How to Start Your Expansion into the Far EastLast time I discussed the overall concept of starting business expansion into the Far East. I raised the fact that there are many exciting opportunities but that many business owners have a fear of the possibility and do not know where to begin. Market research is required and location is key as there are restrictions in some countries but not in others. Jumping in with both feet is daunting and yet it is difficult to just test the water with a toe.
If you are attracted to this possibility of business in the Far East the first thing to do is consider your product or service, evaluate where it would be accepted by the market and whether you are able to operate in that jurisdiction legally.
For example, some foreign operators are banned from providing local tourist services in some countries whereas tourist operations may be totally alien to the market in other areas. Manufacturers of mass production items may find operations too expensive to set up and operate in some countries whereas high tech manufacturers may be perfect in those same countries.
In other types of operations it may be a good strategy to set up a regional headquarters and have sub areas with branches or representative offices in other countries around the region. Whilst the practicalities of this need to be evaluated and operations streamlined to the best possible strategy, consideration also needs to be given to the legalities of operations as I have described above. It may be that your head office in one country simply sells to a customer or third party distributor in another country.
Taxation also needs to be carefully considered. Corporations set up in one country may find themselves burdened with taxation on business proceeds in more than one jurisdiction. If the head office sells via a branch in another country tax may be levied in that country as well as tax assessed for the sale in the head office country. There are often double tax agreements between countries. These will usually allow tax to be paid in only one jurisdiction rather than both.
These considerations need careful evaluation and an overall strategy created to account for them. Each element is an integral part of your overall market entry to Asia and getting them correct will make a significant difference in how the plan is formulated and put in place.
All these considerations certainly make it appear complex to contemplate the Far East as a business area, but this is where I come in assisting you in evaluating and formulating a plan.
There are a number of further considerations to be made and I shall start to evaluate these in the next article.
If you would like an exploratory chat about this please contact me. Andrew Wood, Kaywood Ltd. (Previous article published 22/05/20)