little money!  

I had driven the well-worn route from Calais or Rotterdam to either Hamburg and Hannover on several occasions, through north-east France, northern Belgium, across the Netherlands, and on to the German autobahns. I generally filled up with fuel just as I left the Tunnel or disembarked the ferry and that would ensure an uninterrupted trip into Germany. On the occasion in question, I was to drive on to see a carpet manufacturer located in a town in what would previously have been the very western part of the former East Germany. It was much farther than I had imagined.

From memory I was going to visit our distributor Thomas Siewert in Kiel, after a couple of meetings in Hamburg, and then back along the long road back to the Channel Tunnel. We are spoiled in the UK with filling stations every few miles apart from in some of the more remote parts of the country. In eastern Holland at that time, there was a long stretch without a filling station in sight, and to my knowledge, very few settlements along the way. So as I approached the German-Dutch border with my gauge already well into the red, I knew I had to fill up or fizzle out!

And so I turned south off the autobahn to the sleepy and rather dull and linear town of Gronau, where not for the first time I pulled up at the pumps as I am sure I heard my car take its last gasp. More than a little relieved, I filled the tank to the brim and went into pay. My credit card at the time was a NatWest card, which the lady swiped and then said “No good”. Knowing that there was no problem with credit on the card I said “Yes. Good” and beckoned her to try again, then for a third time. I asked her to try an American Express card but she would not accept that.  Then the lady just said “Bank” and pointed down the road.  I got the impression I wasn’t the first British fool to have cut it a little too fine. So I reversed my car into a parking bay and walked in the drizzle in the direction of the bank, which I when I finally reached it after fifteen minutes was closed for lunch and I was drenched. The bank was not just closed for a lunch hour, but for two hours! And there was no hole in the wall!

A little exasperated by now, and with thoughts of a later than desired tunnel crossing, I decided I was going to go back to the filling station and call Thomas Siewert to help me persuade the lady that there was absolutely nothing wrong with my credit card. I handed her the phone with the words “Herr Siewert”, and Thomas asked her to try the card again and it worked first time.  It never happened again because I made sure I filled up whenever my gauge showed a quarter full. 

  pickled.

TALES FROM THE ROAD 13 – EXPECTATIONS & PERCEPTIONS

It is only in the last five or six years that the tie has become a less vital part of a British businessman’s attire, at home or abroad. It has become more acceptable to show up for a meeting in an open necked shirt, still smart but not quite the traditional image. I am personally not a great fan of the tie. That probably dates back to when it was used as a mild instrument of torture and gentle strangulation on the way home from school on the number 7a bus, but in spite of that schoolboy trauma I still think it is very important to wear one from time to time. It isn’t just about impact, professionalism, conformity, respect for those I am about to meet, or any individual thing. For me, it is mainly because a full suit and tie can occasionally have a very positive effect on people’s general perception of who we are.  

I once went on a long tour of the US North East coast, calling in on distributors and agents from Manhattan to Maine. For anyone who hasn’t done that drive in the Fall, make it one of the top ten things to do before you die. The colours of the maples are actually no different to the wonderful Autumn colours that we experience here in the UK. It is the sheer scale of the spectacle that never leaves you. I was driving up to Vermont for a meeting with the VP of Stanley Tools and his production team. We manufactured a very clever but incredibly complex machine for manufacturing different sizes of decorators’paint brushes, and it was my job to sell them one and to prove to them that it would increase output and quality.

It was a high speed woodturning machine that had a rotating turret with multiple centres that gripped the wood to be turned, and the whole thing moved back and forth against cams and high speed rotating blades to create a paint brush shape every few seconds. Everything but the bristles. A true feat of British engineering. I was especially excited about my presentation to the team because it was the first time I had sold such a complex machine by illustrating its key features on video. How times have moved on!

So I was greeted at the door by the VP’s right hand man, who was dressed in a polo shirt and smart(ish) jeans. He introduced me to the VP, who was similarly dressed, and I was escorted into a room with about 25 men in open neck shirts, polo shirts, or t-shirts, and every one of them in denim jeans. “Well…”, I thought, “…I suppose it is a manufacturing plant”. And there was I in my pin striped dark blue three piece suit and tie, looking far too much like a salesman and not nearly enough like an engineer! The presentation went very well and I sold the machine, an £80,000 order even at that time, which would have been about 1993.

About six months later, I accompanied Roger Bowness our tooling engineer to install and commission the machine. I was greeted in the same way on arrival, and we were led into the same presentation room. It wasn’t nearly as friendly an experience, which at first I attributed to the fact that there were a lot of complex engineering principles for them to absorb and understand.  Roger and I got them going, and the machine performed as well as we knew it would. But the slightly unwelcoming atmosphere persisted and I joked that they might not like Roger’s aftershave. When that went down like a lead balloon, I thought it was best to let Roger get on with his part of the job and take a back seat. My curiosity got the better of me in the end, and as we left the building after a very successful  installation, I asked the VP if there had been anything wrong with the way we approached the machine demonstration because I felt his team seemed to be in a subdued mood on this visit. And he just said “You’re British. You wear a suit!” Wow!

After the previous visit where every man and his dog was clad in denim and other forms of casual wear, I thought I would be on pretty safe ground in a smart jacket and trousers and open necked shirt. But no. To my customers it felt like I was a British person trying to dress more like them, trying to fit in, maybe to ingratiate myself. None of that was the case, but it taught me the value of living up to my customers’ perceptions of John the Businessman. Had we all gone for a beer somewhere afterwards, they would have been fine with John the Person changing into casual gear, but not while I was doing my job. Suit and tie only.

Conversely, I worked successfully with a UK engineering client for a number of years until their business was sold on. On my first few visits I was working on behalf of the local Chamber of Commerce, so I was dressed in a suit and tie, and on each occasion was received politely by the company secretary. The company MD barely said a word to me even though their office was open plan, and at times I felt he was downright rude. Then one day I was passing by en route to a stock taking exercise with another client and dropped off some claim forms for the company to fill in. The same guy was very welcoming, and like a completely different person. I was wearing a t-shirt and jeans! We never had a problem after that day.

So you have to be careful. Think carefully about how your customers expect you to be. Dress for your role on the day, but if you are ever in doubt, stay smart. 

TALES FROM THE ROAD 12: IN MORTAL DANGER

I visited India for a ten day business trip back in 1996. It was my first experience of the Indian market, and combined visits to a number of key customers, helping our distributors with an exhibition, a small amount of sightseeing, and the obligatory indescribably horrible tummy bug!

The journey started with a flight into Bombay that arrived in the early hours in November temperatures in the late ‘20s, and involved a scrum for a cab that would take me around the corner to the Connaught Hotel. I spent the next three days being guided around the city by Shanti Mansabdar, who ensured that I enjoyed just about every travel experience short of climbing onto a bus through the window on a busy roundabout! It was fun, if not as productive as I had hoped.

And so to New Delhi, where I was met at the airport by Sonny Roy and taken straight to the Park Hotel near to the Defense Colony where he and his family lived. As our distributors in Delhi they had taken stand space at an exhibition which can best be described as an outdoor Ideal Home exhibition, where they showed off their range of metal furniture alongside images of our fantastic woodworking machinery, and provided a curtained-off area for ‘Mr. John’ to meet and greet customers and talk to them about why they should place orders with us.

It was our first time exhibiting in India and I was there for a full six days, during which time the family Roy had arranged a good number of meetings with potential customers.  We were adjacent to the British Pavilion where British companies who actually knew what they were doing had taken exhibition space. But actually it was far more pleasant being in the great outdoors and watching the throngs of visitors passing by, with all the colour and bustle that you would expect of an exhibition in a busy capital city.

The Roys had two sons, the appropriately named Kubla and Chotu who occupied a position at entirely the other end of the temper scale, and who remains to this day the coolest person I have ever met in all of my travels. Directly opposite our stand and adjacent to one of the main thoroughfares was a stand manned by a group of religious fundamentalists who had come down from the hills around Delhi for their annual recruitment drive.

Every day they played their music and videos and drew huge crowds to listen to their words of wisdom, but also every day the volume got louder and louder, to the point where Kubla went across to ask them politely to keep the music at a reasonable volume so that it didn’t disturb exhibitors on nearby stands. That didn’t work too well, and resulted in them doing the opposite to what he had asked. Kubla then spent the best part of the day with steam visibly coming out of his ears, and getting slowly more wound up. We left the site at about 10pm when he again approached them politely to request that they would turn down the volume for the days that followed.

Well they didn’t do that either, and their noise became louder and louder and more intrusive until Kubla started to really lose it, and stormed across to threaten that if they persisted in playing their music at excessive volume, he would have no option but to destroy their equipment! And guess what? It got worse again, and Kubla finally cracked and carried out his threat, flinging their one video recorder, the source of their deafening output, onto the ground.

Within seconds, a group of 40 or 50 rather determined looking and extremely loud, bearded men in white surrounded our stand threatening among other heinous things to burn down our stand! Realising the clear and present danger, Chotu, who had been coolly encouraging customers to buy his range of metal furniture amid the din, decided to step in and mediate before his brother became the victim of a lynching. And who knows what would have happened to Johnny English?

A calm descended within seconds as Chotu offered to go and look at the equipment with a view to repairing it, and the throng followed him across the thoroughfare as disciples would follow their Messiah. He spent about 15 minutes there and returned with the damaged video recorder while Kubla was banished by his father to the safety of the Defense Colony.  An hour later, Chotu returned their equipment to them repaired and fully functional, and the rumpus resumed for the final few days of the exhibition.

It was an odd experience because in the whole of the time that our stand was in mortal danger, I felt quite calm. It was like watching a film with Chotu in the lead role as peacemaker and general good guy. It was truly fascinating to watch the transformation of this unruly mob into a respectful, appreciative, and much calmer group of co-exhibitors. I still reckon to this day that he must have had a spare video recorder hidden somewhere in the curtained-off area in anticipation. And Sonny Roy apologised to ‘Mr. John’ for his other son’s fiery temperament! A fabulous family.

TALES FROM THE ROAD 11: THE NIGHTMARE IN ATLANTA

I am glad to say that most of my international exhibition experiences have been pretty good ones. Good organisation. Great stand designs. Exceptional interpreters. Fabulous staff. Great business. But there are some things that you simply can’t plan for, and this is the story of the one that got away!

We had committed to taking several new woodworking machines to the IWF show in Atlanta (International Woodworking Fair), two of them weighing over a ton and each of them requiring setting up for demonstration.  We had booked a reasonable sized stand, relatively close to two of the distributors’ stands, and had contracted an exhibition specialist to set up the stand so that when my colleague and I arrived we would need just to check the machines and get ready to sell.

Kevin and I were originally just going to get off the plane from Manchester and have a few drinks in preparation for the following day, but something told us we had to go to the exhibition hall just to see how the stand had been put together. We arrived in our hall at about 2pm local time and finally had our ‘few drinks’ at 3am the following morning. We were lucky enough to find a bar that sold cans of  Boddingtons adjacent to the exhibition site!

On arrival at the exhibition hall we found four crates located on an otherwise empty stand. Nothing at all had been set up for us. We had no toolkit. We had not booked forklift drivers. We had no idea where to store the crates when we finally prised them open. Our contractors were nowhere to be seen, and to top it all it was 90+ degrees in the hall because they only switched the air conditioning on for the show itself!  

There was no point is wasting our breath getting angry. Our choice was to find a way to set everything up ourselves, or abandon the exhibition and sue the contractors for the wasted time, travel and accommodation expenses.  So we begged enough tools from one of our distributors to take the crates apart and set up these complex machines, for which we had to rob one of the technical guys from another distributor who knew what he was doing.

We had to pay forklift drivers large numbers of dollars to interrupt their tight schedules to remove the crates and to help set the machinery into their demonstration positions.  And we worked our socks off in sweltering, airless conditions for the next 12 hours. The two of us took in a pint of water every half hour just to stay hydrated and finally left the stand in good order shortly after 2:30am the following morning. I think we may have had a couple of sandwiches in all of that time.

Finding a bar had become essential by that time, and finding one with Boddingtons, albeit in cans, was like having our prayers answered. So we slipped quite a few of those down and then realised that our cab ride back to the hotel would take 30 minutes, and that we would have to leave the hotel again through Altanta’s morning rush hour by about 7am to get back to the exhibition stand for an 08:30 start. We each had three hours sleep but somehow got through the following day without either of us expiring.

We had an incredibly busy and successful few days and were lucky that our distributors were prepared to take our machinery into their showrooms rather than have to arrange for their shipment back to the UK. We had averted near disaster by knowing enough incredibly helpful people, and we got the show on the road. It goes without saying that we sued the company who failed to do what they had been contracted to do.

The only thing that Kevin and I could have done differently was to arrive a couple of days earlier. We thought that everything had been planned out to the ‘nth’ degree and that we had done everything possible to ensure that everything would be set up for us when we arrived.

SO THE LESSONS LEARNED?

1. Make sure you know enough people to get you out of a scrape if you happen to inadvertently find yourself in one.
2. We should have worked more closely with our distributors to use local set up companies rather than rely on someone we contracted back in the UK.
3. Make sure there is a good bar open all hours close by any venue where you suspect this kind of thing is ever going to happen to you!

TALES FROM THE ROAD 10: SUPPLYING INTO DIFFICULT MARKETS

TALES FROM THE ROAD 10: SUPPLYING INTO DIFFICULT MARKETS

My European History degree thesis was on the continuance of business with Hitler’s Germany during World War Two. It taught me that business generally continues even in the most difficult political circumstances, although its ethics can often be called into question. 

I spent several years from 2004 advising a UK manufacturer of incinerators whose enquiries were coming from all over the world, including George Bush’s  axis of evil, except for North Korea: Gaddafi’s Libya, Ahmedinijad’s Iran, and Saddam Hussein’s Iraq. Countries in different levels of turmoil but still with a need to trade. The Libyan order was supplied with the help of a well connected British consultant who spent half his life there. The Iranian order was completed through a Greek consultant just before sanctions were increased on Iran. The Letter of Credit (LC) costs were exhorbitant, mainly because the payment had to be routed through a London based Iranian bank. But the Iraq project was more soundly based, and this is the story.

My client had just acquired a UK competitor, and as part of the acquisition they inherited a $350,000 USD for 20 standard incinerator units for the Ministry of Health in Iraq. It was potentially very profitable business and they were both excited by it and at the same time daunted. It took a couple of meetings for them to produce the LC that applied to the order. It was from the Trade Bank of Iraq, owned by JP Morgan, and was stacked entirely in favour of the buyer – the Ministry of Health in Baghdad. These were the key terms of the contract and LC:

·         80% payment to be made on delivery of all 20 units to Baghdad, overland from Amman port in Jordan and to include all insurance.

·         20% payment to be deferred ‘until all units were installed and in use’ at some indeterminate time in the future.

·         A 10% bid bond was required just to take part in the tendering process

·         A 20% performance bond was required to ensure that any equipment supplied would perform to standard, and would also be paid/refunded either partially or in whole at some indeterminate time in the future

·         No British manufacturing plates were to be visible on any machine in case they were captured and destroyed by insurgents.

All of the risk was for my client, who stood to lose all $350,000 if anything went wrong in transit, or if payments failed to materialise. The LC had been arranged by an intermediary in Baghdad who has since proved  to be one of the most honourable people I have ever known. Of course we had no way of knowing that back then, but I advised my client that we could not accept the LC on those terms. The manufacturer was clearly nervous about losing a large and profitable order, but I persuaded them that it had to be re-negotiated so that we could reduce their exposure to risk.

So I picked up the phone to the intermediary, and told him that as the LC as it stood was unworkable we needed to find an alternative arrangement, either a complete set of amendments to the LC or by agreeing a deal that would enable us to cancel the LC. We declined to pay either the bid bond or the performance bond. I know that his LC charges in Baghdad were likely to be very high, and immediately suggested that the LC would cost us both unnecessarily. He accepted that, and agreed the following schedule:

·         The 20 incinerators would be sent in three shipments: the first containing four units, and the second and third each containing eight. 

·         Each payment would be by telegraphic transfer into my client’s bank.

·         50% of the value of the first four units would be paid before shipment from my client’s factory, with the balance payable when the shipment reached Amman in Jordan, plus the 50% deposit for shipment two. The deal was repeated for each of the following shipments.

·         The intermediary arranged overland delivery and insurance from Amman to Baghdad and the installation of each machine.

·         The maximum financial exposure to my client at any one time was $70,000 USD .

All payments were made on time. All shipments arrived in Baghdad on time and the incinerators were distributed around various hospitals in the city. Orders are still being received from the same source, but that fact that my client could demonstrate they had units on the ground in Baghdad  encouraged further orders from both the British and US military.

The situation in Baghdad during that time was extremely dangerous, to the point where the intermediary had to send his British wife to live in Jordan until things calmed down. Their lives had been shattered by the war but they found a way to manage in those very difficult circumstances. He was especially pleased to be championing the supply of British goods into Iraq because the war years had led to the importation of what he regarded as sub-standard products from many different parts of the world. During his youth the Iraqis liked to buy British because it had a quality stamp to it, and a certain prestige. So the incinerator story is a success story for both British manufacturing and British exporting!

The lessons learned?

1.       If a deal looks wrong, you can normally change it. Business is about negotiation.

2.       Business is also about risk. Sometimes a business deal is about minimising the degree of risk rather than taking no risk at all. This was a calculated risk that paid off.

3.       People do business with people. The intermediary is a regular visitor to the UK and my client had the good fortune to get to know him and his family, just as he became familiar with the quality of their machines.

4.       British quality is globally recognised and we should be shouting it from the rooftops!      

TALES FROM THE ROAD 9 – HOW CAN YOU TELL? PART TWO

Whatever decisions you make in life, you can get them right or wrong, partly or wholly. It is no different in selecting who you do business with. However, you can do a number of things to make any risk a calculated one based on facts, figures, and reputation, and therefore minimise the degree of risk to your own business.

In PART ONE of this Tale, Om and Joseph demonstrated a hunger and persistence that encouraged belief in their dedication and will to succeed, and risks were taken in both cases by the companies who gave them a chance. Both risks were minimal and were calculated risks. Om was prepared to finance the purchase of machinery and he did, and our company at that time had no alternative options to sell into Dubai. It was a case of either do it or back off. There was no financial risk, but there was a risk to our reputation should Om have turned out disastrously. At first, Joseph operated as a Sales Agent for the German tooling manufacturer, so he had to win orders and ensure that payments were made before he received his commissions.

The US distributors continued to sell our machinery because we knew they could not get it anywhere else. They continued to sell for our European competitors, so it wasn’t ideal but suited us at the time. Both continued to whinge about the other but there was plenty of space in town for both of them. Our Nigerian friend has stayed in touch and may be of use in future years, so actually none of the cases from PART ONE of this article brought us to a complete dead end.

I only got to know the Nigerian in 2011, but before the advent of the Internet company verification could be quite a challenge. Now we have the luxury of online credit checks, Google Streetview, and a whole host of other information sources that go some way to help us establish whether or not a company is a good or a bad risk. The flip side is also true. Companies and individuals who are a bad risk use the Internet for a range of activities, both innocent and fraudulent.

So you start with two rules of thumb: if it sounds too good to be true then it probably is; if you have even the slightest doubt, check, check, and check again and do nothing if doubts persist. Below are 20 questions that I have used over the years to help verify new enquirers:

1.       What is the street address of your company?

2.       What is your website address?

3.       What is your company registration number?

4.       How many locations does your company operate from?

5.       What is the main business of your company?

6.       What company standards and certification have you achieved?

7.       How many years have you been selling into our market sector?

8.       What is your company turnover and how many people do you employ?

9.       How many sales people do you employ?

10.   What territory do they sell into?

11.   What market/industry sectors do you target?

12.   What complementary product ranges do you sell?

13.   What competitive products product ranges do you sell?

14.   Do you have your own warehousing facility?

15.   What Trade associations do you belong to?

16.   What Industry publications do you advertise in?

17.   What is the scope of your online advertising?

18.   What exhibitions do your company show at?

19.   What are your main sources of sales lead generation?

20.   What sales turnover can you generate for our company in the next 12 months?

What would your company’s 20 questions be? Of course you don’t need to ask all of them all of the time, but it is useful to ask four or five of these to provide you with a basic understanding of who you are dealing with. You know best what your company requires from an overseas partner, so build your own checklist based on that knowledge. Alarm bells should sound if companies are not prepared to answer reasonable questions, and some will not respond at all. Those who do tell you some or all of what you want to know are generally worth pursuing.

Be aware also that there are occasions when you can run through all possible checks but then still can’t tell! That’s when you have to rely on instinctive judgement, gut feeling. And that’s what it was always like 20+ years ago, and it remains an essential skill in appointing any new business partner, especially internationally.