To be sure, the recession clearly has hurt cross-border business, with the dollar value of global trade falling by nearly one-third between August 2008 and March 2009, although it has since rebounded some, The World Bank reports in “Global Economic Prospects 2010.”
(e) Think locally. This means hiring talented local employees rather than staffing up with expensive expatriates, and engaging local vendors. “Most organizations are best suited when they’re staffed by local people; they get greater growth,” Mekrut says.
(b) Follow the laws. OK, this is obvious. However, when you’re operating in another country, it’s not difficult to think that you’re obeying all the rules womens oakley sunglasses, even as you’re inadvertently breaking some, Mekrut points out. To reduce the chances of that happening, partner with local professionals, including an accounting firm with a local presence.
(c) Establish the appropriate business structure. Your corporate structure abroad will impact, among other things, your tax bills here, notes Luis Resendiz replica oakley sunglasses, shareholder with the law firm of Fredrikson & Byron P.A., Minneapolis, in this article. With the right structure, your foreign business can be treated as a pass-through entity, so that income flows through to the owners and is taxed once. Without the right structure replica oakley sunglasses, it’s possible that you’ll get hit for taxes at both the foreign and domestic level.
(a) Challenge your early assumptions. Before you reach the point of no return, examine the assumptions that initially led you to a particular location. “Step back and ask if there’s anything that makes you need to reassess the conclusion,” Mekrut says. For instance, treasury and finance will want to double-check the tax climate in the country, as well as any restrictions on moving money into and out of the location. For instance, while a start-up in a new location may operate at a loss early on, that doesn’t necessarily mean that the government won’t expect some money; some countries assess taxes based on an operation’s net worth, rather than earnings.
For the companies that still are opening plants and offices in other regions of the world, Bill Mekrut, vice president and treasurer with insurer FM Global, offers a few guidelines that can make the process more effective:
However, globalization marches on, and companies still are expanding abroad. In fact, earnings from the foreign affiliates of U.S.-based companies grew from $63 to $80 billion between the first and third quarters of 2009, reports the U.S. Department of Commerce. The report acknowledges that the increase partly reflects the depreciation of the U.S. dollar, which makes earnings of foreign affiliates relatively higher when compared to domestic earnings. Even so, the report adds that the pickup in activity in some foreign countries also contributed to the uptick in earnings.
(d) Understand the culture. In particular, consider the pace at which events take place. While Americans often pride themselves on taking action and not wasting time, other cultures take a more deliberative approach. What’s more, that’s ramped up in light of the global downturn. The individuals who are in decision-making roles womens oakley sunglasses, including government regulators who may need to greenlight the plans of multinationals entering the country, want to do all they can to avoid replicating the U.S.’s recession in their home countries. They “want to make sure that the rapid growth in their countries is well thought out and by organizations that will have a long-term view,” Mekrut notes.
Opening an office outside the home country is challenging in the best of times. It’s even more daunting when the economy is tight and fewer companies can afford mistakes. Nonetheless, companies are moving ahead. As this 2009 survey by HSBC shows, 56 percent of execs with midsize companies were boosting their overseas sales targets last year. This compares with 49 percent a year earlier. ###
Of course, this can be easier said than done, particularly if you’re facing a lack of management-level employees with the expertise you need in a country. One option is to “localize” the management team over time womens oakley sunglasses, notes global recruiters Yes Partners.
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