FastTrack to expanding overseas

Why expand overseas?

There are several compelling reasons.

• Strategic: Tapping into a new customer base can speed growth and spread risk, especially when home markets are saturated or crowded. A foreign base might also give you access to new talent, lower costs and potential tax efficiencies. Meeting the needs of a new cohort of customers can spur innovation in product and service development. Meanwhile, nations that are actively seeking foreign direct investment (FDI) are likely to offer attractive incentives to overseas businesses.
• Operational: Amid ever-evolving regulations, geopolitical shifts and disruption brought by the COVID-19 pandemic, organisations are facing significant operational challenges and uncertainty. Overseas expansion can be part of a business continuity strategy, ensuring you stay open for business in one country even while locking down in another. It can also help you tap into alternative supply chains and production facilities, and might even introduce you to new and better ways of doing things. Foreign experiences expand the mind, in business as well as in life.

At a glance: the challenges of accessing new markets

While the potential rewards are great, there is no disguising the complexity of cross-border expansion. No two markets are exactly alike: what works in one country may fall flat in another.

What homework do you need to do? It depends to some extent on your sector, but there are constants. In April 2022 we asked a wide sample of business decision-makers what was stopping organisations from expanding into new markets. By far the largest number (64%) cited legal and regulatory challenges as the key barrier to entry.

Other challenges include:

• Understanding the local market – will you have to adapt your product or service?
• Understanding local language, etiquette and business culture
• Talent acquisition and onboarding
• Setting up supply chains
• Tax and accountancy laws

Regional focus: Setting up in Europe 

Why? 

As well as the general benefits listed above, setting up in Europe also has specific advantages:

• After Covid-19 lockdowns and Brexit there is significant uncertainty, and UK businesses trading with the EU and vice versa face an increased level of bureaucracy.
• Doing business with European customers is proving more difficult and costly, with red tape causing delays and tariffs.
• Having an EU base helps UK companies navigate these difficult circumstances. At the same time, it limits your exposure to any negative consequences of new EU/UK legislation.
• Growth: having a platform in the EU can make it easier to acquire talent and explore new markets.

What?

Limited Liability Company: the most common legal form. The limited liaibility entity is then a subsidiary of the group company (whether UK, Swiss or EU). 

Branch: an extension of the UK company without separate legal personality but is typically registered in the EU country in which it operates. The branch operates as an extension of the parent company. 

Standalone company: A standalone company can have a variety of purposes, one of which keeping certain assets off balance (of the group company). 

Where? 

*According to 2021 IMD World Talent Ranking: https://www.imd.org/7YWQEii1/rEcRp9yn/SFRWenBH/

**including trade tax

Regional focus: setting up a business in APAC

Why?

As well as the general benefits listed above, setting up in Asia Pacific (APAC) also has specific advantages:

• According to the Standard Chartered research mentioned above, 85% of companies surveyed are already conducting or considering a wide range of activities in Asia, including sourcing, exporting and manufacturing.
• Eight of the 18 developing economies that have shown consistently strong growth over the past 50 years are in Southeast Asia.
• Despite a pandemic slowdown, APAC remains the fastest growing region in the world, according to the IMF.
• It is becoming easier to set up a business or entity across the APAC region.

What?

Subsidiary company: a private limited company with the parent company as shareholder. Subsidiaries are popular options for setting up operations in many Asian countries.

Branch: a branch is registered in the local country but remains an extension of its parent company.

Representative office: businesses wanting to conduct market research in many APAC countries often set up a representative office, a temporary structure with no legal status.

Where?

Popular APAC destinations include:

*According to 2021 IMD World Talent Ranking: https://www.imd.org/7YWQEii1/rEcRp9yn/SFRWenBH/