Commentary

The global expansion top 10

Ahead of speaking at Going Global in London, our Global Head of Corporate Secretarial looks at the risks and challenges companies face when expanding outside their home country.

Expanding your business across borders is an essential but expensive exercise which can be fraught with commercial and reputational risk, particularly if your firm has no prior experience of entering a new market. Moving from a familiar, westernised location to an emerging economy poses an even greater set of challenges – with potentially disastrous results if cultural and regulatory differences are not adequately taken into account. You need to go about extending your reach with confidence, and with your eyes wide open.

Here we present the top ten challenges companies face in establishing and running operations in unfamiliar territory.

1. Understanding, complying and keeping up-to-date with local rules, regulations and processes

It sounds exhausting, but without thorough compliance in your new region, you could find yourself inadvertently breaking the law and shouldered with hefty tax penalties and lost business. There can be regulatory differences, even within a single country between jurisdictions. Some local laws may not even be apparent until you find your company in breach of a specification, and of course the required filing and reporting processes can change constantly.

2. Understanding cultural differences and language

Misunderstanding cultural differences can alienate or offend internal and external stakeholders, and at worst see your organisation exposed to the risk of criminal prosecution. It takes time to develop deep levels of trust with local teams, partners, customers and regulators. Not investing the time to orient yourself with the cultural nuances of the market may result in problems when it comes to trying to integrate local staff into your corporate culture, and instil in them your business mission and values.

3. Assessing local competition

Who are your future challengers, and are you making the right move? Having a clear overview of the market you plan to expand in to is, of course, essential for growth strategy and logistical planning.

4. Finding the right local talent

Building a good team is central to your new venture’s success, but how do you find your local super talents? A strong network of third party partners on the ground can be invaluable in the recruitment process.

5. Educating local staff and giving them career opportunities

Skimp on investing in human resources and training at a local level at your peril; it can take a long time to make, implement and change HR policy from a distance. Calling in a trusted partner to coordinate the initial and ongoing training of your new team can strike that perfect balance between meeting country-specific requirements, and educating new employees in your business objectives.

6. Finding the right premises and local suppliers

A key issue in international expansion is locating that perfect, secure base in the right environment, with good quality, local infrastructure - and the suppliers to match. Establishing solid contracts within the cultural and legal frameworks to which suppliers are used to operating, can be a laborious undertaking – as can ensuring the resulting documents can be enforced.

7. Adhering to labour laws and paying employees at market rates

You need to ensure your staff will be paid on time, every time – with payroll processing in full compliance of local law. 

8. Establishing banking and accounting measures 

Setting up appropriate banking facilities and financial procedures, and then ensuring you’re meeting both local and central reporting standards; the whole process can lead to a significant drag on time and efficiency. 

9. Incorporation

Your legal set up and company structuring in a new market needs to be sound from the outset– are you    sure you are registered in all the right places? 

10. Intellectual property rights, enforcement and discrimination against foreign firms

All local patents and trademarks need to be registered in the appropriate way, to protect your brand. 

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