US: How to ease the transition when expanding overseas US: How to ease the transition when expanding overseas

US: How to ease the transition when expanding overseas
30 Sep 2015

Recent economic hard times in the United States have forced rising numbers of companies to look to overseas markets to bolster their bottom lines, a trend reflected in a study that found the majority of US firms are considering or engaged in cross-border expansion.

The study, by IDC and TMF Group found that eight in 10 U.S. companies are now looking to invest in overseas markets and that increasing sales is the main motivating factor for setting up overseas. It’s all the more evident now that the US economy has pulled out of the multi-year downturn of recent times, as they’re better positioned to go ahead with capital outlays for international expansion, according to the IDC’s John Simcox, who authored the report.

He explains: “The US economy was one of the first recessionary economies to return to growth and this early domestic market recovery has meant that US businesses, having stabilised their existing business, are now in a better position to consider international expansion in other regions ahead of their peers - particularly those headquartered in Europe.

A physical presence is still vital

The report involved interviews with top executives of firms that have headquarters in the US and have already established presences overseas or are in the process of doing so.

Companies were engaged in a range of sectors from technology and financial services to travel, pharmaceuticals, biotech and luxury goods. It was found that even though today cross-border trade is done with ease via the internet, companies selling in other jurisdictions still have to have a local or regional base to serve those markets.

Local knowledge is key

That is where American firms face a range of challenges. How do you effectively set up and run an office in a country or territory with vastly different legal, cultural and trading requirements?

Advisors can help to ease the transition to international expansion by laying the groundwork with the essential elements that are required in different countries. That means first finding the right people who are going to help run the business - it’s all the more important to get it right in a jurisdiction that is completely different to the US and where you need to know local labour laws pertaining to hiring and firing.

In addition, the recruitment process must identify people who won’t pose any potential risks to the new enterprise and possibly cause reputational damage to the main US operation should something go wrong.

Cutting through bureaucracy

Another critical matter is compliance and meeting all the legal and regulatory requirements in the country - often a particular challenge in places with high levels of bureaucracy, such as some countries in South East Asia and Latin America. Finding the right local partner firms, for such essentials as IT services and procurement, is another essential factor in successfully establishing yourself overseas.

Contributed by TMF Group, a leading provider of high value business services to clients operating and investing globally.

Recent economic hard times in the United States have forced rising numbers of companies to look to overseas markets to bolster their bottom lines, a trend reflected in a study that found the majority of US firms are considering or engaged in cross-border expansion.

The study, by IDC and TMF Group found that eight in 10 U.S. companies are now looking to invest in overseas markets and that increasing sales is the main motivating factor for setting up overseas. It’s all the more evident now that the US economy has pulled out of the multi-year downturn of recent times, as they’re better positioned to go ahead with capital outlays for international expansion, according to the IDC’s John Simcox, who authored the report.

He explains: “The US economy was one of the first recessionary economies to return to growth and this early domestic market recovery has meant that US businesses, having stabilised their existing business, are now in a better position to consider international expansion in other regions ahead of their peers - particularly those headquartered in Europe.

A physical presence is still vital

The report involved interviews with top executives of firms that have headquarters in the US and have already established presences overseas or are in the process of doing so.

Companies were engaged in a range of sectors from technology and financial services to travel, pharmaceuticals, biotech and luxury goods. It was found that even though today cross-border trade is done with ease via the internet, companies selling in other jurisdictions still have to have a local or regional base to serve those markets.

Local knowledge is key

That is where American firms face a range of challenges. How do you effectively set up and run an office in a country or territory with vastly different legal, cultural and trading requirements?

Advisors can help to ease the transition to international expansion by laying the groundwork with the essential elements that are required in different countries. That means first finding the right people who are going to help run the business - it’s all the more important to get it right in a jurisdiction that is completely different to the US and where you need to know local labour laws pertaining to hiring and firing.

In addition, the recruitment process must identify people who won’t pose any potential risks to the new enterprise and possibly cause reputational damage to the main US operation should something go wrong.

Cutting through bureaucracy

Another critical matter is compliance and meeting all the legal and regulatory requirements in the country - often a particular challenge in places with high levels of bureaucracy, such as some countries in South East Asia and Latin America. Finding the right local partner firms, for such essentials as IT services and procurement, is another essential factor in successfully establishing yourself overseas.

Contributed by TMF Group, a leading provider of high value business services to clients operating and investing globally.