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Date: 2016-08-12

Utilizing Chambers of Commerce and Trade Consulates to Help Minimize International Trade Risk

by Roberto Bergami

This is the eighth part in my series of articles on assessing risk in international trade.

In my last article of this series I made some comments about bank and bank risk. In this article I will focus on chambers of commerce and trade consulates.

Chambers of commerce are typically private organisations representing a category of industry sectors and working for the benefit of their membership. Chambers of commerce may be quite broad in their activities or very specifically focused; it depends on their charter.

A trade consulate or attaché is typically the commercial arm of a foreign embassy, high commission or a consulate. They are a public body of a foreign government and, as such, they follow a different agenda than the chambers of commerce. Since they are a public institution, they are subject to their current government policies and typically only serve the commercial interests of organisations from their country.

Both chambers of commerce and trade consulates share roles in common such as networking and business-matching functions. They are able to put people in touch with each other and also find sellers and suppliers to assist in the generation of business activities. Probably the best things about working through these bodies are the facts that they already have a network of industry contacts that have been filtered to varying degrees. This accelerates your efforts in finding a potential seller or buyer. As we all know, time is critical in business.

It is also possible to do some personal networking at the local level by attending the various functions these bodies host from time to time. They may be market-specific or industry-sector-specific functions. In either case, they provide an opportunity for people to meet like-minded individuals with a real or potential interest in doing business in country X, Y or Z in industry A, B or C. Attendees may obtain interesting and useful information during these meetings including third-party referrals, swapping stories about who is doing what to whom, and who are the bad guys. This is all valuable information, especially for the novice in a new area. This is part of information gathering that assists in creating a mental picture about a foreign industry sector and its business environment. Much can be learned in a few hours about what works and does not work. This information comes at a low cost but has high value.

Chambers of commerce also offer documentation services, such as legalisations of documents and the process for registration for certificate of origin issuance. They are also able to offer comments about further legalisations processes, such as consular legalisations, etc. This is useful operational information that may impact the ability to service a foreign customer in accordance with the contract specifications for documentation.

Chambers also offer the opportunity to participate in trade mission. These usually take the form of country and/or industry-specific visits. The chamber conducts a matching exercise between buyers and sellers on the mission ahead of the visit with a view to organising in-country meetings with the foreign counterparts.

Trade consulates also offer business-matching opportunities and the organisations in their databases have usually been the subject of previous enquiry to ascertain export readiness and capability. After all, there is little point in matching someone with a counterpart that is likely to be a failure at the onset. Trade consulates also have reputations to protect: their own and that of their ministry and country. They have no interest in doing anything except what is the best possible. Consequently contacts from these organisations are comparatively lower risk.

Trade consulates also offer some tailored consultancy services. These vary widely in their availability, scope, depth and cost from one diplomatic post to another and from country to country, so it is not possible to make specific statements. Typically a local consultancy firm familiar to the trade consulate would be engaged to provide specific advice. This may vary from a general market analysis, to options for selecting agents or distributors in a particular market, to the provision of a specific market report, or anything else that you may desire. The benefits or pursing this option is that the consultancy service is generally quite reliable and produces good reports. You have the added knowledge that any consultant to be engaged has already been filtered by the trade consulate and is highly likely to be a respectable service.

On this score I am reminded of a past attempt by a consultant to provide some specific in-market information about a country in the Middle East that I was interested in selling to. This consultant's claim to fame was that he was originally from that country, was quite well versed with the business culture and etiquette, and had previous extensive working experience in that country in a marketing capacity. I had not been able to find anyone else to complete that task at the time. The consultant was given a written brief on the information required and was engaged to provide this in exchange for a payment of $15,000. He returned six weeks later and produced his report with an invoice.

Unfortunately his invoice was never paid. This is not because I am a rogue, but it was because of the type of report he produced. I am being generous with the use of the word report. Basically what he provided me with was a country profile that was extracted from some encyclopaedia-like resource. It provided me with the structure of the government, the type of legal system, latitude, longitude, population numbers, average seasonal temperatures, annual rainfall, public holidays, and main local foods—not much else. Sure it was in colour, nicely bound, but no details about the specific information I was seeking—what a waste of six weeks' worth of waiting! Of course, he did demand payment, but once he was promptly referred back to the written brief and his lack of performance, he was never seen again. By the way, the report was handed back to him immediately; one less reason to want to claim any remuneration for the job.

What is the moral of the story? Make sure you have written briefs for consultants. They protect both you and them. Also make sure that you check out the credentials of the consultant as much as you can beforehand. It is about reducing your risk after all.

In summary, the advantages of using chambers of commerce and trade consulates are that you potentially get access to a wide variety of reliable information that should enable you to positively accelerate your business activities in international markets. Some of this information is free, and some of it has to be customised to your needs. In my experience whether or not the information obtained from these sources is free, it has always been worthwhile.

Utilising respectable sources of information not only accelerates your processes but also reduces risks. Networking with others may be of great help in avoiding picking bad apples as partners; this way you will reduce risk. It may be that you will not get details about a business counterpart opportunity abroad, but you may well get details of which organisations you should avoid—typically these organisations and individuals have a track record—and that is very valuable information indeed.

In my next article I will focus on some aspects of market access issues.


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