Choosing an Overseas Location When Expanding your Business

Monday, May 28, 2012

 
Many considerations have to be taken into account by organizations wishing to expand their business to a foreign market. The decision of the most appropriate choice of location is crucial for financial success. Knowing that consumers in the target market will accept and utilize the incoming service or product is imperative; managers and risk controllers must also consider the regulatory obstacles to success. Expansion to an overseas market means dealing with diverse legal and regulatory procedures which may require obtaining necessary permits and licenses, verifications and notifications to start operations and meeting local officials.

Over time regulatory obstacles have been reduced through business-friendly adjustments in policy allowing overseas organizations an easier setup process when expanding their market operations internationally. In some nations policies still remain which detract business’ international expansion capabilities and cause problems for entrepreneurs and existing businesses setting up new offices.  

Recent improvements in the number of days it takes to start a business have been recorded. This is the measure of the time needed to complete the necessary procedures to legally operate a business. The data incorporates procedure that can speed up the process. Therefore this measurement is the fastest method with the possibility of paying additional costs for fast track services. 

 

 Days required to start a business
    2007                 2009              2011

 Ease of doing business index ranking

         2010                         2011

Australia

2

2

2

11th

15th

Chile

27

27

7

41st

39th

Indonesia

105

60

45

126th

 129th

Japan

23

23

23

20th

    20th

Korea

17

14

7

15th

           8th

Malaysia

31

18

6

23rd

18th

New Zealand

12

1

1

3rd

  3rd

Philippines

47

41

35

 134th

 136th

Singapore

5

3

3

1st

 1st

Thailand

33

32

29

16th

           17th

USA

6

6

6

4th

  4th

         
















Table:  Data sourced from The World Bank Group Databank

Countries which have decreased this level significantly are Chile, Indonesia, Malaysia and New Zealand, showing a heightened efficiency in their recent regulation policy reforms. All other noted nations had decreasing days measured to start a business, except for Australia, Japan and the United States who remained from 2007-2011 at 2, 23 and 6 days respectively. Japan has an extremely high number of days compared to other developed economies, the others averaging 3.8 days. The country with the quickest regulation requirements facing businesses was in New Zealand with only 1 day being necessary to address required regulations.

The ease of doing business in a particular state also has an impact on the chosen locations for expansion. This number is a ranking from 1st to 183rd, with first place being the regulatory environment which is the most conducive to business. The rating is a percentage of the results of the 10 topics covered in the World Bank's Doing Business Project which includes registering property, paying taxes and enforcing contracts.

The World Bank found that worldwide in 2011; Singapore was the easiest nation to do business in, followed by Hong Kong, New Zealand, the United States, Denmark and the United Kingdom who came in at places 1st- 6th respectively.

Data of other nations and other business expansion issues can be found at The World Bank’s Databank.