It’s sometimes part of the natural progression of any business to cast their net wider and look for new horizons across the globe. Overseas expansion is a tried-and-tested business growth across several industries. And why wouldn’t it? To expand overseas and become a household name in different locations worldwide would be any entrepreneur’s dream.
Reasons for expanding globally
There are several instances where cross-border expansion can be the difference between a business remaining at a standstill and reaching new heights. Once a company’s target market has been saturated in a particular country, foreign markets can provide a competitive edge by providing first-mover advantage in a territory where the business doesn’t exist. This can help to build strong brand awareness with consumers before competitors venture into these markets. Companies should always be aware, however, that this advantage can work against a business when they invest heavily in persuading consumers to try a new product. Later entrants will sometimes benefit from the investment one has made as the groundwork has already been done for them.
New markets can also provide businesses with access to amenities such as technologies, mutually beneficial ecosystems and funding not available in the country of origin. These are the main reasons why startups tend to gravitate towards hubs like Silicon Valley and Singapore. In order to boost the economy, many governments also provide businesses with corporate tax incentives and assistance schemes that can help to reduce costs considerably. Moving the manufacturing process to a foreign destination can also lower labour costs and rentals, in turn raising profits.
The overseas market can be a very different animal
Firstly, every entrepreneur should know that trust is a big factor when succeeding in business. If you are competing with local businesses from overseas, you will meet the usual obstacles of your target audience preferring to patronise local businesses before looking elsewhere. One way to overcome this is to make sure that your marketing strategy includes a brand awareness component that adds to improving brand engagement.
An example of a local company that managed to scale the timing of its global expansion advantageously is Singapore’s very own mobile payment company MC Payment, opening up an office in Bangkok. The company has also spread its wings to Indonesia, Malaysia and Hong Kong – it’s success is largely due to the way it entered markets after ensuring that it was established enough with a positive track record, then carrying out the necessary research.
Know your target audience’s culture and attitudes
It’s extremely important to be well-versed with the culture in the country you are expanding to. What has shown to be popular back home can have disastrous results when applied to different geographies. An example where user behaviour in the country of expansion was not studied adequately was in the case of eBay in China. The highly successful platform did not work for the Chinese market that placed emphasis on having a live chat function as well as reviews of sellers based on their own interaction with them and not others’ experiences. It’s all about knowing your customer and catering to his or her needs.
Create the appropriate user personas
If your new target market has shown to be receptive to your business, it’s necessary to carry out the creation of user profiling to decide who it is you’re actually targeting. Such factors as their preferred channels of communication, personality, motivations, work ethic, priorities and goals should be ascertained using extensive market research techniques. This is an approach that should be taken with most businesses and is often ignored when expanding overseas.
Explore the country’s regulatory standpoints
Another factor to consider is in the area of governmental regulatory standpoints. While countries like Singapore are often tagged as business friendly with corporate tax figures at about 17%, Japan’s corporate tax lies at 28%. This can make a huge difference to bottom lines, especially when working on thin profit margins. Legalities also have to be explored and understood comprehensively. An obvious example is that certain countries require licensing for particular activities where others do not.
Preparation is key
Global expansion should almost always be regarded as a journey that needs to be timed strategically. It’s all about preparation, information gathering as well as making sure that you are ready for the obstacles that will come your way. If scaled correctly, what you will be left with is unparalleled exposure and a widening of your target audience.