Collaborative Exporting? What’s still to achieve @LaFabriqueDeL’Exportation

This is a translation of a French article (Explorer le potentiel de l’économie collaborative) by La Fabrique de l’Exportation

We are witnessing the rise of the collaborative economy, a new production system where economic actors, which are intelligently connected through trusted platforms, cooperate to increase efficiency and reduce costs of production. There have been multiple applications: car pooling, apartment rental for holidays, housekeeping services, training, software and engineering products in open source, etc.

Export activity is essentially collaborative. Each exporter must be fully integrated into an ecosystem to optimize sales, including: distribution, transportation, financing, foreign business and commercial insights as well as recovery of all related economic actors. Academic research also proves that the more an exporter cooperates with his distributor, the more effective his activities are. So, exporters should consider the relationship with their distributors as a way to achieve commercial objectives together (by sharing resources, capacities and information). A talented exporter is one who knows how to build business relationships (and contracts) that generate trust, facilitate and stimulate cooperation.

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Some platforms are starting to facilitate the collaborative economy. For example, the Mocity app helps you find other exporters or Prestashare to find companion companies. Beside those online communities, there are also “collaborative export” operations initiated by Medef, OSCI and ADEPTA, which aims to help exporters join forces in the conquest of international markets by pooling commercial information, marketing/commercial actions to build more comprehensive offers to international customers or traders.

A platform for crowd-exporting is to be invented. Imagine that you want to distribute your cosmetics in Australia. You do not know this market but the platform (let’s call it TheHub) will help you create a skillful team and a trusting relationship with them. Via TheHub, you can interview Pierre, a former L’Oréal Australia Director, who explains the Australia market to you and gives you advice on marketing strategy. Then you recruit Eamon, a freelance designer who will generate an ad hoc packaging and your “Australia special” samples on his 3D printer. You will also find John, a former Beiersdorf Australia salesman who wants to be your local account manager. Smart contracts can be signed among you, your selected personnel and your distributors. These electronic contracts, deposited on the block chain, collect the money from your sales and automatically redistribute a percentage to Pierre, Eamon and John. The whole process is guaranteed by TheHub.

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The day when an on-cloud platform is able to create trust between economic actors, the possibility for international development will be unlimited. Remember the struggle of renting a holiday apartment before AirBnB or hitchhiking before Blablacar. A tool for exporting at zero level of organization is waiting for you to create!

Ready to grow your business online? Join Beeleev, the first Entrepreneur-Only Community and Platform dedicated to their International Projects! 

  • Connect with other CEOs and exchange advice and international contacts
  • Access in-depth Market Intelligence and testimonials from other members
  • Find your future partner or any company in your targeted country
  • Meet through our Networking Events and Learning Expeditions all around the globe

 

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How To Choose The Right Entry Mode For International Development?

To “Go Global” is a challenge for entrepreneurs. Amongst all issues, how to enter a market is always a brain-wrecking question that has no universal answer. This article by La Fabrique de l’Exportation will provide you a reasonable approach to find the best solution to your specific situation. Hope you’ll enjoy the read!

Question your entry mode

Most SMEs tend to seize any opportunities without thinking about associated entry mode. For example, try to sell directly to Brazilian contacts without questioning if this is really the best way to succeed in Brazil. Questioning your entry mode alone is already a good sign, and for a company who wants to expand internationally, the choice of entry mode is a key success factor.

Examine alternatives

hand-picking-among-metal-paperclips-one-red-different-from-others_1163-2747Regarding international entry mode, not only is there no single solution, but solutions may also vary from one country to another and/or from one sector to another. Thus the choice of entry modes not only depends on the country and the market concerned, but also on the company’s strategy as well as the financial and human resources it can mobilize for export activity.

Beware of low cost strategies

There exist low-cost strategies, which involve finding an agent or distributor and signing a contract, with neither prior market research nor thoughtful strategy/reflection on the choice of country and mode of entry, in hope that “the export dream will come true”. These strategies requires fewer resources but also produce very few results: most often, there’s no miracle and a few months later, the agent or distributor doesn’t sell anything. The company then ends up wasting time on marginalizing, while at the same time other companies have already succeeded with good strategies and taken the markets over.

Opt for reasonable approaches

To avoid the cost of failure, there are other strategies, less “low cost” and above all more reasonable. They are more expensive because they include market research and the use of experts, specialized lawyers  to secure contracts. But these strategies generally ensure solid return on investment. However, the investment must also be cost-effective, making export the most cost-effective possible.

Consider alternatives regarding the company’s competence

Each entry mode requires specific skills from the company: selling via a an international trading company does not require the same competence as having a franchise abroad. For each mode of entry possible, first thing is to weigh skills required and skills possessed; and for each task, ask: do I know how to do it today, or will I learn the know-how with reasonable amount of efforts and within acceptable time frame. This analysis does not necessarily give you the best answer, but it will eliminate modes that are beyond the company’s competence. In case of lacking skills, the modes of entry associating a high level of outsourcing may be the solution.

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Consider necessary investments in resources

Similarly, each mode of entry corresponds to a certain level of financial commitment and (shared) risk exposure. It is, of course, also necessary to weigh the investments required for each mode of entry against the resources that the company can and reasonably wishes to mobilize to develop its activity abroad. Entry modes that consume more cash – flow (e.g. creation of a commercial subsidiary) should be ruled out in case of limited financial resource corresponding to this type of risk-taking decision. Cost assessment needs to cover exit strategies in the event of failure (e.g. liquidation cost of a subsidiary).

Learn to work with foreign partners

185.jpgIn case of success, an inter-company partnership can be a good solution because it generate durable development. Even if finding a trusted partner in a foreign country can turn out to be very difficult, the presence of a “regional representative” can be an important factor in developing the business. A well-framed joint venture may, for example, be more suitable than a proprietary subsidiary, especially when it comes to recruiting talented collaborators. However, you have to learn to work in trust with a foreign partner, to create a relationship of trust and guarantees for both parties. It is this learning process that is often ignored by SMEs, diverting them from the entry mode of establishing a partnership.

Take account of market specificity

The juridical security of contracts and payments is an important problem in many African markets. Taxes on imported products from such countries like China can make the price prohibitive. Other markets like Cuba require special financial packages. These are all country-specific parameters that should be incorporated into internationalization strategy.

Integrate digital solutions

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E-commerce offers a new entry mode for SMEs by allowing direct sales to customers (BtoC or BtoB) on their own sites or on a market place. It is a mode where the company is not dependent on a foreign partner, where cashing process is direct and at will – aspects that should please and suit SMEs. It is now a very powerful mode of entry to the international market, within the reach of even smaller companies. It is still necessary have a digital showcase and/or the ability to access an e-commerce platforms. The acquisition of this digital competence is today a major subject for SMEs.

Want to contact La Fabrique de l’Exportation ? Tell us about your project through the Smart Connector and we’ll take care of the introductions!

To read more on the same issue in the context of Gulf countries, take a look at our Chief Marketing – Hicham Bahsoun ‘s in-depth article here.

 

How about Intrapreneurs?

Entrepreneurship and employee empowerment have proven to be a winning combination when it comes to innovations within big corporations. At Orange, the European leader in telecommunications, the idea of starting a program for intrapreneurs was seeded in Spring 2016 and officially took off at early 2017 with the first cohort named David Bowie. Nicolas Bry, Chief Innovation Officer at Orange Vallée, an agile entity within Orange Innovation, put together an insightful testimonial of how the program was executed and the valuable lessons learnt. Enjoy the reading!

The complete and original article can be found on Nicolas Bry ‘s personal blog.

Featured photos are credited to Nicolas Bry.

Tweaking Value Proposition

The value proposition of the Intrapreneurs Studio lies then in Orange Valley roots: we would address employees who have a powerful creative idea, and incubate them to transform their idea into an offering, enriching Orange’s portfolio.

These employees are keen on achieving their product with passion and undefectible will, but are sometimes missing 3 levers:

  1. legitimacy: they are not in the appropriate department to develop the idea;
  2. methodologies: business model canvas and lean startup are still fuzzy for them;
  3. and networking: they don’t have connections all over the company, and sometimes they don’t feel alllowed to develop them.

Defining the Intrapreneur Program

We were convinced that the successful intrapreneur is a couple composed of an attractive idea, and of a committed character. The program was then splited into 2 stages:

  • Qualification: this 3 weeks stage should be dedicated to learning innovation practices, and moreover to put them to work on the intrapreneurs’ projects.

  • Incubation: the intrapreneur would be fully allocated to his project at this time. This period could last 6 to 18 months, and the intrapreneur would suggest his own milestones depending on the project specifics.

Testing MVP

Indeed, entrepreneur should not fall in love with their solution, but with the user’s problem. Consequently we conducted a series of benchmark meetings with other intrapreneur program managers to test, and enrich our this preliminary agenda. Here are some quotes on what was shared:

  • Intrapreneurship is the individual right to innovate for any employee;
  • Intrapreneurship is an ecosystem that supplies the intrapreneur with energy;
  • Intrapreneurs Studio is a tunnel of goodness which protects the intrapreneur.

Go Live with David Bowie Class

And so we started our first season, the Intrapreneurs Studio pilot, in January, opening the program to all employees working in France: Orange France, Orange Business Serices, Orange Innovation, Orange Headquarters.

We received 50 files, out of which we selected 11 intrapreneurs, who followed the 3 weeks Qualification stage, and end up pitching their project on February 1st.

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3 intrapreneurs were selected to develop their idea in the Incubation phase: a next-gen video communication service, a 4G connected sensor to locate daily objects, and a new distribution channel between Orange salesforce and small-business IT suppliers. Since March, they have started to staff their team, and work on their next MVPs.

A great satisfaction was to have created a team-spirit across this first range of 11 intrapreneurs during the Qualification phase. They summarized what is an intraprenur at Orange: an intrapeneur is someone who sometimes hacks the rules, but in the spirit of the rules.

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Lessons learned and next steps

While the program is still in ongoing deployment, 3 lessons appear clearly already:

  • Intrapreneurship is both about innovation techniques, and a human development program: it requires the involvement of human resources to tweak the processes, and a time for the intrapreneurs to consider their commitment, balance the advantages with the risks;
  • Intrapreneurship has a very specific transformative impact on employees: it’s not someone from outside who’s pitching his venture on stage, it’s my colleague that I take coffee with everyday; intrapreneurship unfolds opportunities for every employee, that he can realize within his department, or by applying to the Intrapreneurs Studio;
  • Hands-on sessions, where intrapreneurs directly apply the concepts of Business Model Canvas and Lean Startup on their projects, had the most profitable impact during the Qualification phase: we will focus on them for the next Qualification season in November; we will also give the intrapreneurs some time to build their MVPs during the 3 weeks timeline (assuming a MVP is not necessarily a prototype, but can be much simpler, i.e a homepage with a call to action).

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The next season of the Intrapreneurs Studio in Autum is setting the bar high as the program will go international with 2 pilot countries from Europe and Africa. No doubt that these next steps will bring additional fruitful and surprising learnings!

What do you think about Intrapreneur and its application at your organization? Feel free to share your perspectives below!

Latest Developments in German Tax Law: In-Depth Analysis with CMS Francis Lefebvre

CMS Bureau Francis Lefebvre, the 2nd largest law firm in France by revenue and 4th by workforce size, is sharing with us their latest article on “German Taxation: New Developments” .
If you are going to enter or currently operate in Germany, this update will help you save hours in legal survey. Hope you enjoy the free access to our expert resource!

berlin-66589_640CMS Bureau Francis Lefebvre, the 2nd largest law firm in France by revenue and 4th by workforce size, is sharing with us their latest article on “German Taxation: New Developments” .
If you are going to enter or currently operate in Germany, this update will help you save hours in legal survey. Hope you enjoy the free access to our expert resource!

 

 

Established in 1925, CMS Bureau Francis Lefebvre gathers today more than 400 lawyers in France (Neuilly-sur-Seine, Lyon, Strasbourg, Algiers and Casablanca). The French law firm is especially reputable for its expertise in Tax, Business Law and Employment. Since 2001, it has joined CMS, the leading network of lawyers in Europe with more than 71 offices in 40 countries and over 4,500 lawyers across the world. Today, it is the 3rd legal global network in terms of locations.

CMS Bureau Francis Lefebvre has long been a trusted partner of Beeleev and they are always willing to support our members with in-depth content. For instance, our interview last week with one of their partners, Christophe Blondeau, revealed insight on the development of this network  in the age of technology.

In today’s article, you will find an analysis by François Hellio, partner of CMS Bureau  Francis Lefebvre and Dr. Annett Kenk, counselor of CMS Germany on the evolutions in German tax legislation. The paper discusses in length four major changes and their implications on doing business in Germany:

  • Forfeited tax losses at change of control of a German company
  • Voluntary correction of tax errors
  • Transposition of changes to the European directive on administrative cooperation in tax matters and other measures to combat the erosion of the tax base (Anti-BEPS-I Law)
  • Limitation to the deduction of royalties for the use of intangible assets (Draft Law)

You can download the paper here for free.

Want to contact CMS Bureau Francis Lefebvre? Tell us about your project through the Smart Connector and we’ll take care of the introductions!

François Boulianne: the case for transferring your R&D to Canada

FBoulianneFrançois Boulianne is a Lawyer, Tax Advisor and Partner at YULEX, Attorneys & Strategists. They recently joined Beeleev as Partners and agreed to share this great piece of advice with our Community, which should give you great insights on the advantages of locating your R&D activities in Canada.
Do not hesitate to send us your request to connect with them if you consider developing your activities in the Land of the True North!


“Hey High-Tech Corps, it Might Be a Good Idea to Talk to Your Corporate Lawyers and Tax Advisors about Transferring the Development of Your Technologies in Canada!”

 

The Opportunity

According to KPMG[1], Canada ranks 1st among ten major countries[2] and three of its cities[3] rank in to top four among 51 major international cities, for their business and corporate tax effectiveness, as they bolster the lowest tax burden imposed on corporations doing business on their territories. Canada also ranks second with respect to the costs of doing business (only trailing Mexico), since its labor costs, facility costs, transportation costs, utility costs, capital costs and tax costs are the lowest, or close to the lowest, among those same countries and cities.[4]

One reason for these attractive rankings is the well-developed network of governmental grants, funding opportunities, and refundable tax credits put in place at both levels of government, federal and provincial. Among the myriad of tax and capital funding incentives[5] offered to high tech businesses operating in Canada (the “R&D Start Ups”), particularly in provinces such as Quebec, British Columbia and Ontario, is the Canadian tax credit program for scientific research and experimental development (the “SRED Program”). This program has been for a while, and still remains, once coupled with its provincial counterparts[6], one of the world’s most generous tax incentive programs for R&D activities around the world. This program, which is available to businesses carrying out eligible research and development activities in Canada (the “R&D Activities”), can play a vital role in the financing of R&D Start Up by providing significant non-dilutive funding for R&D activities until their intellectual property assets under development (the “Developed IP”) can be successfully translated into commercializable products and services.

The SRED Program has two major components.  It first allows for current eligible[7] expenditures generated by R&D activities (like labour, materials, overhead, and subcontracting costs[8]) to become fully deductible against business revenues for Canadian tax purposes. This is possible even if such expenditures would not otherwise qualify as such, for not having been incurred to generate business revenues per se.[9] Second, and more importantly for R&D Start Ups from a funding perspective, the SRED Program generates tax credits (“Investment Tax Credits”) that are fully refundable for qualifying corporations. In other words, when the Investment Tax Credits exceed the Canadian taxes payable by the R&D Start Up on its business revenues (which is commonly the case at the R&D Activities stage), the corporation get a cheque from the government for the difference. Combined with its Provincial counterpart, the refund can even reach up to roughly 73% on certain labour expenses related to R&D activities.

The Problem for Foreign Corporations and their Legal Advisors

In order to qualify for the SRED Program and get its generous Investment Tax Credits refunded, a R&D Start Up must not only be carrying on business in Canada, incurring qualified expenditures in Canada, and conducting eligible R&D activities in Canada, but it must also be, and must constantly remain at all times, a Canadian-Controlled Private Corporation (a “CCPC”).[10] Does that mean that no foreign corporation can benefit from the refundable Investment Tax Credits in the development of its IP assets? Not necessarily.

The Solutions

While for anyone other than a Canadian tax guru the actual definition of a CCPC might be quite mindboggling, it can however be roughly summarized as referring to a Canadian private corporation that is not controlled, directly or indirectly, in law or de facto, by any group of non-residents and/or public corporations, related or not.  So, the corporate advisor of the foreign entity might then ask: “How can my client set up, fund and manage a Canadian subsidiary responsible for developing its intellectual property core if we cannot control it?”; “Is there really no other way than to be a minority shareholder in a Canadian controlled corporation?”

There might be two ways around this problem. [11]

First avenue: setting up a new Canadian R&D Start Up with a Canadian partner. In 2012, the Tax Court of Canada decided in Bagtech[12], a paradigm changing case, that even in a situation where most of the voting shares of a Canadian corporation would be held by non-residents and/or public corporations, a Canadian corporation could still retain its CCPC status if a unanimous shareholders’ agreement (a “USAgr.”) is in place and provides that the minority Canadian shareholders shall have the right to elect a majority of its directors. What is noteworthy here is that a proper USAgr. can not only restrict the ability of the foreign majority shareholder to elect a majority of the directors of the R&D Start Up, it can also, at the same time, limit the power of its board of directors to control some aspects of its management, such as the nomination of key employees or the fate of the Developed IP. The whole question is to take care not to transfer so much power to the foreign corporation shareholder that it amounts to granting de facto control over the R&D Start Up. Since the Bagtech decision, foreign corporations are starting to find innovative corporate structures to benefit from the generous tax incentives of the SRED Program and case law precedents addressing those structures are slowly emerging.

Second avenue: entering into a service provider agreement with a newly created Canadian R&D Start Up. There are no restrictions on the ownership of Developed IP eligible to funding under the SRED Program. To qualify for the SRED program, the R&D Star Up must either own the Developed IP resulting from its work or assign it to a third party, which can even be a non-resident corporation, as long as it has with such third party a legally binding agreement confirming that it will own all Investments Tax Credits. Hence, it is possible for a foreign corporation to engage in a commercial deal with a newly created Canadian R&D Start Up to carry out its R&D activities in Canada and generate its Developed IP on its behalf. In this case, the foreign corporation does not benefit directly from any refundable Investment Tax Credits but anyone can see that such refundable credit benefiting its newly created service provider, coupled with all other incentives and cost advantages referred to in our first paragraph, will highly impact the price at which the development services might be sold to the foreign corporation, especially if the foreign corporation participates in the financing of its R&D Start Up counterpart.  Here again however, corporate lawyers must be vigilant not to grant so much powers to the foreign corporation client in their business deals that it amounts to granting de facto control over the R&D Start Up service provider. With proper agreements executed between the non-resident and its Canadian R&D Start Up service provider, ownership of any resulting Developed IP from R&D Activities funded in Canada could end up vesting in the non-resident corporation at a significantly lower cost.

To summarize, if a foreign corporation agrees to team up with a Canadian partner and if the business relationship between the foreign corporation and its Canadian partner is properly structured[13], be it as a parent/subsidiary structure or as a client/service provider structure, the foreign corporation could possibly end up indirectly benefiting from the generous refundable Investment Tax Credits available under the SRED Program.

Now What Lies Ahead?

One concern about the SRED Program is that while it funds expenditures without much discriminations, it leaves the income drawn in Canada from the resulting Developed IP taxable at regular rates. Foreign corporations are then justified to take their Developed IP back home, or even better, to send it to jurisdictions having tax regimes less demanding on income it generates. A year ago however, the Quebec government announced a new deduction for innovative manufacturing corporations (DIMC Program)[14] which shall apply to eligible innovating manufacturing corporation with paid-up capital of at least $15 million (The R&D Manufacturers). The announced purpose of the DIMC Program is to entice R&D Manufacturers to keep their Developed IP, as well as the ensuing manufacturing process, in Quebec, the whole by bringing the combined federal-provincial tax rate down to a low 19%[15] on eligible business income.

The DIMC mechanism would be relatively simple. A R&D Manufacturer residing in Quebec would have to calculate the share of its income that is derived from eligible patents[16] embodied in the products it sells. Such share of revenues would be determined by how much R&D Activities conducted in Quebec and funded by Investment Tax Credits under the SRED Program are at the source of the embodied patents. One can then easily envision the dynamic interaction that will be created between the SRED Program and the DIMC Program, once they are both available.

Now, does the R&D Manufacturer have to be a CCPC? Nothing points to such a requirement in the information made available by the government as of this date. A foreign corporation would then be allowed to set up a fully owned subsidiary in Quebec and benefit from the DIMC Program, without having to go through those arrangements with Canadian partners we were discussing in this paper. However, a set up involving an R&D Startup structured as a partner of the foreign corporation and funded under the SRED Program and a R&D Manufacturer fully owned by the foreign corporation as a subsidiary and founded under the DIMC Program might well end up being the best corporate tandem to conduct high tech businesses in Canada in the years to come.


[1]     KPMG, Focus on Tax, KPMG’s guide to international tax competitiveness, Competitive Alternatives – Special Report, (2016 edition). http://www.competitivealternatives.com/reports/compalt2016_report.

[2]     Those 10 countries are Australia, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, the United Kingdom and the United States.

[3]     Namely Montreal, Toronto and Vancouver.

[4]     KPMG, Competitive Alternatives – KPMG’s guide to international business location costs, (2016 edition). www.competitivealternatives.com/reports/compalt2016_report.

[5]     Programs such as the Industrial Research Assistance Program (“IRAP”), the Canadian Renewable Conservation Expense Program (“CRCE”), the Sustainable Development Technology Canada Program (“SDTC”), the Development of E-Business Provincial Tax Credit Program, and the Production of Multimedia Titles Provincial Tax Credit Program, to name a few.

[6]     Most provinces, including the province of Québec, have their own SRED tax credit program, complementary to the federal program.

[7]     To be eligible, expenditures must be related to R&D activities aiming at eliminating a scientific or technological uncertainty that cannot be removed by standard practice. While the work will be eligible if it creates new or improves pre-existing products, it does not have to have a specific practical application.

[8]     Unfortunately, capital costs are now excluded from SRED Program.

[9]     No revenues can reasonnably be forseen at such an early and uncertain stage of technical development.

[10]   If the R&D Start Up is not a CCPC, for instance if it is a subsidiary of the foreign corporation, the Investment Tax Credit will be significantly lower and, most importantly, will not be refundable.

[11]  Here is where the usual disclaimer of liability is warranted for the undersigned author. We do not intend this paper to be providing any formal legal opinion or advice to readers, nor are we pretending to outline any implementable corporate set up. We merely invite corporate lawyers to have these considerations in mind and to work closely with Canadian lawyers and tax advisors if any of their clients ever wish to consider taking advantage of the SRED Program.

[12]   Bioartificial Gel Technologies (Bagtech) Inc. v. The Queen, 2012 TCC 12 (Tax Court of Canada (TCC)), confirmed in 2013 by the Federal Court of Appeal. In this decision, the TCC found that the company was a CCPC even though a majority of the company’s voting shares were collectively held by non-residents. Tax authorities refused to refund the credit on the basis that the company was controlled by non-residents and therefore was not a CCPC. But since under the USAgr. in place the non-residents (even taken as a fictional one entity) did not have the ability to elect a majority of the company’s directors, the court found that the non-residents did not control the company.

[13]   Caselaw must be analysed carefully and proper attention must be given to the General Anti-Avoidance Rules and Aggressive Tax Planning applicable rules before setting up these kinds of corporate structures.

[14]   Upon sending my paper, draft legislation setting up this DIMC Program had yet to be released by the Québec government. For official documentations, see: http://www.revenuquebec.ca/en/salle-de-presse/nouvelles-fiscales/2016/2016-05-11.aspx“.

[15]  The general corporate tax rate in Québec is currently 11.9% (8% on the first $500,000 earned by qualifying small business) and would be reduced to 4% under the DIMC Program.

[16]   The underlying patent application would need to have been filed after March 17th, 2016 and the deduction could be clawed back if a qualifying patent is not granted within a few years.

Culture does matter for your international growth!

If you are thinking of expanding your business it is important to understand the role of culture in international business. How many companies went bankrupt because of overlooking the importance of culture for their international growth? 

international growth

Can you see all these coloured hot-air ballons? Well, it’s like all the countries in the world: we are all humans but according to the areas and the countries we are living in, differences may exist and culture is one of them (even the main one)!

Culture can be defined as the different characteristics and knowledge of a particular group of people, from language, religion, cuisine, social habits, music to arts.

Culture is an important feature to take into account when you decide to internationalize your business. It can have a huge impact on how a population is going to perceive your offer and can lead to a complete disaster if underestimated.

Understanding well the local and national cultures will help you to better anticipate customers’ needs, strengthen your position and develop a competitive advantage.

Studying culture will give you indications about people believes and behaviors in order to have a better approach of consumers habits, what people are used to buying, their decision making process, what you should and shouldn’t do, what are the actual trends…. It will help you to anticipate the reactions of customers towards your products or services and come up with the best offer and later adapt your marketing campaign.

Let’s take some examples

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Several famous companies that have underestimated the power of culture, have eventually paid the high price. Among them, the famously known Walmart which failed to adapt to the Korean market because the company didn’t take into consideration the local preferences for buying small packages, the presence of native discount chains and aesthetic preferences among shoppers.

Or Tesco, which failed to understand the Chinese market and culture and had to close its stores and give up the market.

These disasters could have been avoided by a better comprehension of cultural differences.

cultural differences

 

That is why it is important to carefully study culture before even thinking of starting your activity in another country. Learn more about consumers’ habits in order to come up with an offer, which perfectly fits the market, learn from your competitors and don’t assume that if your product is a success in your country, then your company will thrive in another one also.

And to have even more tips in order to succeed your international growth, don’t hesitate to read this article! 

4 Key Advice To Develop Your Business In Germany

Yves Rommel, Managing Partner of Victanis Advisory Services in Munich, Germany is sharing his advice on developing your business in Germany.  

yvesrommel-533562-edited.png Yves Rommel, Managing Partner of Victanis Advisory Services in Munich, Germany is sharing his advice on developing your business in Germany.   As a Management Consulting company with expertise in Business Development and M&A in Europe, Victanis helps entrepreneurs, mid-size companies and private equity funds with adapting investment strategies and accompanies them throughout their business development. 
Here are the 4 points that you should reflect on before setting up your business in Germany:

Be Patient 

First thing is to be aware of the German culture. Do not rush to this country before truly understanding how different the German do business. In comparison with the US or UK,  it normally take more time for return on investment to turn positive. In Germany, time for entering the ecosystem is the biggest investment an entrepreneur has to make.

Be Precise

The German is more interested in the functionalities of the products (or services) offered, far than the marketing hype. Therefore, the offerings should be communicated based on facts and functions instead of appearance and emotion.

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Propose Evolutionary Innovations Instead Of Disruptive Ones

The German is rather reluctant towards disruptive innovations, especially ones from abroad. Steadily-developed products are generally more valued than breakthroughs, as opposed to French consumers for example. The underlying reason lies in conception that a new product (or service) needs time to gain trust . This is particularly true for products of high value.

Get To Know The German Ecosystem 

Last but not least, before setting foot in Germany, it is compulsory to know the ecosystem in detail (competitors, potential partners, professional fairs, etc.), thus maximizing your reach to targeted customers.