5 top tips for doing business in a dangerous country

Bodyguards, bribes and up-front fees are par for the course in the world's riskier markets, says globetrotting retail consultant John Ibbotson.

by John Ibbotson
Last Updated: 08 Jul 2016

Britain’s not exactly looking like a growth market right now. While there are things you can do to survive Brexit at home, the idea of doing business abroad is suddenly looking all the more alluring.

Unfortunately, the places with the greatest opportunities often also have reputations for carrying the greatest risks. MT asked John Ibbotson, founder of retail consultancy Retail Vision and veteran of projects in post-revolution Ukraine, Nigeria and Palestine, for his five top tips for anyone considering doing business in volatile and potentially hostile environments. 

1. Understand that corruption is endemic

One of the most difficult things to get used to in volatile economies is the fact that bribery and corruption, in varying degrees, are the norm. In fact, lining pockets is generally hard-baked into the entire process of doing business.

This kind of activity is unacceptable and cannot be condoned, but is sadly often endemic.

For example, while working for one of Ukraine’s biggest consumer electrical retailers recently, senior management were told one day that the company wasn’t paying enough in bribes.

The next day two truckloads of ‘Tax Police’ armed with Kalashnikovs turned up and ripped out all the company's servers. It was only ten days later, after money had exchanged hands, that things were back up and running.

Clearly events like this can be quite intimidating for us westerners. Here, quite rightly, bribery and corruption are illegal and so if they are taking place where you are working, steer clear as best you can.

2. Up your fees and get used to being paid in unusual ways

Understandably, one of the main concerns when doing business in highly uncertain geographies is getting paid — or being ripped off. To hedge against this, don’t hesitate to increase or even double your usual rate and always, always, ask for 50% up-front to protect you if it all goes pear-shaped. 

If the client or company you are going to do business with doesn’t agree to that, steer clear. Also, be prepared to be paid in slightly unusual ways.

For example, I once consulted with a company in Lagos, Nigeria. On leaving the country, I was asked to meet with the owner's currency man at the airport, and signed in triplicate for a bag of £50 notes.

Getting through Lagos customs was no problem, but paying the notes into Barclays Bank in Huddersfield was a bit trickier. Surprisingly, the notes weren’t fake.

Oh, and one other thing money-related: insist on security, especially in Africa, and always stay in the most secure hotels — or risk being robbed or worse.

3. Prepare yourself for financial smoke and mirrors

In certain countries, all companies keep two sets of accounts: one for the tax authorities and one to run the business. This was the case when I was working recently in Ukraine: the two sets of accounts for the company I was consulting with were barely recognisable. 

So if you are shown any numbers, always ask which accounts you’re looking at, as the person showing you them may not know that their approach is out of sync with how things are done in the west. Essentially, the formalities and reassurances of Companies House are non-existent.

4. Expect bad corporate governance and management paralysis

Don’t expect structured management and strong corporate governance. Many companies in war zones and other dangerous countries are either run by local oligarchs themselves or their offspring. 

Whoever they are, the people in charge are generally a mixture of CEO and chairman and have the power to do whatever they want. Volatile decision-making and out-of-the-blue mass-firings are very common.

In short, you may have to get used to dealing with lots of people in quick succession as previous incumbents are swiftly given their marching orders.

5. Brace yourself to go against your better judgement

Sometimes it’s better just to roll with it than try to convince a business otherwise. For example, I once opened a supermarket in the Middle East that was in the wrong place for so many reasons but simply because it was politically expedient to do so. 

Translation: ‘The royal family wants a supermarket here, so just do it.’ I protested and argued that it would fail but, under pressure, went ahead. As predicted, the supermarket failed in six months.

Mortal of the tale: when you disagree, always explain the likely consequences just to keep the relationship with the client or local regime/oligarch/royalty alive.

John Ibbotson is the founder of Retail Vision. 

Picture credit: Oliver Spalt/Wikipedia


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