How to Survive in Risky Markets

By Michael Willard

For some, living and working in Eastern Europe is hardly more than a 15-minute career layover, a ticket to be punched before moving on to a juicer assignment, perhaps that big office in corporate headquarters.

For others, it becomes a lifetime commitment. There are those who came for a kind of sabbatical from a more routine life, and ended up unpacking for the duration.

In either case, it takes a certain type of survivor to be successful. By definition, there are inherent risks in what once was called emerging markets, and they are heavy, like solid rock in a backpack. 

I am in my 16th year. I came to Ukraine looking to escape the hum-drum of working in a worldwide public relations company. Having owned my own company a year earlier, I found keeping timesheets and putting up with bureaucracy a pain in the patooka. I needed tight-rope excitement.

While I didn't have a return ticket, I never felt it would be more than a year-long assignment. That was two new wives, three new children and five grandchildren ago, not to mention a whole generation of weddings and funerals in the States, most all of which I missed.

So, I must have learned something along the way to impart to those who want to do business in Ukraine. I think so, but it is rather general. I generally start a talk on the topic with this:  "Come on in. The water's fine. But watch out for a few jellyfish."

The fact is that Ukraine is a nation of 47 million consumers (there were 51 million when I arrived) who smoke Marlboro, clean their bathrooms, drink Coca-Cola and like to own the latest electronic gadget. It has a growing middle class, or at least did until the recession.  If you have a better mousetrap, a tastier cola or a gee-whiz electronic thingamabob, this is the place for you.

So, here are my five rules for success in risky markets:

1. Avoid coyote ugly. You know, when you wake up in the morning after a wild night, and you would rather gnaw off your arm than disturb the person next to you. This is rather trite, but it fits. Jumping into bed with the wrong local business partner is the No. 1 miscalculation. It is so important because it is so costly. Often, it kills the business; or, at least, your involvement in that business.  This has been the case with mega oil companies and top 10 mobile phone companies as well as the small bar on the corner.

Due diligence is a must. Never make decisions on local partners via long distance. Never rely solely on a word-of-mouth recommendation. Never take credentials for granted. They are often inflated.

2. Don't be a nattering nabob of negativism, to quote a line William Safire wrote for a failed vice president. Be practical, but be positive. The alternative simply is not productive. We advise clients to take a positive but realistic attitude. Constantly haranguing the government -- even if it deserves it -- is to join the doomsday chorus. A positive approach will open many more doors, whether with local business opportunities or with the government.  This is one of those syrupy bromides, but it works.

3. Watch out for barstool philosophers. Opinions are like, well, bald spots: most of us eventually have one. When the economic crisis of 1998 hit, it seemed everyone at the local watering hole had an opinion on the ruble and the hryvnia. The same is true with the recession of 2009. Most overstated the case then and probably have now.  Being alarmist draws a larger crowd. Beyond this, however, are the grizzly cowboys who operate just a shade outside the law, both of their own country and that of the host country. Listen to them. It's entertaining. Don't take their advice.

4. Practice the Theory of Diminished Expectations. This won't win you any points with the folks in the boardroom back home, but it will keep you from becoming a basket case. Too often companies expect from governments and people in Eastern Europe what they couldn't hope to accomplish in their own countries. They rationalize this by saying the risks are greater.

5. Avoid flying under the radar. You can't and won't go unnoticed. If you employ people and sell a product, you're on everyone's scope from the local gangsters to government officials, which might be one in the same.

Don't be ostentatious, but do be strategic in your awareness program. Good corporation citizenship creates a reservoir of good will. Strategic outreach programs with government officials as well as media opportunities can help avoid pitfalls later.

In summary, there is no holy writ. Surviving and thriving in Eastern Europe is a lot like a day at the auto races. If you can get around the track in one piece, winning will take care of itself.