How to succeed in overseas expansion? Five Key Points to Remember

Point 1 Clarify the purpose
Point 2 market research
Point 3 Look for countries, regions and partners
Point 4　Confirm infrastructure development
Point 5 Is there anything to prevent us from advancing?
Summary

Point 1 Clarify the purpose

To expand overseas, it is necessary to clarify the purpose of overseas expansion first. Overseas expansion is a major challenge for companies, and the financial burden of taking the first step in this direction is enormous.

There are companies that place great expectations on breaking the status quo and expanding their organizations by expanding overseas without a vision or purpose.

First of all, we need to clarify the objectives we want to achieve through overseas expansion, and create an environment in which all employees can aim for the same objectives. Let’s check again if we should go ahead with it even if we take risks because it involves overseas expansion.

If you decide to expand overseas in an ambiguous situation, you need to think about whether you need to expand overseas as a major premise or if you can achieve your purpose in any other way.

While overseas markets are attractive if the purpose is to develop new markets, they cannot be exploited by developments or products that do not match consumer trends. Also, if the purpose is to reduce production costs, it may not be possible to lower it as much as you think because of high personnel costs.

In addition, we may need to reconsider whether or not we really need to expand overseas, such as when we consider overseas expansion due to stagnation of existing business in Japan.

Point 2 market research

Market research is essential for a successful first overseas expansion. Market research is essential to the launch of new businesses both in Japan and overseas, but new businesses overseas require more careful and thorough research.

In the preliminary survey, information collected in Japan will be collected through the Internet, research companies, and human resources platforms. There are many things that are difficult to understand in Japan, such as the needs of overseas markets and consumers, and the consumption behavior of local people.

Therefore, it is also important to go to the local area and feel the actual market trend after collecting information through preliminary research. In the local area, we visit retailers, traded products and local companies with local coordinators.

It is an important process to gather information to determine whether our products, services and technologies are acceptable in the market. Even if we consider entering the market because of the relationship between customers and parent companies, we need to conduct our own investigation to see if we can continue sales and manufacturing in the future.

Point 3 Look for countries, regions and partners

In order to expand overseas, it is necessary to select the country and area where you will do business. Also, in order to do business overseas, we will be working with partners who have local expertise.

When searching for a country or region, it is necessary to have an environment, political, economic, and social conditions appropriate to the nature of your business. A country or region that is politically stable and safe and that accepts foreign capital according to tax rules is suitable.

If you are entering the manufacturing field, it is important that rules regarding labor costs, technological capabilities, and the natural environment are appropriate. If you are entering the sales field, it is important that share, needs, prospects for developing sales channels, and distribution methods are appropriate. Especially if the land is favorable to Japanese people and Japanese products, it is the best.

Also, when a country or region is decided, we look for a business partner. Some people and companies are trustworthy and others are not, but people often misunderstand each other or are deceived because they live in different places.

It is also necessary to avoid human trouble by utilizing a service where a reliable partner is introduced.

Point 4　Confirm infrastructure development

When doing business overseas, we need to pay attention to infrastructure, especially in emerging countries. In emerging countries, in particular, infrastructure is not yet fully developed, and problems may occur in water, gas, electricity, and communication systems.

In addition, if there is a need for infrastructure development, funds are also required. From the preparation and planning stages, the infrastructure should be thoroughly checked before making a decision on whether or not it is possible to advance.

It is also important to check the current state of business infrastructure as well as basic infrastructure development. When considering overseas expansion in the manufacturing field, it is necessary to know about the procurement of parts and raw materials. It is also necessary to confirm the status of road and port maintenance and the customs system.

In fact, there are quite a few companies that are forced to make a decision to withdraw because of difficulties in procuring raw materials and materials locally.

Point 5 Is there anything to prevent us from advancing?

One of the key points to keep in mind in advance in order to advance overseas is whether or not there are conditions or risks that would prevent us from advancing overseas. Whether or not we can do business overseas depends on whether or not the country has an environment in which foreigners and corporations can start their business.

The first thing to consider is regulations on foreign capital. 100% of foreign currency corporations are no longer able to operate in some countries.

In addition, the region must be stable in terms of politics and safety and be able to continue business in a long-term and stable manner. It is also important to look at the country’s tax system, such as corporate tax, income tax, and value-added tax, and choose a place where there are no disadvantages to doing business over the long term.

You also need to consider the requirements for deciding to withdraw when the situation changes.

Summary

By paying attention to these five points and moving on to the execution process after setting objectives and carefully examining the local business environment, we will be able to expand overseas with less risk.