Going International With Your Tech Company: A Few Essential Considerations
Unlike other more traditional businesses that sell or serve, tech company find it much easier to expand internationally. This is on account of a few innate advantages that tech-based businesses have over most other industries. We will discuss those advantages below, alongside several other aspects that could prove to be decisive in making your international growth plans a success.
Primary Considerations Before Expanding into A Foreign Nation
In order for any company to consider an expansion into a chosen country, the location must fulfil a few criteria. For example, if they are looking for a new market to find their target customers/clients in, then the chosen place must have a demand for whatever it is that they are selling. If the demand is not there yet, but it is still deemed by market analysts as a future market with high potential value, the company may instead launch a series of marketing and branding campaigns to create awareness first. On the other hand, business owners should also be wary of the local laws that might make it difficult or even impossible for foreign companies to do business in. Therefore, international relations must also be considered while selecting the ideal location.
On the other hand, the company could instead be looking for a place that can act as their new permanent establishment for manufacturing, and not a direct market for sale. In such instances, marketing is hardly necessary, but finding the right spot, local employees, cost-effective labor, political contacts and all other necessary resources, takes precedence. These factors in variable parameters are also important for direct market expansions, but analysis of local demands and a proper awareness campaign should be first initiated before entering a foreign market as a seller/provider. Such steps are unnecessary for building a production hub, as long as legal compliance with local laws are maintained by the new business, and their PEO can help them find cost-effective resources.
Impact Of The Internet
There are some tech operations which cannot be conducted without a localized, permanent establishment, but the physical establishments can be kept to a minimum, especially if you have a SaaS business model. Even in the age of geo-blocking, the internet is still not as restricted as the physical world, so software companies that offer their services or products on a subscription basis to other businesses or individuals do not need to have a huge physical presence in all nations where they operate.
Depending on the software’s nature, as well as the local regulations, a minimal physical presence might still be necessary though, but it varies. Software developers, hosting services and cybersecurity services are among the tech companies that find it the easiest to expand for this very reason. Even if restrictions are there, due to the nature of their product being completely digital, regulations on them having permanent, physical establishments are usually not as strict as they would be for other segments such as brick-and-mortar retailers. However, the same does not hold true for all tech sectors.
Tech Companies That Cannot Expand Via The Internet Alone
If the tech company is manufacturing and/or selling tangible products such as consumer electronics or business robotics for example, they must have at least one permanent establishment for production and/or retail, alongside customer care. Apple, for example, has multiple physical establishments to manufacture and assemble its various products across China, Malaysia, Thailand and South Korea to name just a few. In addition to that, they have permanent retail units and repair centers in every nation where Apple sells their products. The same can be said about Samsung and Microsoft as well, because they all sell tangible tech products to both business and consumer grade customers/clients.
What aids hardware manufacturers and retailers, however, is the demand for their products. As long as you are involved in the business of producing/assembling in-demand hardware or products that are a combination of hardware and software, you will find local governments and associated (not competitors) businesses to be welcoming towards your expansion ideas. Nevertheless, competitors may make it difficult for you to enter a new market zone, so you will need to be tactful, diplomatic and resourceful regarding your international expansion plans. In other words, for an international expansion to succeed, you will likely need the help of a professional employer organization (PEO).
PEOs Aid International Expansions By Estimating Risks And Solving Problems
In case you are seriously considering an expansion in any part of Asia for finding a new market, or looking to reduce your manufacturing costs, first check out the post on New Horizons to know about managing permanent establishment risks in a foreign nation. It’s not just a post that highlights problems, but one that also provides in-house solutions to each of them. New Horizons is the number one global PEO and HR provider in Asia, and they have already helped countless businesses expand beyond their home country. Consult with them to find the most lucrative markets across Asia, if you have interest in those parts for one reason or the other. They know the local rules, laws, customs, market demands, pay rates, etc. all too well, and they have the necessary connections to make your dream of having a permanent establishment in another nation come true as smoothly and as quickly as possible. Post establishment, they will also take care of all your local affairs on your behalf, as is the job of a professional employer organization.
Tech Companies Enjoy One Major Advantage Over Other Segments
Financial establishments sit on top of the list when it comes to the world’s most valuable companies, but that’s not what matters in this regard. If you check for multinational companies which have branches across more nations globally than any other, you will find that the tech sector dominates in this department. Prominent examples include Apple, Microsoft, Facebook, Google and Samsung, among multiple others. The reasons behind the whole tech sector being the most global business is rooted in a few key advantages that they have. These naturally make them more conducive to expansions than any other segment today. We already discussed the internet and the role it plays in making tech companies and all associated businesses global, but there’s one more factor to be discussed here that makes it easier for even tech start-ups to take on the challenges of international expansion.
Out of everything, the most prevalent, obvious and common fact which aids tech businesses is that nearly everything, from banking and shopping, to marketing and business transactions, is now heavily dependent on digital tech and supportive hardware. As technical and technological companies are the ones who manufacture, install, repair, secure and maintain the necessary technology for any and all other types of businesses in some way or the other, their demand in the global market is constant and universal. This holds true for B2B and B2C sectors alike, although the sectors themselves might differ, along with the companies that cater to each. This is not something that is about to change, because if anything, technology as an industry is only growing and producing more subdivisions with each passing year, if not sooner.