Looking to Expand Internationally?

By Ian Matthews - Moore Kingston Smith

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At Healys we have close relationships with other professional advisers looking to support business owners and founders as they build and grow their ventures. Ian Matthews is the head of Moore Kingston Smith’s India Group and shares his insights on things to consider for businesses looking to expand internationally. Take a read of Ian’s article below and please do contact our team, or Ian, if you would like to discuss your options for international expansion.

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Looking to expand internationally? It is often the natural step for a growing business and as with all business decisions there is a lot to consider.

The obvious first question to ask is where to expand to. A useful tool for this is the trusty GE-McKinsey Matrix, comparing market attractiveness against your competitive strength. You can use this to map different markets and compare which region would be best suited to your business. You will know your business best when deciding on your strengths but you do need to consider market specific conditions before deciding on which new market to enter.

I head up my firm’s India Group, looking after Indian business investing in the UK, and with that I work with many international businesses. Based on this experience I have picked 4 areas for expanding businesses to consider:

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Culture

This is not just business culture, though important, but more general nuances around the target market. On the business culture side you do need to appreciate that styles of communication, negotiating and working will be different. In India there will be completely different ways of working with a business based in Delhi compared to Chennai. Many countries will have State and Federal authorities and so adapting your product or service to fit local tastes and preferences can make a big difference.

Taxes

It wouldn’t be an article by an accountant without a reference to taxes. While there is general worldwide consensus on how companies are taxed, you need to be mindful of the country specific tax implications on the company and its people. This could range from tax friendly jurisdictions like Ireland or higher tax countries like Argentina, again be mindful of Federal and State taxes.

Utilising low cost countries in your supply chain may also lead to customs payable or transfer pricing arrangements depending on your corporate structure. If you do trade in goods looking at the custom arrangements between the UK and other countries as well as the double taxation treaties will help guide you on the additional levies and cash flow impact of withholding tax and tariffs.

People

When choosing the person to lead the expansion do you employ someone local who knows the market or send your own people who know your business? There is no right answer, but if you are looking to sell into a new market one of the key considerations will be who will be in charge of the expansion and how long will you give them. It always takes longer than you expect and costs more than initially estimated.

There will be local employment and immigration laws to consider and the wider impact on having a globally mobile workforce.

Regulation

In India there are foreign currency and investment restrictions which needs allowing for and will influence the structure of your expansion. Do you create a standalone company, a subsidiary or register as a branch? Each option will depend on your own situation and the target country, but local advice around registrations will save time and money later on.

Industry specific regulation is also an important factor, e.g. food standards, and a useful first contact might be the Department of Business and Trade who have country specific experts who can help you understand geography specific issues.

Growing your business internationally is exciting and I have seen many business expand significantly by looking overseas. You will not be able to foresee all barriers but you can certainly mitigate most of them with a little planning up front.

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If you would like to discuss any of the above topics a little further, please get in contact:

• Healys corporate team solicitor: Jamie Lasaki Jamie.lasaki@healys.com
• Moore Kingston Smith, India Group head: Ian Matthews IMatthews@mks.co.uk

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