Expansion Abroad

Offices abroad bring glamour and international travel to an industry that could otherwise do it all from a desk. The only acceptable reason for opening another office in another country is to develop overseas markets for profit. No corporation is rich enough to support overseas operations on an altruistic basis. The sharp business reasons for setting up abroad can be many. Trade is already growing at such a fantastic rate you need to organize it properly. You have been offered a whale of a contract provided that you have a locally based operation. Or there may be some other major fiscal advantage.

Because trading conditions vary, there is no hard and fast rule to guide you through setting up overseas territories. Nevertheless, here are some thoughts to consider:

♦ Have you done your homework? Do you know before you make a move exactly what you are getting into? Have you studied the country closely? How many fact-finding trips have you made?

♦ Is X the best country to start with? Do surrounding countries speak the same language or follow its lead (USA and Canada)? Is it part of a block (Denmark, Sweden, and Norway)? Is it a good springboard for neighboring countries (Switzerland)? Is it a center of technical excellence (Silicon Valley, Cambridge, or Sophia Antinopolis)?

♦ Can you possibly make better use of your national distributor? Might he be able to let you have a little spare space? It is an excellent place to set up camp while you gauge the local market and work out where you'd really like your offices.

♦ Have you found a local manager? Having a foreign national on your side can smooth out a host of bureaucratic problems as well as being a source of sound on-the-spot advice.

♦ Will supervision strain the home staff? Someone is going to have to commute regularly. Will your ambassador be split between the company headquarters and the new operation? Can he or she do both jobs well? Are the travelling costs supportable?

♦ Recognize the language barrier. Do they speak English there? Can English remain the company language? If not, do you have a senior headquarters person who's fluent in the appropriate language? Is the language of the country one that might be useful elsewhere (such as Spanish)? What provision have you made for language training?

♦ Do you appreciate the outlay? Setting up overseas offices always costs more than many expect. Get quotes for all aspects of the exercise including setting up the firm, renting premises, paying staff, and transferring key staff from the head office. Just in case, take into account your wrap-up costs, as well. In some countries laying staff off is prohibitive and office rents have to be paid in full to expiry.

♦ Is it easy to repatriate the profits? Is the government stable? Is the country tolerant? Are you likely to be affected by changes in international currency rates?

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