Bridge business culture with confidence

Good communication can help you avoid common pitfalls when doing business abroad, advises George McFarlane, Senior Policy Advisor for Exports at the CBI.

Any company that wants to grow needs to move into new markets – and for many, that means trading overseas. At the Confederation of British Industry (CBI), we’ve looked closely at this issue, particularly in a recent report conducted jointly with accountants BDO. Worryingly, our research showed a lack of knowledge within businesses on how to navigate those markets. Understanding the questions to ask potential partners – and where to go for support if you’re unsure – is key to success for any business wanting to go global.
1. Clarity over contracts 
It’s essential to decide which legal system applies when you’re drawing up contracts – UK law or that of the external market? A lack of clarity can lead to unpleasant surprises, such as disputes over who will pay the bill if something goes wrong. Under UK law, you might assume it’s the responsibility of the third party (your international partner) but a different country’s legal system may put the onus on the brand owner (you). Even within a country, local laws may mean you need different contracts for different states or regions, so it’s important you get legal advice from your own advisers or external agencies.
2. Protecting Intellectual Property
The ownership of Intellectual Property (IP) is a vital issue when working abroad. It can be a particular problem for small companies, who may not have in-house IP expertise, or for newer creative sectors such as web design, where IP may be challenged. If a country is a member of the World Trade Organization (WTO), it must include some IP protection in its national laws. This provides reassurance if you’re doing business with the USA, for example, that its IP enforcement will share similarities with procedures in the UK.
3. Communicating across cultures
When you’re working with a business in a new market, communication is everything. As far as possible, you want to feel as if you’re sitting across a desk from each other, even if you’re actually thousands of miles apart. The CBI has found a correlation between direct aviation links and success (nothing beats face-to-face conversations) but hopping on a plane for every meeting isn’t viable for most businesses. Instead, you need to build cultural bridges with effective online connectivity; an understanding of different time zones, working hours and holidays; measurements (imperial versus metric); and religious and social differences. You’ll need to brush up on basic terminology, too. For example, in the USA, FOB (free on board) means the shipper has responsibility for goods until they go on board ship; in the UK, FOB means having responsibility until the goods leave Customs.
4. Sourcing the right information and implementing it at the right time
Relevant information and timely advice are imperative for any business wanting to export, and bodies such as the CBI, UKTI and financial institutions are therefore your first port of call.
You’ll also need to put that information to use at the appropriate stage within your journey towards exporting. Understanding the bigger picture of where you are heading can be just as important as the details. The joint CBI and BDO report Go Your Own Way: A MSB [Medium-Sized Business] Guide To The Journey From Non-Exporter To Global Business proposes five stages that businesses go through when starting their overseas journeys: 

  1. Building the knowledge and confidence to sell overseas
  2. Developing the practical knowledge of doing business overseas
  3. Transitioning from successful exporter to international business
  4. Investing for greater rewards
  5. Becoming a truly global business.

And finally, don’t forget your passport.

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK