Doing business in Hong Kong during COVID-19 with Callan Anderson
Callan Anderson from Hong Kong Corporate Services Group explains how the COVID-19 pandemic has affected doing business in Hong Kong and his advice for companies doing business in Asia.
The Ultimate Guide to
International Expansion [2022]
Everything you need to know about taking your business global in 2022 and beyond.
If you’re anything like our clients, your story probably goes something like this:
You started your business 10-15 years ago, on your kitchen table or in your garage. It started small, with just a handful of customers, you figured things out as you went and over time, it grew.
These days, you’re a grown-up company. You have offices and staff, a board and millions of dollars in revenue and expenses to manage each year. Your team has fantastic technical expertise, your clients love your work, you’ve done well. But you’re still hungry. You want more.
You have a vision for international expansion, so that people everywhere can experience the beautiful products and amazing solutions that you create. You want to amplify your impact.
However, a couple of questions keep niggling at you.
You’re wondering… “is now really the right time to ‘go global’? Since the start of 2020 Covid-19 has ravaged the world, disrupted supply chains, destabilised economies and created general chaos. China is a market that we’d like to sell to, but its relationship with Western countries isn’t doing so well at the moment. And of course, we’d love to do business in the US, but with the political upheaval and that’s going on there and COVID affecting so many people, is it still a good choice? There’s so much uncertainty … perhaps we should just focus on our domestic market…”
The good news is that despite the challenges…
- There are still plenty of opportunities for companies to do business internationally
- Smaller companies are still succeeding in the global space
- Scaling your business across multiple markets is still the most effective way of increasing its value … if you get it right.
The key thing to remember is that you need to be able to navigate greater uncertainty and adapt to the changing market conditions in order to thrive.
The second question you’re probably chewing over is “Where do we start?”
Even if you’ve decided that ‘going global’ is something that you want to do, you might not have clarity about what it looks like, or how to make it a reality.
Expanding internationally seems like a huge, complicated project that’s going to require systems and resources that you don’t have right now. You may be wondering… “what should my first step be?”
If that sounds like you read on. I’ve created The Ultimate Guide to International Expansion for business owners who want to scale a business internationally and need a little help to get started. I’ll show you the three key things that you need to successfully scale a business internationally and the core areas of business that you’ll need to consider as you do so.
Looking for tailored advice? Get in touch and book an introductory call to find out how we work.
Let’s get started.
Clarity
On Your Vision and Goals
Momentum
Your Secret Ingredient
Money
Jet Fuel For Your Business
First things first… let’s define a clear vision and strategy
You must first clearly see a thing in your mind before you can do it. – Alex Morrison
Getting real clarity on what you want to create and why is the first critical step in being about to successfully scale your business internationally. That’s because, as someone once said
“Clarity is power – the more clear you are about EXACTLY what it is you want, the more your brains know how to get there.”
In other words, until you have a crystal clear vision about what you want to create on the international stage and why, you’ll struggle to come up with a winning plan for making your idea a reality.
When I talk about ‘crystal clear vision’ I don’t mean a CEO who says, for example
“I want to expand our company to China so that we can generate more revenue”.
I’m talking about the leader who says, for example,
“My vision is to expand our company into China. I believe that our product will appeal to elderly, middle-class Chinese in second and third-tier cities, because it will address some of the significant quality-of-life issues that people in those cities face. I know we can address those problems at a price that they can afford. In five years time, I’d like us to have offices in Chengdu, Wuhan, Hangzhou and Daqing and 20 staff on the ground in those cities. I expect that we’ll be turning over $30-$40 million a year from the Chinese market in that timeframe and that we’d be giving back $1-2 million to local communities in the form of social care programs for the elderly”.
While the first example spells out a very general proposition, which everyone can understand, it doesn’t articulate any goals or targets, which we can use to plot a course or to measure success. Without that clarity of vision as to what must be achieved, it’s difficult to put quality plans in place. It’s a little like getting in a car and driving without a destination in mind – how do you know when you’ve arrived?
The first example also doesn’t give any clues to a motivation other than profit. While making money will obviously be one of the reasons for expanding overseas, it’s far easier to get people inspired, motivated and committed to an international expansion plan when there is a deeper, more compelling motivation involved.
That’s why the first step on the road to international expansion should be getting clarity about what you and your company plan to do, and why.
Once you have clarity on the scope and shape of your international project, you’ll need a strategy, a roadmap to achieving your ‘big picture’.
Without a roadmap, your crystal clear vision will remain just that – a vision, without a lot of substance behind it. As someone once said
‘A vision without a plan is a dream … and a plan without a vision is a nightmare!’
So what should your roadmap look like?
Ideally, your strategy should be a plan in the form of a document, which sets out how you will achieve your ‘big picture’ in a way which anyone can understand. It must cover all of the key areas that you will need to address as you take the business overseas, from finance to distribution, to international marketing, taxation and a whole range of other things.
A good strategy will include milestones and metrics for each of the areas you address. It will also make clear links between your goals and aspirations and the work that you will do to reach them. A good strategy doesn’t need to be long, but it does need to be clear. In my opinion, the best strategies run to a couple of pages at most and are so compelling that you can use them to win investors, secure funding, motivate staff and keep yourself inspired on days when the going gets tough.
It’s imperative that your strategy doesn’t sit in a drawer somewhere. Everyone on your team should understand the roadmap, where they fit on it and how they need to contribute to realise the ‘big picture’. What’s more, you and your team should regularly review the strategy and make sure that it can deliver what you need. If it can’t, you’ll need to make some tweaks so that you stay on course to achieve your vision.
Momentum - your secret ingredient
Momentum is “the impetus gained by a moving object’ and without it, your international expansion is going nowhere, fast.
In a business sense, I like to think of momentum as the impetus gained by a team, as they move forward towards a common objective. Momentum in action is a beautiful thing to see – a group of individuals, working together to achieve a specific project: goals being set, work being done, milestones being achieved, progress being made and celebrated, bigger goals being set, a vision unfurling.
Unfortunately, momentum is also one of things that business owners, entrepreneurs and CEOs struggle with most, especially when it comes to international growth. Why? There are multiple reasons.
Some leaders are apathetic, they lack the drive and ambition to get out there and tackle the challenge of taking a company overseas. “International expansion is a nice idea”, these people say “but it seems like a lot of hard work…”.
Others lack confidence and no matter how much they want to grow the business internationally, fear and the perception of enormous risk hold them back.
For some entrepreneurs, it’s a question of focus. They see other companies taking their business offshore and think “it would be great if we could do that”, but the day-to-day demands and distractions of the domestic business keep them in such a tailspin that they never make the time to think strategically or to set in motion a course of action that will put them on the path to international success. Time passes, they toy with the idea or stick a toe in the water, go on a trade mission or sell a thing or two abroad. But they never get serious and the international plan never amounts to anything. Others get started, but the gravitational pull of “business as usual” prevents the international side of the business from ever really taking off.
No matter how clear the vision or how great the strategy, it’s all a waste of time if you can’t inspire, empower and equip yourself and your team to embark on the international project and complete it.
The difference between the businesses that I’ve just described, where momentum is lacking and those where it is present is striking, especially where it’s combined with clarity of vision and purpose and a great strategy. In these companies, the leader and the team are rocketing along at a hundred miles an hour, straight towards their goal. They know what they’re doing and why, everyone understands what’s required of them and they’re excited to show up each day and make progress on achieving their big picture. This is a zone of real focus and a whole different set of values and behaviours. It’s compelling, it’s magnetic, it’s powerful.
If you want to make your international business a success, you need momentum.
Money - jet fuel for your business
And thirdly, you’ll need money if you want to build a successful international business.
Of course, you can always talk to the banks or look for equity investors, but your starting point should be to optimise money in the company, so that you can finance as much of your international growth as possible from your own funds.
The second reason for paying attention to money is that if you do have to look to external sources for finance at some point, you’re much more likely to be able to access it if money in the business is healthy and well-managed.
There’s a lot to be said about money, but to boil it down to the basics, consistent, positive money in a company is the result of critical thinking (the opposite of running your business on autopilot) and extraordinary execution (operating your company like a ninja).
So there you have it. The three key elements for international success are:
- Strategy
- Momentum
- Money
What Key Areas Do I Need to Consider?
Now let’s get down to tin tacks and talk about the core topics that you’ll need to address and the key things you’ll need to do as you start your international expansion, or earlier. Some of these are more exciting than others, but they’re all central to your success.
Before you get started on your international expansion plan, you need to make sure that your company is ready for the ride. This means being clear about what has enabled your company to be successful in the domestic market and having some evidence that you will be able to repeat that success in another country.
You should ensure that all your key stakeholders (board, shareholders, senior managers and life partners) support the international expansion and work with them to map out a shared vision of what success looks like that you can all agree upon, as well as a high-level roadmap for getting there.
As you’re doing this, make time to think about whether your business is resourced to expand internationally. You’ll need some understanding of how much the venture will cost and how you will cover those costs. You’ll need to decide whether your team has the right skills to operate in international markets, especially if you are dealing with a country where the language and culture is very different to your own. And you’ll need to figure out whether you have enough staff to meet the extra work and demands on the team’s time that scaling up the business internationally will create.
Companies that do best overseas develop a deep understanding of the target country, usually based on a combination of data and personal experience of how that market works. There are a range methodologies for market selection (some more complex than others), the important thing here is that you base your decision on something more than “gut feel” about the potential of a particular market. Don’t be one of the people who goes on holiday somewhere, falls in love with it and decides to set up shop there, only to discover a year and hundreds of thousands of dollars later that there’s no market for their product!
At a minimum, you should have carried out some research on more that one country before choosing a market to focus on. With data on the macroeconomic, microeconomic and industry trends in several countries in hand, you’ll begin to get a sense of where the best opportunities lie for your company. Understanding the circumstances and trends in different markets will also help you to get a handle on where your best return on investment is likely to be and to secure support from your stakeholders, based on something more than guesswork.
In the process of selecting a market, don’t forget to check that you can actually turn a profit there. No matter what methodology you use, this is a vital part of the exercise.
Remember to investigate whether there are international barriers to entry into the countries you’re considering – tariffs, licensing regulations, national employment quotas, product standards, or other bureaucratic hurdles. You should also make sure that you can repatriate capital easily and that the taxation regime won’t be too onerous for your company to bear.
As you can see, there’s quite a lot to think about as you choose a market to expand to, but it’s worth doing properly, so that you can make a sound decision, based on data.
For more insight into choosing the right market, check out our blog series that covers key pitfalls to avoid, questions to ask in the research process and other considerations like free trade agreements and intellectual property protection.
Looking for tailored market research? Check out our market research and modelling services.
Once you’ve decided where you want to expand to, it’s time to choose a mode of market entry, in other words, what model you’ll use for going to market. Your options include everything from online selling, using agents and distributors, licensing and franchising, right through to setting up a subsidiary or wholly-owned company in the new country, or merging with or acquiring a local entity.
It’s important to get this decision right, as it will have implications for the scalability and profitability of your international business in the long-run. In some cases, your choice of market entry strategy can make or break your business in international markets. It’s also smart to consider different market entry options for the short, medium and long-term. What might work well as a way of demonstrating initial demand or getting early traction, may not be so attractive several years down the track.
As you ponder different modes of market entry, check out what your competition in that market is doing and what seems to be working for them – you may want to replicate some aspects of their model. Also think about whether there are other companies, including clients, suppliers or even potential competitors with whom you could partner to enter the market. A partnership or strategic alliance can reduce some of the risks related to market entry – read more on how to source and engage trusted international partners.
Who is your ideal client in your new target market?
You might be thinking that your ideal international client is more or less the same person as your ideal client as your ideal client in the home market, just located in another country, but it isn’t as straightforward as that.
If you run a successful business domestically, it’s highly likely that you know your ideal domestic clients inside out. You understand what makes them tick, what they struggle with and how to satisfy their needs and wants – that’s one of the reasons your company has thrived. But when it comes to doing business internationally, the deep understanding that you have acquired about your clients at home through years of client contact does not exist in the new market. You don’t know your new international clients yet, and they don’t know you.
What’s more, it’s not just a lack of familiarity and established relationships that can be problematic. Clients in different countries can and do behave differently. Different societies can be visibly different in terms of level of prosperity, language, diet, dress, ethnicity and religion. There will be invisible cultural gaps too. Culture can create stark differences in consumer spending habits, attitudes towards youth, respect for privacy and preference for tradition, to mention a few.
To give yourself the best chance at successfully attracting, engaging and impressing clients in your new target country, it’s important that you get to know as much as you can about the people you want to serve, before you get too far advanced with your plans.
Don’t assume that you know what people want. Building up a client profile on the basis of guesswork is a recipe for disaster, because it’s unlikely to reflect the client’s real desires, goals, challenges and cultural preferences. Although it’s time-consuming, it’s worth making the effort to do your homework. Research your future international clients through secondary sources (market reports, media, social media), talk to potential clients in the target country, speak to associates who understand the market, visit the country yourself and spend time talking to and observing people.
Understanding the people you hope to sell to will give you the best shot at doing so.
In the section above, I talked about how important it was to truly understand your ideal international client. One of the most important reasons for this is to make sure that your product or service is going to hit the mark and that you can get traction in your new international market.
Once you understand your client and his/her preferences, you’ll be able to work out whether your product as it stands will do the trick, or whether you’ll need to modify it in some way. It will also help you to understand whether you can sell your product or service at a price that makes sense.
An anecdote from Gillette (the razor company) illustrates this point beautifully.
In 2009, Gillette razor brands accounted for more than 60% of razor and blade sales in the US and about 70% of the world’s total razor and blade sales. But in India, a market with the potential to be four times bigger than America’s for shaving products, the company had just a 22% market share, because its products were expensive for the Indian market.
To increase market share in India, the company realised that it had to target the lower-to-middle income segment of the population. To do this, Gillette decided to create a new product for Indian men, but before they did so, they spent a lot of time interviewing people in India and other emerging markets. Gillette observed potential clients at home and on shopping trips to understand what features razors had to have, and which features were nice to have.
Gillette designed and priced a new razor, the Guard on the basis of its research, creating a razor with a single blade and a hollow handle, which cost just 34 cents, cost a fraction of the cost of a premium product. The results were swift and stunning. By 2012, the Guard had captured 60% of the razor category in India, tripling Gillette market share there.
As the Gillette story shows, taking the time to make sure that there is ‘fit’ between your ideal international client and your product has the potential to dramatically improve your results in international markets.
Read more about international product-market fit and international pricing to learn how to get clear on your value proposition abroad.
It’s not enough to understand your international clients and the products that they’re looking for, you also need to understand where your offering fits in the competitive landscape.
One of the common mistakes that I see companies making as they go overseas is that they assume they have no competition. The truth is that even when your offering is very niche or has many unique features, there’s likely to be a competitor of some kind. If you don’t know and understand the competition, you can’t develop a strategy for dealing with them and in the worst case this could mean that the you get knocked out of the market by companies who create something better, sell something similar for less, or offer a more appealing experience for the customer.
The best way to avoid this is to spend some time mapping out the competitive landscape – getting to know who else is playing in your space, looking at what they are doing, understanding where your strengths are … as well as your weaknesses.
Armed with this information, you’ll be able to make better decisions about which areas of the market to focus on, whether to try and compete with existing players or to carve out in a space which no-one else is occupying.
What you don’t want to be is a “me-too” company, which sells the same thing as a hundred other companies (just with different packaging), so take the time to understand who you’re up against, so that you can create a strategy that will allow you to compete effectively.
To be successful in international markets, you need to be clued in to international cultures – how they are different to your own culture, what values matter to people from those cultures and what kinds of preferences your potential clients in those cultures are likely to have.
Understanding the culture of the country you want to expand to will inform not just what you sell, but how you sell it, and should influence everything from how you run initial meetings with potential clients and suppliers, right through to how you collect payment and supply after-sales service.
Culture is a huge and multi-faceted topic, but there are a few simple things that you can do to begin equipping yourself, even early on. You can read widely on your chosen country, join a relevant chamber of commerce or industry association, get some cross-cultural training, and plan a market visit. When your plans are more evolved you can also create culturally relevant marketing materials and campaigns, translate and localise the company website and hire team members or consultants with experience in the culture of the country you are targeting.
Find out more on how we help companies build productive, profitable relationships with clients, colleagues and partners in global markets with our cross-cultural training and consulting services.
To get traction in international markets, you’ll need a powerful pitch which resonates with your international clients and partners and a crystal clear marketing strategy that enables you to build influence and credibility on a global scale. Build in a turbo-charged lead generation funnel and you’ll have the leads you need to reach the clients you want.
One of the biggest mistakes that companies make in this space is that they try to “copy, paste” whatever marketing strategy has worked in the home market to the new market. Unfortunately, this approach is often unsuccessful, because each market is different. Language, social cues and tastes vary, social media channels, usage patterns and penetration rates differ and regulations affect how your company can market itself to varying degrees in different places. That’s not to say that if you already have a marketing strategy that works that you should abandon it and start over. By all means take what has been successful and apply it internationally, remembering that you’ll need to make allowances and adjustments to account for the cultural, structural and regulatory specificities of your target country.
Read more on why it’s important to have a tailored international marketing strategy.
When I start talking about regulatory frameworks, I often notice people’s eyes starting to glaze over. It’s hard to make this topic sexy, but it’s important that you really understand the regulatory environment of your international market, because there’s a lot that can go wrong in this space.
Because regulatory stuff isn’t fun, business owners and entrepreneurs are sometimes tempted to skimp on research and keeping up to date on regulatory development. This can be fatal, because regulation touches nearly all facets of your business operation in a new country and will determine to a large extent what you can and can’t do.
My key tips here are:
- Appreciate that there will be regulatory considerations that apply to all areas of your business, from your product, to establishing a presence, from IP protection to hiring and firing, from repatriation of profits to winding up a company structure.
- Understand the context in which you are operating – don’t just rely on the regulations that you can see on the page – speak to advisors, colleagues and competitors who are operating in a similar area and seek their views and experiences on how the regulations are applied in practice.
- Set up an early warning system – there’s nothing worse than being blindsided by sudden changes in the rules that prevent your business from operating. One of the most practical ways to mitigate this risk is to build relationships and goodwill with relevant people in your target market early on so that you can seek early updates if you believe that the rules are about to change and adapt accordingly.
As I mentioned earlier, money is oxygen for your business, so it’s vital to understand what kind of financial resources your international venture will require and get them lined up before you need them.
In the excitement of planning an international expansion, it’s all too easy to underestimate the costs of the exercise, or to assume that you’re going to incur the same costs that you incur at home, in a different currency. Failure to resource properly and unexpected contingent costs are two of the big danger areas for companies starting out in the international space, and in order to protect yourself, it’s a good idea to have some financial modelling done by someone who understands international business and to map out and forecasts before you go conducting expensive market visits or outlaying large sums of capital to get set up somewhere.
It also pays to do your homework on the range of funding options available in case you need them as you go. These obviously vary depending on where you are based but include,bank debt, equity, government loans and grants, crowd-funding and angel investment. Start early on this so that if you do need extra sources of capital you’re prepared in advance, not scrambling to build relationships and source money at the eleventh hour.
And finally, team. Having the right people, doing the right things at the right time in your business, is key to your success – even more so once you start expanding overseas. Your people are your most precious asset, but creating and running a team which is spread across multiple countries can be quite a challenge, so it pays to put some thought into how you’ll do this. One option for doing this is with an Employer of Record (EOR), but there are many options available.
Ideally you should have mapped out a process for creating your global team and plan for operating it before you make your first international hire. You’ll also need the right tools to make sure that the team can communicate and function effectively, no matter where they are.
So folks, there you have it. International expansion isn’t a huge, frightening project that only large companies can undertake. With 21st century technology, even small companies can access clients around the world, it just needs some careful thought and planning to turn out well. You too can go forth and change the world … get out there and make your company an international success.
Looking for tailored advice on how to design and implement an international strategy for your company?
Tune In
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Breaking International Barriers with Kathryn Read
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Kick-start your international expansion today
Get in touch to book an introductory call and kick-start your international expansion today.
