That means Americans will have to become more familiar with how business is done abroad, learn who their foreign suppliers and customers are, and deal with the impact of international terrorism.
Harry Brandon and Gene Smith are partners in their own business consulting firm, Smith Brandon International Inc., Washington, D.C., and they provide international investigative services.
As the last speakers in this year's Williamson Symposium at Youngstown State University, they addressed students, faculty, and invited businessmen this week on managing the risks of overseas business. Smith is a former Foreign Service officer who served throughout Latin America. Brandon is a former deputy assistant director of the Federal Bureau of Investigation with responsibility for national security and counter-terrorism programs.
In the next decade, the most attractive business opportunities "will be found not in the United States or western Europe, but Iraq, China and southeast Asia, areas not so comfortable, not so familiar," Smith said.
That means business owners, purchasing managers and credit managers will have to know who they're dealing with abroad, and the cultures and legal systems in the countries their suppliers and customers are based. It means performing due diligence, which Smith and Brandon noted, means different things to different professions -- one thing to an accountant, something else to a lawyer, and yet something else to a government contractor.
Unfortunately, too many U.S. businesses proceed without performing due diligence, as Smith and Brandon related in a small number of horror stories. One involved a client who, with a contract signing two days away, asked them to perform a background check on the other party. "I don't have their full name but phonetically it looks like this," Brandon was told. As serendipity would have it, he was familiar with the individual and quickly checked him out.
The first concern that all U.S. businesses doing business abroad face is this: Is the person they're talking to the person he says he is? Moreover, is the name given the other party's legal name and will it stand up in that country's legal system? The second concern, once the name checks out, is: Does that person represent the company he says he represents?
"Fraud is often committed by people who say they represent the company you're trying to contract with," Smith warned. Next, make sure that company is not a shell company. Find out their address, she advised. Is it a post office box or a real building? Is it a business office or a warehouse? How long has the company been in business?
If you find out that the other company is less than a year old, Smith cautioned, be wary. If two to five years, proceed slowly. Those with six and more years are safer to transact business with, she said.
On issues related to addresses, she continued, where is the business registered? In the Grand Cayman Islands, the Channel Islands off southeastern England, in nations that offer flags of convenience or secrecy laws?
What do public records say about the company you're getting ready to sign a contract with, Smith asked. How many lawsuits has it been involved in? Did it ever file for bankruptcy?
It can be tough learning these answers in other countries where records can be harder to find. The prudent U.S. business may need the help of firms such as theirs, Smith said, and some answers may not be found in the public records, such as a foreign's firm's reputation for on-time delivery, having adequate physical assets, and their connections with the ruling government.
As in this country, Smith said, "it comes down to knowing your partner's strengths and vulnerabilities." Where businesses, or at least their lawyers, know where to look in this country, it can be quite another story abroad.
Regarding terror, the civilized world will have to deal with it for some time to come, Brandon said. He predicted another Madrid-type attack in Europe before U.S. elections this fall, and said there's "a very high risk factor the summer Olympics in Greece will be a target of terrorists," despite the likelihood of NATO sending troops to help Greece's security forces. Athens "is almost too good a target," he said, and it's so close to terrorists in the Middle East.
The conditions that nurture and foster terrorism will continue for some time, Brandon said. "We must have patience. America is the only country I know with attention deficit disorder."
The global economy and the spread of democracy will improve living conditions, he continued, and raise standards of living. "So I'm optimistic about doing business around the world." Hindering U.S. business ventures aboard, he said, is the perception "in the corrupt regimes throughout the Middle East that America is propping up these regimes. The United States is No. 1 and Saudi Arabia is No. 1-A."
Despite this week's news from Iraq, most Iraqis are willing to give the United States a chance. Having visited Iraq last month (it was his third visit), Brandon found that much of the damage he saw in Baghdad did not result from U.S. arms and bombs.
"Saddam pillaged the country," he reported. "He stole everything and so there is no effective infrastructure.The small things are encouraging, parents walking their kids to school in uniforms, traffic jams. There didn't used to be traffic jams under Saddam Hussein. I came away with the opinion that the vast majority of Iraqis are very optimistic about their future."