EDITORIAL & OPINION — GUEST COLUMN — Foreign preparedness is key

As mining companies venture into foreign parts of the world where business customs are different, it becomes increasingly necessary for executives to be cautious about with whom they do business and how they conduct themselves. This caution also applies to the geological survey teams, core testing companies, and providers of mine site accommodation.

Many of the countries being explored by mining companies have business customs very different from those of North America, and it makes good business sense to have a country profile developed before pursuing business opportunities. A well-researched country profile can provide information on the geography and demographics of the country being examined, as well as a profile of criminal activity and any significant and recent terrorist activity.

Some of the most important elements of a country profile have to do with identifying and understanding the political landscape of a country, its economic policies and resources, and the governing structure. Companies must also be aware of factors that can affect day-to-day business, such as electricity-generating facilities, currency controls and kidnapping risks. Each of these elements will determine what business leaders must be aware of and what security measures should be taken to ensure the personal safety of employees.

The following information outlines questions that should be asked and issues that should be addressed before employees and their families are sent abroad to pursue business opportunities for a company:

* Criminal activity — What is the level of criminal and/or terrorist activity in the country? This information is important as crime continues to be a serious social problem in many developing countries. Attacks on foreigners, both by street criminals and organized gangs, can be common. In most Latin American countries, the police and the military are closely aligned and corruption is rampant. Terrorist groups will often target foreign businesses and their employees through kidnappings and ransoms. Canadian business leaders have mistakenly concluded that their companies will not be perceived as a political target. However, research demonstrates that terrorist groups often do not differentiate between Canadian and U.S. interests.

With this high incidence of crime in developing countries, most foreign businesses obtain kidnap/ransom insurance for their employees and their families. In addition, bodyguard services are available and are highly advisable for foreign executives travelling in such areas.

Employees should be warned that obvious displays of wealth are provocative and therefore are highly discouraged. It is also advisable that foreigners avoid driving rental vehicles that are easily identifiable as such; instead, use hired drivers or taxis.

* Health considerations — Health standards in most developing countries are markedly below those of Canada. Emergency health services are available only in densely populated areas, and all hospitals require prepayment in cash for medical attention. Foreigners requiring even the most basic surgical procedures are strongly advised to postpone them until they return home.

* Availability of power utilities — In many developing countries power utilities are being privatized, and governments have provided incentives for foreign investment in the construction of electricity-generating facilities. Consequently, a chronic shortage of available electricity has resulted in frequent power outages. These shortages make it difficult to conduct business on a daily basis.

These and other issues and questions must be addressed before pursuing business opportunities in developing countries. The risk of sending employees abroad unprepared is too high. The key to successful business overseas is understanding the customs of the country in question and demonstrating that knowledge.

— The author is a member of the corporate intelligence division of the Canadian branch of KPMG, an international accounting firm.