UK: European Companies Looking Abroad To Access New Markets And Grow Market Share
Last Updated: 4 December 2015

Stronger economic conditions are driving businesses to look at international expansion. However, there are many potential hurdles to consider...

Research commissioned by TMF Group, a leading global provider of high-value business services, has found that almost three quarters (74%) of European businesses are looking to expand abroad in a bid to access new markets for their products and services, while seven in 10 seek to gain market share.

Published by the Economist Intelligence Unit (EIU), the study 'Corporate overseas expansion – opportunities and barriers' also asked senior decision makers to state reasons for company expansion It additionally finds that almost half of European businesses wish to move into foreign markets in response to increasing competition at home. This may be partly driven by a desire to differentiate products or services, as Jose Papa Neto, CEO of global fashion trend forecasting company WGSN, explains: "Our clients – large and small – are impacted by the global marketplace, and the more we can be experts internationally the more value we can provide to help our clients grow."

Juraj Gerzeni, Regional Director of TMF Group EMEA said: "An increasing number of European businesses are looking to expand abroad as part of their growth strategy and to attract new talent. However, moving into new territories can be a time-consuming and expensive process – whether it is sourcing the right people or understanding the local regulatory, tax and compliance environment.

"Even once established overseas, firms continue to face fresh challenges as they attempt to manage the many local nuances that influence their business strategy. Businesses should pay careful consideration to local practices and customs or they risk commercial and reputational damage."

On resources for expansion, the report reveals that while half of European businesses opt to undertake the various components of international expansion in-house, around a third look to external service providers to complement their own knowledge and expertise. James Kidd, CFO at AVEVA, comments: "It is important to provide service and support in local language and in accordance with local culture."

Nearly a third of respondents use both in-house and external advisors for HR admin and payroll services. Meanwhile, a quarter might exclusively seek external help in the area of legal or accounting and tax compliance. Excessive bureaucracy in local tax systems was rated by respondents as the biggest accounting issue for expanding business.

Finding new talent and skills is also a high priority for European companies, with 46% of them citing this as a key motivation for international expansion. Hiring local employees, rather than transferring staff abroad, is a highly effective way to ingrain a business in the local culture. According to the research, 63% of EU respondents rely on resources provided by the local government and/or the Chamber of Commerce to assist with HR admin & payroll. At least half seek external help in the areas of legal compliance and accounting and tax compliance.

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