Ask not what ambassadors do for their country, but what they can do for you. ADRg Ambassadors, a new service run by former UK ambassadors, is offering corporate diplomacy and high-level influence to companies expanding and investing abroad.
One of the biggest challenges to FDI lies in understanding the economic, political and legal complexities of a particular country as well as building key relationships within it. There are, of course, any number of consultancies which provide information and advice on these issues, either in-country or externally.
In addition, there are investment promotion agencies, specialist consultancies such as frontier consultancies and risk analysts (indeed, there may be scope, perhaps, for a consultancy advising on which consultancy to choose). But ADRg Ambassadors has a powerful brand – the ambassador is synonymous with discretion and diplomacy.
The group is a partnership of former ambassadors and high commissioners to countries such as Brazil, China, India and Poland, as well as to international organisations such as NATO and the UN. They work on a retainer or fixed fee basis for companies looking for the best way in. They assist in negotiations, mediate when things go wrong as well as make introductions and proffer strategic advice on a company’s foreign investment strategy.
One of their clients, MAST Commercial, whose business operations include armed security for the marine environment, explains how it works and what the added value is. Phillip Cable, one of its directors, explains: “Our business is highly complex and controversial; we have to deal with the political arena so we need to talk at the right level. Recently, we were in negotiations with the Mauritian government about our proposal and we brought one of the ambassadors in to help.”
The company is also about to go to India and intends to take one of the ambassadors with it for talks. “We need them to give us guidance, to open doors – as well as on how to couch things, how to deliver proposals in the right way,” says Mr Cable.
The group will get involved even before a company has made its investment decisions. Sir Stephen Brown, a former ambassador to South Korea, former high commissioner to Singapore and once also group chief executive with UK Trade & Investment, explains: “Part of our role is in the initial introduction, looking at whether it is worth their while in investing in the first place. Sometimes negative advice is the best advice you can give.”
One of the critical components of FDI, ADRg Ambassadors believes, is in understanding the effect of politics on business. John Buck, who works at ADRg Ambassadors, has been involved in countries as diverse as Iraq and Portugal, and has held a senior post with BG Group, an international energy company with operations in 25 countries.
“Where companies come adrift is in not appreciating the broader political context and risk,” he says, “particularly in developing countries where they need to understand the extent to which doing business is a matter for the government and, beyond government, how politics is rolling out. Companies can underestimate the level of state interest and involvement. We can offer an understanding of those issues and the means of overcoming them.”
Mr Brown agrees: “If we divide up countries into those that are government-run, such as China, those which are ‘heavily influenced’ by government, such as [South] Korea, and those of a pure market economy, it is those which are ‘heavily influenced’ that are misleading.”
Government-run countries, the first category, have their own challenges too, such as understanding who you have to deal with, which authority, which government department, which regulatory body.
“We assisted one company which was setting up a project in Shanghai,” says Mr Brown. “At the last minute, the Shanghai authorities turned the project down even though the Chinese central government had said yes to the deal. The Shanghai authorities had already given their support to a rival project. There are often overlapping areas of interest; in China it is usually central, provincial and municipal, and you have to understand all that.”
Or, as Mr Buck neatly puts it, “All the interests have to be aligned.”
A question of trust
Beyond the need for knowledge lies the need for trust. Mr Brown gives a typical example where he has been approached by companies and trust has fallen down. “We were approached by a UK company who did everything by the book, but didn’t double-check whether the man who sold some land to them actually owned the land,” he says. “So much is about developing trust with the individuals you are dealing with.”
It is in order to establish trust that companies will seek out local agents or partners who, they hope, will provide insight and they can rely on. ADRg Ambassadors agrees that such on-the-ground support is necessary, but that its service aims to be complementary to that because that trust can be misplaced.
Mr Brown explains: “A business will use every lever it can. But when a company comes in and says it has an agent and that the agent says they are very well-connected, it sends a shiver down my spine, to be honest. How well-connected are they really? What if their hand is in the till? You have to be very careful in relying on this. We advise businesses to have a series of people working for them.”
Mr Buck agrees and adds that it goes back to understanding the political context and where the local agent fits in politically. He says: “A local partner is often of limited use since they can have conflicting political alliances or be identified too closely with a particular domestic political interest.”
Ultimately, FDI can mean dealing with political cultures that are vastly different to a company’s own. Mr Brown tells a cautionary tale: “I once sat next to a senior foreign politician in a roundtable discussion on transparency. He tapped me on the shoulder and said: 'Transparency is not a local value'." An ex-ambassador may be just the right person to bridge such a cultural divide.