About Marcelline T. Babicz Expertise Questions about how to make a business function successfully overseas--whether it`s U.S. business operating outside the States, or companies outside the U.S. trying to function in the States. Questions related to managing in multi-cultural workplaces.
Experience
Past/Present clients U.S. Embassy, Doha, Qatar; Qatar Petroleum, Doha, Qatar; Vanyoganneft Joint Venture, Nizhnevartovsk, Siberia; James River Corporation
Question Hello, I'm a co-owner to a small business and my company has family in Germany. I think it would be a great idea to do business with Germany, some feel otherwise. Could you tell me five issues that we could encounter while doing business transactions with Germany? This information would be very helpful as soon as possible, for we are up in dispute over this matter.
Sincerley,
Nicole Wilson
Answer Hello Nicole,
Congratulations on your interest in expanding overseas. It's a great step to take.
Here are five issues that you'll have to consider:
1. Legal and financial issues: You will need to consult attorneys and financial people in the U.S. and Germany who are familiar with local in international trade laws. You didn't say whether your business dealt with goods or services. If you sell services, the legal and financial issues are a bit easier. Import/export of goods is an area that is highly regulated. You'd need to have good counsel to make sure you don't inadvertently break any laws. Also, financial people should help you navigate the confusing world of monetary exchange rates so you don't lose money in the exchange.
2. The German Market: by market, I mean your potential customers. Don't trust your family there to tell you the market will be receptive to your business. Family can, with the best intentions, be enthusiastic without data. Make sure you do enough research to find out whether your product or service will sell well enough to make the investment worthwhile.
3. Company structure: You need to know whether you'll be functioning as a separate entity over in Germany or whether you'll still be just a U.S. company. There are pros and cons to both. (See issue #1!)
4. The E.U.: Don't forget, when it comes to trade these days, you're dealing with more than just Germany. Germany has its own laws, but it is also part of the E.U. The E.U. has another set of laws governing trade. You need to understand those as well.
5. Cultural differences: You may have an advantage with this issue since you have family in Germany, but don't forget the Germans have some very different norms from the U.S. Marketing, work practices, business relationships, company structures, and consumer behaviors are all different from the U.S. Be sure to take these into account before you commit to doing business over there.
Finally, one thing that struck me about your question is the issue of family. Family businesses are some of the most difficult to manage rationally. When we interact with family, our emotions are more likely to come into play than if we were functioning in a company independent of family.
If you do decide to go ahead in this business venture with family overseas, be EXTRA sure to draw up legal agreements regarding company business, and take the time to discuss, agree upon, and document roles and responsibilities. It will be time well spent.
Another good source for information is the International Trade Administration, US Department of Commerce. Their website is: www.ita.doc.gov.
