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CFOs: Establishing a Subsidiary a Top Hurdle to Global Business Expansion

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The following is excerpted from “Meeting the Challenges of International Expansion: CFO Best Practices for Managing Risk While Supporting Global Growth,” Globalization Partners’ latest whitepaper in collaboration with CFO Research.

Carving out new business territory is never easy, especially when it involves navigating economic, regulatory, and political environments in unfamiliar parts of the world. Companies must balance the rewards of greater profits and increased market presence with the challenges of building and managing a team in a new country.

While the complexity of employing staff in a new country is not a new phenomenon, it must be addressed by firms seeking to grow.

Talent, Compliance, Onboarding, and What To Do About Subsidiaries

Ramping up operations in foreign territory is not simply a matter of finding the right people—although that is an issue—but also managing and supporting the staff once they are in place.

In our recent survey of 64 senior finance executives from companies that are actively planning to expand abroad, finance chiefs point to finding talent (cited by 52%), legal compliance (48%), the challenge of setting up a subsidiary (33%), and onboarding (33%) as the human capital/talent issues representing the largest barriers to expansion into new countries. While successful businesses are adept at managing these issues when operating domestically, they can be potential roadblocks when trying to build a staff in areas where they lack a network or even speak the language.

Yet, these challenges cannot be ignored, as 44% of survey respondents confirm that in 2018 they will hire employees in countries where they currently have no employees. And given that three-quarters (75%) of respondents expect to expand to at least two new countries over the next five years, the pressure to staff up in new territories is intensified.

Globalization Partners is a Global Employer of Record. We put our client companies employees on our payroll through our established business entities in countries around the world and assign their work 100% back to the client company.

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