Global Head of Corporate Services, Thorold Youngman-Sullivan is speaking at the Going Global conference on 13 May about avoiding the pitfalls of international expansion. Here, he explains why compliance is key when you’re moving your business across borders.
Even the most established global companies face hurdles when expanding into a new territory. In fact, TMF Group surveys have found that firms are actually expecting the same challenges to crop up every time; from deciphering local laws and ensuring they’re meeting regulations to understanding cultural influences for internal and external stakeholders.
Despite lessons learned, the same roadblocks keep appearing, and they’re virtually unavoidable when you consider that no two markets are alike. There is simply no such thing as a ‘one size fits all’ approach to growing your business internationally.
Critical of course, is complying with the laws and regulations that govern your new venture – as the consequences of any oversights can be dire. In Thailand for example, a foreign-owned company’s missed tax return filing deadline resulted in local authorities issuing a warrant for the arrest of the director, even though the company was still technically on its “tax holiday” in the country.
Another case in Bulgaria saw a global company so focussed on chasing market share from the outset that it neglected to devote enough time to compliance and administration. The eventual result was a multimillion-euro penalty for not properly meeting tax requirements.
Developing a solid understanding of cultural practices in new territories can be an involved process, but the insight is essential for smooth operations. Cultural differences resulting in HR challenges are among the top three issues raised in interviews we have conducted with corporations.
Business ethics and best practice of western economies are not always reflected in some countries, and legally risky grey areas may appear due to differences between a region’s laws, and what is widely accepted and tolerated in day-to-day business. You need to build deep levels of trust with your new teams, partners, customers and regulators – and fully understand how they work to identify the most effective strategy for integration into your corporate structure.
When we have asked enterprises what they would do differently the next time they embark on an overseas expansion, the overwhelming response has been to devote more time to, and put a stronger focus on, complying with local regulations and understanding cultural nuances.
Particularly while you’re working up to full speed, it makes sense to use external partners with an existing presence in, and invaluable understanding of your new market, to ensure accounts, legal, financial, corporate secretarial and HR and payroll tasks all hit the mark. Then you can focus your attention back to where it should be, on making your venture a success.
Register for Thorold’s Going Global talk at 4.15pm on 13 May.
Read more about international expansion.