Operating globally?

How to deal with cultural challenges in international markets. PHOTO: THINKSTOCK

Quiz question: what do the initials OECD stand for? It’s short for the Organization for Economic Co-operation and Development, one of the more useful acronyms for exporters. Founded in 1961, and sometimes referred to pejoratively as a club for rich countries, the OECD includes 39 nations from Australia to the US – and of course Canada. It’s a forum where “governments work together to address the economic, social and environmental challenges of globalization.”

Some of these are covered specifically in an interesting and important document for exporters from OECD – the Guidelines for Multi-National Enterprises (MNEs). It’s absolutely not necessary to be a multi-national organization to benefit from these recommendations – they were updated and expanded in 2011 and apply in varying degrees to everyone in business and especially to those working internationally.

Some recommendations are generic (and pretty obvious) such as “MNEs should obey the laws in countries where they operate and be transparent in their undertakings,” but others are helpful in dealing with specific cultural challenges in international markets. Here’s a brief overview.

Human rights (HR). Have a policy commitment to respect HR and deal with adverse impacts whenever and wherever these arise, to the extent that domestic laws allow. This recommendation fits in with the United Nations’ framework to “protect, respect and – where necessary – remedy [abuses].”

The environment. Be on top of the environmental situation where you operate and aim for sustainable development. Keep track of the environmental effects of your activities, set objectives for improvement and have systems in place for regular verification and measurement. Put contingency plans in place for emergencies, adopt new and environmentally friendly technologies, and strive for emissions reduction, efficient resource utilization and recycling. If hazardous materials are involved, provide training to handlers.

Combating bribery. This is perhaps the most direct and important of the recommendations. Do not “directly or indirectly offer, promise, give or demand a bribe or other undue advantage to obtain or retain business.”

Anti-bribery stance

The recommendation applies particularly to foreign public officials, where Canadian law – and specifically the 1999 Anti Bribery Convention – applies. Don’t use agents, distributors or any third party to get around these laws, and have adequate internal controls to ensure compliance (see www.mneguidelines.oecd.org). The guidelines recommend discouraging facilitation payments (paying a “fee” to someone to carry out a task that is part of his/her normal responsibilities), even if such payments are technically permitted under the law. Take special care recruiting agents or distributors to ensure reliable partners. Make the enterprise’s policy regarding bribery public and ensure employees are made fully aware of it.

Consumer interests. Much of this is “boiler plate” stuff, such as: act in accordance with fair business, marketing and advertising practices; and goods or services should be reliable and at the targeted level of quality. Supply appropriate support or technical information to customers, put a dispute resolution mechanism in place, and there should be no deceptive or fraudulent practices. Customers’ privacy and personal data should be respected.

Science and technology (S&T). Ensure S&T activities are compatible with policies in the local country, and technology transfer where appropriate is encouraged, provided intellectual property (IP) rights are respected. As far as possible, perform S&T in the host country to address local (job or technology) needs, and licences for patented technology should be agreed to on reasonable terms. Enterprises are also encouraged to work with local universities and technical institutes.

Competition. Comply with local competition law (no price-fixing, rigged bids or divided markets). Co-operate with investigating authorities, and promote employee compliance with local competition laws and regulations.

Taxation. Comply with the letter and the spirit of local tax laws. Treat compliance as an important part of general oversight and “broader risk management.”

Troubleshooting

Implementation. To help enterprises deal with potential or actual problems in following these guidelines, the OECD arranged in 2000 to have national contact points (NCPs) in participating countries. Their job is to make the guidelines available, raise awareness about them and respond to enquiries from other NCPs, the business community, worker organizations, NGOs and the public. Reach Canada’s NCP in Ottawa at www.ncp-pcn.gc.ca. It has been proactively involved in establishing guidelines for the extractive industries, (dealing with community engagement and environmental impacts) and also for supply chains, calling on other government departments for technical and logistical support. Canada will only apply its “economic diplomacy” in support of companies that adopt the guidelines and deal with the NCP.

More information. The latest (2011) edition of the guidelines is available from the NCP, or from the OECD library. The guidelines make for sensible and practical (if stodgy) reading, and companies of all sizes are well advised to follow them.

Mark Drake is former president of Electrovert Ltd. and the Canadian Exporters’ Association. E-mail corsley@videotron.ca.