How foreign business communities organise, and what a newcomer actually gets from them

In any market with meaningful foreign investment there is a community of people running foreign-owned operations, and collectively they hold information that exists nowhere else.

They know which regulators are reasonable and which are not. They know which law firms deliver and which bill. They know what a warehouse actually costs to rent, what a plant manager actually costs to hire, how long customs clearance actually takes, and which distributors pay.

None of this is published anywhere, and all of it determines whether an entry succeeds.

How the layer is structured

Bilateral chambers of commerce, organised by country of origin, which run events and represent members to authorities. Sector associations, organised by industry, which are usually more useful on technical and regulatory matters. Informal networks built around nationality, language or professional background. And professional service firms — the accountants, lawyers and recruiters serving foreign clients, who see across the whole population of entrants.

The formal organisations are the visible layer and often not the most useful one. The informal networks carry the candid information, and access to them runs through individuals rather than through membership.

What a newcomer actually needs

Not general market intelligence, which is available in published form and is usually adequate.

What is not available in published form: the actual timeline for a specific permit, the difference between the nominal and effective cost of employing someone, which counterparties have a history of not paying, what a reasonable price is for a service you have never bought locally, and which advisers are worth their fee.

That is operational knowledge, it is held by practitioners, and the only way to get it is to ask someone who has it.

How to get it

Ask specific questions. "How is the market?" produces a useless answer. "How long did your customs registration take and what held it up?" produces a useful one.

Talk to people who are not competitors. Someone in an adjacent sector will be far more candid than someone in yours, and most of what you need is sector-neutral anyway.

Talk to people who left. Companies that exited a market give a much more accurate account of the difficulties than companies still operating and still explaining their decision to headquarters.

Offer something. The exchange works when it is reciprocal, and a newcomer usually has something — a view of another market, a technical contact, a supplier reference — worth trading.

The general point

Most market entry failures are not caused by getting the strategy wrong. They are caused by operational surprises that were entirely known to people already in the market: a licensing step nobody mentioned, an employment cost that was double the estimate, a distributor who never intended to pay.

Two weeks of conversations with people already operating there would have surfaced all of it, and the cost of those two weeks is trivial against the cost of learning the same things by experience.

That is the case for this layer, and it holds in every market — Ukraine simply has a thinner one than its size warrants, which makes the individual conversations more valuable and harder to arrange.

Related in this archive

• The media sector: ownership, reach, and why it matters commercially
• Emigration: the constraint that outlasts every other problem
• Kyiv's traffic and the transport economics behind it
• Ukraine Annual Review 2011: a recovery that did not become a foundation

Finding that layer was the most useful thing I did when settling here, and it is part of why I now serve as president of the International Association of Entrepreneurs of Ukraine. What a newcomer needs is not advice but the telephone number of somebody who has already made the same mistake. The value of that network is something no consultancy report can supply: knowing the outcome before your turn comes.