Where does COVID-19 leave businesses that, pre-crisis, were looking to expand into new territories? With survival being the focus for the majority, all but the most advanced plans will have been paused.
As restrictions begin to ease, firms fight to recover their place in the global market and countries incentivise international investment. Growth plans will start to return to boardroom agendas - albeit radically altered.
There will be a natural slowdown in expansion plans, but not because companies are stopping expanding, says Leila Szwarc, TMF Group's Global Head of Compliance and Strategic Regulatory Service. "They will re-evaluate their structures and the ways in which they do business, and many will become much more flexible and creative."
Some rationalisation is inevitable as businesses adjust to the scars left by coronavirus and the reality of the economic outlook. The focus will move to markets where companies see the strongest recoveries and evidence of a deft handling of the pandemic.
"In any crisis, there are opportunities," says Emine Constantin, Global Head of Accounting and Tax at TMF Group. "While many companies are taking a cautious view in the short-term, international expansion is still a trend and will still create potential."
The crisis will reshape decisions about where and how to expand. Governments' perceived handling of the situation, the infrastructure they have put in place and how they responded culturally could all have a material impact.
The US, UK, Singapore and more have offered billions in support packages. Many jurisdictions moved quickly to ease the reporting and compliance burden, allowing executives to focus on shoring up operations.
Having an international presence will be seen as advantageous going forward, with the benefit of spreading risk beyond one nation's borders and potential incentives to expand from nations seeking to bolster their economies.
"All countries are going through a tough time," says Constantin. "Being able to attract international investment will become more important."
With new business opportunities, however, come legal, tax and compliance challenges. For example, country-wide lockdowns led many companies to reassess their online selling platforms and offer products direct to the customer. Global online revenues surged as people stayed at home, according to data from Emarsys and GoodData.
"Online sellers have specific issues to consider," says Constantin. "One is the digital services tax and that is a new topic being explored by various countries."
France already has a digital services tax, and TMF Group anticipates more jurisdictions will consider introducing one.
The pandemic has also forced businesses to go digital in other ways they might not have previously considered, including reporting taxes.
While the regulations remained largely unchanged, the communication and the methods of reporting and filing migrated in many cases to online platforms. Indonesia and Romania, for example, both relied heavily on paper before the crisis. In the absence of person-to-person contact, this was no longer feasible, leading to hasty digital adoption.
There are also specific COVID-19-related tax and compliance issues to stay abreast of. "Obligations are not going away," says Szwarc. "But in many countries, you are able to delay them to rebalance priorities."
These factors have led to a fundamental shift in how companies assess international expansion. While outright levels of growth and the complexity of starting up will remain important considerations, these will be overlaid with a view on how well the government supported business during the crisis, and the implications for any future outbreaks.
"If in a crisis you're only betting on one country, which gets heavily affected, then chances are you will be seeing your business fail," says Szwarc. "In an international setting, with a bigger footprint and more diversification, if one part is badly affected, then the other part can still thrive. And with the different territorial and industry waves this crisis presented, certain businesses managed to learn fast how to apply business continuity plans to remain relevant and fully operational, despite the challenges."
The message is clear: times are tough, but there are opportunities to be found for companies with strong business continuity plans, good growth maps, and the ability to pivot to serve new sectors or new customers.
"What goes down will come back up," says Jason Gerlis, TMF Group's Global Head of Consultancy Solutions. "This isn't the first recession or depression, and this one has a pretty time-framed impact. Economies will bounce back and companies will look to expand to secure supply chains, improve business continuity and respond to changes in consumer habits.
"Even after this is over, it will have changed a lot of people's psyches," he adds. "The successful companies will be the ones thinking ahead and working out the implications and opportunities for their businesses. Certain aspects of the way we work, and live, will have changed forever, and businesses will need to innovate and adapt to the new reality."
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