As companies look to international expansion, having a robust market entry strategy is a critical element to help avoid major roadblocks when moving into each new market. This starts by conducting detailed market research to understand elements such as the specific customer demographics of the region, cultural differences and sensitivities, customer needs, the competitive landscape, the economic environment, and growth potential within the market, as well as the legal and regulatory considerations involved in setting up business and compliance thereafter. It is also important to understand the political and social environment, as barriers to market entry come in all shapes and sizes.
Once thorough research has been conducted, an entry plan can be crafted, beginning with selecting the mode of entry to each market. Consider the best approach to entry based on the conditions of each market. This could be selling directly to customers, opening a new branch, forming a new subsidiary, entering into a distributor or reseller agreement, entering a strategic partnership or joint venture, acquiring an existing business, and any combination of the foregoing. Companies should also conduct operational planning, including establishing the necessary operational infrastructure, hiring key employees, site selection, and supply chain logistics.
From a legal perspective, the initial decision is what legal entity will be doing business in a country or jurisdiction with customers, suppliers, employees, contractors, and contractual counterparties. Sometimes, the choice of entity will evolve over time. Doing business in a country or jurisdiction will make a business liable to being compliant with the existing legislation and court system of that market, and each aspect of the business needs to be reevaluated. How can you maximize revenue? How can you minimize expenses? What taxes will be due to whom? What are the legal rules around employment or consulting relationships? How to do you protect your intellectual property? How do you mitigate risk? And so on…
Local resources and advisors who know the specific market you are attempting to access are invaluable when establishing your operational presence. Legal, tax, and accounting advisors are key.