Looking for the right consultant
Many companies face the question of where they will receive affordable and trustworthy assistance for the foreign investments they plan to make. While thinking it over, it makes sense to come up with some expectations for those who are to provide consulting and support. Consultants must:
- bring a good managerial understanding of the investment plan;
- be able to understand and help push forward strategic approaches for company development;
- understand both the investor’s business culture and their way-of-thinking, as well as those of the country targeted for investment;
- know the ins and outs of the legal possibilities for establishing and structuring companies
- have contacts within the local authorities as well as in terms of funding measures;
- have as much experience as possible with the investor’s branch and with the local market;
- be a “cultural ambassador” with a knack for negotiating between the investor and the partners in the country of investment, e.g. construction companies, land developers and plant manufacturers;
- be able to win over the investor’s personal trust in the consulting team.
From this list one can see that the search and selection process for accompaniment is a difficult task to handle.
One thing’s for certain: lone wolves who present themselves as pensioners, longtime expats in country, or an expert in a certain branch are unable to offer the diverse skillset necessary for a good consultant. It is also not always ideal to try to cover one’s bases by “throwing together” a high number of consultants to handle various functions. At the very best, this will be an expensive process with lots of overlaps, conflicting advice and problems with coordination. In short, it’s a recipe for disaster.
What you need to fulfill these requirements is a team with various competences and established structures. Teams of this sort come in a variety of shapes and sizes.
The Foreign Chambers of Commerce (FCC)
A reasonable first step that many do indeed choose to take is to turn to the German economy’s representative abroad. Others, however, avoid doing so, often being the result of subpar consulting experiences with their own Chamber of Industry and Commerce (CIC). Keep in mind, the principle that an organization can only be as good as the boss’ own ability to organize the company applies to that FCCs, CICs and all companies as well. For this reason, there are FCCs that are good and not-so-good. The FCCs are certainly appropriate for certain types of basic information. They can provide information about the country and administrative procedures as well as lists with suitable lawyers and consultants from within the client’s own cultural circle. They can also give tips about the process in general from time to time. We advise you to be cautious if they offer to provide consultancy services themselves. This cautious attitude does not represent disdain towards the FCCs themselves, but rather is a way of respecting the functions and services for which they are actually responsible.
That is to say that their main function is to represent the German economy abroad. They are most effective in their lobbying efforts, providing advertisement for their country and its industries. Having good lobbyists at the helm is a must, and they can also be found in the FCCs. However, lobbyists are not companies; thus, their way of thinking is and has to be totally different. The Federal Republic of Germany pays them for these lobbying activities. The second function of FCCs is to act as a base for local companies which come from one’s home country. This mainly consists of giving information on new legal developments, supporting networking events and acting on behalf of federations. Federation executives are needed for this, and there are quite a few that can be found in the FCCs. This kind of work is financed by the members themselves. But as one knows from their experience at home, the business executives of such federations are organizers, not companies.
Since there is not an excess of funds flowing out of Berlin, and because the members are not exactly bringing in massive amounts of wealth, the FCCs have also had the function of generating revenue through “company consulting” for quite some time now. But who should be providing these consultations? As department leaders are usually recruited from the large reservoir of second-rate lobbyists and federation managers, there is of course a lack of company experience as well as the a lack of understanding of the type of thought necessary for such engagement. Sharp interns who can handle consulting matters as young economists are often very helpful. It is also a great chance for young people to gain practical experience in a company environment. Why would someone choose to gain this experience with a chamber of commerce, and what top young manager would want to work in a chamber of commerce after their time at a company?
It is exactly for reasons of this sort that companies are often disappointed with the company consulting provided by FCCs in practical situations. If you are lucky, you will receive honest advice about the right people to contact for legal and consulting matters in country. If you are unlucky, you end up with the address of a consultant or lawyer who has used such acquisition opportunities over the years to get themselves elected with full authority onto a chamber board. This is why FCCs are, as a rule, good to have as contacts, as long as you are not looking for practical company consulting. Be sure to also keep a healthy dose of skepticism during the process to make sure that you are not put in contact with a member of the FCC’s committee.
Every case of foreign investment is tied to the establishment of a company. This is also a matter in which the investor should not try to be too frugal. Without a lawyer who is an expert in your country of investment, you run the risk of getting caught up in dubious enterprises or joint and holding ventures. Additionally, most law offices are very familiar with investment funding and the various applications which accompany the process. You will also need the assistance of a lawyer for property sales contracts as well as employment contracts.
You should never rely on the legal advice of potential partners abroad, especially when it comes to contracts written in a language that you do not know. If, for example, a partner in a joint venture claims that their local lawyer is “cheaper” and able to prepare everything for you, then this should set off an alarm in your head. Similar problems can arise when lawyers try to “poach” honorary fees for tasks with which they are not at all familiar. Lawyers are often under a lot of pressure by joint law offices to “rake in” as many honorary fees as possible. This is why they sometimes offer suddenly to facilitate contact with construction companies, help with finding a suitable construction site, or even assist in the process of personnel recruitment.
In such situations, investors can be certain that such partners are not focused on providing fair location evaluations, well-structured construction tendering and tried and tested processes of personnel recruitment. In a best-case scenario, the lawyer will be doing a favor for a friend to guarantee clients, but in more drastic cases, they may also expect for their mediation to result in their own increased revenue. It is also quite rare for lawyers to have industrial business experience. Even if they do have some experience, then it is usually as a businessman with legal experience, rather than as a lawyer with business experience.
Legal firms are potentially great contacts to have, as long as they “stick to what they know”. The investor must stay in charge of their own affairs, searching for and evaluating the best location, while the lawyer reviews the sales contracts. The investor is the one who finds the right employees and construction companies, while the lawyer should be busy drafting construction and employment contracts.
The SANET ASEAN ADVISORS are a mid-sized consultancy group in the ASEAN member states: with over 40 international and local experts, they support western companies in Bangkok, Ho Chi Minh City, Jakarta and Yangon. Their management draws from many years experience as entrepreneurs and company managers, with a team consisting of lawyers, engineers from various professional fields, marketing experts and financial specialists.
The “Big 4“ Auditors for Consulting Business and their Brothers
From legal consulting strategies and feasibility studies to tax consultancy, the “Big Four”, namely PwC, KPMG, EY and Deloitte offer everything that an investor’s heart desires, as long as they can and wish to pay for such services. These are of course international service providers that have experience with similarly structured consulting companies such as the Boston Consulting Group or with similarly structured economic offices in many different service areas. For all the services they provide they have numerous experts as well as numerous interns at their disposal who also understand how to sell consulting services in a way that is visually appealing.
For large companies, there is almost no alternative for this consultant selection. What project overseer risks his neck by having to admit after the project’s failure that he did not so much as even ask the big and expensive consultants? If the project goes awry with one of the “Big Four” as the advisor, then the project leader can simply shrug and point to the fact that they at least they relied on the best of the best. How good the consultation actually was in practice is anyone’s guess. They are working with the same basic ingredients as all the other consulting companies, and sometimes things just do not bear the fruitful results one might have expected.
„Company consultants are like men who have read the entire Kama Sutra but have never actually met a woman!“ Every company consultant has heard this as well as other similar jokes of this type. The bad thing is that, while such stereotypes often actually do apply, they are sometimes also very unfair. This is because serious consulting companies or “advisors” often survive off of a low number of managers who shape the company and rarely if ever change companies. They gather knowledge from various sectors and then integrate this knowledge into project teams. As noted above, lone wolves are rarely able to pull this off. At least, the risk of being led along the wrong path due to lacking individual competencies is high.
When choosing a consultant, one must beware of a list of important indicators:
- The company must have a structure. A one-man-business with two employees is too demanding even for an experienced and benevolent leader. The structure must consist of very well trained employees, ideally being from the region, who have various sales and technical backgrounds.
- The management should be experienced in the business sector and also possess high professional qualifications. Having only one or the other is simply not enough. An academic without practical experience will not be able to understand an entrepreneur, while a businessman with no training background often has problems abstractly identifying unknown challenges and creating strategic solutions to these problems.
- The company should be run under intercultural management. Foreign investments are investments which depend on the implementation of goals in the land of investment. For this task, “countrymen” are needed to handle the negotiations with other “countrymen”.
- Request references from employers who required comparable tasks from the consulting company. Accurate preparation by conducting an extensive legal and economic examination of the plan’s feasibility, potentially even a comparative study and a professional location selection analysis, is part of any foreign investment. A competent consultant will also provide support for the localization of procurement or for construction tendering.
- The necessary juristic and strategic skills for establishing a company, investment funding, as well as questions regarding customs and approval should be present in-house or at least within a small network of consultants
- Test the advisor with a stepwise process. Invite them to an intensive project interview. Spend the extra time to find out whether they possess some of these listed qualities. Examine their managerial knowledge. Then give them a first assignment. Only if they fulfill it optimally should you then put your money on them.
However, the most important thing is to ask yourself: would you go into the jungle with this advisor? Making a foreign investment means entering new territory, i.e. “traversing into the jungle”. In the jungle, there are many dangers and risks lying in wait. If, after encountering the first difficulty, the boss gets the feeling that they would not have chosen this path, then that means it is the wrong one. If the adviser takes off with their supplies, i.e. their honorarium, leaving you behind to fend for yourself, then the path chosen will turn out to be a catastrophe. A good partner shares the responsibility along the way through the jungle, even blazing a trail with their machete if needed. In other words, choose an adviser whom have you come to trust after diligently getting to know them.