What You Need to Know Before Expanding Your Business Overseas

Expanding your business overseas is an exciting development for entrepreneurs. Developing economies are the new frontier, and only the industrious can hope to take advantage of it. Of course, where there are unique opportunities, there are also unique challenges. Expanding your business abroad comes with several legal concerns that can be critical. When considering expanding your business abroad, here are a few important points for you to consider.

The Business of Exporting

Expanding your business gradually is often the best practice. One of the simplest ways to enter an international market is by exporting goods.  Compared to opening a business locally, exporting will allow you to tap into the international market while avoiding heavy taxation, depending on the market and product. Generally, your business will only have to pay nominal customs fees.

As your engagement overseas intensifies, you might decide that it’s time to hire distributors. You’ll need to be familiar with local laws, especially regarding taxation.  Before you hire distributors or localize your operations with a branch office, consider hiring a consultant.  A  local business consultant will have specialized knowledge of applicable laws and regulations. A thorough understanding of these issues can help business leaders avoid costly mistakes.

Related: Entrepreneur.com

Patents and Property Rights

U.S. patents and intellectual property laws only protect businesses within the United States. Although European countries have a history of respecting US intellectual property registrations, the same does not apply to many countries in Asia and Eastern Europe.  There are international and local intellectual property organizations with which you can register your intellectual property.  It’s up to business leaders to protect their intellectual property when expanding to new markets. 

Contracts

Contracts in the United States work according to common law derived from judicial precedent. Whereas, contracts in several countries abroad operate according to civil law. Learn the difference and understand how it affects your agreements. How are commercial agreements made and disputed? What are the relevant regulations? What kind of records are you required to keep? These are all vital market-specific questions to which you should have the answers before you set sail.

Related: ACC.com

Learning About the Marketplace

Successful entrepreneurs know how important it is to understand the market if they want to be successful in their enterprise. A product or service that is popular and well-received in one market may be offensive and destined for failure in another. Have customers who are engaged with your customer services agents helps learn more about the culture and the market. Reading reviews and communicating with customers is another way.

Related: Podium.com

Culture Matters

It’s easy to take the cultural causes of previous successes for granted. Even what is considered a common greeting in one country can be thought of as deeply offensive in another. Rely on relevant experts and local market experts to avoid a misstep that will leave a poor impression. Remember that although you may be an expert in your industry and market, it doesn’t always lend itself to new markets.

Determine whether competing products or limitations in related technologies will be a challenge to your success. Target markets that will facilitate future expansion. Hong Kong and Singapore, for example, are excellent places to start because of their financial and business footholds in the world, and their location to many other economic and global powers. Think of a new market as a hub which will grant you access to increasingly distant opportunities.

Related: E-Sandhurst.com

The Logistics of Doing Business Abroad

Make sure you can scale your business appropriately. Early success has been disastrous to many businesses which were not prepared for a sudden explosion in demand. Expect to grow slowly, but be prepared for rapid expansion by developing a business plan and the resources to scale in advance. Understand the organizational patterns which are common to businesses in the markets you wish to explore and don’t take for granted that they work the way you’d expect. 

Making Connections

Part of the benefit of doing business abroad is learning about new cultures and people. Getting to know the entrepreneurs in a market can be rewarding both for you personally and as a business strategy. By forming contacts with local business leaders in transportation, supply or other related enterprises, you can help bridge the gap between theoretical and practical knowledge. This can become the positive difference in your business’ success. Always enter business relationship with an optimistic view–after all, those local  contacts can also become critical in navigating through any potential legal pitfalls that might entangle the unwary.

Related: Mashable.com

Franchising Overseas Should Be Done Very Carefully

For businesses that are a franchise, the prospect of expanding overseas especially since successful franchises often get the attention of investors across the world. But don’t jump into an offer too quickly, you need to stick to your core model, while being as adaptable as needed. And there needs to be caution as well, as things you might have originally have had down pat – such as franchise royalty fees – may be up to debate in other countries. Just do research as you need, and take it slow.

Related: FranchiseGator.com

Fortune Favors the Well Considered

Moving into the international marketplace is a big jump, even for big companies. Make sure you consult the relevant experts to ensure the process goes as smoothly as possible. Being well-informed is the first step to being well-prepared for success.

Have questions about expanding your business abroad? Or did you have questions about how your patents or trademarks will hold up in the international market?  Contact our office and speak directly to an experienced attorney!