No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Featured

There’s Never Been a Better Time to Expand Globally—But Is Your Business Prepared?

by Jason Gerlis
May 9, 2018
in Featured, Leadership and Career
Global Expansion

Ignorance is Not a Defense in Global Expansion

In this article, Jason Gerlis examines the importance and particulars of global expansion. While a business may thrive internationally, jurisdictions in all parts of the world are increasing transparency with modern technological advances. 

Despite the shrill voices of anti-globalization, the world is continuing to interconnect and U.S. businesses are increasingly going abroad to access new markets.

In fact, U.S. firms of all sizes are now expanding internationally. A recent study by foreign exchange company USForex found that 58 percent of small businesses already have international customers and 72 percent plan to grow their international customer base.

Establishing a regional presence in a new market can increase efficiency. Rather than operate as a foreign entity and subject yourself to import restrictions, it often makes sense to set up a subsidiary or make an acquisition in a target market in order to create a local presence and transact as a domestic entity.

The threat of tariffs and a possible global trade war only amplify the urgency for companies to establish legal entities within foreign markets and employ locals to avoid the penalties of protectionism. Already, the European Union has said it will retaliate against a host of U.S. products, including Harley Davidson motorcycles, bourbon, and blue jeans.

Globalization is now easier thanks to technology. Real-time connectivity has simplified the flow of communication and commerce. Meanwhile, the application of new technologies in developing countries is speeding economic growth and opening up new markets in those countries. Additionally, more jurisdictions in all parts of the world are now automating and digitizing their information storage and reporting requirements, which increases transparency.

Positive market forces push expansion

The advantages of expanding internationally are numerous. While the U.S. market offers fixed growth opportunity, international markets present a far more elastic upside. And even though the U.S. is still the world’s largest consumer market, it is also highly competitive. A company might be just a midsize player in its U.S. space but could potentially expand to a less developed economy and find itself the leader.

The stars have aligned to create a near-perfect atmosphere for U.S. corporations to aggressively pursue outbound market expansion. One leading driver of expansion now is the U.S. stock market. Its recent gains have made businesses more confident, allowing them to pursue new opportunities overseas.

Another strong influence is the recent changes to the corporate tax code, which for certain firms are creating surplus capital for growth initiatives. U.S. companies large and small are finding money to spare thanks to the lower tax rate of 21 percent and many of them are looking to spend it on market expansion abroad.

A second aspect of tax reform—the limit on interest deductions—is also motivating global expansion, because in many cases, acquisitions are now easier to finance than domestic deals.  US firms can buy a foreign firm, but “push” the interest expense onto the foreign business’s balance sheet. This may result in greater tax-deductible leverage in the foreign authority than if a US business was acquired. We expect this will increase the already substantial trend of US firms merging with and acquiring overseas counterparts.

Immigration policies in the U.S. are also getting stricter, which impacts the ability of companies to hire skilled workers, and this, in turn, causes problems, particularly for the technology sector. If a firm in Silicon Valley can’t access the H-1B visa talent pool that it once used to augment its workforce, it may look to establish a local presence elsewhere. Canada, for example, has far friendlier immigration policies, and as a result British Colombia is arguably becoming a viable alternative to California. Hopefully the USA will advance investment in local training programs to create a domestic talent pool, which could both maintain the USA’s competitive advantage in high-tech, while also supporting workers in declining industries.

Meanwhile, the International Monetary Fund (IMF) is among the many agencies signaling bright prospects and optimistic markets around the world. It reported recently that the cyclical upswing underway since mid-2016 is continuing to strengthen. Some 120 economies, accounting for three-quarters of world GDP, saw a pickup in growth in year-on-year terms in 2017, the broadest synchronized global growth surge since 2010.

Local knowledge leads to success

Once you’ve decided that global expansion makes sense, the next question is where to go. You can start looking for your answer in TMF Group’s second annual Financial Complexity Index, which ranks accounting and tax-compliance complexities of investment, expansion and M&A activities across Europe, the Middle East, Africa, Asia Pacific, and the Americas.

Turkey, for example, is near the top of the TMF Group complexity index due to its extensive tax code, which is often changed and updated in legislation that is not always easily traceable. By contrast, Norway is one of the least complex nations in the world. Its regulatory environment is generally transparent with relatively low reporting requirements and little bureaucracy. Plus, the country’s tax framework is generally very stable—there are few large or sudden amendments in rates or legislation.

A business’s understanding of such financial, regulatory, and cultural factors will influence the speed with which it adapts to a new marketplace. It can also lead to greater opportunity. For example, in an emerging market that is complex, better understanding and quick adaptation can put you in the lead and give you first-mover access to a large market.

A company might know, for instance, that it wants to be in the Middle East. But which country in the region is most advantageous, given that each one has very different rules, regulations, cultures, and pay scales. How much will it cost to incorporate a company in a specific local market? How expensive is real estate? What are the tax requirements? How does a holiday like Ramadan affect business and the workforce there?

To understand this level of detail, companies need a local partner that can steer them in the right direction.  A local partner can tell you what the competitive landscape looks like in a particular market, how the economy is operating, how consumers are feeling, whether they’re likely to purchase your goods and services, and much more.

Say, for example, you’re looking to expand to Eastern Europe. You might know that Poland has about 40 million people. But you might not know how many of those people live in cities, what their lifestyle is, how many mobile phones and cars the average family owns. The right local partner can tell you what the new Poland looks like and explain why the economy is growing into a powerhouse of Eastern Europe.

Due diligence makes all the difference

Wherever you go, you really need to do your due diligence to learn how your product will be received in that market, and what the macro and micro economic factors look like. From there, you can start to form a judgment of how successful you’ll be.

Expanding abroad also requires knowledge of the local bureaucracy. You’ll have to fill out numerous forms in the local market. If you’re based in Atlanta, can you complete those documents in Latvian or German without making a mistake? The last thing you want is to incur a large fine, or have your business shut down, for not doing something you didn’t even know you were supposed to do. In Qatar, there have even been reports of foreign nationals being imprisoned for more than thirty years for writing checks that later bounced. Ignorance is not a defense.

Local knowledge is vital wherever you are. But it’s especially critical in today’s rapidly changing global marketplace, where new products and services are introduced every day, where tax requirements evolve constantly and where cultural norms shift by the week.

The time is now for global expansion–but before you go, do your homework. After all, knowing the regional requirements and understanding the local playing field could be the difference between success or failure of your cross-border business initiatives.


Previous Post

People, Process, Technology: Optimizing Risk Management Initiatives

Next Post

TRACE: Corruption, Rule of Law and Legitimacy in War Zones

Jason Gerlis

Jason Gerlis

Jason Gerlis is Regional Director of North America & Caribbean at TMF Group. Jason is responsible for TMF Group client delivery in the USA, Canada and the Caribbean. His teams support businesses expanding, or investing into the region. He is an experienced Corporate Director who regularly advises USA and Canadian businesses looking to expand abroad, as well as foreign companies and individuals coming to North America & Caribbean. Jason has been with TMF Group for five years, first based in London, but relocated to Miami, Florida in November 2014. Previously he worked at Deloitte Consulting LLP and Tesco PLC specializing in strategy, change management and Operating Model Development. Jason is a graduate of the University of Oxford and a Black Belt in Lean Six Sigma.

Related Posts

Phaxis 100 dollars

AML & KYC: Addressing Key Challenges for 2023 and Beyond

by Alex Roberto
March 16, 2023

(Sponsored) In today’s world, financial criminals are often a step ahead of regulators and financial institutions who struggle to effectively...

audit

IIA Survey: Technology Issues Widening Risk Landscape

by Staff and Wire Reports
March 15, 2023

The past year has seen internal audit staffing and budgets continue their recovery to pre-pandemic levels as organizations contend with...

Paul Weiss Economic Sanctions and AML Developments 2022_f

Economic Sanctions and AML Developments

by Corporate Compliance Insights
March 15, 2023

Sanctions start high and stay high 2022 Year in Review Economic Sanctions and AML Developments What’s in this report from...

insider fraud threat

As Layoffs Continue, the Potential for Insider Fraud Is Growing. Are You Ready?

by Chris Gerda
March 15, 2023

From startups to big banks, the technology and financial services sector have already seen tens of thousands of layoffs in...

Next Post
Two helicopters at sunset

TRACE: Corruption, Rule of Law and Legitimacy in War Zones

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT