Since sanctions ended, South African businesses have been spreading their wings and taking the plunge into global markets. South African brands are strong way beyond national borders and out of a list of 25 most valued African brands, 13 are South African, 11 are Nigerian and one is Kenyan.
But for businesses that have been restricted to domestic markets, making the transition to access global markets can present a number of challenges. Commonly, these include, but are no means limited to cultural differences, local tax laws, hr and payroll.
1. Keep you scope realistic
As a brand new to the global market, you are not going to be able to take advantage of every opportunity that comes your way. You are better served focusing your limited resources on markets that can provide a substantial customer base, cost efficiencies via less expensive labour and materials, or a business-friendly environment.
If an opportunity offers one or more of those advantages, it is worth pursuing. Above all, remain focused on your international business goals and do not go chasing after every opportunity that presents itself.
2. Build up a strong infrastructure with technology
Powerful personal technology allows regional teams or individuals to manage their workloads remotely from their laptop and smart phone.
Cloud technology allows overseas staff to work as effectively as if they were in the head office. Being able to provide service support at local times, in the customer’s own language gives you a huge edge on other small businesses and even allows you to compete for business from local competitors.
However, you’re dipping your toe into the international arena. Don’t buy expensive software systems that may not be needed until much later down the line. Look for simple cost-effective support for your in-country personnel. This strategy is much more cost efficient as you make your early transition into new markets.
You must also take into consideration that, as you grow globally, your data has the potential to be stored in more and more disparate places. Unifying your data stores and managing a globally standardized policy of data storage will keep you secure as your business expands.
3. Understand the obstacles and opportunities of overseas regulation
For companies looking to expand into European markets, the General Data Protection Regulations (GDPR) will need to be taken into consideration. These data security regulations put very specific duties upon any company that holds the data of EU citizens. This includes EU customers and any local EU staff you may choose to engage to do work for you on the ground.
There are also many options available to investors looking to do business in overseas markets. Many countries are excited about receiving foreign investment and have tax breaks and structures in place to make it easy for companies to enter the market. Having an understanding of these opportunities and the benefits you can help yield the direction of your investment.
4. Take advantage of foreign expertise
There’s no need to waste time learning the language, culture and legislative complexities in every country. Work smart and pick up experts to enrich your talent pool and give you a head start in global markets. Once you’re established, you can roll out a more in-depth training programme.
Picking up local talent is the quickest way to get unlock knowledge and understanding of the local business environment. Having boots on the ground, even one pair, can give you a huge edge in many markets, and help establish your international business.
5. Get a grip on paying staff overseas
The most straightforward way to enter a new country is to establish a commercial presence inside its borders by registering with applicable authorities, acquiring a local taxpayer ID, and putting overseas employees on an in-country payroll.
This option obviously comes with a significant upfront cost and may not be suitable for all businesses. However, there are many options available, including secondment to allied business interest, immigration or local affiliates. Part of the challenge in launching your market overseas is establishing a cohesive HR structure to ensure smooth running of your business all over the world.
On average, you need 14 pieces of employee information to process global payroll. These include employee name, age, pay scale, tax code, bank details and so on. More data means more complexity. In addition, you have to consider any regional reporting obligations you may face.
This is why France has the most complex payroll in the world. As well as needing 16 separate pieces of data to even pay someone in France, the French government demands much more detailed reporting than other countries.
Some payrolls change on a regular basis, so you need to keep up. Take Italy, for example. Collective Labour Agreements change frequently, seemingly randomly and are all unique. Contribution amounts, legal work hours, overtime rules and the number of pay cheques per year all vary according to CLAs. If that wasn’t complex enough, CLAs are renewed and renegotiated every 4 or 5 years. 25% of them are renewed annually. This means that pay runs can potentially differ massively year after year.
Getting a handle on these complex aspects of payroll compliance are essential if you want to start expanding into global markets with boots on the ground.
6. Immerse yourself in the culture
Every culture has a different approach to doing business. In order to cultivate lasting relationships with business partners and clients, you need to walk a mile in their shoes and embrace the way they do things.
For instance, the formality of address is a big consideration when meeting people for the first time. Do they prefer titles and surnames or is being on the first-name basis acceptable? While it can vary across organisations, Asian countries such as South Korea, China, and Singapore tend to use formal “Mr./Ms. Surname,” while Americans and Canadians tend to use first names.
The concept of punctuality can also differ between cultures in an international business environment. Different ideas of what constitutes being “on time” can often lead to misunderstandings or negative cultural perceptions.
For example, where an American may arrive at a meeting a few minutes early, an Italian or Mexican colleague may arrive several minutes after the scheduled start-time and still be considered “on time.”
Local companies looking to maintain growth rates will often expand into adjacent activities or verticals to avoid the natural limitation that comes with a singular focus in one geographic market.
Going global is an alternative that can allow you to retain your specialism and grow at the same time. Specialist companies exposed to large markets are valued highly by investors. So maybe it’s time your business made the transition into the global marketplace.
