LIFE AFTER BREXIT: THE MOST PROMISING FOREIGN MARKETS OUTSIDE THE EU FOR UK-BASED FIRMS
Ben Wright, CEO at global expansion solutions provider Velocity Global, highlights some of the world’s most promising countries for businesses growing internationally, the opportunities that exist for UK firms outside the EU, and how a more flexible approach to hiring overseas is the key to taking advantage.
The UK government directed its attention towards Covid-19 in recent weeks, so for the first time in a long time almost no one is talking about Brexit. Not surprisingly, discussions with the European Union kicked off again recently with little fanfare.
The timeline for Britain’s exit from the EU hasn’t changed and planning for life after Brexit, along with life after Covid-19, is still on the radar for UK businesses.
Velocity Global’s 2020 State of Global Expansion Report™, which surveyed 500 UK tech companies on their plans for overseas expansion, found that over 90% have immediate plans to expand into at least one new market and that negotiating the impact of Brexit uncertainty was a driving factor for them.
The EU is a key area of focus for UK firms, but losing access to the free market is a good reminder that there are other countries further afield with significant potential as well.
Choosing the right location
The Global Expansion Tech Index™, part of Velocity Global’s State of Global Expansion Report, scores different countries on a range of factors that make them an attractive destination for businesses – skills, regulations, the quality of connectivity and infrastructure, GDP growth and the level of inward investment.
Non-EU countries featured prominently on the index with the U.S., Hong Kong, Singapore and Australia all in the top 10.
The U.S. is home to some of the world’s best-known universities and a large pool of skilled workers, scoring highly for knowledge in the index.
The two Asian-Pacific countries performed well on connectivity and infrastructure. Singapore’s public transport system is one of the best in the world and both countries offer some of the fastest internet connections globally.
In 2019, the Australian government launched the Global Talent Independent program (GTI) to help ramp-up its efforts to attract senior technology leaders to the country. Australia has a robust economy set up to import skills from abroad, making it an attractive place for businesses in search of overseas talent.
Even among countries at the top of the expansion index, the strengths and opportunities vary greatly depending on the location. This leaves two key decisions to make: where to expand internationally, and how.
Exploring the options
Establishing an overseas presence is complicated in the best of times, and outside of the free market that process gets even more complex for UK firms. Traditionally, businesses used legal entity establishment to expand abroad and operate in a foreign country.
Creating a fully-fledged legal entity is a slow and expensive process. In fact, it is impossible in many cases right now as a lot of countries have halted applications while in Covid-19 lockdown. Businesses need a faster, more agile way of expanding overseas, particularly if they’re considering countries on the other side of the globe that are economically and culturally very different to their own.
One such alternative is to use an Employer of Record, also called an International Professional Employment Organisation (PEO). The International PEO utilises its existing global infrastructure in the desired country to employ workers on a company’s behalf so the business doesn’t have to set up a foreign legal entity in-country. It acts as these workers’ Employer of Record managing administrative aspects such as payroll and benefits and ensuring compliance with local labour laws.
This approach allows a business to hit the ground running and be fully operational in a new country in a matter of days. In uncertain times such as these, it also makes it easy to test the waters in a new market and pull out just as quickly if it doesn’t live up to expectations.
Looking beyond Europe for new expansion destinations will be the norm once Brexit is finalised. New will open up as the UK government secures trade deals with countries across the world.
In the meantime, businesses losing access to the European free market focus on the opportunities presented by other global markets. They rethink how to expand internationally, with a focus on agility to tap into new customer bases and recruit global talent.