The World is Your Oyster: Expanding into International Markets

Published on 27th Aug 2015

Globalization is a word that has become part of so many business objectives today. Not just for those larger corporations planning to conquer the world but also for earlier stage businesses who recognize the value waiting for them overseas – or very often simply reacting to customer demand who have found them online and requested their product/service.

The question often asked (or ignored) is how best to structure overseas growth? How do you protect what you already have in your domestic business and how do you find the right team to extend your culture and brand across borders?

Of course the correct answer (from a lawyer) is “carefully”. The challenge often faced by business leaders is a flurry of competing and contradictory advice from those with experience. Here in Silicon Valley, everything is done quickly and success is often viewed notwithstanding risks taken to achieve objectives as quickly and cheaply as possible.

One comparison I always make is for a business to consider what thought and effort was put into launching domestically – when risk was almost zero with limited revenues and people affected if things went wrong. Why therefore would you rush into launching overseas with the wrong approach, ignoring local laws and devaluing the recruitment process…all in a new market which you know little about? The answer of course is that pressure to implement Board decisions is high and often delegated to junior level executives with an instruction to “get it done”.

Much of my role is therefore to counsel businesses into thinking about the right approach, to think about how important an overseas market is to them, to select the right people to complement their culture and to understand that a remote office means different time zones, business cultures, geographic distance and of course different sales cycles. It is worth considering that in new markets customer relationships can take more time to nurture – but will often become loyal and profitable customers.

The good news is that with an increase in globalization, there are many more advisors to help with every aspect of the move. It is no longer unusual or pioneering to enter a new market. There are clearly some markets where US businesses are welcomed and embraced versus more closed markets. However, irrespective of destination, the launch of an overseas office is now achievable relatively quickly (certainly for developed markets) but don’t fall into the trap of assuming that “one size fits all”. From a legal perspective, corporate structure, tax, employment, immigration, real estate, terms of service and data protection are issues which vary considerably. Ignoring these often leads to very expensive mistakes and can often completely undermine the upside potential for the business.

When speaking about such hurdles, I always remind myself to highlight the positives of overseas expansion! Those are more obvious and of course are the reason the Board approves the expansion in the first place: a new market, more customers, a global brand and of course more profits. Bear in mind that there are ready-made solutions for the hurdles and so expansion needn’t be a problem.

So whilst there are many different approaches to globalization – not all of which require overseas offices or employees, it is important to ensure:

• time is taken to plan a launch,
• advice is taken to understand local laws and regulations,
• thought is given to local business etiquette,
• recruitment is undertaken at least as thoroughly as a key member of a domestic team, and
• thought is given to the market you are targeting and the cultural differences which will impact the success of your business

The world really is your oyster, so make the most of the opportunity and speak to those who know the markets (and the hurdles).

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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