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BLOG: The grass is greener on the other side

John Henderson | April 8, 2013
More and more businesses in mature economies are expanding overseas but four main challenges are emerging.

The UK has also adopted a somewhat narrow view. Historically, its main export markets have been the European Union and developed countries outside it. Exports to emerging economies, such as Brazil, Russia and China, have grown recently, but remain a relatively small proportion. Unsurprisingly, the UK's main exports in 2011 were services, and it is expected that demand in developing countries for design, advertising, legal and business and related fields will grow in coming years.

Four main challenges

As to what holds back companies from making the leap into exporting or represents a challenge to those pressing ahead anyway, opinions vary. However, four main challenges emerge. Top of the list is property and paperwork, followed by risk management, local taxes and regulation and building an image overseas. The divergence of views is indicated by the fact that, while Indian, German and Singaporean companies regard property and paperwork issues as a particular challenge, Japanese and Chinese businesses are relatively unconcerned by such matters. But the Japanese and Chinese are especially worried about risk management - while Dutch and Singaporean enterprises are much less bothered about it.

Perhaps unsurprisingly, smaller businesses tend to be less prepared to deal with the challenges posed by overseas expansion than their larger counterparts. The report even suggests that the finding that smaller businesses are less worried than large companies about risk management may have more to do with a lack of awareness of it than with better preparation.

The truth is that, while emerging markets may promise a solution to businesses seeking to boost flagging sales, overseas expansion can be daunting. For all the talk of the world seeming smaller and more accessible to even the smallest enterprises, there are still plenty of obstacles. Just as in the past, many companies have formed arrangements with local businesses as a way of taking early steps in a new territory so now they can use flexible workspace providers to deal with administrative and property-type issues. Without having to make the sort of long-term commitments that can be so off putting they can concentrate on making the most of new opportunities.

John Henderson is Asia Pacific Regional Director, Regus



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