In today’s globalised world, market access is more important than revenue and profit – at least in the early stages of a company’s journey.
For entrepreneurs with innovative and unique ideas, the key is to get those ideas to as many markets as possible, as fast as possible. One only needs to look at the lightening-fast expansion of Uber and GRAB to know that once a company is entrenched within a market and has that ‘critical mass’ of users, then it is deemed a success. Expansion strategy is key to getting funding and success.
Where many start-ups come undone though, especially in Asia, is in the implementation of their expansion strategy. Growth-orientated companies in Europe will not face the same challenges as those in Asia. Language aside, European (and other Western) markets are generally well run and have clear regulations and guidelines. Often, they are business / start-up friendly and will have agencies dedicated to helping foreign companies and investors set up in their country.
Asia is very different. While some countries – Singapore, Malaysia and Hong Kong especially – are welcoming for start-ups, others still have a thicket of rules and regulations that need to be navigated. Some countries require a local partner before incorporating, others have complicated taxation requirements, others require the hiring of local staff. All this can cost money, raise complexity and, more importantly, take time.
For example, while better than other countries in the region, the Philippines still has its fair share of red tape challenges, requiring 16 procedures and 28 days just to start a business (compared to the regional average of 7 procedures and 23 days), and it is ranked 171st out of 185 economies in the ease of doing business. In Vietnam you will need 57 days on average to register a property, 400 days to enforce a contract. If you want electricity installed in your office be prepared to work under candlelight for 115 days (and welcome numerous inspectors in the process). There is also good chance that as a business owner, you will be asked to make 32 different corporate taxes.
There are a few solutions that start-ups can choose from. Firstly, they can try and go it alone, hiring local partners and relying on their expertise and knowledge. This is challenging at best, as it requires the right set of contacts which many entrepreneurs don’t have in some of these markets. The other alternative is to engage with an experienced corporate services firm who is able to assist with all of the administrative tasks from company incorporation, taxation and accounting to payroll and HR.
What is for certain though is that the downsides of not taking this seriously can be significant, from being penalised by governments and regulators to losing valuable market-share to a competitor.
Alpadis Group can help you to enter new markets safely and in total regulatory compliance. Contact us to learn more from our experts!