When people find out I worked for P&G for several years in emerging markets, the most frequently asked question is, “How difficult was it to deal with the bureaucracy? Regulations? Corruption?” These are fair questions. While there is no denying these can be tough issues, my experience taught me they are not impossible to deal with, if a company has faith in its principles and the patience to overcome hurdles, one step at a time. It also helps to keep your eye on the long-term worth of the business you are trying to build.
Even within emerging markets, there is a wide range between countries as far as bureaucratic and regulatory hurdles go. The World Bank issues “ease of doing business” ratings for each country. This is a good place to start to have a sense of what you may be faced with. Sometimes these may be counterintuitive. For example, Pakistan rates relatively high for ease of doing business, due to very few licensing and approval requirements in terms of setting up a foreign business in most sectors of the economy. India, on the other hand, ranks as a more difficult country to do business in due to regulatory restrictions, even though lately they have been improving on this score.
In planning to enter an emerging market, the first step should be to get a sense of the regulatory landscape. International banks and accounting firms can be a very good source of this information. When P&G decided to set up a business in Pakistan, our global banking and accounting relationships were of utmost help. Then of course there are corporate law firms that can help navigate the landscape. But these firms tend to be local, so it is less likely a multinational company could rely on global relationships here. It also helps to find out which law firms are being used by other respected multinational companies in the host country. In Pakistan as well as in Ukraine, we had no problem finding bankers, as well as accounting and law firms, that became very important advisers to us and helped us set up and operate in the country.
Then there’s the issue of corruption. It actually exists everywhere, including to some extent in developed Western countries. There is only one way to deal with it: You make it clear from day one that under no circumstances would you do any personal favors to move your busin
ess ahead. In the beginning this can be quite painful; be prepared for serious pushback. For a while you may lose time and money, but once you have clearly established that you are unable to do anything that violates the laws of your host country, or your home country, or the principles of your company, you will be surprised at how smoothly obstacles start to disappear.
To this I would add one more piece of advice: Avoid the temptation to lecture anyone outside your business about the ethics involved. There is nothing to be gained by seeming to be looking down on others or showing yourselves to be morally superior.
There is another very important matter one must keep in mind. When you operate in an upright manner, there will be many entities that would be looking for you to make a misstep. I learned this the hard way in Ukraine. The country had very complex certification requirements, which had to be fulfilled in order to sell imported consumer goods. P&G were a young organization and still learning the ropes. Some of our employees did not file required paperwork correctly, and consequently we were late in depositing fees owed to the government. The details of the story are too complex to describe here, but P&G found itself in the crosshairs of several regulatory bodies in Ukraine. During hearing after hearing, continuing for four months with much negative publicity in the press, P&G’s sales levels were cut in half. It took much hard work, a petition to the president of the country, and support from the highest levels of the U.S. government to get us out of this bind.
Fighting this fight also took a tough toll on me. I worked 12 to 14 hours a day, for 16 weeks straight, without a single Saturday or Sunday off. My payoff was solely that in the end P&G was exonerated by the highest authorities in the Ukrainian government. “Procter & Gamble has made some administrative errors, but penalties applied to them are out of proportion versus their mistakes,” read the report issued by a commission set up by the president of Ukraine to look into the “matter of P&G.”
August 14, 2017