First steps to start working internationally.
Reconfiguring your product for a target country.
Working in the Arab world as a young woman.
Similarities are differences between Arab countries.
The concept of time in different countries
The failure of Starbucks in Australia
Australia-based Cynthia Dearin is an international business strategist and lawyer, and the Founder of Dearin & Associates. With 25 years of international experience, she is on a mission to empower business owners and CEOs, mainly in manufacturing, to scale internationally and amplify their impact in the world. But while opportunities abound, many executives have no idea how to start. Cynthia advises clients on how to go global and reach their full potential. She has lived and worked in the UK, France, the US, Australia, Egypt, the UAE, Iraq, Jordan, Qatar, and Indonesia, expanding her clients to the US, UK, Singapore, Malaysia, Vietnam, China, Hong Kong, the UAE, Saudi Arabia, and New Zealand among others. In addition to her native English, Cynthia speaks fluent Arabic and French.
Hear more episodes: https://auerbach-intl.com/podcasts
Learn more about Auerbach International: https://auerbach-intl.com
Get free quote: https://auerbach-intl.com/get-quote/
Global Marketing requests: firstname.lastname@example.org
Get the insurance settlement you deserve: www.IGICworldwide.com
Business intelligence and growth: Rainmakers’ Forum Report Order Form
DanSing Pancakes. Great song and book to teach kids to resist drugs, drink and smoking … and to make healthy life choices: www.DanSingPancakes.com
Build the strategy, connections, and roadmap to enter the U.S. market with WorldUpstart’s Accelerator.
Mastering Cultural Differences offers consultation and training solutions for culturally diverse organizations that want to implement successful and long-lasting diversity, equity, and inclusion initiatives. The end result is an organization where employees feel valued, respected, and want to stay.
To learn more about Mastering Cultural Differences and the programs it offers, click here.
Mastering Cultural Differences, The Global Academy is an online program designed to help you recognize the cultural differences impacting your organization so you can work more effectively across those differences.
This program is for you if (1) you want to know exactly when cultural differences are at play in your cross-cultural interactions, and (2) you want to learn how to adjust your behavior to the cultural orientation of your employees and clients so you can avoid misunderstandings or potentially embarrassing moments. You will go from feeling fearful and confused to having clarity and certainty when you are working across cultures.
To learn more about Mastering Cultural Differences, The Global Academy, click here
To register for the Global Academy, click here.
*** For Global Gurus listeners only, enter the coupon code GG50 for $50 off the course registration.
What Global Gurus subjects would you like to learn (more) about?
[email return to Philip@Auerbach-Intl.com]
Since today’s guest has done a lot of business in China, I thought it would be appropriate to present a sign near the Great Wall that attempts to make people aware of the interconnectedness of things or beings, but not quite in the way that westerners would express it.
So, the sign said in Chinese, it was very short, but in English, it was much longer. And it said literally, “People, flowers, and help each other in breath. If you pluck the flowers and break off the branches, you will reduce your own life at the same time.”
With that, today’s guest is Australia-based Cynthia Dearin. She’s an international business strategist and lawyer. The founder of Gurin & Associates has 25 years of international experience. She is on a mission to empower business owners and CEOs, mainly in manufacturing, to scale internationally and amplify their impact in the world.
While opportunities abound, many executives have no idea where to start. Cynthia advises clients on how to go global and how to reach their full potential. She has lived and worked in the UK, France, the US, Australia, Egypt, the UAE, Iraq, Jordan, Qatar, and Indonesia, and has expanded her clientele into the US, the UK, Singapore, Malaysia, Vietnam, China, Hong Kong, the UAE, Saudi Arabia, and New Zealand.
And She also speaks three languages. Australian English, of course, Arabic, and French. Welcome, Cynthia. We’re thrilled to have you on board.
Thanks for having me on the show, Philip.
And perhaps you could explain about your wonderful—well, our audio listeners can’t see it, but our viewers can see your wonderful picture on the wall. You said that it was made by your uncle Cedric, wasn’t it?
The picture is of the guy in the picture, whose name is Cedric. My uncle is called Neil, but my Uncle Neil painted Cedric for me when I was a little girl of about 4. Cedric has gone all around the world with me for many years, and he’s now ended up back in my office in Sydney. So if you look at photographs of my life from around the world, you often see him in the background, which is kind of a little bit funny,
Yes, well, it’s wonderful to travel with you. It’s great to have a world traveler accompany you as well.
I know you’ve written a book called Business Beyond Borders about taking your company global and in it, you mentioned some of the steps to launching globally. I wonder whether you could give us three or four steps that one should really start with.
And that, in case you’re curious, is what it looks like. That is the book. So, I mean, I believe there are many steps in the process of going global, and the book has 16 relatively short chapters. And even at that point, it’s a fairly high-level overview of how you need to take your company global. For me, the real starting point is figuring things out. Why are you on this global journey, and what are you trying to achieve?
So, what happens quite often is that people accidentally start selling internationally because they get some random orders coming through their website. Or, you know, somebody phones them and says, “Oh, I saw your thing somewhere on the Internet, and could you please send me some to whichever country it happens to be?” And people kind of take that as a sign, and they kind of head off down that path, and everything that they do is just reactive to what the universe is throwing at them.
That is not the methodology that I’m particularly fond of, so for me, it’s really important to get clear on why you’re doing it and what it is that you’re trying to achieve because it could be that you react to random orders from overseas, which takes up a lot of time, energy, and effort and really doesn’t generate the return on investment that you would get selling more of the same thing at home, so I think if you’re going to do this process, you need to be intentional about it.
Then it’s really important to pick a market. And again, you know, I encounter a lot of people. People come to me all the time and say, “Where are you thinking of selling to?” And they’ll say, “Oh, well,” and then they’ll reel off five markets that were drawn at random. Markets and I ask, have you had international experience? Have you done much overseas before? No, I don’t think so. But these are the markets I want to do, and I tell myself, “Stop.” You can only succeed if you know what you’re doing. But anything in life that requires a lot of focus is going to be harder, so the thinner you spread yourself and the more places you try to go, the harder it is going to be. So, you want to identify one market that you’re going to sell to.
Once you’ve done that, you must determine whom you will sell to in that market, because if you sell to everyone, you will sell to no one, just as you would do at home. And it looks like some people haven’t even done it for the home market, but you’ve got to get very clear on who is the person with whom you can really work, and there will be several, but you’ve got to pick one out for a start. One person whom you love working with or selling to, whom you can really help, and who can afford to pay you.
And then, once you’ve done that, you need to work out other issues. Well, what is my winning offer? You know, I might have had a company come to me a while ago and say, “Well, you know, we’ve got some Herbal capsules of some kind that will improve your health in all these various ways, and we’ve also got the same thing in powder”. OK, that’s good, “and you know we have some soap infused with this stuff, and we have some chocolate, and we have some hand cream”. And I’m like, “Oh, stop.” You know you can; that’s just complicated, and complicated is fine, but it’s slower, harder, and dumber, so figure out what sells best and generates the highest margins already and see if one of those could be the starting point because what you’re trying to do here is go for is Simple scales; Complex fails. That’s in everything you’re trying to do. It should be super simple.
Now, I know you said three or four steps. Let me give you a couple more. You need to have a single channel that you’re going to send your stuff through, so don’t say, “Well, let’s do distributors, e-commerce, and partnerships, and we’ll try some direct sales as well.” Let’s pick out one that we think is going to be a good place to test and get that really dialed in.
And then, in the same vein, if you haven’t built your marketing out from overseas, don’t say, “Let’s do Facebook ads and trade shows and TikTok videos, and you know, let’s say okay? Well, we’re selling, for example, we’re selling a consumer product. And it’s very close to where it is. It’s a very good-looking product with beautiful branding. Maybe we’ll run an Instagram campaign to start with, but we’re just going to try one thing.
And then lastly, a financial game plan. So, how much are we talking about? Given what we’ve done in terms of figuring out what we’re going to do, how much money will that require? Do we have that money? Do you know what we will need to pay if we don’t have the money? How will we get it? How will we do it? How will we make that a reality? And I think those are, you know, at a high level, the key steps that I like my clients to take.
That’s fascinating, yes.
One of the major steps that people overlook when going international is that very often products or services must be reconfigured for the target country. Can you give us an example for our listeners and our viewers of a client you’ve worked with who has reconfigured a product? It’s sometimes in the packaging. It’s in the form. It’s in the pricing, the colors, the redesign, or something like that.
In Australia, there is a company that produces high-quality breakfast cereal, high-end breakfast cereal like high-end granola stuff. They’re not a mass-market product, but they’re a well-known niche product here in Australia.
And their packaging is very simple because, in Australia, we like things that are quite simple and clean, so it was white with black writing. They wanted to sell that product in China, so they got it up and running and sent it off in its original packaging.
Now, for people who are listening to this show who do not know, whereas white in western culture symbolizes purity, cleanliness, innocence, and all that kind of stuff, in China, it signifies death. You certainly could assume you sent it off, you know, white packaging with black writing, and it’s sort of like death cereal, so that didn’t really work super well. I believe what they did was flip it around and make it black with a tiny bit of white instead.
They did not make it red packaging?
No, they didn’t make it red. No, they didn’t make it red with gold trimming, but you know they did have to significantly modify the plan that they’d started out with.
Similarly, and I’m having trouble coming up with an exact example is, you know, off the top of my head, but if you sell to the Middle East in Australia again, we know what we like. Very simple packaging. So, for us, simple is fashionable.
I’m sorry, what’s fashionable?
Simple, yes, but as you know, simplicity is very fashionable in minimalism. The Middle East comes from a totally different place. In the Middle East, simple and streamlined are not necessarily premium.
So if people are considering premium, they are considering something that’s ornate and gold. So if you want to sell a premium product, where do you want to put it? Gold is all over it in the Middle East. And you know, maybe there’s some foil that’s going to be fantastic. If you put foil on things here in Australia, people just think it looks gaudy, so you know you’ve got to really take that into account. What are people’s design sensibilities because they are quite different, place to place.
Now those are some wonderful examples. Thank you. Those are great. You mentioned the Arab world, and I know you’ve worked a lot in the Arab world. Have you encountered any barriers as a woman or as a younger person?
Look, it’s really interesting. I mean, I think both genders and age are both traditionally important indicators in the Middle East, and so on.
Well, let me put it this way: I didn’t encounter any barriers as a woman or as a younger person, and to be honest, I haven’t encountered any in the years that I’ve been a professional. I encountered more obstacles working in Australia than I did out in the Middle East, which people will find quite horrifying.
I want to say alongside that you have to remember that status is very, very important in the Middle East, and in all the roles that I was doing, I always had a status position. So, I first worked in the Middle East as an Australian diplomat, right? And so, you get taken out of that normal category, and you’re kind of, you know, in your own category, so the normal rules don’t apply. A female Australian diplomat, for example, can participate … In the Gulf, men’s and women’s gatherings of local people are separate; men and women don’t socialize together. So, if you go to a wedding, the women have their own wedding. And then the men have a separate wedding. And the bride and groom only appear at the women’s wedding. The bride does not really go to the men’s wedding. But as an Australian female diplomat, you can move back and forth between the two.
So, I could go to a men’s coffee celebration and be the only woman there; it was a little weird for me, but it was allowed, and then I could also go across and sit with the women, so it had a kind of special status. When I was working in Iraq again as a management consultant, I was there as a representative of the British government and then of the US government. So again, the normal rules didn’t apply. You know the status of the thing that I was doing, trumped the fact that I was, you know, in my 30s and I was female. And then again, I ran an industry association, the Australia Arab Chamber of Commerce and Industry, for a number of years after I came back to Australia. And again, I would travel very frequently out to the region, but again, it’s a status position, so you kind of get it. You get a pass. Do you know what I mean? So, I don’t want to say that every woman working in the Middle East has ever had problems, and it’s a massive myth. That would not be the case, but I want to say it’s not as simple as OK, if you’re female, then it’s all going to be terrible, and if you’re young, it’s all going to be. It depends on how bad it is. You know, if I were female, Filipina, and working in a nail salon somewhere in the Middle East, it would be a totally different equation from being a diplomat or a management consultant. So how you are treated is also determined by what you are doing and how people perceive your role in society.
Yeah, that makes perfect sense. So, do you feel that you were treated equally as a man would be in your role?
I would say I was always treated very, very respectfully, so if people didn’t agree with me, because in Middle Eastern culture, you never tell people to their face, “No, no, you’re wrong. I don’t agree with you.” You and so many others were on the case. People, in general, were not very respectful to me. Arab men, because if you knew you, you would always be saying, “Is there a problem between the men and the wome[n?” No, I found them to be very polite and easy to work with. And I made some wonderful friendships and professional working relationships, many of which are still there from the time I was there.
That’s fascinating and wonderful. Can you tell us some of the similarities and differences among Arab countries? The unifying factor, of course, is Islam, but it’s practiced differently in different parts of the Arab world. And the way people dress—whether they’re more restricted with the hijab, for example, or It’s about more fundamental issues about how one does business or conducts oneself in these countries.
In that way, it’s really about greater and lesser degrees of formality. Do you know? Again, it’s difficult to make broad statements about it because it depends on whom you deal with, such as if you go to the Gulf States and work there, it is more formal in many ways than just the way that business happens. You know, sitting in a traditional majlis is perhaps something that you would see more of if you went up to Lebanon.
If you think about it in the context of the US and Canada, how is the way that people do business differently? The differences from country to country are not always glaring. They are subtle, you know it’s about degrees; I mean, I always have one thing that jumps out at me. Egyptians are very, very funny people, and things in Egypt are often quite hilarious and funny. It doesn’t mean they’re always going to be funny when they do business, but they’re people. You’ve got a very particular sense of humor that you won’t see if you go down to the UAE and go to meetings in Abu Dhabi or Dubai. You might not get the same degree of levity if you went to some meetings in Cairo, but then it also depends on whom you are dealing with.
You know, if you deal with a country like Saudi Arabia, Egypt, or Lebanon, you’re going to be dealing with primarily Lebanese, Egyptians, or Saudis. Whereas in some of the other countries with which you may be familiar, such as the UAE and possibly Qatar, the level of immigration is so high, and these countries have the highest level of immigration in the world, that the local population is conservatively somewhere between 10% and 20% I’d probably say closer to 10 than 20, so local people are in a minority. And when you do business, you know where you’re doing it. Dubai, you might not be meeting with Emiratis. You might very well be meeting with Indians or Pakistanis, Brits or Australians, Europeans, and so on.
When you say nationals, you mean people, citizens of the country, correct?
I meant nationals. Yeah, there are people who are actually from there. Yeah, look, I think it’s a matter of degree. It’s about more informality and less formality. People’s punctuality is determined by, you know, time; it is about how directly people can communicate with one another.
I have to say in general that the Middle East is not famed for direct communication, and you know they prefer indirect communication. There’s a lot of reading between the lines. There’s a lot of learning to do to give and accept hints. It’s a lot about never directly saying no; it’s about not making people lose face, you know, which is also a common theme that you see across many Asian cultures. Hierarchy and status are important, it’s important to demonstrate respect to people who are older.
Yes, that’s fantastic. The example of Time is a great one for our listeners. It’s certainly not a Western concept. Well, punctuality in the West is very important. whereas in other countries, it’s much less important.
I used to live in Africa, and one would call it Africa time. You will know in time, so don’t expect anything. Don’t expect someone to pitch up or show up at a specific time for a meeting. Could you give us some examples of how that would work?
The example I’m thinking of is when I was working with Americans, as you know, are toward the punctual end of the spectrum, you know. And these are professionals, and we would go to see if they weren’t counterparts, in which case they would be Iraqi counterparts from government departments, and they might be advisers to ministers in those departments.
And then we’d go to one of Saddam Hussein’s old palaces, which had clearly been taken over by Americans following the invasion. And that was where the meeting would happen, and we would go through, get out of our car, go through all the security, go in, and sit down. You know we’d be there a minute or two early for our 10:00 o’clock meeting, and we would wait. And we would wait, and it was often very hot. The air conditioning was not really working, and we were all sweating in our suits. Even though we’re in the middle of the desert, we’re still dressed like Western management consultants.
I’d already been working in the Middle East for several years at that point, so I’d sit down and be like, “Oh, this is kind of boring.” But you know, this is just normal, and you have to remember we didn’t have smartphones back then either. Everyone was carrying an old Nokia, so unless you remembered to bring a book, there wasn’t much to do but chat with the people around you, and so would the American guys I worked with. just getting so frustrated. You know, they were tense and a little bit angry because they felt that they were really being disrespected.
So, it is when you sit down to start a meeting and discover that half of the attendees are already a little bit irritated, it’s not really the best start.
And there’s just something different. There is a different time that is seen as more flexible in the Arab world as a whole.
And again, I don’t want to generalize too much because it depends on whom you deal with. If you go to the Gulf and deal with people who have grown up since the age of 12 in British boarding schools and universities, which a fair number of them have, they have about the same sense of time as we do, and they know what our expectations about time are, so they will be there on time.
However, if you go somewhere more traditional, such as in Qatar, you will be kept waiting for two hours for a meeting in Qatar with a very senior guy at the Chamber of Commerce. And I turned up, and his assistant said, “I’m so sorry, he’s been called into a meeting by the Sheikh.” Do you want to have a seat? And I was like OK, and I sat there and sat there, and after, you know, two hours, I was annoyed as well. Even though I know that I kind of shouldn’t because, you know, I’m still Australian, and so we tend to be pretty punctual as well, you know, and that’s something I don’t like. I don’t like to be late myself. I don’t like to be kept waiting.
And I just had to say, “Don’t get cross, don’t get cross, don’t get mad,” and eventually the guy turned up, we had the meeting, and I got the thing that I had gone for. But I had to wait, you know, and thankfully I’ve learned this because I’ve been working there for such a long time. That’s exactly how it was. But if I hadn’t known that I would have been annoyed, and you know, imagine if that happened and someone kept you waiting two hours in Australia or in the States
I mean, usually, you wouldn’t after 20 minutes at a time. You’d be like, “Well, I’m done.” Let’s reschedule this. I’ll keep going, but you don’t, and that’s because relationships are more important than getting things done on time and looking good.
To be honest, that is one of the key things, not just in the Middle East, because you’ll see it in Africa, and you might even see it there. You’ll see it in other parts of Asia in more traditional societies where relationships are given pre-eminence. It can be difficult for Western companies to do business there because the expectations about time are misaligned.
The Westerners feel like, “Oh, my goodness, these people are so slow, and they’re wasting our time.” Maybe they’re just not serious and don’t want to do this. And the people from the traditional culture are thinking about it. Wow, these zWesterners are so rude and abrupt, and all they care about is money. And they really don’t give a damn about us as people. And actually, maybe we will. I’m not sure if we really want to do business with them.
Yes, that’s fascinating, but let’s move on to other topics. When companies enter various countries that you’ve dealt with, how do they measure success? Is it ROI? Is it market share? Is it profit, or are there other considerations?
Well, look, I mean, I think you’ve got to work out what you’re measuring for, so it could be any of those things. I mean for me. Let’s say, for example, you’re a purpose-driven business. You would naturally be measuring how many people’s lives you transformed in whatever way your product or service is supposed to operate.
But, you know, it’s not a charity for me, so I’d always be looking for revenue and profitability, and I think profitability is a very important marker because, you know, as I said at the beginning, you put a lot of time, energy, and effort into getting an international business up and running. If you can sell at 25% profitability overseas and you can only sell at 25% profitability in your domestic market, you can only sell at 5% profitability overseas. It truly begs the question, you know? Well, is this the right place for us to be? And if it is, what is it about our strategy here that needs adjusting so that we can get to a level of profitability that’s at least commensurate to what we’ve got at home?
And in the same way, when companies have established themselves abroad, what criteria do you think they should use for deciding whether to expand?
So, you’re saying that when they’re actually set up somewhere, should they take it further?
Well, I mean, I think you have to look at what the opportunity in the market is, and would you prefer to consolidate and stabilize the business and get it running to the same standard as your domestic business runs and just expand within that market? Or do you want to open another loop and go for wider coverage?
And let’s look at the question of priorities. I think people often get distracted by shiny objects. So let me give you an example. I did a Vision and Strategy Day for a favorite client this week, and they’re selling to Australia, a little bit to New Zealand, and they’ve opened the Japanese market, and they started off by saying we have way too many things on our plate, and we need to narrow our focus. And this was what the point of the day was about: getting very focused so they could go faster. And then they say, “Well look, we want to add in one more Asian market.”
“Look, could I make a suggestion based on what you just told me?,” I asked, looking at everything on the whiteboard. You have too many things on your plate. There is a demand in all of the areas where one exists within the business, instead of, you know, opening yet another loop and putting in more complexity when you haven’t gotten what you have on your hands, there are all these areas that need tightening up within the business instead of opening yet another loop and putting in more complexity when you haven’t gotten what you have on your plate under control. Could we just stick with the markets that you have for this year, can we get your production tightened up? Can we get your marketing under control because you’ve told me that’s something that’s not working super well? Can we actually just figure out what we have and make it work really well before we do anything else?
I personally think less is more, but yeah, that’s me.
That makes perfect sense. You mentioned in your book that Starbucks tried to enter Australia, and it basically failed there. Could you give us some reasons you think it failed and what others can learn from that experience?
I think it’s a classic big company mistake, and it all starts with hubris. People think I know how to do this. We have done this all over the world. And I think essentially, they didn’t make any effort to really figure out what Australian coffee culture was like.
You know they looked at Australia and they thought, well, you know it’s kind of the same. Well, I’m a British colony. Everybody speaks English, they drink coffee. I mean, like what wouldn’t work out? What they didn’t really realize is that Australian cafe and coffee culture was formed as recently as post Second World War and the key influence was Italian and Greek migration and people bringing the Greek and Italian culture to major centers in Australia, you know primarily Sydney and Melbourne to start with and actually brought the culture of…. not just drinking coffee as a drink, but it was everything that went with that.
I mean, that’s still very strong here in Australia today. Nobody wants to go to a chain and have an impersonal experience that is predictable, and you know, is going to be just the same wherever you go.
What people value is that you can…. I mean this morning I walked up to my local coffee shop and I bought a coffee from somebody I knew and we had a bit of a chat and you know, talked about the day and the other people from the neighborhood in the coffee shop having breakfast and getting their coffee. That’s more along the lines of what people expect, on the whole. Starbucks came in without knowing that, and they thought, well, everybody will want this thing that’s done so successfully everywhere else.
Also, people didn’t like the taste of the coffee because it was very different. As you know, we’re used to Italian. Espresso is what we want to drink. And obviously, Starbucks coffee is US-style coffee, and it just didn’t fly. I mean that they had a similar problem. It’s about not understanding the market. If you don’t want to slam Starbucks, or because many companies have made this mistake, Bunnings is a large Australian hardware chain owned by one of the major supermarket conglomerates.
I’m sorry, could you please spell it?
Bunnings B U N N I N G S
They decided they would take over a chain store that was not doing well in the UK, while the other store was more about home stuff than hardware, and Bunnings is very much about hardware, and again, well, what happened was they went in… they paid a large sum of money to buy this chain of stores all over the UK, and they invested Bunnings in it.
For two to three years, the whole thing failed. They sold it for a pound, wiping out billions of dollars in shareholder value in the process. They took the concept, and they thought this concept was going to work. Britain and Australia know each other’s strong historic ties. Bunnings is well-known for its sausage sizzles, which worked extremely well. Every weekend, sausage sizzles.
“Please accept my apologies” as the Brits would say.
The sausage I think a sausage sizzle, it’s worth it to sizzle.
Yes, it’s as if they do some kind of BBQ. Charity groups can use the Bunnings space, and the charity groups get to provide sausages, bread, and tomato sauce, similar to this weekend tradition. So, everybody who’s going to get the hardware at. My kids love it; they always want to go to Bunnings at the weekend for the sausage sizzle. That worked in the UK but nothing else.
Australia is similar to California in some ways. You know, there are lots of big houses on single stories with big gardens where people need lawnmowers and want to be painting, and the weather’s nice for a lot of them, and that’s how Bunnings was. How Bunnings operates and that’s how it was. But up in the UK, I feel like they forgot along the way that if you go to London, Birmingham, or Manchester, people are living in small houses with, you know, 10 square centimeters of lawn, and it’s raining for nine months of the year. Nobody likes doing a BBQ outside. Nobody needs a log split. You know, and nobody wants 200 colors of paint because it’s freezing cold, and they don’t want to spend Saturday on a ladder in the rain. No one wanted to attempt to paint the roof. That, I believe, is oversimplified.
There may be other business reasons in there, but I think it’s a lot about the product-market fit and really just whether you have taken the time to work out whether the thing that you are selling is good and really addresses something that the country you’ll be visiting wants and needs.
So, rule #3, I suppose, is to conduct in-country market research first to ensure that your marketing strategy is effective.
Because, as you say, often it doesn’t transfer.
And, yes, it’s research, but it’s also testing, so it’s more than just research.
I think Bunnings would have done better if it had tested a concept and maybe run a flagship store or two somewhere, you know, just in that belt outside London, rather than going in and just buying up a chain of stores and then having it fail.
So, I mean, if you can treat your international expansion as a series of steps, I think you’ll be fine. Small, modestly expensive experiments. That’s a lot less. It’s slower, of course, but it’s far less risky than staking your farm on something and having it blow up in your face.
Exactly, yes. I guess one final question would be about China.
Australia has had a lot of diplomatic problems with China, as have the US and the Western world, and increasingly China is becoming, you know, well, it’s always been a dictatorship since 1949, but an autocratic dictatorship where effectively the rule of law doesn’t apply. But it does apply is what President Xi says today, after he sneezes or something.
Some of our guests have talked about the intrusiveness of the Communist Party and into private sector businesses, and they will tell you whom to hire or whom not to hire, or whether this potential hire is acceptable or not.
How do you advise your clients who now want to go to China?
Well, look, I mean, I believe it is dependent on how you intend to do it, and looking at this, I would say there is a range of opinions, so I believe you are aware. Broadly speaking, politically, I agree with what you say, and I think there is a real level of concern both in the States and also here in Australia about how that is going to play out. Over the next, say, seven to ten years.
Then there will be a whole other layer of stuff going on below that, which is the commercial sphere and the experience again, and this is why I hesitate to generalize. There are still plenty of companies doing business and making money.
I mean, just because the political relationship has gotten rocky and because some sectors, you know, for us, it’s been beef, barley, wine, and fresh seafood. These industries have been affected, but there are other businesses that, for example, sell kombucha and went into China or even in the last two years and just went boom. You know, it just exploded because it had a popular product that people wanted.
So, I mean, how do you deal with that? I was speaking to somebody yesterday who spent 30 years in China. And he was saying to me, “Look at this idea of government interference.” He just said I’d never seen it personally. It shouldn’t go, I mean, It’s kind of a Myth: Of course, there is a hiring regime, just like there are immigration and labor hiring processes that you’ve got to go through. You have to do those in China, but you have to do them anywhere, so let me know if you want to bring a foreign employee to Australia and sponsor them. It’s quite a process. You’re aware that you must clear a slew of hoops. We have a very strict immigration regime. No, I’m sorry.
I was speaking about Chinese. The foreign company wanting to hire Chinese people and the government would argue that this person may have protested in Hong Kong, mainland China, or wherever, and thus you know the person is unacceptable. Please don’t hire her.
Yeah, well look, I think you could do it a few ways. You could approach your employer. So you go to a company that does Employer of Record hiring, and you work with them, so you don’t have any employees. You basically manage that person and their work, but a Chinese entity takes control, takes care of the back end of that for you and manages all the payroll and stuff.
Or you work through distributors. You know that you remove yourself and the potential for conflict based on being a foreign country as much as you can by feeding it back through the Chinese network.
I would say for people working in China, it’s going to be much easier. I mean, this applies to lots of places. I don’t want to say it’s just China, but you know how things are in China. It’s great to work with local people wherever you can because those people have networks and influence. And, as you may know, guanxi is everything in China and its connections.
You want to lean on them and use them to help you solve the problems that you’ve got.
That makes perfect sense. Is there anything else you’d like to add before we close?
Look, I just would like to say that despite what we’ve seen in the trade space over the last few years, I believe there is still hope. There are enormous opportunities for international trade, and I think people shouldn’t be scared off. Geopolitics and protectionism are topics that can be researched. Those are all realities. But at the end of the day, if you have an amazing product that can change lives and make a positive contribution to the planet, people are still going to want to purchase those, and you should still be trying to get your stuff out there.
And, you know, make your life better, your community’s life better, and the lives of the people you serve and work with. So, there is still plenty of opportunity to do your research. Don’t go in reactively. Actually, think about what you’re going to do, pick a small target, and do that.
And thirdly, be patient. You know It’s probably not going to be an overnight success. Overnight success stories often take ten to 15 years to become a reality, and international expansion is no exception. It’s a minimum three-year journey if you get lucky. It’s a three-year journey, so if you’re going to do it, you have to say it’ll take three years. Take a while. I’m OK with that. I’m going to invest modestly, I’m going to be very patient, disciplined, and focused, and we’re going to… We’re going to move forward on it a little at a time.
That’s fascinating. Thank you so much, Cynthia. That’s really extraordinary advice and wonderful insights, and we greatly appreciate your being with us.
It is my pleasure, Philip.
And this is Philip Auerbach of Auerbach International (www.auerbach-intl.com) and I hope you’ll join us again next week for another episode with Global Gurus and their stories of international business. Thank you.
Your email address will not be published. Required fields are marked *