International business expansion can be a very exciting prospect
for many companies; however, it isn't always straight forward
and there can be many barriers to entry.
Our guide explores the top 5 challenges companies face when expanding internationally and highlight practical ways to overcome them.
Top 5 challenges of international business expansion
Challenge #1 - Meeting local regulatory and compliance requirements
As companies grow and expand into new regions, so too do their compliance responsibilities. Meeting local rules, tax obligations and regulations can certainly become complex as the company's footprint and workforce expand.
Solution - Do your due diligence or consider calling in the experts
Doing due diligence ahead of time is essential, but sometimes it's a question of expertise and time. Outsourcing to a specialist, like Hawksford, will help you comply with the local employment laws and adhere to the business licensing requirements to save you time and mitigate risks.
Investing in technology infrastructure to help your teams stay compliant with the latest legislation can also be useful, however can be costly; Many companies look to outsource to a service provider which is already established in the region to guide them through their expansion while keeping costs to a minimum.
Challenge #2 – How to hire the right talent
Scouting talent from abroad and retaining a sense of company culture can be challenging when expanding from a company's headquarters into new international locations. From making sure selection processes comply with local laws, to ensuring that there is a quota being met for local hires and foreign talent, meeting local rules and requirements can even test the sturdiest of talent acquisition strategies.
Solution – Build connections
Reaching out to local Chambers of Commerce to ask for resources can be a good way to source talent, connecting with an experienced executive search firm or consultant can also be another great way to find specialists with strong technical skills. At Hawksford, we can connect you with key government institutions, chambers of commerce and professional institutions, to help you settle in and build your network locally.
Challenge #3 - Understanding the local language, business etiquette and culture
Understanding the local language, culture and knowing the correct etiquette for doing business in a new market can be vital for successful business expansion.
Solution – Nothing beats the personal touch
Having at least one employee on the ground, who speaks the native language and understands your product positioning and offering can make a world of difference. Clients are also more at ease when they know that they can contact an individual in the same country, who can speak their language and deliver the service in the same time zone. Depending on your country of expansion, some companies in particular sectors and industries may also be eligible for financial benefits and incentives from the local government to promote regional employment. Lean on us to guide you.
Challenge #4 - Travel restrictions during COVID-19
With countries going in and out of lockdowns and quarantine travel restrictions likely to be in place for quite some time, business travel to conduct due diligence and market testing can be very challenging, there are also ongoing requirements for directors and boards to satisfy their fiduciary duties; This is easier said than done given the material impact of Covid-19 on traveling across borders.
Solution – Find the right partner on the ground
Although it can be challenging, business expansion during COVID-19 isn't impossible. With the right partners and connections on-the-ground, it is possible to do a lot of leg work and set-up your business from your base country.
For example, our international business experts recently worked with a large company head quartered in Germany, where management had set a tight APAC expansion timeline to meet growing demands. The company knew that they needed to outsource the administrative aspects of their business set-up such as incorporation, business bank account opening and immigration requirements to a trusted corporate services provider, so they could alleviate the stress of expanding their business internationally. Hawksford, was able to deliver and exceed expectations by reducing administrative burdens and assigning dedicated German speaking specialists from our German and European desks that have extensive knowledge about local laws and regulations and could communicate in their native language and make the whole expansion process seamless.
Finding the right partner on the ground that understands the local regulatory landscape and speaks a common language can make a world of difference and help alleviate many of the common pain points of business expansion from abroad.
Challenge #5 – Supply chain management in new territories
Managing a supply chain that crosses national boundaries can be a real challenge during expansion; Shipping costs can be high and managing storage facilities can also become problematic.
Solution – Prioritise and regionalise
Regionalising your supply chain can be very beneficial for foreign companies. Many are attracted to regionalise in Asia-Pacific to take advantage of the convenient trade routes, and technology-driven supply chain models to increase efficiency and deliver goods and services. At Hawksford, our team of local experts can identify supply chain risks and opportunities to help you make informed business decisions for business expansion. Our experts are familiar with the common trade routes, tax, and investment treaties in place between ASEAN and countries in the West which help facilitate and drive business growth.
International business expansion can be complex but rewarding for any company looking to accelerate their business growth. It requires strategic planning, time, and resources to successfully set up or grow operations abroad. A plan of action and considering the above five key considerations can help mitigate many challenges that may arise during the process. Having the guidance and support of an established trusted global partner, like Hawksford, can provide you with the local expertise to address your in-country and around the clock needs, while supporting your business as it builds internationally.
Through a combination of offices in major financial hubs and an extensive network of partners in established and emerging APAC locations, we can advise you on all aspects of business set-up and management, from market entry to keeping your business compliant with the changing regulations in multiple jurisdictions.
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.