HR Challenges Expanding to a New Country – Part 1

Posted by: Brad Reid - Safeguard World International on Tuesday, August 2, 2016

To be in the best possible position to succeed when expanding to a new country, you must complete your due diligence. However, research and planning will can only take you so far. To build a strong foundation and truly understand what it’s like to do business in the country, nothing can replace the invaluable experience that comes from operating there for a period of time.

U.S. companies often make the mistake of assuming that foreign markets will operate exactly as their home market does—compromising their ability to react when they discover that nothing could be further from the truth.

It’s only once you’re on the ground that you can truly understand the local culture and the local ways of doing business. Here we’ll be bringing you a three-part series with a look at the top issues a company expanding to a foreign country must consider—and how to successfully manage each issue so your company can thrive in the new environment.

Fiscal Representation

Fiscal representative is a common term in many countries. When starting a company, some jurisdictions require that a foreign business hires an individual to be their fiscal representative.

Social Costs

Social costs are usually made up of statutory benefits and insurance. In broad terms, they can be thought of as the employer’s tax payments for employees, or anything that needs to be paid out to enable a company to legally employ people in a country. The range of social costs differs drastically from country to country.

Often, these payments are not immediately obvious and cannot easily be budgeted for ahead of time. Without local expertise, statutory requirements such as a Christmas bonus for all your workers may not be paid correctly or on time, resulting in anything from employee dissatisfaction to heavy government fines and penalties.

Liability Insurance

An employer’s liability insurance provides a specific level of protection for workers employed by their company. Not all countries have a state mandated plan for a company to pay into. However, companies still have a legal and moral responsibility to look after their workers.

Even if a country does not have a formal regulatory plan in place, companies generally set up their own liability insurance to protect the worksite and the individuals working there. This ensures the company is protected regardless of each jurisdiction’s legal requirements.

Negating the Risks

To succeed when operating your business in another country, you need an experienced and reliable partner that can keep up to date with ever-changing laws and regulations and help you mitigate compliance issues.

SafeGuard World International invests enormous resources in its established network of global experts, making them the ideal resource for businesses looking to expand into new markets. Their international experience and relationships with local experts provide you with the exact support your particular business requires. Simplify your strategy with a single experienced partner to help your business grow with confidence.

Next week we discuss employee benefits as well as key considerations when constructing policy and contractual agreements.

Brad Reid, Safeguard World International


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