EcDev Journal

Trade Missions: Business or Boondoggle?

Posted on Thursday December 17, 1998

by Peter Constantinou (1998 Issue)

SINCE TIME IMMEMORIAL, political figures and governments have made trips to foreign lands to improve relations and expand trade opportunities. This model has changed little over time, except that private and public sector organizations have "institutionalized" this type of activity. The concept of a trade mission has now been enshrined as an essential format for increasing business or trade. As well, it has the potential for leveraging other political or social effects.

The federal government has lead the charge with an expanded version of this activity – Team Canada. With the Prime Minister and representation of most of the premiers, the Canadian trade mission travels the globe trying to expand opportunities for business.

Local, regional and provincial governments have all adopted international trade activities, usually with trade missions as fundamental components of their strategies. This is in addition to the activities of all of the chambers of commerce and boards of trade, not to mention the consulting firms that consider this a significant core component of their international financial institution work.

The activity is not without its detractors. Many dismiss trade missions as junkets or "perks of the job," where thousands of dollars are spent on luxury travel and accommodation and where little business is done.

Given the increased acceptance by organizations and governments of the trade mission as prime vehicle for trade expansion, and the fiscal restraints faced by most public and private sector organizations, it is important to ensure that this activity has not been perpetuated only because that is what has always been done.

Are trade missions about business or about publicly-funded, high-style holidays for our public servants? Certainly, it is worthwhile to re-examine the value of trade missions as components of trade expansion strategies.

THE ROLE OF GOVERNMENT
In many parts of the world, government controls, or is at least very active, in certain parts of the economy. In some cases, government merely regulates foreign investment and activities; in others it actually operates crown corporations or state enterprises. In such instances, private companies often encounter difficulties in accessing key individuals or decision-makers. In some instances, government-to-government contact in traditionally less-open economies is the only way to do business.

In such countries, heads of businesses or corporations report to political leaders or government officials. As a result, political approval or direction is usually required.

Trade missions, particularly large ones like Team Canada, bring a great deal of attention to the capabilities and interests of companies and countries. Team Canada missions to-date have been heavily covered by local and international media. Media coverage brings Canadian companies to the minds of decision-makers.

GOVERNMENT ENDORSEMENTS
Endorsement of a government is tremendously important as it establishes credibility and trust with potential business partners, in particular with countries where business is not done by price alone, but more on established relationships.

In this regard, areas of new technologies where scientific results are new and less understood, government endorsement is fundamental. The question whether a technology is operational and approved in your country is always an issue.

Endorsement is of particular importance in the area of environmental technologies. If a company's air pollution control device is not approved in the host country or if the government is not associated with the company and technology, it may be difficult to convince others to adopt your technology. This normally means companies will lose valuable time in attaining market share while other companies or countries develop similar technologies.

Moreover, as is often the case in the environment industry, some of the best technologies come from individual inventors or small firms which do not have the wherewithal to sustain an active presence in international markets on their own.

Trade missions facilitate access to decision-makers or potential partners that would not normally occur otherwise. Such activities also accelerate the learning process for companies starting to conduct business internationally. Most effective is the accompanying support services that governments offer in the areas of commercialization, business plan development and marketing activities.

THE CANADIAN ADVANTAGE
What is often most frustrating is hearing from international organizations about the way Canadians tend to do business. Canadians are generally not as aggressive as other business people. What they tend to forget is that Canadians have a special place in the world – we do not have much political baggage. Canadian companies can work in the Middle East without worries about flags being burned or terrorist attacks, as is so often the case with American firms.

Assistance from government economic development professionals and trade missions is necessary in building exposure and advantage. Often, doing business in certain countries means getting through political barriers which can include tariffs, duties, intellectual property provisions, etc.

Government can bring opportunities to countries, and exert pressures to ensure that companies are treated fairly. While this does not necessarily mean preferential treatment, often it can mean improved access to markets or better positioning for contracts.

Having the attention of high-level political leaders can often set the tone for positive business relations. Governments, either directly or through their embassies, can access key contacts easier than companies. This is one area where government can really add value and deliver.

Doing business in other countries often involves relationship building and endorsement by government ? nothing does this like visiting with a prime minister.

In order to do business in certain countries, foreigners must establish themselves and build a real presence. More that just setting up shop and being there, an association with the government always adds credibility. In some countries, this is absolutely necessary. What distinguishes one company from another may be sheer persistence and government support.

EFFECTIVE TRADE MISSIONS
Missions can be extremely effective and successful or they can be a complete waste of time and money. But how can effective activities be ensured? Even the best-organized mission can turn out to be a waste of money.

Here are "Ten Ways" to ensure an effective and successful trade mission:

1. You must do your homework.
It is extremely important to do a thorough job of market intelligence. There are numerous sources. In fact, for some countries there is too much information and your job must be to assess the value of material. Contact the Department of Foreign Affairs, as the embassy continually feeds information from "on the ground" back to Ottawa. As well, there is a tremendous amount of information on the Internet.

It is important to get all of the details of "who is who" in other countries and the way in which decisions are being made, so you are not only meeting with the right people, you are also able to focus the meetings. Determine early on what you wish to accomplish with each meeting. And make sure all the participants understand the cultural norms of the country you are visiting and that they adhere to all the usual protocols.

All your documentation should be translated into the relevant language, also ensure that your business cards are translated correctly!

2. Efforts must be targeted.
Once you understand what opportunities exist out there, try to determine where your efforts would have the greatest impact. Try to time your mission strategically. Have the mission coincide with a major trade show or conference where more of the key people will be around or available, or the exposure to additional potential partners may be greater.

Always try to find out who else has already broken the ice in that country. If Team Canada was there six months ago, another mission from Canada would be timely.

It is important to have a presence and visit on a regular basis. Such a mission would be the perfect follow-up to a Team Canada visit. Because the world is so big, and in certain countries like China you could spend all your time trying to break open new markets, focus and continually build on whatever "in" or advantage you have.

Keep "hitting the same nail on the head" so that you will eventually make inroads. Otherwise you will make many contacts, but never develop an ongoing relationship with any of them.

3. Preparation is key.
It is important to do as much business from home as possible so your meetings are not just introductions, but more substantive business. Your time in the country is extremely valuable and it must be maximized. You probably should spend as much as four or five times as much effort planning your agenda and preparing your documentation than you actually spend visiting the country.

4. Partnerships are powerful.
Work hard to determine who you can work with, both at home and in foreign markets. One simple way of doing this is to spread the word about your interests. In cases where you do not wish to reveal proprietary information, or give away any market secrets, have confidential discussions with embassy representatives and others. Remember, there are numerous business counsels who help companies find each other.

Quite often you are able to come to agreements with people to share expenses, thereby doubling your resources and efforts. When planning your mission, make sure to contact all of the relevant players, other governments and other companies, and get as much information as you can to maximize your efforts while you are there.

Do not underestimate the valuable role of the government economic development professional as a great source of market intelligence and as a partner when trying to access information or key individuals in other countries.

5. Cost recovery and value-added.
It has often been argued that trade missions are a joke with business people attending because they are freebies or because government pays for everything. There was a time when companies did get most of their expenses paid, but not anymore. Every mission I have organized has been arranged so that companies paid their own way: flight, accommodation, transportation costs, etc.

In some cases, it makes logistical sense that the government organize and pay for certain activities or events, but they should be on a cost-recovery basis. Whether companies go or not will be a real indication of whether they place any value on such activities when they have to pay for them. This allows the government to do what it does best arrange meetings or activities and approach and encourage certain key contacts.

This is the elusive "value-added" role of government and it is best that government sticks to it, as no one does business better than business. Often, company representatives will know more about doing business in foreign markets than anyone else.

6. Commitment, resources and time.
Developing business internationally is not cheap: you must have a real commitment to be in a particular market for the long haul. If you are not committed and supporting that activity fully, then any resources you do allocate are indeed wasted. As one very wise and experienced player in the international market once said: "If you want to play, you have to pay."

7. Activities that matter.
Trade missions have earned a reputation for fluff, and if you are to successfully attract the right people and make the right connections, you will have to battle this reputation which will proceed you.

Organizers must do everything in their power to ensure a proper balance in the program between political talks and business, and private time and sight-seeing. There must be some private time built into the program. After travelling thousands of miles, people will have jet-lag and will require time to recuperate.

Keep in mind, trade missions are not vacations. They are usually packed with meetings from morning to night, including all meal times. In fact, in some countries, food and drink are a big part of the ceremony. Be respectful of customs and rituals. Work hard at developing the right program and setting the right tone ? you do not want to show up at your next meeting or destination with the reputation of being rowdy drinkers or hooligans!

8. Business relations.
In many countries, no business is done until a certain relationship exists. Build time into your business and marketing plans to build such relationships. This means a repeated presence and effort.

Be attentive to local customs and manners, and be sure to be seen making an effort to embrace those customs. A certain amount of hospitality should be part of your itinerary, including small gifts, dinners, and social events, etc.

9. Trade is a two-way street.
The days of having someone buy something out of a briefcase are gone: now international trade involves more than just a purchase order.

Most typically, business discussions will focus on joint venture agreements to manufacture in that particular market, with the company building, operating and eventually transferring the facility over to the international partner.

The key to building goodwill in this regard is to include workshops on technology transfers or training opportunities/exchanges in your program. Build into your negotiations an opportunity to make the host country feel involved and see the benefits of the relationship, instead of just buying a product or service. These things are now expected in most cases, and one way to distinguish your efforts from a competitor is to address this expectation up front.

10. Follow-up.
You can lead a horse to water, but you can't make him drink. Follow-up is consistently the biggest stumbling-block for most companies. That is to say, most people who are out of the office for a couple of weeks, return home only to find a pile of paper on their desks. By the time they recover six weeks have passed and they are working on the next project; as a result, they do not spend the time necessary to properly follow up every real lead they may have received. In such cases, the trade mission can be considered a waste of time.

Great effort goes into developing a marketing plan, identifying opportunities and potential partners, arranging meetings, and discussing ideas. When they do not act on any of the discussions, or "strike when the iron is hot," people begin to wonder about their interest, commitment, and ability to deliver.

Conducting business internationally always takes time, and results often do not manifest themselves for 12 to 24 months. You should still be communicating and visiting regularly. Unless you are prepared to spend time and money regularly, do not bother with the international market.

MEASURING SUCCESS
Measuring success in any government program is difficult - how do you show results to your political masters or the public when you are developing relations and goodwill? Business people know that developing business internationally takes time and requires a significant investment before seeing any benefits.

Any evaluation of this sort of activity must contain a number of components:

  • General good will. Investing in positive relations between companies produces valuable results on many levels, not just trade relations.
  • Contracts. Are Canadian companies winning more business internationally? Are the overall trade figures for that nation improving?
  • Technology transfer and exchange

Business missions are a combination of various components. The mission should educate business people about doing business in foreign countries. It should also educate our politicians and decision makers: the world is bigger than their jurisdiction or constituency, and with their jobs often comes some responsibilities for the greater good.

In the case of environmental technologies companies, it behooves government to help other jurisdictions in meeting their environmental challenges, since we often share the same problems. And if Canada has technologies that can go a long way towards solving those challenges, then it is a win-win situation.

The question will be asked if any real contracts were signed, as opposed to memoranda of understanding or letters of intent. While this is important and is one of the few more tangible indicators, it cannot be the only measure of success.

Contributing to better relations, trade or otherwise ? such as the sharing of values and expanding our understanding of each other ? is also essential. In this way, trade missions are vehicles through which government can add value and assist business to do what it does best.



ABOUT THE AUTHOR


PETER P. CONSTANTINOU is Senior International Trade Advisor with the Green Industry Office at the Ontario Ministry of Environment and Energy. He has lead numerous business missions, most recently to China and Hong Kong.

Constantinou has a B.A. and M.A. in Public Policy and Administration from York and McMaster universities respectively and is part of the faculty at York and Ryerson where he teaches policy analysis and program evaluation.