Companies looking to internationalize operations will understand that having a local presence and conducting business in foreign countries means following the laws of that country.
This may sound a bit simple but legal business structures can affect how the business is taxed, have minimum capital requirements, limit shareholder percentages, and may have difficult registration requirements –all of which may affect operations. Additionally, companies who dismiss the opportunity to have a local presence typically fall into the ethnocentric trap –the belief that one’s own country practices are superior. It is the idea that “we know best” therefore we know what we are doing irrespective of attitudes, behavior and business practices in a foreign country. Many companies have served as prime examples of this principle when they failed to familiarized and adapt their practices to target markets (i.e. American car-company Nova and Euro Disney).
Companies must assess the available business structures to ensure the appropriate legal entity is established. CIMA can help you establish the right business entity in foreign markets. Common structures include Corporations and LLC’s. To obtain more information, compare structures, or get started contact us today.
