International trade: Breaking through export’s ‘glass ceiling’
THERE is a limit to how much any North West company can grow a market by simply making a product here and then sending it on in a container to an oversees distributor.
Clive Drinkwater, regional director for UK Trade and Investment calls this the glass ceiling for export.
“It will only get you so far so you need people on the ground and people of origin working for you,” he said.
Josh Wong, partner at law firm DLA Piper, says the tipping point often comes when a business finds that it is doing a significant volume of trade in a market and that it could actually save on costs, by no longer paying agent or distributor commission for example, if it had a presence in that jurisdiction.”
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“The cost of setting up an entity overseas is always falling because of decreasing regulation – for example, it’s much easier to set up in China now. A few years ago it would routinely take six months to create your own company, now it takes three months at half the cost.”
Peter Donnelly, managing partner for RSM Tenon in Greater Manchester, added: “Critical mass customers will start to tell you ‘we want you here’ or you may lose business to a competitor who is there.”
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Sooner or later businesses that have cracked the export game should continue along that international growth path and set up a presence in a key market – that could be a branch, a joint venture, a subsidiary, a trading office or a representative office.
Clive Drinkwater adds: “This will vary depending on the country you are dealing with – some won’t allow a 100% foreign owned company, some need a local partner.”
A business’ structure can be dependant on a range of issues: litigation protection, tax issues, repatriation of funds, staff, and accounting compliance issues can all be affected.
