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How paying due diligence can protect your investment in emerging economies

by Josef Kafka

Globalisation and the vast potential for remote working have made the world a much smaller place.

It’s now immeasurably easier to establish trade links or even set up satellite business operations in every part of the globe. Growing your business by engaging with emerging economies has become particularly attractive and infinitely more possible. 

The race is on in the UK to carve a share of business in locations that are fast rising to economic prominence - if not dominance. For example, the potential economic growth of China and India has led to talk of the “Asian Century”. PcW has predicted that, by 2050, these two countries will be the first and second biggest world economies according to purchasing power parity.

Colombia, Angola, Venezuela and Far Eastern countries such as Vietnam, Malaysia and Indonesia are also all opening to UK investment and trade.

The possibilities are exciting, and many companies are exploring the best ways to proceed. Others are jumping in and getting their fingers badly burnt due to lack of due diligence.

Doing business overseas is always knotty, but when you are establishing links in emerging economies, the complexities are even more likely to trip you up.

Barriers to overseas due diligence

When your company is checking the assets and liabilities of business partners in other countries – and evaluating commercial potential for deals – then having as much information as possible is basic common sense.

But thorough company checks are not always easy to achieve, particularly in emerging markets.

The countries with the most potential for overseas investment and trade are often also the ones with the worst record for unrest, corruption and failing systems of governance. This is partially why they now offer untapped potential and fertile business territories.

However, the lingering effects of these negative aspects can trip up UK organisations who don’t do sufficient “homework”.

The countries that are primed and ready for UK trade and investment are not lawless outbacks, however. They have developed their own systems of regulation and control, as preparation for greater economic and social parity.

However, the laws in each country – and of course data protection rules – vary enormously.

What private and public sector organisations report (and what they are permitted to conceal) will also clearly differ from country to country, making company verification more of a headache.

Knowing who you are dealing with

Recruiting staff for an overseas project or business venture? Even with the wonders of the internet for collaboration and communication with overseas agencies and partners, the simple process of a CV check can become more demanding.

What if you have suspicions that your overseas associates or business partners are not playing fair? 

How can you establish surveillance and observation systems discreetly and at arm’s length when you are out of your comfort zone?

The process of doing a directors check could also be a drawn out and complex issue when establishing and maintaining overseas trade deals.

When you need evidence

If you have cause for concern that something is badly wrong with your overseas trade or business project, robust action is also harder in emerging economies.

How do you gather evidence for fraud litigation and professional theft, for example, in countries with different legal processes and compliance boundaries?

Even the subject of debt collection can be more of a headache overseas, especially in countries where it is easy to “disappear” overnight.


Many organisations in the UK choose to use expert intermediaries and agencies to help them to make better-protected inroads into overseas trade and investment.

Even that presents limitations. It is not always clear where the line is between them making money from your endeavours and their ability to safeguard your assets.

What separates out a wise investment or trade deal overseas, from a rash one, is one global currency: information.

The more information you can extract, gather and analyse, the better able you are to protect the cash, staff, time and products you are investing in a new overseas project.

The right information at your fingertips is the only way to create a level playing field, no matter where you are doing business.

In emerging economies, it can be as simple as having a far better understanding of your competitors and potential business partners. Because who they are may be very different from who Google says they are!

Information is the difference between speculation and investment that brings clear returns.

If you need an example, look at the 1998 Bre-X mineral scandal in Indonesia. Investors across the globe rushed to secure a share of the enormous gold reserves “discovered” there. The mine was a scam that cost organisations hundreds of millions of dollars. Falsified findings from the mine could potentially have been uncovered with proper research and investigation.

Having specialist help for due diligence and many basic business functions makes great sense when setting up overseas trade deals or investing in satellites or start-ups.

Fortunately, 247 Detectives know how to ensure that companies and individuals have nowhere to hide, anywhere in the world.

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