some of us, the image of Nikita Khrushchev banging his
shoe on the podium of the United Nations in the early
sixties and uttering the words We will bury you is burned
into our minds. For others, Ronald Reagan standing in
front of the concrete and barbed wire monstrosity separating
East and West Berlin and saying: Mr. Gorbachev, tear
down this wall! echoes resoundingly today. Solidarity
in Poland, the uprising by the freedom fighters against
the Ceausescu regime in Romania, the general sweep of
freedom as oppressive governments toppled one by one...
these are events burned in memories all over the world.
Well, the wall is down; and for the most part Communism
is a thing of the past in Eastern Europe. While there
are still parts of Eastern Europe that are in considerable
turmoil, much of what was formally part of the Soviet
block nations including a great deal of the former Soviet
Union itself is becoming an extremely important part
of the European Union, and of the global economy. Tens
of millions of potential customers in both the consumer
and business markets are looking for goods and services
that were both unavailable to them until recently and
which their own business infrastructure is unable to provide
While, for the most part, the Eastern European markets
are wide open and invite trade with the West, it is necessary
to remember that doing business there is not like doing
business in the United States, or even Western Europe.
In large part because of their recent history of oppression
and the fact that to most of these countries free enterprise
is a new and unfamiliar concept, businesses face unique
challenges when doing business in Eastern Europe. However,
while these challenges can certainly appear formidable,
the key to overcoming them is knowledge, and understanding.
Just a few of the most significant challenges you are
likely to face include:
1.Cultural Differences and Diversity: While there
are many who talk about Eastern Europe or former Soviet
Block nations as being a single entity, nothing could
be further from the truth. Doing business in Poland, for
example, is not the same as doing business in Estonia
the same way doing business in China isnt the same
as doing business in Japan. Eastern European nations each
have their own rich and unique history and culture and
because of this each have different and often times complicated
customs and protocols when it comes to business transactions.
To effectively compete in Eastern European markets, it
is necessary to be aware of the dos and more importantly
the donts of doing business in each individual country.
2.Government Regulation: While it is certainly
safe to say that the citizenry of most Eastern European
nations currently enjoy more freedoms and live under less
oppression from their own governments than at any time
since the end of World War Two, the same cannot always
be said for Western companies attempting to transact business
there. Because many of the governments of the Eastern
European nations are far less than two decades old, there
is very often less stability in their rules and regulations
than you will find doing business with nations where the
governments are older and, therefore, better established.
Tariffs, import/export taxes, customs regulations, the
level of governmental intervention in a specific business
transaction all these and many other facts can change
literally overnight. To adequately protect your profits,
a thorough understanding of the governments you are involved
with is crucial. It is not enough to know how things are
now you must also understand how things were last year,
and have a reasonably good idea, based on recent trends,
of how things will be tomorrow.
3.Negotiating Strategies: As we all know, the purpose
of business negotiation is to get the best deal you can
possibly get, and thereby increase your profit margin,
while at the same time offering the individual or company
you are negotiating with a deal that they can live with
as well. When negotiating a business deal in Eastern Europe,
there are several questions you should ask yourself:
What is the general sentiment of the government
and people towards the United States?
How do the local ethnic and religious customs affect
How stable is the government and/or business environment
in the country and even the region of that country
you are looking to do business in.
Are there any ethnic, cultural or religious prejudices
you need to be aware of (example: is there a strong sentiment
against Western Europe in the area you are looking to
do business in).
The single threads that run through dealing with the above
listed challenges and which is crucial to dealing with
the many other challenges you will face doing business
in Eastern Europe are knowledge and understanding .
One of the things I have learned in my years of consulting
and advising businesses of all sizes on how to trade in
Europe is that it is virtually impossible to have too
much knowledge with regards to the diversity and rich
cultural and ethnic differences that exist between Westerners
and Eastern Europeans, and also between Eastern Europeans
themselves. Lack of appreciation for the specific challenges
they will encounter in the Eastern European marketplace
is the single largest reason why some businesses fail
in their dealings there.
The profits are there in Eastern Europe. They want what
you have to sell them, and they will pay a fair price.
But before you venture into that market, make sure you
know what you are getting into and if you are unsure of
the specifics, seek help from a professional. Believe
me, its worth it.
Author Bio: Steve McLaughlin founded Global Market
Insights, with offices in Europe and the U.S., with his
vision of giving clients two synergistic competencies:
knowledge of the global marketplace and industry expertise
in manufacturing, finance and information technology.
Steve has over twelve years of international experience
in three continents, having started in executive search
as a Beckett-Rogers Associate. Steve is a graduate of
Rice University where he was student body president, and
completed post-graduate studies in International Economics
at the Universidad Mayor, Santiago, Chile.