Even with the advantages of expansion, every company will face some difficulties when entering foreign markets. Some of the drawbacks of a company’s globalization include the following:
• Tightening Immigration Regulations
The task of establishing a branch and assigning staff can be daunting in the face of immigration rules for long-term workers. Expect a thorough government audit of the company’s registration, as well as work permits for any assigned management or employees.
• Cultural and Linguistic Barriers
Most regional markets, such as the EU or Southeast Asia, continue to have cultural and linguistic barriers between countries, as well as distinct business norms that many people are unfamiliar with.
• Costs and Regulations of Incorporation
Companies establishing their own production branch will face significant and time-consuming registration and incorporation challenges if they do not seek expert assistance.
• Services may still need to be outsourced
Because establishing a branch solely for customer service is difficult, many businesses outsource to call centres, but they lose some of the individualized attention provided by experienced employees.
• Requirements for Capitalization and Ownership
Some countries impose capitalization limits on international enterprises, and the UAE requires at least 51 percent local ownership of any company (except in free trade zones).
• Compliance risk
Breaking into new markets can be difficult. When entering a new market, a company must adapt to and operate in accordance with local norms. These rules may be significantly different from those in your home country. As a result, it’s critical to start with the right experts who can help you stay compliant and implement proper business procedures with regards to localization and SEO optimization.