97% of international businesses expect to expand into new jurisdictions in 2022
New research1 from Auxadi, a leading provider of accounting, tax and payroll services to private equity, real estate, and multinationals, has revealed the likely hurdles businesses will need to overcome in the coming years when looking to expand their business into new geographies.
The research, which explored the expansion plans of 100 global businesses already operating in more than one jurisdiction, has identified the different challenges faced by different sized firms. Overall, costs and the ability to connect with most suitable lawyers, accountants, advisors in new locations (both 42%) are the greatest issues faced when expanding internationally, followed by finding the right talent (30%), market access and having the right corporate culture in place (both 27%).
When broken down by business size, medium-sized businesses (between 50 and 249 employees) planning expansion into new markets have a particular need for expertise when it comes to connecting with suitable lawyers, accountants and advisors in new locations (46%), followed by needing to find the right talent (34%) and costs (28%).
For larger corporations (more than 250 employees), meanwhile, the primary barrier appears to be the costs associated with expanding into a new geography, as cited by 56% of respondents. This comes ahead of being able to connect with suitable lawyers, accountants and advisers (38%) and gaining access to the right technology infrastructure and systems for data security, transparency and control (32%) – an issue cited as a barrier by only 4% of smaller businesses.
With previous research from Auxadi pointing to an anticipated boom in international expansion in 2022, with 97% of businesses expecting to expand into a new geography within the next two years, and 82% believing that the decisions they took when adapting their international expansion strategy during the Covid-19 pandemic has put them in a prime position to reap the rewards in 2022.
However, despite this optimism there remain challenges ahead, particularly when addressing compliance and servicing requirements. The area of greatest concern when considering a business’s international expansion is data protection and privacy, selected by 54% of respondents. This is ahead of corporate governance (50%), corporate tax (47%), global mobility (41%) and accounting and reporting (40%).
Raimundo Diaz, Global Head of International Corporations at Auxadi said: “It’s clear that businesses are viewing 2022 as a fresh start, having identified a number of opportunities for growth on the international stage. However, it’s also apparent that expanding into new markets will not come without logistical complexities, with cost and networking being two notable issues flagged by businesses. Although not currently vital, the growing role of technology and the right tech adoption to cater different geographies will also be important for companies’ to implement if they want to be successful in their international expansion.”
“With a significant amount of expansion expected to take place this year, now’s the time for businesses to streamline what can be a very complex process with unfamiliar compliance and regulatory regimes creating unexpected roadblocks. Our clients find that working with a partner with local experts on the ground and an intimate knowledge of the local market conditions can make a huge difference to the chances of seamless international expansion.”
