The market for global business expansion, among mid-sized companies and large corporations, has never been healthier.
The biggest trend, in the wake of the Covid pandemic, was the ability to easily hire staff remotely using solutions such as the Employer of Record (EOR) model. However, businesses quickly realised this was not a long-term solution and that eventually, they would need to establish a more permanent presence to conduct their business activities.
Jeremy Wastall, a business advisor for GoGlobal, explains: “There are many reasons why companies choose to enter new markets - having local representatives on the ground, driving revenue growth in new markets, tax incentives, talent availability, lower-cost of operating or employing, and so much more.”
Companies also face competitive pressure from rivals and may decide to diversify rather than become too dependent on a specific market, particularly during times of geopolitical uncertainty. As Wastall points out: “It’s about de-risking and future-proofing the business”.
The challenges of global expansion
But going down the global expansion path is not without its challenges. Firstly, each country has unique rules and regulations related to the types of structures businesses can establish and the activities they can perform. These broad differences significantly impact a company’s ability to ‘hit the ground running’, instead finding themselves navigating nuanced local rules and compliance requirements - all with a lack of clear guidance.
These challenges are most prevalent when choosing the type of entity to establish, navigating how to hire and manage a local workforce, setting up a compliant payroll, and meeting the accounting and tax obligations required by local laws.
Another consideration businesses must deal with is language and cultural barriers. In fact, according to a survey by Censuswide, 74% of business leaders report language barriers as a concern when planning to enter new markets. Each culture has its own varied, often nuanced, customs and social norms which makes understanding, and complying with, these local rules and regulations even harder.
As businesses enter each new location, they work with a myriad of local vendors supporting various back-office or administrative functions, such as payroll or accounting. Over time, this can lead to a fragmented network of vendors, each with different service levels, systems and capabilities. As a result, managing this network can quickly become overwhelming. Without a cohesive strategy, companies risk inefficiencies and compliance failures, both of which can undermine their expansion efforts.
As Wastall points out: “You need to speak with lawyers when setting up your entity, accountants to help with the financial setup, payroll experts to run a compliant payroll, and HR vendors to help with hiring, onboarding, and managing the administrative elements of local HR,” he says. “For just one country, you could be working with as many as six different vendors, but if the aim is to expand into four countries, you could end up engaging with up to 24 different vendors, which ends up being completely unmanageable.”
Finding ways to test the market
Due to such challenges, Moon Suen, GoGlobal’s executive director of client solutions, recommends that the most effective approach is to start small, test the market and continuously evaluate.
“Maybe employ one or two people before you make a decision to put real investment into a new country,” she says. “If you test the market and it works, you can transition later, but to be successful you really do need a local presence.” Understanding when to make this move requires sound market analysis, input from local experts and data-driven insights, rather than relying solely on intuition, she adds.
One organisation that took this approach is Chinese conglomerate, Fosun. It was keen to expand into Africa, Europe and Southeast Asia but encountered several challenges, including identifying the right structure for both short-term and long-term business activities in each country. In each country, it intended to employ a small workforce but struggled to find the appropriate support that looked at their business as one whole entity. Instead, Fosun spent months receiving contradictory information from different vendors.
Fosun also faced significant complexities and issues in its expansion planning due to a lack of local HR expertise, as well as limited knowledge of legal, tax and accounting requirements. These gaps became more apparent when it began onboarding a local workforce. Without sufficient HR support on the ground, it proved difficult to effectively manage and support new hires. Staying compliant with local laws and regulations added further complexity, making the process both demanding and time-consuming.
As a result of these challenges, Fosun decided to partner with GoGlobal due to its expertise as an international provider of business and corporate services, ranging from payroll to accounting to local HR and tax compliance. Doing so has generated several key benefits for the company.
Due to operating across 133+ countries, with a direct presence in 83, GoGlobal’s familiarity with diverse local and cultural nuances allowed it to view Fosun as a cohesive organisation rather than fragmented entities. This perspective helped streamline the process and tailor solutions suited to each market’s specific needs. Additionally, GoGlobal’s distributed workforce ensured Fosun’s representatives had accessible, localised support within their time zones. Another benefit of having local expertise was ensuring Fosun maintained operational compliance with each country’s unique legislation and regulations. This tailored support not only addressed Fosun’s immediate challenges but also positioned them for sustainable success in their chosen markets. Now, Fosun also leverages GoGlobal’s BlueOcean platform for managing payroll across multiple jurisdictions and employing workers through the Employer of Record EOR model where it lacks a local entity.
The benefits of a complete solutions provider
Unsurprisingly then, there is already a sizeable and ever-growing market for business and corporate services. Unlike venture capital or private equity-backed providers, whose focus is often on optimising their exit strategy, GoGlobal’s privately-owned model allows it to prioritise delivering a high-quality, personalised and hands-on customer experience. In this line of work, consistent and reliable delivery is the ideal end goal.
Leaders want to speak to the real experts on the ground that understand their business and their goals
Wastall explains why interest in working with a single, global provider is increasing as a means of reducing business complexity. “Not only does a single global provider offer a single point of contact to their customers but their broader view and understanding of a business also means they can guide it more thoroughly. This enables businesses to optimise their operations more effectively.”
“It means that clients have a more consistent experience working with the same vendor to address questions or issues that come up globally,” Suen explains.
Ultimately, these considerations are important because clients do not want a platform-only approach, says Wastall. “Leaders want to speak to the real experts on the ground that understand their business, their goals, the associated risks and how to optimise costs for running a global business or entering new markets.”
This personalised approach bridges the gap between technology and the intricate realities of operating in diverse markets, offering clients a more tailored and effective solution. “There simply isn’t a tech platform out there that can address these complexities with the level of nuance required. Working with experienced professionals makes all the difference. It all comes down to the human touch,” he concludes.
In a world where businesses must operate across borders seamlessly, having a partner with true global reach is no longer a nice-to-have, it’s a necessity for long-term success.
Considerations for business leaders looking to master market expansion
Before starting down the path to global expansion, it is important that business leaders carefully weigh up the implications of such a move. Here is a checklist of considerations to evaluate before making any final decisions.
Reflect on why you want to expand
Understand your motivations for undertaking international expansion and be clear on why it makes sense at this time. Doing so will help inform the right expansion model for the business going forward. These include hiring someone locally to represent the business, taking on an Employer of Record, or setting up a new entity.
Research and understand your target market
Doing so should enable you to recognise whether it is a good fit for your business goals and priorities. This includes the size of the market, the local culture and whether the time zone is manageable. It also includes local competition and establishing whether there is real demand for your products and services. Ensure your evaluation is based on objective rather than subjective measures to identify if any assumptions you have made are correct.
Understand your business timeframes
Make sure they are realistic. For example, if your aim is to sell key products into your target market within three months, ensure you are not thrown off course by finding it takes six months to set up an entity in the country.
Undertake financial planning
Be very clear about how much setting up an entity in your target market will cost, whether this aligns with your budget plans, and what investment will be required. Also conduct a return on investment analysis to understand what payback you are likely to receive over a specific time period.
Explore scenario planning
Gain an upfront view of what the situation should look like if things go well, not well or somewhere in between. Doing so will put you in a good position to make informed decisions, challenge the status quo and adapt as necessary
Validate your findings by speaking to local experts
Nothing can beat information from experts who know the market. They can provide you with an authentic, qualitative, anecdotal picture of what the market is truly like and how it works on the ground. They will also be able to advise you on how best to proceed if you decide to take the leap.
Listen to internal advice
Do not make decisions in isolation. Instead, ensure you benefit from input and advice from three or four respected colleagues from different areas of the business. They will be able to provide alternative viewpoints and insights to cover any blind spots.
To find out more please visit goglobal.com
The market for global business expansion, among mid-sized companies and large corporations, has never been healthier.
The biggest trend, in the wake of the Covid pandemic, was the ability to easily hire staff remotely using solutions such as the Employer of Record (EOR) model. However, businesses quickly realised this was not a long-term solution and that eventually, they would need to establish a more permanent presence to conduct their business activities.
Jeremy Wastall, a business advisor for GoGlobal, explains: “There are many reasons why companies choose to enter new markets - having local representatives on the ground, driving revenue growth in new markets, tax incentives, talent availability, lower-cost of operating or employing, and so much more.”
