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Challenges Of International Contracting

June 17, 2010

We all know that things are different when we are contracting outside our own country. But how different?

Most negotiators and contract managers find themselves on a voyage of discovery when they start working on international deals or relationships. There are some books available, and maybe we have internal mentors or colleagues who can help. There are areas which we know will be different – for example, the legal system – but the real risks and challenges are in the unknown areas, of which there are many.

A growing number of IACCM members turn to others within the association for help. With more than 120 countries now represented in the membership, it is generally quite easy to identify someone who will know the local conditions and pitfalls. But I have encountered a growing number of comments recently about the challenges of doing business in many markets – issues such as lack of contracting skills or understanding, difficulties in getting paid, cultures with an intrinsic lack of trust. Factors such as these can result in highly unpredictable behavior, with discussions taking a sudden turn into a completely unexpected direction or negotiations being abruptly terminated. Was the other side palying games, did we do something wrong, or were there hidden forces pulling the strings?

It is with these types of experiences in mind that IACCM is currently running a study to better understand the relative ease / difficulty of doing business with different countries. It includes input on the specific areas which represent risk or present negotiation challenges – for example, business ethics, contracting skills, language, enforcement – and is coming up with some fascinating results. The output will include a table showing not only relative ‘ease of doing business’ from a contracting perspective, but also indicators of the particular issues that negotiators and contract / procurement managers have encountered.

IACCM plans to dig deeper. Based on the results, it will develop a more detailed analysis and report on the things to watch out for in specific countries. Input to date has generated some fascinating findings. Even the most ‘advanced’ countries have areas in which they can improve. So negotiators will gain not only an understanding of the traps they may want to avoid, but also the possible perceptions of the other side. For example, when it comes to legal risk, which countries should you be most worried about? The answer will probably surprise you!

If you would like to participate in this IACCM study, please visit https://www.surveymonkey.com/s/marketcomparisons. All input remains confidential and, as a participant, you can elect to be sent a full copy of the final report.

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