10 global trends affecting international expansion and business in 2016 10 global trends affecting international expansion and business in 2016

10 global trends affecting international expansion and business in 2016
31 Dec 2015

2016 is shaping up to be a fascinating year for global geopolitics and economic swings. We’ve put together a list of 10 items that we think will be hitting the headlines in 2016 for international expansion and business.

An overall slowing in global GDP

Certain countries will feel less of an economic impact in 2016 meaning that international expansion opportunities will be plentiful for better-positioned companies/countries. Many knee-jerk reactions by Fortune 500 companies to reduce exposure to slowing global markets means many opportunities for midmarket companies to strike while the giants are sleeping. Companies that are getting in early with an agile approach to these markets will see significant returns in the coming years.

Debt will become more expensive

Interest rates are about to rise globally and this may be exacerbated in emerging markets. Companies realise they shouldn’t tie up their free cash in static infrastructure like legal entities across the globe, causing more of a push towards service-based solutions like FSaaS.

The sharing economy

The world’s eyes are opening to the sharing economy and this will become a more and more prevalent concept in international business. For example, companies like Uber, the taxi company that owns no cars and AirBnB, the hotel website that owns no buildings. This type of approach will find its way deeper and deeper into international business and all business for that matter.

China’s slowing growth

A slowing Chinese economy will have ripple effects across the entire globe, particularly among those countries, with which China trades the most. For example, 86 per cent of Australia’s exports to China are commodities-based. For Chile it’s 92 per cent and it’s 71 per cent for Indonesia, 45 per cent for Brazil and 86 per cent for South Africa. All of these economies will feel the pinch. This means re-distributed investment opportunities exist for countries that have recently relied on investment and trade from China and they will be scrambling for alternative trading partners and private investment.

Communications improvements

Further proliferation of cellular and Wi-Fi communications will continue to decrease connectivity barriers with international employment talent. It’s getting even easier to communicate regularly with colleagues across the globe, which means hiring the right talent may be a global concern.

The US market will continue to expand

The US market will continue to be strong, further pushing the US dollar to new heights. Furthermore, prolonged depressed commodity prices will create great employment cost arbitrages globally. This is critically important for US businesses that will continue to struggle to fill highly technical roles with domestic talent.

Geopolitical and refugee issues will challenge the EU

Conflict in nearby regions is spilling over into the EU in many forms. Smaller countries with less robust infrastructures will find themselves overwhelmed. This will have wide effects on immigration generally and may impact the traditional flow of expatriates around the region.

Technology upsurge - specifically all things wireless, mobile or app related Despite global economic uncertainty in 2016, power and technology investments in developing nations will continue to bring huge opportunities.

These locations are bypassing traditional steppingstones in adoption and just going right to modern standards, so there are actually higher adoption percentages. Think M-Pesa and the direct to cellular phones/satellite services versus using hard lines in developing countries.

Geopolitical tensions in the Middle East and North Africa

Economic growth in certain parts the EMEA is at risk (Israel, Turkey, Iraq, Syria, Afghanistan and Egypt) and may result in companies shifting their resources to higher growth and more economically stable regions/countries. Further fallout may occur across some Eastern European countries as refugee/ immigration concerns cause political unrest locally.

Russia’s economic troubles

Russia’s prolonged economic sagging could destabilise the region from an economic and security standpoint. However, there are some Eastern Bloc countries that are making a compelling case as business/tax hubs (eg. Kazakhstan).

 

Contributed by Ben Wright, CEO at Velocity Global, a global employment services company that is reinventing the way its clients do business internationally with its Foreign Subsidiary as a Service (FSaaS) solution. With capabilities across over 166 countries, Velocity Global is a leader in agile global expansion.

2016 is shaping up to be a fascinating year for global geopolitics and economic swings. We’ve put together a list of 10 items that we think will be hitting the headlines in 2016 for international expansion and business.

An overall slowing in global GDP

Certain countries will feel less of an economic impact in 2016 meaning that international expansion opportunities will be plentiful for better-positioned companies/countries. Many knee-jerk reactions by Fortune 500 companies to reduce exposure to slowing global markets means many opportunities for midmarket companies to strike while the giants are sleeping. Companies that are getting in early with an agile approach to these markets will see significant returns in the coming years.

Debt will become more expensive

Interest rates are about to rise globally and this may be exacerbated in emerging markets. Companies realise they shouldn’t tie up their free cash in static infrastructure like legal entities across the globe, causing more of a push towards service-based solutions like FSaaS.

The sharing economy

The world’s eyes are opening to the sharing economy and this will become a more and more prevalent concept in international business. For example, companies like Uber, the taxi company that owns no cars and AirBnB, the hotel website that owns no buildings. This type of approach will find its way deeper and deeper into international business and all business for that matter.

China’s slowing growth

A slowing Chinese economy will have ripple effects across the entire globe, particularly among those countries, with which China trades the most. For example, 86 per cent of Australia’s exports to China are commodities-based. For Chile it’s 92 per cent and it’s 71 per cent for Indonesia, 45 per cent for Brazil and 86 per cent for South Africa. All of these economies will feel the pinch. This means re-distributed investment opportunities exist for countries that have recently relied on investment and trade from China and they will be scrambling for alternative trading partners and private investment.

Communications improvements

Further proliferation of cellular and Wi-Fi communications will continue to decrease connectivity barriers with international employment talent. It’s getting even easier to communicate regularly with colleagues across the globe, which means hiring the right talent may be a global concern.

The US market will continue to expand

The US market will continue to be strong, further pushing the US dollar to new heights. Furthermore, prolonged depressed commodity prices will create great employment cost arbitrages globally. This is critically important for US businesses that will continue to struggle to fill highly technical roles with domestic talent.

Geopolitical and refugee issues will challenge the EU

Conflict in nearby regions is spilling over into the EU in many forms. Smaller countries with less robust infrastructures will find themselves overwhelmed. This will have wide effects on immigration generally and may impact the traditional flow of expatriates around the region.

Technology upsurge - specifically all things wireless, mobile or app related Despite global economic uncertainty in 2016, power and technology investments in developing nations will continue to bring huge opportunities.

These locations are bypassing traditional steppingstones in adoption and just going right to modern standards, so there are actually higher adoption percentages. Think M-Pesa and the direct to cellular phones/satellite services versus using hard lines in developing countries.

Geopolitical tensions in the Middle East and North Africa

Economic growth in certain parts the EMEA is at risk (Israel, Turkey, Iraq, Syria, Afghanistan and Egypt) and may result in companies shifting their resources to higher growth and more economically stable regions/countries. Further fallout may occur across some Eastern European countries as refugee/ immigration concerns cause political unrest locally.

Russia’s economic troubles

Russia’s prolonged economic sagging could destabilise the region from an economic and security standpoint. However, there are some Eastern Bloc countries that are making a compelling case as business/tax hubs (eg. Kazakhstan).

 

Contributed by Ben Wright, CEO at Velocity Global, a global employment services company that is reinventing the way its clients do business internationally with its Foreign Subsidiary as a Service (FSaaS) solution. With capabilities across over 166 countries, Velocity Global is a leader in agile global expansion.