Global Business Development & the industrial espionage NSA fallout

Ed Marsh | Aug 7, 2013

As if it wasn't hard enough already.....

The statistics are clear and astounding.   American SMBs typically ignore, or struggle to realize large international sales & export opportunities.  (Department of Commerce statistics indicate that only 1.5% of all US companies export outside of the NAFTA region.)

And that's despite large, welcoming markets which value "Made in USA" products, and the particularly compelling advantage that manufacturers of productivity enhancing technologies have in many emerging markets which need US expertise and products.

What if our government is working against us

There are a number of programs offered by the US Government that support SME global business development.  Gold Key Services and other commercial service programs from @ExportGov are often valuable, as are finance products from @ExImBankUS and @SBAGov.

Despite the support, for many years the export controls restrictions faced by many US manufacturers have been cited as an often unnecessary limit on the ability of companies to export innovative tech, industrial and defense/security products manufactured in the US.  Clearly the intent of export controls is sensible - the question has been in their application.  And compliance has been problematic for many small companies who fail to realize that not only their product itself, but even details of licensable items which travel globally on executives' laptops and information on their domestically hosted .com TLD websites are subject to the same regulations.  It can be complicated stuff.

global business development implications of NSA monitoringBut now it seems that a more pernicious challenge is emerging.  Since the NSA monitoring story broke there have been more and more surveys and stories about other countries' official and commercial impressions of the risks of doing business with the US.

Basis in fact...but what's new?

Germany in particular, for a variety of cultural reasons, has taken particular umbrage at the US monitoring which is seen to have a likely industrial espionage angle.  Recent stories in the Financial Times and der Spiegel highlight the concern.

But here's the thing.  There shouldn't be any surprise here.  In fact, folks who follow the FCPA (Foreign Corrupt Practices Act) Enforcement activities noticed a strange and substantial uptick in actions against foreign companies beginning in 2003-2004.  US Government officials have confirmed that the resources of the NSA have been used for purposes of economic espionage. (Kudos to @TFoxLaw)

So the recent uproar is more an issue of heightened awareness rather than new activities.  On the one hand therefore, it's not really a new story.  On the other, however, perception is reality as the saying goes.  And if major trading partners like Germany see new threats at the corporate level in cross border business with the US, then American SMBs will certainly experience negative consequences.

What's good for the goose is good for the gander

US business people have known for a long time that their laptop hard drives and phones are frequently copied as they pass through security checkpoints in certain jurisdictions known for state sponsored IP appropriation.  But what if that becomes common practice?  If working on email or speaking on your mobile from your hotel room in Frankfurt, Ankara, Cape Town, Bogota or Bangkok becomes as problematic as it is in other spots?

It will certainly add another element of complexity to global business development precisely at a time when more SMBs must aggressively pursue that opportunity.  Emerging markets are growing while the domestic market remains stagnant.  It's in the American business psyche to pursue growth, and global markets are the opportunity.

At Consilium we advocate that even SMBs who export establish Government Relations programs for a variety of reasons.  Now might be a good time to ramp yours up, and to reach out to your elected representatives to let them know that perception of US government sponsored industrial espionage will complicate your global business development efforts.

And if you think it might be time to take your export efforts from OK to awesome, check out our whitepaper on selecting an export advisor.

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image credit - der Spiegel