WHEN LOOKING FOR OVERSEAS INVESTORS, NOT ALL THAT GLITTERS IS GOLD

When it looks like a rose and smells like a rose, is it really a rose?

One of the biggest time wasters in international business is pursuing what I call the Potemkin village opportunities (after Grigori Aleksandrovich Potemkin who erected ornate fake villages to impress Catherine the Great when she toured Ukraine and Crimea). So many things appear glamorous and outsized. But talk of fast money in the air is usually plagued with scams, promoters, crooks, gangsters, dreamers and time wasters. Common characteristics of a booming market, they are no different from the fast talking stock promoters of the Gold Rush, the railroad boom in England, or the Internet bubble.

So here are some proven tactics, which will help you avoid time wasters.

Be many times more skeptical towards any project abroad than you would be evaluating a similar project at home.  Do not be dazzled by official looking letters with seals and wink-wink promises that the promoters have “everything under control.” Demand the due diligence upfront. If it is not available to your satisfaction, walk away. If it sounds even remotely too good to be true, run, don’t walk, because it definitely is.

Develop a broad in-country network of contacts and run any potential projects by them. You will be surprised how small most of emerging markets really are and how well-informed the people in them are.

Scour the Internet and poll your contacts that do business abroad about the typical scams prevalent in your target country. Learn about them, how they work and avoid them like the plague.  (Excerpted from the Fluent In Foreign Business Ch 17 ) The article below is a very good illustration on the importance of doing one’s due diligence when seeking to attract a foreign investor who “glitters” on the surface.

Confidence Ebbs in Chinese Tycoon’s Ambitious Deals

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