Doing business in Guyana: Facing the challenge Business Page Stabroek News December 3, 2000 BUSINESS PAGE is dedicated to providing objective information an opinion on issued of interests to the business community and the public at large. The articles in Business page are prepared and contributed by CHRISTOPHER RAM. Christopher Ram is the Managing Partner of Ram & McRae, Chartered Accountants, Professional Services Firm. Introduction Guyanese businesses increasingly worry about their ability to compete in a world where globalisation is now looked upon as a mixed blessing. In some quarters it is welcome because it is perceived that competition will force businesses to improve their capacity to deliver the types and quality of goods and services people want more efficiently. Others view globalisation with suspicion since they feel it can destroy fledgling local businesses and breed a new form of colonialism. Both of these positions are equally defensible but no matter which side one supports the reality is that all businesspersons are forced to respond appropriately to the challenge. Changing expectations The first principle which many businesspeople in Guyana do not seem to understand is that they must put the customer or client first and ensure that everyone in their organisation understands this. For some time, local businesses have not been forced to adopt this attitude because the consuming public has had low expectations and limited choices but as they say, "the times they are achanging". Increased travel and migration, exposure through the world of television and the onset of increased competition have all changed the dynamics of doing business in Guyana. People are being exposed to better quality products and customer service that almost reaches the level of pampering and now demand the same when they are in Guyana. New paradigm Businesses now have greater geographic reach and even though the local market is relatively small many companies both regionally and internationally can threaten the share of that market that local businesses have. While there is some cause for concern in the business community this is a welcome change because it drives home the lesson that shoddy quality and poor customer relations are no longer acceptable as norms. This is not to say that all local businesses are only now embracing the new paradigm because there are a number of shining examples of local business including Precision Woodworking Limited, Liana Cane and Demerara Distillers Limited with high quality products that can and do compete worldwide or do focus on delivering the highest quality service. Unfriendly environment However even these businesses sometimes struggle because the environment for doing business in Guyana is rather unfriendly and does not necessarily promote growth and expansion. A punitive tax system combined with a narrow overall base, limited options for accessing capital, and a dwindling pool of skilled human resources are some of the hurdles faced. These factors inhibit the capacity of businesses to adjust to the rapid pace of product and technological changes that threaten their very existence. Technology Technology provides a business with the opportunity to obtain more customer information and opens up multiple channels of distribution, allowing them to offer customers greater flexibility and "anytime, anywhere" convenience. But with greater opportunities come greater challenges and often the challenge for the local business is to find the funds to access the relevant technology. A continuously weak local currency, high rates of interest, and a financial system that is still somewhat rudimentary make it a rather expensive proposition for domestic businesses to proceed with the level of investment in technology that they need. Dilemma Even the financial services sector itself is somewhat technologically challenged and faces its own dilemma of how to meet the needs of a rather unique and somewhat volatile marketplace. Significant exposure to customers who are subject to the vagaries of phenomena over which they have no control such as world market prices and natural disasters does not make life any easier. The infrastructure that allows ready access to credit information does not exist and often decisions must necessarily be made on the basis of a perceived and not necessarily accurate state of creditworthiness. Infrastructure Financial institutions have to rely on each other for information but in a competitive environment it is probably unrealistic to expect accurate information on a customer whose financial condition is shaky when the possibility of someone else taking over the burden arises. Without the proper technological infrastructure it is extremely difficult to establish a reliable and objective credit reporting system but until this is available, a financing decision in Guyana will remain a much more imprecise science than it needs to be. This situation in itself limits the availability of capital since risk assessment is extremely difficult in the local environment and banks must necessarily make prudent if somewhat conservative decisions. The shortage of capital quite often these days results in talk of establishment of a Stock Exchange but again the enabling technological infrastructure must exist before this idea can materialise in any meaningful fashion. In addition sometimes one gets the sense that our decision makers are incapable of making that all important distinction between a cost and an investment and therefore allocation of funds to much needed areas is not always forthcoming. This is not the first time that the question of the Stock Exchange has been raised in Guyana. Business Page has always advocated and supported the development of a formal capital market but unless there is the will to accomplish this the idea will continue to be written off as unjustifiable and unworkable. Indeed, we had proceeded to the point where a Call Exchange was established only to be abandoned because of little interest and even less support. Of course not a lot has changed since. There are certain conditions that must exist before a Stock Exchange can become a reality. On one hand Government must take the lead especially in the area of legislation and the legal system and on the other, the business community must be prepared to adhere to the tenets of sound financial reporting and transparent information disclosure. In addition they must evolve from the mindset of rigid control if they wish to attract the type of inexpensive capital that would allow their businesses to expand. With many of the state owned enterprises already privatised we may have already lost a unique opportunity to create real shareholder interest and growth when successive governments chose as the preferred investors for the privatised entities, single buyers over wide ownership because of the premium which those single buyers were prepared to pay for control of the companies. The result has been the perpetuation of the culture of control in the privatised entities which is so common to those family owned businesses often being advised to raise capital by going public. Business page remains convinced that the preferred method of privatisation has operated to the detriment of the longer term interest of economic and social development of Guyana. We have in fact taken active public companies and converted them effectively into private companies. Branding Regardless of whether a business goes public or not, the bar on customer service has been raised and a powerful tool in building customer relationships is establishing an identity or brand. In the traditional bricks-and-mortar world of retailing, companies with strong, sharply defined brand identities have almost always succeeded in drawing customers, often at the expense of companies whose brands have become weaker and less identifiable. In the internet space because of their focus on building their brand Amazon.com, America On Line, E-Bay and Yahoo enjoyed much early success though some investment purists may argue not enough profits. Delivery Latecomers to the online world, like Barnes & Noble and Toys "R" Us, have proved that they also can succeed, largely because they have built brand equity with customers in the pre-Internet world. In fact, both companies may have closed the gap on their online competitors because they understood the need to differentiate themselves in ways other than the price. Brands that resonate with consumers can offer a striking competitive advantage. There are, of course, several strong brand names locally and they retain strong equity with the customer. Over time other domestic businesses must bolster their brands by consistently delivering on their brand promise, whether that means offering comprehensive services and products or offering timely, friendly, and high-touch customer service. Conclusion Merely by operating in Guyana, local entrepreneurs have proven time and again in the past that they are equal to almost any of the manifold and diverse challenges thrown at them. They have shown resilience, courage, and innovativeness despite everything the bumbling bureaucracy of various administrations offered. They are once again being tested but on this occasion by the new global imperative which dictates that they again prove their mettle and adaptability. This time however it is a more demanding task: delivering value and satisfaction in excess of customer expectations efficiently and cost effectively. But isn't that what building a lasting business is all about? Follow the goings-on in Guyana in Guyana Today