Question from an IM Member:
Q: “How do I find information regarding the pros & cons of setting up a foreign business?”
A (by Ed Marsh): This is an enormous topic, and one with many angles and perspectives. I typically work with existing US-based companies that want to internationalize their business. For these companies, there is always a potential “con” in the commitment of resources against an anticipated return. The “pros”, however, are numerous: increased diversification, counter-cyclical or offsetting market cycles, access to much larger market opportunities, reduced competition as well as financial and tax benefits assigned to “export businesses” by the US government are just a few examples.
For these “going concerns” that seek to internationalize, my common approach is to first develop business activity in markets selected as favorable (in terms of product and preference-driven metrics).
The chosen market will depend on a number of factors, including:
- The owner’s personal objectives (often including income and asset diversification, and potentially for purposes of retirement or additional diversification).
- Corporate objectives, which are distinct, though closely intertwined with the owner’s personal goals.
And of course, plans are often adapted as market conditions change and data is accumulated.
In a typical scenario, we will look at clusters in Latin America, ASEAN and Africa. We look for markets with low barriers to entry and focus on those that would be good regional bases as volume grows and activity spreads regionally.
This approach takes a business you know and launches into a market you don’t know, which is different than packing up, moving overseas and opening a new business. Doug Casey often cites the real measure of a persons’ business acumen as the ability to parachute into a new market and figure out how to be productive and create wealth. That may be the ultimate yardstick – and there are certainly other International Man readers who have expertise, anecdotes and advice in that area – but in this case the “pros” and “cons” are bigger. You’re guaranteed a great adventure, but if you fail where will you go? The stakes are high! If this is your desired route, the best way to “find information” is to interact with folks who have done it. The International Man Network Forum provides a perfect venue to have these exchanges.
Ed Marsh has in-depth experience on a number of continents, in various capacities and industries. He founded and managed a start-up in India; successfully built channels throughout Latin America; leveraged his German birth and marriage to a German national in his extensive work in Western Europe and has deep cultural experience with Vietnam. Ed’s B2B and B2G pan-global experience has involved a variety of products and services including capital equipment, industrial automation, distribution services and homeland security and defense technology. He is a Founder and Principle at Consilium Global Business Advisors.
Caveat – these are complicated legal issues, which have a variety of potentially serious legal implications. Decisions shouldn’t be made without consulting capable and internationally experienced counsel. These are just practical replies.
PLEASE NOTE: The information contained within this article is based on the best research we could find as of the date of publication. However, the world changes fast and information can become out of date relatively quickly. So, two points… First, before undertaking any action described in this material, please conduct your own due diligence and verify all facts. Second, if you happen to spot an out of date fact or figure (or even suspect something is out of date or false), simply get in touch with us and we’ll look into it. International Man is a network made up of some very smart people – tax specialists, accountants, lawyers, analysts and many other talented individuals. As a group, we can create and maintain a very accurate and highly actionable resource for internationalization.
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