Establishing an overseas office can be expensive so is seldom the first market entry option for new exporters. Setting up a dedicated sales or marketing office in one market will cost several hundred thousand dollars per year or more. The costs can be even greater in markets with higher business costs such as the US, Europe and Japan.
Another option could be to set up a ‘virtual’ local office. This might mean using a local phone number that is re-directed to New Zealand, or a secretarial service which takes local calls and contacts you.
Employing staff overseas
Employment legislation varies from country to country. If you intend to establish an office or employ staff in your target country, check local legislation to ensure you comply with all employment laws and requirements.
For example:
- If you are trading in Brazil you must form a Brazilian company before hiring any local employees.
- In China wholly foreign owned enterprises must provide local employees with a written agreement in the prescribed Chinese language.
Always seek expert legal advice before you start to trade or employ staff overseas.
The advantages of having an overseas office include the following:
- You have greater control of your business activities in the overseas market.
- The office acts as importer and distributor, and provides a point of communication and marketing for overseas customers.
- You can reach customers who may only want to deal with locally based companies or ones that can provide locally based support. It adds to your credibility and demonstrates a commitment to the customer.
- Setting up a local office as part of a joint venture can lessen the risk to your business while accessing local knowledge.
- Further expansion into an the target country can be easier if you have an already established presence.
The disadvantages of having an overseas office:
- The costs of running an overseas office can be very high.
- You will need to understand local tax, contract and employment laws in the overseas country.
- There may be issues repatriating profits from your overseas operations.
There are important legal and financial considerations when setting up an overseas office. Make sure you get professional advice before commencing operations in an overseas country.
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