Expanding internationally is exciting and rewarding, but the hard reality is that every country in which you operate is different. Along the way, we’ve learned valuable lessons about conducting business across borders.
There are a few things you should consider before you start taking your Australian business globally.
1. Research before you jump
Before making major business decisions, you should think through all possible scenarios – especially during international expansion. Do as much as you can to understand the markets you are entering.
Take a trip to the country you want to expand into and gain first hand experience on how your business will fare. Speak to existing businesses located where you want to startup and consider a "soft launch" before you spend the money on establishing a new entity in the geographical location.
2. Local competition
It’s not easy to persuade a foreign customer to trust your brand when a similar product is made in their home country. "Why would customers buy from you over the local champion?"
3. Taxation in different jurisdictions
Besides a host of business and regulatory issues you face, you must also consider foreign tax issues. Learning the different tax rules and business regulations in different countries can be challenging. Most foreign countries have a territorial tax system.
You should adopt a holistic view of the tax system of both Australian and the parent company’s home country and you need to be aware of or establish a protocol around:
- Double Tax Agreements between Australia and overseas jurisdictions
- Transfer pricing
- Thin capitalisation
- Withholding tax
- Source of income
- Residency for tax purposes
- Goods & Services Tax (VAT)
- Stamp duty
- Payroll tax
Consider what tax advise you need before you take the leap. Azure Group's International Tax Specialists have extensive experience in coordinating international tax advice with advisers in other jurisdictions. If you have any concerns please contact us today.
4. Language and cultural barriers
Try to understand the people and culture in the country you plan to expand into. Consider the challenges such as culture and language and whether your product is suitable. You may need to revamp your packaging to include legal requirements for that country. Remain consistent in branding, but adapt to the environment.
You need to consider carefully whether there are any cultural concerns with your product. For example the colour red is considered good fortune in China, but in South Africa it is the colour for mourning. In Japan people sit on the floor to eat their family meal, where in Europe they sit at a table. These differences can affect how well a product or service is accepted in a country.
5. Hire a Local Company or Outsource to local experts
As a business person you can do as much research as you like, but you will never understand the country in the same way as a local. Our advice is to hire a local company to give you local advice. We suggest seeking both legal support and local business resources to guide you through the processes and procedures.
6. Stay connected
It's likely you will end up with professional advisers both in Australia and abroad. Make sure you connect them with each other so that you can maximise the advice and support you receive. This will ensure all jurisdictions are being managed appropriately to boost opportunities. Having advisers both in your home country and abroad that are connected can help address any concerns or emerging issues.
Likewise, make sure you are keeping in contact with your distributors or workers in the new country and capturing local feedback. Connect teams in geographical locations so you are sharing intellect and creating new opportunities and learning.
Azure Group has built a strong reputation for assisting offshore clients set up operations in Australia and Australian businesses who want to set up overseas. It can be hard to find the right support and an accounting firm with this sort of experience so feel free to reach out if you are wanting advice in this space.
Azure Group also sit on the board and are a founding member of XLNC an international alliance of accountants and lawyers with global representation. We have direct relationships with our global partners and an introduce you to the right firm that can help you enter into international markets.
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