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My top 16 tips for doing business in the developing world

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With over a decade doing business and often living in remote, difficult countries, I’ve learned a few things I’m happy to share with you. These are my top sixteen tips for doing business where it’s impossible to know the rules.

business developing country
Stretching my legs beside the main north-south highway in Mongolia.

 It’s an odd choice of lifestyle in retrospect.  I’ve spent the past thirteen years doing business, and often living, in East Africa, Russia, Asia, and Mexico.  I’ve had ups.  And many downs.  Thrilling wins.  And utter, total, heartbreaking losses.  Overall, it’s been the best of times and I wouldn’t trade any of it.  Mostly because I’ve never known what to expect from one day to the next.  I enjoy opportunity combined with lack of certainty.  Of course you can find opportunity combined with lack of certainty anywhere, from a certain point of view.  San Francisco, say.  But I’m talking about the extremes.  Imagine not being able to call the police or rely on the courts to help you resolve a dispute with armed rivals who show up at your site in a remote part of the world.  If this way of life interests you, you’re crazy.  But call me.  Let’s go for beers.  And read on…

Most of the things I’ve learned have become heuristical, or rule-of-thumb-like.  They’re things you only really learn properly when you experience them several times.  Or when things go horribly wrong and you’ve survived intact.  But you can partly learn them by reading about them, daydreaming about being in that situation yourself, and admixing and applying your own common sense.  This will take you partway.  You’ll really lock them in and customize them by gaining on-the-ground experience.  I should also add that in the context of “difficult places”, as with matters of the heart, it is much easier to know what other people should do, and much harder to do those things yourself in the moment.  It is fair to say that I have honoured several of my tips more in the breach than the observance.

The most important thing to keep in mind, whatever’s happening, is this: “It’s going to be okay.  It’s just life.  It’ll be alright.  In fact it’ll be more than alright.  Chin up!  At least you’re not a captive of al-Shabaab!”

Here’s the list.

1) Visit the target country first and get a feel for it. 

Figure out whether you like the people, the food, and the music.  It will be your home away from home.  Find in-country expats.  Many of them will have lived and worked in many countries and will be able to detail the pros and cons of your target country with deep insight.  Repeatedly hit the local pub or even better, the roadside white lightning shack.  Get out in the countryside.  Take note of power outages, transportation, and weather.  Ask how locals mitigate common issues.  Think about how you will, yourself.   Consider costs.  Usually things you’ll need for your business aren’t cheaper in developing countries, and often they are much more expensive.  Unskilled labour is cheaper.  Consider costs carefully.  Take copious notes and read and re-read them.  Plug your assumptions into your financial and risk models.  Then double costs and timelines.

business developing country
East Africa: just when we really had to be somewhere.

2) Locals have a huge amount to teach you and you need them.

They know a lot.  Some of it is cultural understanding that you’ll never have, some of it technical, some of it political.  All of it will be country-specific knowledge you must have and will never have yourself.  If you voted for Donald Trump, the local person in front of you, if he or she is a professional person, is almost certainly exponentially, logarithmically, orders of magnitude smarter, more subtle, more broad-minded, and more tolerant and a better person than you, so you should pay extra special attention.

We got hit by surprise snow storm in Mongolia once, while really out in the middle of nowhere.  Our local friend, who’d drifted by (perhaps concerned for our safety), gathered big rocks and threw them on our dwindling fire.  Hours later, when our fire had died and it got bitterly cold, we put them under our tents covered by an inch or two of dirt.  That kept us toasty warm all night.  Perhaps it even saved us.

Learn the language if you can.  Don’t make enemies of locals or embarrass them.  Spend time with them.  You need them.  Plus, most languages and cultures are endlessly interesting.  So get in there and get involved.

Having said that….

3) Keep your mouth shut and be extremely cautious. 

This means, be poor.  Your business is not good.  “I don’t make much money.  In fact I’m losing money.  Can I borrow some from you?”  Those are your mantras.  Appearing successful, putting on airs, being fancy.  Doing these things is stupid.  Sooner or later, it will make you and your family targets.  Don’t advertise the existence and composition of your family if they are in-country. You want the local criminal element to say at the water cooler, “don’t bother with that guy”.  It can be hard sometimes, but you have to keep up the discipline in terms of keeping your mouth shut.

Recently a friend of mine had to decamp to a neighbouring country after some European gangsters, who had set up a branch office on a beach in Asia, found out he might have some money coming in.  This takes us to Rule no. 1….

Rule no. 1: Never talk about how much money you have coming in to bikini-clad Russian girls at Asian beach bars.

Unfortunately, after three drinks Rule no. 1 is impossible to adhere to without navy seal training.  And if you’re a navy seal, you two are already back at your place anyway.  

In terms of partnering with a local, here’s what can go wrong.  An expat neighbor of mine in a country I shan’t mention partnered with a local to open a fine bar on a main street.  It was successful.  The staff were great fun.  I loved it.  The beer was cold.

Tragically, the staff decided one day to kill my neighbour.  Today the bar is still running and the beer is cold and refreshing.  I still go.  But now, with my neighbour dead, all the profit is divided up among the local partner and the bar staff.  Don’t be my neighbour.

4) Figure out who to trust, and how. 

Take your time.  Don’t jump into anything.  Get to know people.  Locals are doing the same with you.  In terms of who they trust in society, family and friends come first, as you’d expect, but note that their local or regional tribal leader is probably much more important, and more trusted, than any politician.  In fact, that’s likely understating the trust differential.  You need to understand how to identify and build trust with the people who really matter, in the way that matters, and not with the people who make themselves out to be potentates or are there to meet you when you get off the plane.  There’s a reason that effusive, happy-seeming person has presented himself to you, excited to “help” you.  As with so many things in life, the person you really want is the one who’s hard to find.

Be disciplined regarding your trust relationships.

5) Avoid people with guns.

I don’t just mean gangsters.  I mean security guards at industrial installations.  Banks.  Airports.  Rum shacks.  Once you’ve had a twitchy young man jam a shotgun in your sternum for no reason, you’ll permanently internalize that one.

6) Use your spidey-senses.

Learn to understand when you’re in personal danger.  You may not realize it, but humans have a finely-tuned sense of when something isn’t quite right, but it needs to be combined with experience and action.  The best example, one we can all relate to, is when people around us are behaving oddly.  They’re looking at us askance, but not the way an indifferent person would.  Or they’re trying too hard to behave in a manner opposite to they way they would if they were up to no good.  If you sense this, you’re probably not wrong.  You’ll learn the hard way if you’re not careful.  Get safe.  Don’t trust.  Do the opposite of what you think they want you to do, or what you would want you to do if you were them trying to cause you harm. People who are being especially helpful must be avoided.

7) When is the meeting? 

It is when people arrive, if they arrive.

8) Uncertainty is the only certainty.  It’s all Black Swans. 

So much of the uncertainty existing in developing countries cannot be mitigated.  For example, in the run-up to a recent presidential election in East Africa, the opposition party politicized the resource sector.  No surprise there.  That’s what opposition politicians all over the world do.  But in a surprise move, the incumbent president, who, let’s get real here, wasn’t going anywhere (this go-round he’d changed his date of birth to avoid constitutional limits), out of nowhere banned the export of unprocessed minerals from the country.  The law of unforeseen consequences took hold in various ways.  For (law-abiding) companies in the business of exporting unprocessed minerals, this ban was devastating.  For a wide range of other companies who needed to export modest amounts of raw minerals for exchange, testing, or other purposes, the law was a huge obstacle to doing business.  After the election the law was immediately canceled of course.  You never know what politicians will do.

How do you mitigate against black swans?  First, you can read the book Black Swan to get tips.  Personally I find Taleb’s writing tedious.  What I recommend instead is a general approach to life.  Don’t set up your business or life so that if something goes horribly wrong, you’ll be in deep trouble with no way out.  Never put yourself in that position.  And always be philosophical and stoic.  By that I mean, you can’t control things.  So don’t go crazy.  Always have a plan as to how you’re going to get somewhere safe and sound quickly, ideally out of the country.  Somewhere where there’s a cold beer and a telephone so you can call mom and tell her you’re alright.  Keep a “go bag” packed and ready with underwear, a toothbrush, and some cash.

Avoid al-Shabaab.

9) Take care of your staff. 

Have empathy at every turn for your staff.  Help them.  Keep them safe.   Pay them on time.  They likely have dependents you’re unaware of.  Always pay.  Always on time.  Give them bonuses.  Train them.

10) Figure out what your international level of influence will be.

Will your local embassy or consul be able to help you sufficiently in a time of need?  It is even better to partner in the first place with an international lender with local experience and contact them instead when things go sideways.  These folks really know how to solve problems.  If they’ll take it, sell them some equity when they lend to you so that they are invested in your deal. This way, if something goes wrong, the lender’s local country representative will be your point person for problems even after you’ve repaid the loan. If you give your country’s embassy a call they usually won’t be able to do much for you beyond inviting you to their next garden party; but if you call the lender’s local representative, he’ll know just who to call and how to apply the thumbscrews.  Many international lenders are run by fearless former investment bankers from New York, London or Moscow who will be your champion and take shit from nobody.  Of course, they’ll also be protecting their investment.  That’s the kind of person you want on your side.

11) Don’t throw good money after bad.

It is incredibly difficult to walk away and stop investing if you have sunk costs in a project, but sometimes it’s the best thing to do.  Because of the huge emotional investment you’ll have made in the project and that country and your staff, this will be excruciatingly hard.  Believe me.  You must walk away.  If you figure out how to actually do this, please contact me.

12) Rotate out your expats so they don’t go local.

Or else one day all of a sudden when there’s a critical deadline, instead of pulling another all-nighter at the lab tweaking the flux capacitor, you’ll find your team blitzed at The Aubrey Arms singing karaoke, playing dominos, and suggesting you “have a drink and ease off the throttle, boss”.

13) Don’t keep much money locally.

You never know when your bank will close down.  Picture yourself going to pick up cash just wired into your business account and finding the bank’s door locked with a note posted saying, “Sorry, the bank has closed.  Forever.  Have a nice day.”  This happened to us.  In our case the country’s banking regulator stepped in to settle most of the balance and eventually the rest was paid out.  But having your hard-currency deposit vanish on you is very stressful.  How are you going to pay for a drink at your dead neighbour’s bar?

Instead, only wire in what you need and don’t let it linger.  Don’t leave large balances in-country.  If, happy thought, you somehow accumulate a large local balance you won’t need, wire it out immediately.

Avoid operating in countries with foreign exchange controls.  Those are complex and can change on you without notice.  Your cash is easily seized or held by your bank “for confirmation” or whatever.  Really, they’re earning central bank interest on your money and deciding whether to give any of it back to you.

The other day Egypt pulled its currency peg (a wise and overdue move), and the official value dropped 50% (closer to the black market rate).  Imagine holding your local money in pounds and, because you wanted to get to the beach to see your friends, you waited to convert and wire it out.  “I’ll do it tomorrow.”  No.  Go to the bank.  Get your money out.

14) Be careful with contracts. 

Contracts should be carefully crafted to take care of every eventuality and anticipate problems. Sit back and think about how things might play out.  Don’t trust that if it’s not dealt with in there, everyone will be reasonable when an issue arises.  Ensure that things are deemed to happen automatically.  What I mean is, you don’t want to need more signatures later from your counterparties to accomplish things like land transfers, payments, and asset sales.  Get them all in the master agreement if possible or as signed enclosures.  Use language like, “on 25 December 2017 the transfer of ownership of building x to Tom’s company will be deemed to have taken place notwithstanding the unavailability of the seller to sign deeds of transfer, and this agreement and the enclosures at Schedule A are sufficient proof of transfer and can be lodged at the land title office as incontrovertible proof of Tom’s ownership as of that date.”   People will disappear on you or they’ll SMS you to tell you “Today’s not good.  Can we meet in 2023?”

Be absolutely clear in the documents who has authority to make important decisions and spend money (and who doesn’t).  A trusted person from your side must be a signatory or co-signatory on the accounts.

Also, require that disputes be settled in neutral countries and unless you know why you’re using a different approach, use a single arbitrator rather than a court process.  Think hard about how you’ll enforce an arbitrator’s award in the target country.  If disputes are likely because of the nature of your business, figure out how you’re going to handle disputes and collect if you win, or else don’t move forward with your business.   This connects to my next point, which is the most critical one of all….

15) Think carefully about how you are going to make money and get that money out of the country and into your pocket.

This is not easy.  There are many, many awesome business ideas for the developing world that could result in wildly successful businesses.  Agriculture. Custom steelmaking.  Legal services.  Food.  Mining.  Oil and gas.   Healthcare.  But how are you going to get the money out?  How are you going to get liquid?  If you don’t know exactly how you’re going to do it, check yourself.   Consider whether you have the leverage to force people to pay you when they owe you.  The importance of this cannot be overstated.

It is very difficult to create a business in the developing world and export the profit.  Do you know anybody who’s done it?  I know lots of people who have failed trying.  Me, first and foremost.  But almost nobody who’s been successful at it.  Try to think of companies that manage to do it. Indian generic drug makers.  Yes.  Chinese and Indian motorcycle manufacturers.  Yes.  How about mining and oil and gas companies?  Yes.

business developing country
One of our operations in Mexico

It’s probably occurred to you that the leaders of those companies already have deep experience in difficult places and understand how they’re going to get their money out.  You don’t, so think very carefully, get advice, and make a plan.

16) If you are up for the adventure, you’ve made a great choice! 

Give me a call and I’ll buy you a beer at my dead neighbour’s bar.


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Thomas Lamb View All

A former corporate lawyer, Thomas Lamb has spent almost two decades founding and running companies everywhere from Mexico to Uganda.

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