Setting up a business in Brazil

 The ultimate guide – Part I

Why would I set up a business operation in Brazil?

There are many advantages to having your own company compared to relying on distributors and agents:

  • Local Branding and Identity
  • Control
  • Confidence that business and legal objectives are met
  • Add local content to unfinished products (or manage OEMs)
  • Ability to develop insourcing capabilities to support other operations
  • Act as a regional base to take advantage of MERCOSUR

 

Sounds good, I am convinced? But, what type of the company?

There are several legal types of companies, but on this article we are only considering:

  • Joint Venture
    • Local partner brings management skills for HR, legal and financial matters, and possibly premises or other things
    • You bring brand name, product/service, know-how
  • Wholly-Owned

 

Brazil a quite big. Where should I set up in Brazil?

Location is important!

  • Different state regulations and taxes
  • Physical distribution – infrastructure varies, and distances can be huge
  • Education, skills and experience of potential employees
  • Communications infrastructure
  • Access from the UK

 

(please read more on the “Part II” entrance for this topic.)

 

by Oliver Dowson, CEO – ICC – International Corporate Creations

These case studies were presented at the UKTI Exporting is Great – Opportunities in Latin America Roadshow

It’s business as normal in Brazil

… and a good time to grasp opportunities

Reading the press and watching TV news covering the current impeachment process of Dilma Roussef, you might think that Brazil is descending into chaos.  But for Brazilian companies, and for 99% of the population, it’s very much business as usual.   And for international companies, now is a great time to grasp the nettle and exploit this market.

I’ve just returned from meetings with several recent start-ups in Brazil, and can vouch for the continuing high level of enthusiastic confidence that they will achieve great economic success.   Nobody is fazed by the political situation – almost everyone in business is looking forward to Dilma going, even if so many other untrustworthy politicians will remain in office, as it’s a first and big step towards improving the country.

It’s true that the economy has nose-dived in the last year, but this is more down to the depressed mining sector, that has become increasingly reliant on the Chinese market, which has largely dried up.   The spark that came with the discovery of huge oil reserves under the sea off Rio has dampened more because of the fall in oil prices than the “car wash” corruption scandal at Petrobras.

Unfortunately, the corruption scandals have further discouraged foreign direct investment and business expansion in Brazil.  The reality is that corruption is largely off the map for most businesses.  I’ve set up, managed and grown several companies there since 2006, and have never in that time even seen suggestions of bribery or false accounting. That’s not to say it doesn’t exist – when it comes to government or very large corporate contracts, clearly it does.   I can see how some Brazilian accounting practices, such as allowing small businesses to work on “Lucro Presumido” (presumed profit) could support it.  However, I believe that international businesses starting up in Brazil can be confident that they won’t get involved in any way.

Confidence in Brazil has picked up a great deal in the last few months, as evidenced by the improvement both in the exchange rate and the stock exchange (see charts).  The exchange rate is still around half that of 3 years ago, and looks to have stabilised.

Whilst this – in addition to tariff barriers – can make the Brazilian market unattractive for most exporters, it’s very good value now for setting up in-country operations such as Shared Service Centres, in/out-sourcing, and local manufacturing for the MERCOSUR countries.

The overwhelmingly young workforce is increasingly well-educated, and it’s easy to hire professionals in most sectors who have very good English.  In my experience, productivity levels can be impressive.   There are some interesting barriers to overcome.   Brazilian employment laws are archaic and byzantine, all staff are “unionised” (but not in the sense understood in other countries), annual salary increases are mandated, the paperwork can be formidable.  However, all these can be addressed in a straightforward way, with some professional help, and the advantages of having 3 or 4 professionals for the price of one definitely outweigh the disadvantages.

It’s also one of the most pleasant countries to live, work and do business.   If the weather alone doesn’t lift one’s spirits, the enthusiasm and “can do” attitude of the Brazilian people will.

 

Brazil Stock Exchange Index

Brazil Stock Exchange Index

 

Brazilian Real Exchange Rate

Brazil Exchange Rate

 

 

by Oliver Dowson, CEO, ICC – International Corporate Creations

(Graphic Brazil Stock Exchange Index – courtesy Google)
(Graphic Real Exchange Rate – courtesy Yahoo)

 

10 questions to ask when locating your overseas SSC or insourcing operation

by Oliver Dowson, CEO, ICC – International Corporate Creations

Great, so you’ve decided that you can both save money and improve business efficiency by setting up a Shared Services Centre or “Insourcing” (wholly-owned Outsourcing) operation abroad.  Excellent.  Now where?   There are hundreds of possible destinations.  You’ll naturally be putting cost evaluation at the top of your checklist, but there are lots of other considerations.  Leaving aside the financial, legal and technical matters that everyone thinks about, there are some others that frequently get neglected or overlooked:

  1. Does the time zone work?

How much real-time communication is needed with your other offices?  Whilst it’s usually possible to hire staff who work nights or non-standard shifts, it’s much more difficult to retain them, and it’s especially difficult to get good management.  If it’s data processing work, then work on the other side of the planet where the time difference will help (they work while you sleep), if it’s high-contact, think North-South.

  1. Will the team have the right language skills?

While you may assume the staff you’ll hire will speak and write English, it’ll be their second language in almost all countries, and there are many kinds of English, not just British and American!  Think carefully about what communications you will need, written and spoken.

  1. How easy will it be to hire and retain staff in the future?

Even if it looks easy to hire the staff you need now, think ahead.  If you’ve picked a location which other multinationals are planning to set up in, it’s likely that the competition for skilled staff will drive wage inflation and increase employee turnover.

  1. Will applicants be right for the job?

There’s probably nothing that gets lost in translation more than a job description!  Straight translations hardly ever work, even for defined qualifications – advertising needs to be drafted in consultation with local HR specialists to ensure the right cultural angles are considered.

  1. What other skill sets are readily available?

You’ll know exactly what operations you want performed now, and the skill sets you need for those, but again, think ahead.  Most businesses setting up abroad only think about moving specific tasks.  However, once it’s successful, you should want your SSC to take on a wider scope and responsibility – and remember that the higher-skilled the job, the bigger the saving by doing it overseas instead of back home.

  1. How fast are wages likely to rise?

Salaries in developing countries almost always rise faster than back home – annual rates of 8-15% are common.  In some countries, wage rises are government mandated.  And, of course, any merit increases go on top!  You need to plan costs for 5 years ahead and plan to stay on top of achieving productivity improvements year after year.

  1. How easy is it to get to?

With good local management, you won’t need to rely on expats located there – but to be fully successful, you will need a lot of regular visits from the mother ship, both by those who can give training and support and by some of the top CXO team.  Enthusiasm for travel quickly wears thin if it’s a horrible journey – you and your colleagues will need to travel there year after year.  Also, when things go wrong, you may need to get people there in a hurry.  So don’t only look for locations with daily direct flights, but consider the door-to-door journey time and the jetlag effect.

  1. Is it a nice place to visit?

OK, you’ll only ever be going on business – but let’s face it, you and your colleagues are much more likely to visit frequently (and thereby help develop the operation) if you enjoy going there – so this really is a critical consideration.  Good weather, tourist attractions, food that you like and a happy culture all help.

  1. How will your staff commute to and from work?

Understanding this can be critical to staff retention and operational management.  If the only way home is by bus, and the last one leaves at 18:30, they won’t ever stay late.  If they have a 2-hour commute each way by train, any new job offer that comes along with a shorter commute could be very tempting!  These aren’t exaggerations, but true examples applying to many staff in two common outsourcing locations.

  1. How useful will it be as a base to develop new regional business?

You might only be interested in setting up a SSC today, but, depending on your Company’s business, it’s well worth thinking about how the operation could serve as a future sales and marketing hub for the country or region where you are setting up.  Setting up the initial operation can be costly, but adding functionality later is usually straightforward and cheap.

 

The danger of inaction: “The sooner businesses act, the quicker bosses will reap benefits”

by Oliver Dowson, CEO, ICC – International Corporate Creations

With the pound dropping in value, and many incentives available from the likes of UKTI, British manufacturers should be taking advantage by prioritising their export strategies. Many, however, seem to be falling into the trap of simply doing nothing – and there’s a real danger that could be a result of uncertainty over the outcome of the EU in-out referendum.

“Out” campaigners say that we need to be out of Europe to open up trade – but in fact there are no reasons not to do business anywhere in the world right now! You’d never guess it from the hype, but there are no countries where the UK would be likely to want to seek an independent trade deal where there isn’t an existing attractive EU deal that we can take advantage of. And, whilst exchange rate volatility may worry importers, it should be seen as an incentive by exporters.

Smaller UK companies have an unfortunate tradition of being over-cautious about trading abroad. You’d think that with the barriers to international travel having been broken down over the last 20 years, trade would have expanded the same way – but no. There are countless opportunities going to waste.

The services sector is bigger than manufacturing in the UK, but with the emphasis of government promotion on exporting, there is little done to promote its international expansion. Many do consider expanding to English-speaking countries like US, Australia and South Africa, which is relatively easy. However, this neglects the 90 per cent of countries where English is not the first language.

The “free” advice on offer from UKTI appears wide in scope but, beyond information on exporting, is in fact very limited. Sometimes the free advice even seems to have the effect of discouraging expansion because it only goes so far, and then leaves the company to either purchase services or try to do everything themselves. The problem is acute with SMEs. The charges that the big consultancies make are prohibitive, and “Fear of Foreigners” and lack of language skills completes the dissuasion of doing it for themselves.

One of the biggest risks of Brexit for UK companies – and one of the best reasons for expanding overseas urgently – is that the existing skills shortage will get even worse. Business is already heavily reliant on migrant labour – there simply aren’t enough qualified employable Britons. If the current influx of well qualified young Europeans dries up, it could cause many businesses to fail.

Setting up operations abroad for this reason, especially in developing countries, is a win-win. Firstly, it enables businesses to tap into these labour markets, usually at much lower costs than employing in the UK. At the same time, the new overseas company can sell products and services in its local market, expanding the company’s business. There are many businesses already outsourcing relatively low value functions such as accounting and call centres, and high skill IT and software development.

Now is the time to look urgently at employing more highly skilled job functions abroad. But not through outsourcing. Costs are higher than they need to be, simply because of the high margin added by the overseas BPO company – and companies that send critical functions such as R&D and Customer Support abroad need to own the overseas business.

Setting up a typical overseas operation employing just ten skilled professionals delivering services to the UK would yield cost savings of around £250,000 a year, even allowing for UK liaison costs. The total costs of setup would be recovered in less than a year, and the value of additional sales to the local market comes as a bonus!

It’s neither as expensive or as risky as many assume to set up overseas subsidiaries or JV companies. There are professionals who can provide everything from initial advice through to turnkey solutions – setting up an overseas company completely – using trusted local resources to achieve results quickly and economically. Some are consultants who specialise in certain countries, through to businesses such as my own that offer unbiased advice and help to companies to set up in any country of the world.
The sooner businesses act, the sooner bosses will reap the benefits – reducing costs, increasing sales and stealing a march on the competition. The ones that do nothing now can only come to regret it.

From prime minister David Cameron suggesting London mayor Boris Johnson was a great friend albeit wrong in opinion, to former shadow business secretary Chuka Umunna and Johnson telling each other to man up, the Brexit debate has caused a few UK politicians to squabble with each other.

 

Article originally published on Real Business Magazine: http://realbusiness.co.uk/article/33406-the-danger-of-inaction-the-sooner-businesses-act-the-quicker-bosses-will-reap-benefits

 

Getting in ahead of the US Invasion

Business Opportunities in Cuba

President Obama’s visit to Cuba and the opening up of US-Cuban relations has made headlines over the past few weeks.   A major part of that story was the enthusiasm of US companies to expand into Cuba – and it gave the impression that a major corporate invasion was under way.  But US sanctions remain in place (but are being eased), so despite the definite interest, it will be some time before significant deals are put into place.

For those of us in Europe, though, there’s no embargo on doing business with Cuba, and now appears to be an ideal time.   Setting up in Cuba isn’t easy, of course. It’s also a destination way off the map for most companies, and there are indeed many that would struggle to benefit.  However, the rewards for SMEs with a suitable business model could be huge, especially if the inevitable US invasion is “designed in”.

Why?  Well, the owners of almost all SMEs will want to plan an exit route at some time in the future, and in most cases that’ll be through a trade sale.  One of the surest ways of growing the value of a business is to expand internationally.   If it’s the sort of business that’s likely to be attractive to American purchasers, having an operation in Cuba could seal the deal and drive substantial additional value – it would provide a fast track for US companies to operate in Cuba, simply by buying an existing business.

It used to be near-impossible to have a foreign owned or JV business in Cuba, but the Foreign Investment Act of 2014 opened up a raft of possibilities.  Specifically, the right to transfer the ownership of property to a third party – and a foreign one – is now accepted.   There are now expectations of over $8 billion of foreign direct investment over the next few years.

What sorts of business could benefit?  Well, Cuba is not a market economy, and it’ll be a long time before consumer goods companies find it worthwhile.  The major opportunities lie in tourism, infrastructure, healthcare, agriculture and technology.    Of these, perhaps the most interesting is healthcare.  Cuba has a very well-developed system and trains a huge number of doctors and medical staff, sending many to staff hospitals in developing nations around the world.  In Cuba itself, pharmaceutical manufacturing grows every year and bio-technology is particularly strong.   When the US embargoes on travel are dismantled, there will be huge scope for health tourism.

Young Cubans are well-educated and hugely enthusiastic to succeed, and businesses can rely on getting the labour force they need to develop effectively and quickly.

But as I said, it’s not an easy market to get started in.  Businesses need help, even for the most basic research.  Trustworthy local partners are essential, as is the Spanish language and a great deal of patience.  Entrepreneurs who are brave and get over all the hurdles, though, will reap rewards – and I suspect that in many cases that will mean millions by selling their businesses on to Americans.

by Oliver Dowson, CEO, ICC – International Corporate Creations

 

Portugal: sun, sardines… and start-ups

by Cristina Parente, International Business Strategist at ICC

The announcement of this summer’s openings in Lisbon of a Second Home Hub – a major tech workspace in London, and Impact Hub – one of the biggest entrepreneurship communities in the world made me stop for a second and ask myself: why are these two iconic start-up incubators interested in settling in Portugal? Can a country submerged in a deep financial crisis, with one of the biggest population exoduses in Europe, be the next big tech destination?

Last month, $US 22 million in Venture Capital was raised by Veniam, a Portuguese start-up that wants to enable free Wi-Fi in urban settings using vehicles. The company was created two years ago in the incubator of ctwo Portuguese universities and now has offices in Porto, Silicon Valley and Singapore.

When start-ups and VC hold hands in the same country, it is probably worth taking a closer look.

Portugal is a small, financially troubled country better known as a tourist destination than for its entrepreneurship.

Portugal has a population of 10 million people. It is part of the EU, and is a gateway to a market of 250 million people worldwide, thanks to its ties with other Portuguese speaking countries such as Brazil, Angola, Mozambique and Macau. It also has a long tradition of trade with the UK. The Eurozone crisis hit Portugal early in 2009, and a great recession led Portugal to a 3-year bail-out programme in 2011. Portugal’s GDP grew by 0.9% in 2014 and 1.5% in 2015, and the growth forecast for 2016 is 1.6%. After an extremely difficult period, the Portuguese economy is now showing signs of recovery and a buzz of excitement is attracting international attention… and investors.

Is it safe to assume that a small tech revolution is happening in Portugal? Why should you, or I, be considering opening a start-up in Portugal?

Porto, in the north of Portugal, was recently considered one of the best value destinations for start-ups. In summary, Portugal has a low technical cost base (low rent, cheap food and transportation, etc) and a developed local infrastructure, with good connections by road, air and sea. The government has introduced a number of tax breaks and incentives for those who set up their own company. Portugal has a well-educated work force with a talented young generation with a high technical skill set. Portuguese are welcoming people, and English is widely spoken in business.

Portugal is becoming synonymous with innovation and leading companies are building a new and effervescent reality. If these are not good enough arguments for you to take your laptop and move to Portugal, I will give you a few more: sun, quality of life, security, golf, Port wine and… sardines, of course!

The Elusive Prize – achieving a Common Corporate Identity when expanding overseas

by Oliver Dowson, CEO, International Corporate Creations Ltd

When expanding abroad – especially when setting up operations like Shared Service Centres that will take over work previously done in-country – there’s always an aspiration to achieve and maintain a common “Company Culture”. Unfortunately, many companies fail. I’ve met with management of many international subsidiaries of multinationals all around the world – and conclude that finding common corporate identity at the human level is disappointingly rare. Often it feels like the only thing that’s common is the logo over the reception desk!
This is nothing new. On my first day at work for a US multinational in London, long ago, I received a telex from my new opposite number in Minneapolis welcoming me and asking me to send him some stats for the UK company. I asked my boss how I should reply, and he screwed up the paper and threw it in the bin. Stunned, I asked “and?”. “And you wait and see if he remembers to ask again. If you get a third reminder, I’ll explain what to do” came the answer. I found out that the London management mantra was that “the money might be American, but here it’s a British company”.
Years later, in a new job, I was reminded of this at the German HQ of a US car manufacturer. Waiting in the lobby for a meeting, I watched a workman put up a new corporate poster – and then carefully stick the German company’s logo over the corporate one. Reversing nationalities, I’ve had executives of the US subsidiaries of two of the biggest German companies tell me that they try to ignore anything coming from Frankfurt or Munich.
Therefore, when I started to take my own businesses abroad, I resolved to make it a priority from the outset to try for “one company thinking”, for which the key is to get everyone respecting each other and working together.
It’s not so hard where the new overseas operation is a sales office, or is dedicated to expand the business with a new market, product or service. The real challenge comes where work is being transferred abroad – for example, taking accounts processing or customer call centres to a lower cost economy. Whilst most companies dedicate effort to inspiring the new overseas workforce with the corporate identity and values, many pay scant attention to staff in existing operations, except those destined to lose their jobs as a result of the change.
Overseas expansion and business change is actually a great opportunity to build global corporate identity at all levels. Staff at the new overseas operation can probably be enthused quite easily, but the home office always needs great care. Even those not affected directly may have negative feelings, perhaps because they have friends in an affected department, perhaps because they fear they “will be next”, perhaps because they think they will end up with more work to do – or perhaps simply just because they are prejudiced (almost certainly unjustifiably) against the country in question.
The approach I’ve used and recommend has several elements. Fundamentally, you need to make your management teams understand that the move will not only make the company stronger, it will make their jobs easier, and they will be able to deliver better results, making them look good.
• When you set up a new overseas operation, don’t just use it to transfer work abroad. Add a small number of staff that will work on exploiting the new base to expand your company’s market, or to deliver extra services back to the home base that are new and valuable.
• In conjunction with that, establish people in both operations – home and abroad – who will need to depend on and communicate with each other every day. Pick individuals who are likely to build a rapport and share a little social chit-chat (this can dictate who you hire for the new overseas operation).
• Hire better-educated staff for your new operation than you actually need
• Consult your management team about the job functions that you may have previously cut out in your home country to make savings, and that have loaded extra work onto them – then re-staff them in the new overseas operation.
• Educate the home office staff (all of them) about the country and city where you’re establishing your new operation, and the people you’re hiring. Admit to making efficiency savings, but also make it clear that your company is deliberately trying to help the development of the country you are moving work to. Give as many of them as possible the opportunity of visiting the new operation – but only once it is up and running smoothly.
• Don’t switch over operations until you have fully QA’d the entire operation. If it doesn’t work perfectly from Day One, you’ll have to climb the mountain again.
• Never forget time differences! Don’t expect overseas staff to always have to work unsocial hours to fit in with the home office – try to compromise on scheduling.
• At least for the first year, directors or senior management should play the role of Company Evangelists, visiting the overseas operation regularly, and spending at least a few days each time getting into details and meeting all the staff – and then spend time reporting back to the home office team when they return.
There’s never a single solution, of course – but all of these ideas have been proven to work. Another set of ideas apply to how you should manage corporate identity in your new overseas operation – but that’s a subject that needs another article!

 

THE ICC DIFFERENCE

by Oliver Dowson, CEO, International Corporate Creations

People often ask me “What’s your USP?”.  I’m increasingly realising that it can be difficult for others to understand how ICC is different to other professional services – and difficult for us to explain concisely!  So I’m going to take a stab here at getting the message across more clearly, specifically for one of our core services of setting up new overseas business operations.

My “elevator pitch” is that, unlike other professional services, we put ourselves in the position of each client, and act as if we are spending our own money, prepared to undertake each step of the process ourselves.  We don’t just tell companies what to do, we’re actually prepared to do it.  So we have to give complete, accurate and practical details.

But that’s compressing a big project into a few words, so for those who are interested (and I hope that includes you, since you’ve read this far), here’s a more detailed explanation.

International Corporate Creations is unique in its approach to helping its clients expand globally through research and implementing the creation of new wholly-owned subsidiary and Joint Venture companies in any country of the world.

  • Before starting each project, we immerse ourselves in understanding our client’s business and their approach and objectives, to ensure that the recommendations we make are those that we would choose ourselves were it our own business.
  • We aim to think of absolutely everything that our clients need to know and act on
  • We always look for the most cost-effective solution, using trustworthy and reliable local service providers and partners in each country and location that our clients want to enter.
  • We’re not a conventional consultancy. We don’t just make recommendations, we’re ready to act on them.  Nothing is vague, everything is detailed.  If a client wishes, we can implement every step to deliver their new international business as a turnkey solution.
  • When we set up a new international operation, we QA every step to ensure that everything will work perfectly from the first day it opens for business.
  • We endeavour to quote firm, fixed prices for our services for each stage of each project. Where we cannot do that, we make that clear upfront, with the best estimates we can.

Setting up a new Overseas Operation

We divide setup of a new operation into three stages.

FIRST STEPS (STAGE 0)

This stage costs nothing, and carries no obligation.  Our objective is to prepare a proposal for the next stages – but if we find that a project won’t work, we’ll be honest enough to say so.  Usually this stage includes:

  • Exploratory meetings with the client, by WebEx or face-to-face
  • Further research and understanding of the client’s business sufficient to ensure that any Proposal that we submit is likely to be suitable
  • Our team brainstorms alternative solutions for the most appropriate and cost-effective solution for the client
  • Exploratory discussions are undertaken with ICC contacts in the relevant country
  • Initial research into legal and regulatory issues, restrictions and competition, to try to avoid any foreseeable hurdles
  • Project evaluation by ICC team
  • Preparation of Report and Proposal
    • Includes fixed price proposal for Stage 1 (next steps) which would be chargeable
    • Includes timeline for performing Stage 1
    • Includes a general indication of Stage 2 (if stage 1 approved)
  • Presentation to Client – findings of Stage 0 and Proposal for Stage 1 – and Agreement on Next Steps

RESEARCH & ANALYSIS (STAGE 1)

This stage creates a complete model, not only of how to create an overseas subsidiary or JV company, but of how it will work in the future.   Depending on country and complexity, this typically takes 6-12 weeks, keeping the client informed of progress on a weekly basis.

  • Detailed market study
  • High-level discussions with client to agree approach to different aspects of the project and understand corporate methodologies and objectives (Finance, IT, Marketing)
  • Analysis of alternative business locations (country and city) and recommendation of the most suitable one(s)
  • Research and analysis of relevant business legal, regulatory and employment issues in sufficient detail to enable fully-informed business decisions to be taken
  • Identification and selection of suitable local business partners (legal, accountancy, real estate, HR, banking, etc), usually located in or near the recommended destination city
  • Analysis of IT infrastructure requirements and any issues
  • Evaluation of employment situation (availability of staff with suitable technical and language skills, local competition and retention risks, salary levels and other employment costs. Recommendation for methodology of recruitment and salaries and benefits to be offered.
  • Evaluation of training requirements and where this would be done (bring trainer to country or take staff to home base)
  • Infrastructure and costs for future client routine visits – transport, hotels with corporate rates, etc.
  • Fully detailed costing for Stage 2 Actual Implementation (as accurate as is possible)
  • Detailed step by step costed operational plan for the first full year of operation, including all necessary bureaucracy, legal documentation, financial plan, recruitment, training, local promotion and marketing.
  • Detailed “Road Map” and proposed timetable for implementation and first year operation. ICC use their skill and experience to identify steps in setup that can be carried out contemporaneously and that therefore make the overall setup process as efficient as possible
  • Stage by Stage client update meetings (usually by WebEx)
  • Detailed business “Model” presented as a fully-illustrated Report on conclusion of Stage 1
    • Exactly what the business would look like on Day One
    • What it will look like after 3 months
    • What it will look like after 12 months
  • “On the ground” presentation – face-to-face meetings at the recommended destination location, with presentation of the detailed business models mentioned above, meetings with suggested local business partners, visits to competitors or similar operations where possible, visits to possible office/property locations, etc. These meetings would be spread over 1-3 days depending on the size of the project, and have the objective of ensuring that ICC’s Stage 1 Report is clearly understood and all client questions are completely answered on the spot.

MAKING IT HAPPEN (STAGE 2)

At the completion of this stage, our client will have a fully-operational overseas company!

  • Research and implement any modifications to the Model developed in Stage 1 as required by the client
  • Agree implementation plan with client – refine timescale to adjust to client needs and objectives and decide “who does what”. ICC are willing to undertake the entire implementation of setting up an overseas operation for a client, but most clients want to be involved to varying degrees, and every country and project is different, so there is no single model for this stage.
  • Carry out implementation of project to set up overseas operation following the step by step plan developed in Stage 1. Typically this will take between 3 and 6 months and include
    • Business legalisation (including company name registration, regulatory matters, tax registration, etc)
    • Banking arrangements
    • Contracts with local business partners for accountancy, legal and other required services
    • Business premises acquisition and furnishing
    • Staff recruitment and training
    • IT infrastructure acquisition/import and installation
    • Communications (telephone, internet, etc)
  • QA – we test every step of the way to ensure that everything works the way it should
  • Complete Transparency Guarantee – When things don’t happen as expected, we consult with our clients immediately and adapt the plan to overcome issues and get back on track as efficiently as possible

At ICC we offer a host of other services revolving around the creation and management of overseas operations of all kinds, in all countries of the world.  We aim to take a similarly comprehensive approach to all of them.

 

Iran is back in the game

by Yvonne Rivera, International Business Strategist at ICC

For many years now, Iran has suffered commercially due to extensive sanctions from the UN, and it was due to this that UK companies were unable to conduct much trade with Iran.  However, last year on 14th July 2015, the E3+3 (France, Germany, UK, China Russia and USA) announced that they had reached an agreement with Iran on a nuclear deal which gave Iran the opportunity to demonstrate to the world an exclusively peaceful nuclear programme, and that as a result many sanctions would be lifted.

Therefore, since 16th January 2016 there are now fewer sanctions due to the International Atomic Energy Agency confirming that Iran had completed all necessary steps to reach “Implementation Day”.  It is important to point out though that some sanctions not affected by the nuclear deal remain in place, in particular those related to human rights and support for terrorism.  Primary US sanctions, including the US trade embargo, also still remain in force.

As far as we know at International Corporate Creations, EU trade with Iran before “Implementation day” already stood at $8bn/year, and this is now expected to multiply by 4 over the next couple of years.  In view of these recent developments, the UK Government is fully supporting the expansion of UK-Iran trade and investment relations, and encouraging UK companies to benefit from business opportunities that may arise.

In my opinion, this is a huge market opening for UK businesses looking to expand internationally.  Iran is the second largest economy in the Middle East after Saudi Arabia, with an estimated GDP of $397bn.  It is also the second largest in population at 80 million.  Opportunities for UK businesses should arise across all major economic sectors like energy, automotive, airlines, manufacturing and consumer goods.

That said, having read articles on this topic, many comment on the multiple challenges that UK companies might be faced with when doing business in Iran such as corruption, bureaucratic delays, inflation or price control.   These are common when starting business in new markets, as unfortunately not all destinations are straightforward, but in my opinion this should not discourage UK companies looking at entering the Iranian market.  Other more complicated factors depend on the type of business activity and a company’s other existing international markets.

Currently travel between the two countries is not as easy as we would hope, mainly due to the visa requirements and the fact that neither the Iranian Embassy in the UK or the British Embassy in Iran offer visa service.   Iranians still need to apply for visas in Abu Dhabi or Istanbul, and British citizens need to apply for visas at the Iranian Embassy in Dublin or Paris.

So if you are looking to expand or invest in Iran, please come and talk to us at ICC where would be more than happy to discuss the specific factors you need to be aware of to help your business succeed, ensuring that the appropriate due diligence measures are taken before engaging in any activity.

To discuss in more detail, call me on +44 20 7278 9210, or email info@internationalcorporatecreations.com

Why Outsource when you can Insource?

by Oliver Dowson, CEO, International Corporate Creations

There’s a general belief that offshore outsourcing is only for big companies, and that Shared Service Centres are only for really big companies.  However, that doesn’t need to be true.  Even quite small operations can be viable.  And importantly, the economic benefits will improve overall business profitability from the very first year – and the enhanced quality of service can accelerate growth.

It’s true that outsourcing probably carries more risks than benefits for the smaller company, unless the work being offshored requires a sizeable existing infrastructure, as is often the case with IT.  The most commonly cited risks are variable quality and poor customer perceptions, but the real problem that emerges for most businesses is lack of control – outsourcing creates a reliance on third-party management and increases certain risks such as IP security.

Every business executive hates “people who tell me what they think I want to hear” – and such people are prevalent amongst the owners and managers of offshore outsourcing operations, which makes this a major concern.  As a result, customer companies often get a distorted view of staff turnover and productivity, and can be badly misled about costs and other matters.

So, if you’re committed to outsourcing, or think it’s the best solution for you, it’s essential to keep a close eye.  Use an independent and knowledgeable audit service (we at ICC can advise) and/or carry out frequent, unannounced and detailed visits of your own.

But I believe there is a better solution.  Most outsourcing risks can be eliminated by setting up a wholly-owned or Joint Venture overseas company (turning it into “insourcing”).  This can be practical and economic with initial staffing of as few as 8-10 employees.  Pick the right local manager, and you don’t need to transfer your own management as “expats”.   Essentially, you’re picking another country to move work you might otherwise outsource, or perform work where skills are scarce and expensive in your home country but relatively plentiful abroad in the destination country.

Businesses that switch from outsourcing to “insourcing” overseas, or creation of an offshore Shared Services Centre – will benefit immediately from taking control.  They also reduce costs through eliminating outsourcing BPO supplier margins, that are usually huge, and dramatically improve staff motivation and retention.

Furthermore, such insourcing brings additional benefits.  Since ownership opens the way to employing higher skilled and qualified staff, businesses can migrate work that wouldn’t be considered for outsourcing, so increasing operational cost savings.   By thinking ahead and choosing an appropriately strategic destination, the new overseas company can also form a base for marketing products and services to the country and regional markets, expanding the company’s global business.

Although most executives would agree these advantages, most don’t proceed further, either because they perceive it would be too expensive, too difficult or both.   But it’s not so expensive if you use the right resources.   And it’s not too difficult if you have the right help.

If you’re unconvinced about the costs, take a look at the chart at the top of this article.  They’re actual figures for similar 8-person clerical operations.  I’ll be writing separately about the cost comparisons between the different countries in another article.

It was my experience of starting small operations from scratch in countries such as India, Brazil and China, overcoming the bureaucracy, cultural, management and economic issues in each, and nurturing each of those operations to a large critical mass, that led me to form International Corporate Creations.  Our mission now is to prove to other businesses that they too can expand abroad, successfully, quickly and affordably, starting small with minimum risks.