How Have Closed Borders Impacted International Business?

William Rosenstadt is a partner and co-founder of Ortoli Rosenstadt LLP, and head of the firm’s capital markets and securities practice. 

As international lawyers who have born witness to numerous shifts and adjustments during our careers, my partners and I certainly expected that of all things brought on by the coronavirus, closed borders would result in restricted business.

International business requires a level of movement and flexibility for companies to function appropriately and successfully. Of course, international trade is impacted when borders are closed, but the question regarding the extent of its impact was still unknown at the time those restrictions were initially put in place.

My team and I braced ourselves and expected the reduction of the cross-border capital market, as well as mergers and acquisitions activity, as just another byproduct of the pandemic-era we are currently living in. And unfortunately, the pandemic has forced thousands of businesses to close their doors permanently. But my team and I have also observed some businesses that have been able to adapt — a welcome surprise I am more than happy to embrace.

For example, a publicly listed pharmaceutical company I am involved with has pivoted one of its licensed assets from focusing on infectious diseases in general to specifically targeting Covid-19 treatment. Another client significantly expanded its operations in Italy to deliver personal protective equipment to those in need and is now focusing its resources on expanding into food delivery to help keep people safe while also growing the brand.

At the time of this writing in September, U.S. travelers were restricted from various countries, including Australia, 24 European Union member countries and even Mexico and Canada, according to Forbes. The U.S. conducts most international business with Mexico, Canada and China, so of course, it is reasonable to conclude that all international business dealings would suffer.

What Do Closed Borders Mean For Small And Medium-Sized International Businesses?

The short answer to this question is that closed borders have had unexpected results for some. To explain it further, we have to delve into the nitty-gritty details of what is going on behind the scenes.

For one, I’ve observed that the confidence level is high for growth-stage companies and that the U.S. capital markets and the U.S. marketplace are still open for business. In this strange new world, a continually evolving landscape offers an opportunity for the nimbler, less entrenched players in many sectors. The flexibility found in these companies has turned out to be an outstanding asset and will likely continue reshaping the international corporate landscape for years.

Of course, this does not exclude the large-cap issuers by any means. However, my focus and experience is at the other end of the market, where entrepreneurs live in constantly evolving landscapes. As a result, and seemingly contrary to what many would expect, it appears, at least to me, that small and medium-sized international business is far from doomed.

Looking Toward The Future

The pandemic has certainly tested all facets of life as we know it. Many small and medium-sized enterprises need to embrace rethinking their business strategies in light of the new world order. The willingness to be flexible in their operations and creative in directing their limited resources will be paramount to their survival and ultimate success.

While I’ve seen that my team’s successful clients always seem to have a healthy balance of confidence and humility, it’s important to also understand that the old adage, “Plan for the worst but hope for the best,” rings true today. I’ve seen firsthand just how resilient the world of business is, and I’m hopeful that this will continue to power small and medium businesses back to a new normal.

One of my most effective pieces of advice is to continue to communicate with your customers, thereby collecting more information from which to operate. Real-time feedback from one’s market is uber important in this dynamic pandemic environment. It goes without saying that data collection is a required step, but what often gets lost by smaller enterprises is the proper analysis of such data. Those who place as much emphasis on the interpretation and not just the collection will have a better sense of the business forecast map and end up being prepared when the climate changes. Successful implementation of processes can also breed a more successful culture, which may continue to replicate long after the initial effort has been made.

This ability to communicate and interpret the information that is received in a materially valuable way ultimately allows businesses to maintain the flexibility to act to sudden changes in the marketplace. Searching for ways to effectively collect and interpret data, as well as maintain efficient communications with employees and customers, will continue to prove to be effective ways to ensure success.