Overseas Business Expansion: The Promise and the Pitfalls

Overseas Business Expansion

This is a guest post from Archie Ward.

For most business owners, the dream is to one day expand beyond the original market. Whether a large corporation or an SME, many look for ways to scale and develop additional revenue streams. One of the most popular options is to expand overseas, where they can tap into additional groups of consumers that want their product or service. However, while expanding overseas may not sound any more complicated than adding additional cities to your network, there are many cultural, political and economic factors to consider when expanding internationally.

Before attempting to begin an overseas expansion, it might be wise to outline clear and realistic expectations about the new markets in question. Sometimes even the best-laid plans can go awry because of some oversight or cultural ignorance.

Timelines have proved to get drawn out, which can lead to delays like those experienced by Xiamoi Corp in starting operations in a foreign nation.

Another area that should not be overlooked is the money needed for the expansion. Because overseas expansion involves dealing in foreign currencies, it’s always smart to collect as much payment as possible in advance to avoid any potential pitfalls regarding currency values or other misunderstandings. A mismatching between currencies can turn transactions unprofitable overnight, or even land you in the red.

Language barriers often present problems with an overseas business. Many companies in the past, those entering Brazil and China in particular, have had issues regarding how a popular product’s name translated in the native language, resulting in marketing plans having to be drastically altered or scrapped altogether. Before doing a business expansion overseas, make sure the country’s humor and use of slang language meets your own, and be prepared to adjust accordingly if necessary. A top priority should involve hiring someone who works as a translator, who is also versed in common sense of both countries involved, as well as a good ear for marketing.

Perhaps more so than any other aspect of how to expand business overseas, legal barriers must be taken care of well in advance. Obtaining a business visa as early as possible will get things off to a good start, and researching tax laws, import restrictions, liability laws and customs law will help to avoid any embarrassing or costly issues from arising. If the expansion will involve hiring employees within the new nation, a thorough knowledge of the country’s labor laws will be needed to make sure all policies are followed.

While expansion may seem like a natural fit with some countries, others may present a challenge when it comes to gaining access to raw materials or skilled labor. If these areas present any problems, expansion may need to take place elsewhere. In some cases, too many changes to a product will be needed in order to overcome these challenges, resulting in too great a sacrifice of the business format.

Whenever a move is made into a new country, questions may arise surrounding intellectual property laws and quality control issues. When operating abroad, being able to protect a trademark or trade name is vital to a company’s success. This can greatly affect the ability of a company to grow, so strategies should be in place to not only protect intellectual property rights, but also to go after those who violate those rights.

When deciding on market penetration, one area that is at the forefront of those discussions is government regulations. A process that is difficult enough at the best of times, and in many overseas situations it can become a nightmare if not properly researched in advance. While many foreign governments are quite receptive to expansion from western companies, others may object to the idea based on past experiences or disagreements regarding political philosophy. This is where having the services of a local liaison can make all the difference. A liaison, in addition to understanding cultural differences and local laws, can also explain differences in protocol, etiquette, and customs to a company seeking expansion, allowing it to have a better understanding of the proper approach to take with government officials.

Finally, the success or failure of most products or services in foreign nations will usually be determined by the marketing strategy. A great example of this is fast food chains, which while serving food that has proven to be popular with foreign customers, have found themselves needing to de-emphasise their focus on speed in some countries due to a cultural emphasis on leisure and being able to relax during a meal rather than eating on the go. In fact, consuming fast food may be seen as a status symbol of wealth in certain developing markets, and so the whole idea of getting in quickly and leaving with a bundle of cheap calories may need to go out the window. McDonald’s, in particular, has shown to be an innovator in the fast food stakes abroad, with food offerings which respect local dietary laws, varying tastes and seasonal changes. Another example is coupon advertising, which while widely accepted in the West, is viewed as offensive in some nations that have fixed pricing. For success to occur, a marketing strategy needs to be put to the test to ensure plans contain elements of flexibility so that any changes which need to be made, can be made, and at short notice to boot.

While expanding a business overseas might entail extremely precise planning and will almost certainly involve many unexpected surprises along the way, those companies that take the time to plan the smallest of details will often find that the process results in growth which would have been unimaginable by simply trying to penetrate further into current markets.

Archie Ward is a business consultant and social media strategist. Archie splits his time each year between Asia and Australia. While he is hard at work helping other people make their businesses successful, he hopes to launch his own by year end.