Despite the impact of COVID-19, more than 80 per cent of businesses are expanding their operations globally.
However, the pandemic has added a layer of complexity as each country takes a unique strategy to tackle the pandemic. Our guide lists the top considerations you need to consider before setting your sights overseas.
Step 1: Conduct due diligence before venturing abroad
Performing due diligence in your target market isn't just good business practice. It is crucial to avoid costly pitfalls that may not exist in your home market. According to risk advisory Ponemon, non-compliance costs 2.71 times more than the cost of compliance itself.
For example, each country has its unique cybersecurity and data privacy regulations.
Vietnam, for instance, does not have legislation on personal data protection. Instead, rights are enhanced in general laws as the Civil Code, Law on Cybersecurity, and sectoral laws as the Law on Telecommunications (LOT) and Electronic Transaction Law. If a company fails to familiarise itself with country-specific nuances, it may face non-compliance fines and expansion delays.
Due diligence may highlight a myriad of challenges for most businesses without a presence in the target market. Bringing in outsourced experts, like Hawksford, can help you understand the local regulatory landscape and help you map out your business expansion plans.
Step 2: Define your target market
Determining your target market isn't as simple as guessing who your customers are or hoping for a certain demographic. Instead, it requires an in-depth review of your products and services, the marketplace, your potential (or current) customers, and more. Countries in Asia speak different languages, operate in separate time zones, and have diverse foreign direct investment policies. One way to facilitate your entry into this region is to take advantage of bilateral or multilateral trade agreements between your home country and the target market.
Such free trade agreements can open new markets for expanding businesses without opening many offices across the region. Strong government support in growth industries is also directed at accelerating growth in electronics, automotive and medical devices.
At Hawksford, our team of experts are familiar with favourable tax and investment treaties in the Asia Pacific region. We can help identify relevant trade agreements that help you make informed decisions for your international business expansion. Talk to our experts.
Step 3: Tap local government agencies for assistance
Many governments and their agencies provide support to assist business internationalisation - this assistance may vary by industry and nature of business.
The Singapore government, for instance, facilitates overseas expansion with a range of resources, pro-trade policies, and financial assistance. Its Automatic Double Tax Deduction for Internationalisation (DTDI) helps companies benefit from a 200 per cent tax savings on the first $150,000 for nine activities in the assessment year. No prior approval is necessary from Enterprise Singapore for certain activities as overseas market trips, product or service certification, and packaging design for the overseas market. Applying for these government grants can help cushion your landing in a new market. On the other hand, many countries are actively courting international businesses and have set up government agencies for this purpose. Singapore's Economic Development (EDB) works closely with foreign businesses to establish and deepen strategic relationships by offering investment and incentive schemes for target businesses.
At Hawksford, we work very closely with local government agencies to ensure that your executives can hit the ground running. Speak to one of our professionals today.
Step 4: Establish a firm foothold with the right local partners
Your business may be at a competitive disadvantage without a core local team with local networks and an understanding of regulations and cultural norms.
If you build an overseas office, international payroll can be a complicated process with different government regulations and compliances. For example, in countries like Australia, payroll tax rates may vary depending on your company's state or territory. Finding the right partner who is well-versed in these requirements can ensure that your payroll experience and ground-level management comply with local regulations.
Companies that want to go global will need a solid plan of action and resources to ensure returns on investment. The right kind of insurance is by having the guidance and support of the local partners.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.