Business checklist: Expansion into the APAC regionProcloz Services
As the business world continues its post-covid realignment, companies, and enterprises are increasingly expanding their horizons, both literally and metaphorically.
However, this is not necessarily as straightforward to accomplish as it might seem, as moving into new markets can pose a number of challenges — cultural, legal, linguist, and regulatory, to name but a few.
This is undoubtedly the case for enterprises who want to establish a presence in the Asia-Pacific (APAC), and while there is a certain degree of uniformity with regard to political stability in the region (albeit under very different economic systems), there is nevertheless quite significant diversity between each country’s business cultures.
Doing business successfully anywhere in the Asia-Pacific, therefore, requires an agile approach, and an appreciation of the business and political cultures encountered.
As Papaya Global, a global payroll company explains, any business planning for success in a new market, in particular anywhere in APAC, should therefore take the factors discussed below into account when planning and executing an expansion program.
Identify opportunities and align strategy
Although it is an obvious question, it is also an easy one to overlook — what are the market opportunities an expansion into APAC represents? Expansion for its own sake is unlikely to be successful unless appropriate market opportunities have been identified and a clear strategy formulated to take advantage of them.
As an example, a key reason many enterprises want to have an APAC presence is to be able to take advantage of opportunities created by the formation of the Regional Comprehensive Economic Partnership (RCEP). This is a regional free trade agreement between Australia, New Zealand, Brunei Darussalam, Cambodia, China, Japan, Laos, Singapore, Thailand, Vietnam, South Korea, and Malaysia, and covers trade in goods, services, and investment, with particular reference to e-commerce and technical cooperation.
However, any business planning to expand into APAC should be looking closely at RCEP and its implications for operations. For instance, will it present the business with opportunities for reaching into multiple markets simultaneously, or will it expose it to greater competition, the challenges of which it is not set up to meet?
This is just one example of the way in which expanding enterprises need to think and plan strategically — will being in APAC increase your access to customers in these countries, with greater exposure to global trade resulting in the growth of the business, or will more competition in practice actually mean that development stalls and opportunists contract?
How will you build on local talent?
One of the most appealing aspects for many enterprises to developing a presence in APAC is the access to an enormous talent pool. To be best placed to take advantage of the opportunities this presents, it is important that accurate and honest assessments are made of the current ‘home’ talent available at all levels of the business, and identifying shortfalls and gaps that need to be addressed.
At the same time, however, a relocating or expanding business also needs to understand the specific challenges that operating in a different culture can present and, crucially, how a local workforce can most effectively be managed.
Asian countries within the APAC region can have very different workplace structures, hierarchies, and customs in place (both when compared to European businesses and each other), and failing to recognize this can mean that valuable human resources are either lost, or not given the chance to fulfill their potential.
Therefore, clear-headed assessments should be made as to whether or not you have the management capacity in place to successfully lead a foreign workforce (or if you have to bring it in), how well you understand the cultural and workplace practices in a new location, and how attractive your employment offer will be to the best local talent, in comparison with your competitors.
Is your business set up to operate in APAC?
Any business that wants to operate in multiple locations simultaneously needs to have structures in place that will enable some important functions of the business to be conducted remotely.
For instance, when beginning operations in new countries, leaders need to ensure that robust reporting procedures are established and in place in advance so that there is minimal disruption to beginning operations in the new locale.
If this requires investment in new technologies, this should ideally be done ahead of operations commencing, as too much focus on setting up processes and procedures can put an unnecessary and unwanted handbrake on more important aspects of operations.
An essential question for expanding businesses, therefore, is to determine how these functions can most effectively and efficiently be performed, and whether an in-house or outsourced solution is required.
Get to grips with the regulatory environment
When a global business relocates part of its workforce to a new region, and/or hires workers locally (either on-demand or as contract hires), ensuring that it remains in compliance with local employment laws, taxation and other regulations regarding workers’ pay and conditions is essential. In addition, there are important obligations regarding the protection of sensitive personal data, which will vary according to the jurisdiction.
Adhering to the various employment regulations and data protection laws in different countries in the APAC region can unquestionably be a burden, but it is nevertheless essential, and so any enterprise looking to engage a workforce in this part of the world needs to take specialist advice re: compliance as early in the expansion process as possible, as these obligations will have a significant impact on planning and implementation.
The right payroll model is the solution
Following on from this, it is important that a company with workforces in multiple locations is using the right model for the delivery of payroll services. An effective global payroll system can help significantly in the management of a dispersed workforce, where different currencies, languages, pay cycles, and regulations all need to be accommodated simultaneously.
For instance, a wholly-owned model might make sense, where payroll is managed locally by a team who are employees. Alternatively, relocating or expanding business might opt for an aggregated model, where payroll is managed by a global payroll provider working in partnership with in-country partners (ICPs), who are locally-based service providers.
Payroll is a very significant function for businesses wherever they operate, but for enterprises with a global workforce in multiple APAC countries, ensuring the smooth operation of payroll is fundamental to be able to operate successfully and with goodwill.