Multinationals face significant challenges when setting up each new branch or subsidiary in a foreign country. Finding skilled, experienced local staff can be more difficult than many business leaders expect – and training them to fit in with the existing multinational company culture is no easy task either. An even bigger obstacle tends to be the varying regulatory environments at both the local and national scale where the new branch or subsidiary will open. In many cases, company headquarters will find itself unfamiliar with the regulations, licences, and application processes needed to operate in their new location. Failure to comply can seriously damage brand reputation, and lead to serious legal implications.
For every potential upside of organisational expansion, such as market scalability, favourable trade rules, and increased brand value, there is an equally real possibility of experiencing a significant setback. How, then, can multinationals minimise their risks when expanding abroad?
If the problem involves ignorance of local laws, customs, and on-the-ground conditions, then perhaps it will come as no surprise that the solution involves local expertise. External consultants, particularly those based in the destination country, can provide all manner of guidance – from finding the right location to set up shop, to partnering with local builders and suppliers, to recruiting suitable staff, to navigating new and complex regulatory requirements.
A knowledgeable and experienced team can even keep your business on the path to success long after it has established itself in country, by improving operational efficiency and effectiveness in a number of important ways.
Yet it is regulatory compliance that often represents the biggest hurdle during international expansion, and so it is worth paying special attention to how the right local consultant can not only resolve the most pressing legal issues, but also help your business anticipate and address future regulatory challenges before they become roadblocks.
Compliance risk management process assessment
The old business adage, “You don’t know what you don’t know,” is especially applicable to companies that enter new jurisdictions. As often as not, these companies realise too late that they are entirely ignorant of essential regulatory requirements, and then find themselves scrambling to fill out last-minute licencing applications and patch areas of potential legal exposure.
It doesn’t have to be this way. By taking the right steps at the outset, it is possible to get ahead of the game, retaining momentum even when setting up a branch or office in a new country. The right on-the-ground consultant can help you:
- Assess the current state of your organisation’s approach and structure towards regulatory and non-regulatory compliances using a detailed gap assessment
- Refine gap analysis based on surveys and interviews with your team
- Assess risks (high, low, medium) with reference to existing compliance processes
- Recommend process improvements to support the high risk areas.
- Review a roles and responsibilities matrix, as well as communication mechanisms
- Review knowledge of compliance guides and materials
All future action in the compliance realm depends on knowing where you are in relation to your goals. By following the aforementioned steps, you will be able to chart a clear course of action that will take you to your destination – full compliance with the laws and regulations at your new location.
Let us now take a closer look at that course of action in greater detail.
Once the gaps are identified, the consultant can help the entity enhance its compliance maturity through process improvement. The competency and preparation ladder begins at the bottom left of the image below, ultimately reaching the top right corner:
Technology plays a key role in this progression. When dotting each i and crossing each t, specialised software can analyse the processes being followed and then learn to reproduce them with extremely high fidelity.
Implementing tailor-made automated processes significantly enhances efficiency while eliminating errors. An additional, more creative use of AI can then provide further insights, benefits, and safeguards, including automatically alerting the responsible person of imminent compliance threats. Trained AI can even track the transaction path surrounding certain processes and activities, automatically alerting relevant persons in case of anomalies, regulatory issues, or unauthorised transactions.
When a well-run system is in place, your team will have a clear view of the types of regulatory boundaries your organisation may encounter – not just on the immediate horizon, but also in the future – and be able to adjust strategies accordingly. Just as importantly, each step in the direction of improved efficiency and foresight will bring a smooth legal pathway within reach, reducing organisational stress and enabling positive relationships with regulatory authorities.
The effectiveness of these and other initiatives will, of course, depend on the ability of company staff to work effectively within the regulatory environment, and alongside the smart software solutions that are applied.
To that end, consultants can lead training sessions and workshops for employees, creating awareness across the organisation on compliance responsibilities and business risks, including protecting against fraud. Just as importantly, consultants can get everyone up to speed with minimal involvement from your organisation’s headquarters – so that high-value teams don’t get bogged down in the dreary treadmill of time-consuming regulatory minutiae.
The same training format can also be used to address other HR-related concerns, such as building a suitable cultural identity for the new workforce, and teaching staff to improve operational efficiency through new technological tools such as AI. The more focused effort is applied at the outset toward developing a highly functional team, the more quickly that team will deliver on its potential.
Getting off on the right foot
Setting up an office or branch in a new country can be challenging for multinationals, but the rewards are immense for those that get it right. Ensuring compliance is one of the most effective ways to minimise business risks, and the combination of local expertise, technological knowhow, and staff training capability can help your business hit the ground running when it enters a new market.
Let Grant Thornton in Thailand guide you through the compliance journey, so you can focus on what you do best. Learn more at GT Business Risk Services.