This post has been updated and republished with new information.
Many startups and SMBs expand into new markets, particularly foreign markets, out of necessity, for competitive reasons or market opportunities (foreign customers interested in buying their products). Because of this, most companies choose their expansion location based on a broader business strategy, which should include the comparison of FDI incentives available. Optimally, you’ll want to take FDI incentives into consideration before deciding where to do business. This article will explain how to include FDI incentive considerations in your international expansion plans. To learn about FDI and how you can benefit from the incentives available, please read the first article in this series, Foreign Direct Investment For Fast-Growing Startups and SMBs.
Put together a dedicated expansion team:
As soon as you start to explore the idea of expanding into a foreign market, no matter the reason why, you should put together an expansion team. This does not need to be a huge team, the team can include members who have other roles within the company, i.e., you don’t need to hire new employees to fill this team, and the team should certainly work with the entire company. It’s best if you include people from different roles, such as finance, product, sales, marketing, HR, operations, legal, and a senior ‘lead’ that has the support of the executive team. Having a team that is specifically tasked with expansion planning will help to ensure your company hits the ground running.
At Globig, we have some great resources on how to build an Expansion Plan and the aspects of global expansion to consider before you jump in. You can watch a video on Lean International Expansion here in our Globig YouTube channel and read more here on our Globig blog about the Lean International Expansion Framework.
How does this relate to FDI? Your team, or at least one member, should focus on looking for, understanding, and ultimately negotiating FDI incentives available in the market(s) you are considering. This is particularly important if you are considering more than one location, which by default means you will be comparing the two (or more) locations. There are companies that provide FDI assistance; these companies offer expert consultants with many connections throughout the world. Some companies bring one of these experts on to their expansion team. Keep in mind, most government agencies will not work directly with these consultants. If you can find the information, which isn’t too difficult, these government agencies prefer to work directly with companies looking to come into their location.
Look for FDI incentives:
Most countries, and often smaller localities, have dedicated government departments or agencies to handle their foreign direct investment operations. You can find many of these agencies through a quick Google search (the link above provides a list by country). These government agencies are often the best place to start when looking for FDI opportunities. Many offer free help to companies looking to bring business to their location. Because most incentives are negotiated on a company specific basis, you must reach out to the appropriate agency to get information on the incentives that may be available to your company.
Connect with the appropriate FDI agency:
Reaching out to the local FDI agency is the best way to move forward and create an ongoing relationship. Many such agencies will work closely with you to help make your expansion process successful, because, after all, these governments also have a vested interest in your success in their market. For this reason, most of these agencies offer their assistance and services free of charge and they welcome an ongoing relationship.
With many governments creating FDI incentives that are more appropriate and attractive to smaller companies, now is the time to take advantage of those available to your company. However, because most smaller companies do not choose a new market based on these incentives, it is imperative that you include FDI incentive strategies in your expansion plans. This strategy should include a specific person within your company to manage your FDI incentives, including the research and relationship with local agencies.
Globig is here to help you with your business expansion needs around the world, even the U.S. Join Globig today for free business resources and expertise, and, through our Marketplace, access to vetted experts around the world.
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