Starting a company in another country, or expanding current company operations overseas, is no small matter. Even if business owners are prepared to handle new languages and new cultural values, they shouldn’t start crossing national borders until they’ve extensively researched the country where they’re considering doing business. What factors should business owners think about when starting a business overseas, and which countries are the best or worst for foreign business owners? Find the answers below.
Factors Businesspeople Should Consider Before Opening Their Doors Overseas
Both small businesses and large businesses are capable of making similar mistakes when it comes to moving or starting businesses overseas. In both cases, the businessmen and women involved might feel confident enough in their industry, product, or service that they fail to think about basic infrastructure and cultural questions that could impact their operations. Take a look at these five topics companies should carefully research before beginning business in a new country.
1. How long does it take to complete the basic set up of a new business?
Bureaucratic red tape exists in every country, but some countries have a lot more tape than others. In Canada, Australia, and the United States, for example, getting a new business registered and running should really only take 10 days or less. By contrast, trying to start a business in the war-torn Democratic Republic of the Congo can easily take five or six months.
2. If things don’t work out, how long will it take to close down the business?
Business owners don’t like to think about it, but not every business works out. If a business owner decides to sell a business or get out of the field, how long will it typically take to properly close down operations? Again, in the United States, it usually only takes a year or two. Even in China, it should only take a year or two. What if the business is in India? Don’t be surprised if it takes as long as six years to shut down the business.
3. Are foreigners allowed to own property?
If the business owner him or herself or other employees plan to move to the country to run the business, check to find out if foreigners are allowed to own property there. In some places, such as the Philippines, foreigners are prohibited from owning property.
4. What is the Internet infrastructure like?
Many Westerners have come to take high-speed, reliable Internet connections for granted; high-speed Internet seems as natural as having electricity. In places like Indonesia, Bolivia, India, and Nepal, however, expect to step back in time to the days when a dial-up connection was as good as it got.
5. What are the rules and regulations for businesses?
Although it may seem like a no-brainer, it’s still very important to mention that business owners should make sure that they thoroughly understand business rules and regulations of foreign countries before attempting to do business there.
The Most Business Friendly Countries
With the five points above in mind, which countries are the most business friendly in the world?
1. New Zealand
It’s far away from everything, but that might be one of the reasons why New Zealand’s so globally connected. English-speaking, close to Australia but also to Asia, New Zealand’s government has worked hard to attract businesses over the last two decades.
Americans like to think that Canadians are basically just Americans of the distant north; Canadians like to remind Americans that the two countries are very different. One of the ways in which they are different is that Canada came out almost unscathed from the recent global economic crisis, at least when it’s compared to Europe and the United States.
There’s hardly a place in the world more international than Singapore. Distinctly Asian but with a British sensibility, the city-state is thriving economically and is poised to continue to do so for years to come.
Denmark is high-tech, green and a global shipping power. Like Canada and New Zealand, its government and business policies are Western and modern.
5. Hong Kong
Not unlike Singapore, Hong Kong is a crossroads between East and West. One of the advantages of locating a business in Hong Kong is its proximity to the emerging economic giant, China.
The Least Business Friendly Countries
Just as the five countries listed above are ideal environments for starting a business, the five countries listed below are like business kryptonite. Don’t start a business in one of these places unless there are no other choices. Even if there are no other choices, business owners should still think twice before starting a business in one of these places.
It might come as a surprise to see Russia on the list, but it’s actually the hardest place in the world for a business to get hooked up to public utilities. Blackouts and other energy problems have been plaguing Russia for a few years now.
Brazil might also be a surprise, given that the nation has been making headlines for a few years now for its growing economy. However, Brazil also places one of the highest tax burdens on businesses in the world, and the bureaucratic red tape is so bad that big firms can spend the equivalent of three months in man-hours every year just filling out paperwork.
Although it has the fourth largest economy in the world, India also has some of the worst government corruption on Earth to contend with.
It may have some very beautiful beaches on some of its islands, but the business environment isn’t nearly as postcard-perfect.
The country that nearly brought down the European Union with its debt crisis rounds out this list of bad places to start a business. Perhaps in the future, this historic and picturesque country will once again be an inviting place to start a business.
Doing business in a new country always requires more know-how than doing business in one’s native home. Think carefully about the points given above before jumping into a business in a new nation; what might seem like ideal conditions at first could turn out to be the calm before the storm. To get a broader picture of which countries are easy to do business in and which countries are particularly difficult to do business in, check out the chart at the top of the page on the ease of doing business in countries around the world.
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