Editor’s note: “International Business Corner” by Joan Keston provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment. This article discusses the validity of basic business assumptions when dealing with developing countries.

RALEIGH – When we are doing business, and without even being conscious of it, we make certain assumptions that emanate from our experience in our business culture. Although international business requires a certain flexibility and understanding of foreign business cultures when working with other industrialized countries, it requires a much deeper reflection into our basic assumptions about business when dealing with developing countries.

Being a Local in a Developing Country

Through the 10 years that I lived and worked in a developing country as a local, I was continually amazed at the basic assumptions that I automatically made when doing business that were not valid, did not have the same impact or were not applicable. It is one of the reasons why it is crucial that a company have a person on their international bridge that has done business in a developing country as a local, even if not the particular country where you are working.

Avoid Making Assumptions

When you are discussing a transaction or specific terms or conditions, stop and reflect upon the reasons for the structure of the transaction or requirements behind certain terms and conditions. Get down to the very basics of the deal. Understand and keep in the forefront the driving economic factors and critical points. Beyond this, you must have a general understanding of the pulse of a developing country and how the critical factors are impacted and play out in that country’s business culture.

Some Specific No-No’s

Don’t assume that:

• People are behind you in technology, education or sophistication.

Developing countries often leap-frog into advanced technologies and avoid the time it took industrialized countries to get there.

Developing countries have contradictory and extreme differences in terms of levels of society, education, sophistication, financial resources, etc.

• The concept of Rule of Law exists.

This is a major issue and impediment to business development in countries such as China and Russia, and to a lesser degree in India and Brazil.

• The governing infrastructure is adequate or in reality functions as designed.

Often resources are stretched to capacity to address the enormous tasks confronting developing nations.

Indices of corruption are very high in developing countries.

Legislative, executive and judicial functions may not be separate or independent, and may not function or impact business as we might expect.

• The country’s infrastructure is adequate.

Transportation, port facilities and communications are examples of infrastructure that may be essential to your business success, but may not be adequate.

• Quality assurance and control are adequate.

Don’t lose sight of the fact that it took decades for us to develop the quality control processes and regulatory authorities in this country. And, this process was secondary to our industry development.

• Business concepts are the same.

Many characteristics of business in developing countries emanate from a survival mode or mentality, necessary in extremely unstable economic situations, authoritarian or corrupt political regimes or non-free market economic regimes.

• The reality of implementation and enforcement are as they appear to be.

Things may look good on paper and the other party may agree to your terms and conditions, but the reality may be an entirely different matter.

Never lose site of the fact that you are dealing in a relationship-based culture, not a contract-based culture. You must make the extra effort to understand, and engage the executives who understand the business culture and its nuances.

About the Author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com.