Business briefing series

20 issues for businesses expanding internationally

At Ernst & Young, we understand the challenges and we The Institute of Chartered Accountants in Australia
know what it takes to drive sustainable growth because (the Institute) is the professional body representing
we’ve helped many of the world’s most dynamic and Chartered Accountants in Australia. Our reach extends
ambitious companies develop into market leaders. to more than 66,000 of today’s and tomorrow’s
business leaders, representing some 54,000 Chartered
Our global network of Strategic Growth Markets
Accountants and 12,000 of Australia’s best accounting
professionals are dedicated to serving the changing needs
graduates who are currently enrolled in our world-class
of fast-growth companies. Whether working with dynamic
postgraduate program.
mid-cap companies or early stage venture-backed
businesses, our professionals around the world draw upon Our members work in diverse roles across commerce
their extensive experience, insight and global resources and industry, academia, government and public
to help growing businesses reach their full potential. practice throughout Australia and in 109 countries
around the world. We aim to lead the profession by
As well as providing traditional assurance, advisory, tax
delivering visionary thought leadership projects, setting
and transaction advisory services, our professionals work
the benchmark for the highest ethical, professional and
with you to reduce the complexity of legislation, help align
educational standards, and enhancing and promoting
your tax strategy with your business goals, expand into new
the Chartered Accountants brand.
markets and pursue mergers, acquisitions or other strategy
transactions to take your business to the next level. We can We also represent the interests of members in
provide guidance around how to manage and control your government, industry, academia and the general public
risks, so that you can approach the future with confidence. by actively engaging our membership and local and
international bodies on public policy, government
So whether your business thrives on entrepreneurial
legislation and regulatory issues.
spirit, innovation or superior customer service – and
regardless of your stage of growth – our Strategic Growth The Institute can leverage advantages for its members
Markets team can help you take the next step. It’s not as a founding member of the Global Accounting
luck that makes leaders. Alliance (GAA), an international accounting coalition
formed by the world’s premier accounting bodies. The
Ernst & Young is a global leader in assurance, tax, transaction
GAA has a membership of over 800,000 and promotes
and advisory services. Worldwide, our 144,000 people are
quality professional services to share information
united by our shared values and an unwavering commitment
and collaborate on international accounting issues.
to quality. We make a difference by helping our people, our
The Institute is constituted by Royal Charter and was
clients and our wider communities achieve their potential.
established in 1928.
Ernst & Young refers to the global organization of member
For further information about the Institute visit
firms of Ernst & Young Global Limited, each of which is a
charteredaccountants.com.au
separate legal entity. Ernst & Young Global Limited, a UK
company limited by guarantee, does not provide services to
clients. For more information about our organisation, please
visit www.ey.com

Disclaimer All information is current as at October 2010

This discussion paper presents the opinions and comments of the author First published October 2010
and not necessarily those of Ernst & Young, the Institute of Chartered
Accountants in Australia (the Institute), or their members. The contents are This communication provides general information which is current
for general information only. They are not intended as professional advice for as at the time of production.
that you should consult a Chartered Accountant or other suitably qualified Published by:
professional. Ernst & Young and the Institute expressly disclaims all liability
for any loss or damage arising from reliance upon any information contained The Institute of Chartered Accountants in Australia
in this paper. Address: 33 Erskine Street, Sydney, NSW 2000

© Ernst & Young Australia and the Institute of Chartered Accountants in Ernst & Young
Australia 2010. Address: Ernst & Young Centre, 680 George Street, Sydney
All rights reserved. Business briefing series: 20 issues for businesses expanding internationally
First edition
ISBN: 978-1-921245-62-6

ABN 50 084 642 571 The Institute of Chartered Accountants in Australia Incorporated in Australia Members’ Liability Limited. 0910-37
ABN 75 288 172 749 Ernst & Young.
Business briefing series
20 issues for Anyone who has made the bold step of starting their own business has at some
stage dreamed about taking that business offshore in a bid for increased expansion
businesses expanding
and to generate additional revenue.
internationally
Although ambitious and potentially very lucrative, such a move could also prove
very costly if not done correctly.
To assist business leaders with the process of taking on globalisation, the Institute
of Chartered Accountants in Australia (the Institute), in conjunction with Ernst &
Young (EY) has produced this thought leadership paper entitled Business briefing:
20 issues for businesses expanding internationally.
The publication is the third part of the Institute’s Business Briefing series designed
to help businesses to successfully navigate challenging issues. The commentary
in the report is divided into three key phases of an international expansion project:
• Planning for expansion
• Choosing your location
• Conducting business overseas.

Business briefing: 20 issues for businesses expanding internationally has been written
and presented in such a way as to maximise the reader’s understanding of the
issues. Each of the three sections contains a series of pull-out boxes which guide
the reader as to the types of questions that they should be asking with regard
to the business. These questions are consolidated into a detachable checklist at
the back of the publication which can be used when consulting the paper.
I trust that you will find this thought leadership paper interesting and
worthwhile reading.

Michael Spinks FCA

President
Institute of Chartered Accountants in Australia

Business briefing series: 20 issues for businesses expanding internationally 3

4 Business briefing series: 20 issues for businesses expanding internationally
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Planning for expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1. Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. Global trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Market research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Choosing the location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4. Political and social climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Local tax and regulatory environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. Legal system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Innovation and incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Location and infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. Cultural compatibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Local workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Doing business overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

11. Global management team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. Global human resources considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. Choosing the operating structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. Implementing the operating structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. Foreign exchange management and currency risk/controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17. Business and international taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
18. Supply chain, transfer pricing and intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
19. Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
20. Exit or wind-down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Contact details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back cover

Business briefing series: 20 issues for businesses expanding internationally 5

 Introduction
In August 2010, China overtook Japan as the second largest economy in the world, and it is closing the gap
on the United States. The world is changing at a fast pace, driven by globalisation. Throughout the global
financial crisis, agile organisations continued their quest to participate in and prosper from the tremendous
growth in the emerging markets. Very few Australian organisations can afford to ignore this growth momentum,
nor the other benefits that can be achieved from investing in emerging and international markets.

The Globalization Index1 supports many market indicators Regardless of the size of their international footprint,
that the trend towards ambitious international expansion the research identified the top five drivers for
will continue. This research depicts a global landscape businesses expanding internationally as overall growth
where organisations execute their international opportunities, profitability, access to materials, access
expansion strategies at a rapid pace. This speed of to human resources, and the ability to innovate.
expansion may indicate the strong desire by companies
to be the first-to-market and/or the imperative to
Benefits for international companies
capitalise on new market developments.
from globalisation
The survey was conducted in August 2009, with 520 In which of the following ways has globalisation
senior executives worldwide. 38% of respondents had a positive impact on your business over the
indicated that they currently derive over half of their past three years?
revenue from overseas operations. As indicated in the
chart below, by 2012 more than half of the respondents 86%
Overall growth
expect this to be the case, with one in four respondents 80%
53%
expecting to derive more than three quarters of their
revenue from overseas. 68%
Profitability 51%
32%
Only one in 50 executives surveyed believes containing
their operations within their home country or earning 35%
Access to materials 27%
less than 10% of their revenue from overseas markets 39%
by 2012, to be a viable option.
42%
Access to 27%
human resources 21%
What proportion of your company’s revenues is derived
from its overseas operations (i.e. outside your company’s 27%

home market) currently, and in three years time?* Ability to innovate 33%
31%

Proportion of
30%
Investment revenue from
27%
Now 13 10 17 23 20 18 opportunities international clients:
29%
25 – 75%
Three 16%
years 2 7 15 21 28 26 Access to finance 20% 10 – 24%
time 15%
0 – 9%
0% 100%

Proportion of revenue: Source: The Globalization Index Survey 2009

0 – 9% 15 – 24% 50 – 75%
10 – 14% 25 – 49% Over 75%

Source: The Globalization Index Survey 2009

* Figures may not add up to exactly 100%, due to rounding.

1. The Globalization Index 2009 is a report written by Ernst & Young with the Economist Intelligence Unit. The 2010 edition of the report is expected to be
released in January 2011.

6 Business briefing series: 20 issues for businesses expanding internationally

This report, the 20 issues for businesses expanding and incentives, location and infrastructure, cultural
internationally, focuses on the core issues that you compatibility and the local workforce. These issues are
should consider when formulating and executing your looked at from a strategic point of view rather than a
international expansion strategy. It does not provide country specific angle. Whilst for example legal systems
country specific analysis, however, common themes are not examined in any detail, we raise the question
have been identified that can be applied regardless of whether your business is equipped to deal with a legal
your target location. system based on civil or Muslim law.
The commentary in this report is divided into the three The last section deals with issues associated with doing
key phases of an international expansion project: business overseas. An existing global management
1. Planning for expansion team would make it easier to set up your footprint
in a foreign location. Would your management team
2. Choosing your location
know how to deal with a request by a high ranking
3. Conducting business overseas. official asking for a facilitation fee? Does your global
workforce need security protection in addition to other
incentive payments? Will your business be funded
The planning funnel by an intercompany loan or do you need to consider
more innovative funding arrangements such as Islamic
Planning for expansion finance? Will you acquire an existing local business to
reach a certain market share quickly? Foreign exchange
management and currency risk/controls, business and
Choosing the location international tax, supply chain and intellectual property
and risk management issues are also looked at in
more detail.
Doing business
overseas Finally, we consider exit and wind down issues. Agile
organisations will go through the process described
above at regular intervals. Based on the findings they
may decide to wind down operations in one location
and commence operations in another. This may make
perfect commercial sense, however, broader brand and
reputation issues must be considered. For example, if
The diagram above depicts the importance of you have become an important employer in a particular
funnelling your efforts to ensure the bulk of your country or region your exit must be carefully planned to
energy and resources are spent setting up successful mitigate social backlash.
operations. The first two phases focus on identifying
potential locations and selecting the most appropriate
for your operations.
In the ‘planning for expansion’ section we examine the
importance of a clearly defined strategy, global trends
driven by changing demographics and market research.
The planning phase is vital to avoid wasting resources in
assessing investment locations that should never have
been considered in the first place.
The detailed assessment under the major heading
‘choosing your location’ involves looking at the
political and social climate, the local tax and
regulatory environment, the legal system, innovation

Business briefing series: 20 issues for businesses expanding internationally 7

 Planning for expansion
1. Strategy changes that arise from this growth that will affect
business practices and profitability in the future. In
Clearly define and stress test your strategy
countries such as China and India, population growth
What are the implications of international expansion is accompanied by increasing affluence and a growing
for your existing business operations? middle class consumer base. Therefore, the traditional
characterisation and perception of emerging markets
Very few organisations can afford to ignore the
as predominantly low cost manufacturing centres is
increasing trend towards globalisation. Entrepreneurial
quickly changing. Emerging markets are also becoming
organisations that are the first to move often have
strong consumer driven societies where the demand for
the most startling success stories. However, those
products and services is increasing faster than in more
organisations that do not stress test the financial and
established and mature markets.
operational impact on their existing business, may lose
more than their dream of becoming a global player. The implications for your business are clear. You can
become a participant in these markets and tap into
Before expanding internationally, you should have a
an ever increasing consumer base to help secure
clear picture of what you are trying to achieve. Are you
your future profitability, or you can watch others fill
searching for a new and cheaper source of capital,
that space. Those business leaders that do not act
market leading talent, more cost effective production,
risk watching others reap the benefits and may be
new markets, or all of the above? Can you execute your
challenged when those first-movers turn their attention
strategy alone or do you need strong partners both
to Australia. Seen from this perspective, international
from an advisory as well as a business perspective?
expansion is also an opportunity to help strengthen your
You should consider the pressure global expansion may
business at home in the medium to long term.
have on your domestic operations in terms of finance,
management time and human resources. Will you enter The flow of foreign direct investment (FDI) into a country
the identified market(s) through acquisition, joint venture, is an important indicator of the economic viability of
a partnership or a green field development? Ensure you that location. Similarly, demographic trends such as the
test your assumptions and have a clear understanding of age and education profile of the population may also
how long it will take to turn a profit. indicate future economic vitality and the growth of a
consumer base. An example of this is Vietnam, where
2. Global trends more than 70% of the population is 30 years or younger.
Vietnam is currently attracting significant FDI in certain
Is your organisation exposed to new and industry sectors.
emerging markets?
Has the composition of your major
competitors changed? ‘Global foreign direct investment witnessed a
Is foreign direct investment in your industry modest, but uneven recovery in the first half of
sector clustered in locations where you do 2010. Developing and transition economies now
not have a presence? absorb more than half of global FDI.’
It is important to monitor and to be aware of global World Investment Report 2010
trends, particularly in relation to demographic changes. United Nations Conference on Trade and Development
Australia’s population is estimated to grow to 36 million
by 2050. To put this into perspective, that is equivalent
to the bi-monthly combined population growth of
China and India. World population growth is not a
new phenomenon; however it is the demographic

8 Business briefing series: 20 issues for businesses expanding internationally

3. Market research
What research is available to provide you with
information on market and industry conditions?
Is this information up-to-date and what is the
future outlook?
Create a short list of new and emerging markets,
tap into existing networks, talk to your advisors
and visit your short listed locations.

Market research is very important but can be costly;

however there are numerous resources available free of
charge to help you uncover useful information about the
strengths and challenges of global markets. Much of
this research can be done from your home base and will
help you in generating a short list of potential locations
for expansion.
Reliable statistical data or reference material can
supplement but should not replace a field trip. The world
is moving and changing fast. What may have been a
good investment location historically, may not present
the same opportunities in the future. Tap into existing
networks via chambers of industry and commerce or
other organisations representing an investment location,
visit trade fairs, talk to your advisors, visit your target
locations and meet the local people. This will greatly
assist you to make an educated and informed decision
about whether that market is right for your business.

Business briefing series: 20 issues for businesses expanding internationally 9

 Choosing the location
4. Political and social climate An assessment of your target location’s political
environment, including the potential for social unrest or
Is the political system stable? How do you
regional instability is relevant for determining the risk of
assess sovereign risk?
any potential investment. This has been an important
Does the country suffer under high levels of issue in South East Asia, where various countries
sovereign debt? have been affected by social unrest in recent years.
Is there likely to be social unrest or are workers
To support this, the graph below illustrates the
organised in powerful unions?
importance investors place on political stability in
The pace of change of the global political landscape assessing emerging market locations. Almost 60% of
is accelerating due to globalisation. Political decisions respondents rated political stability as the most important
in one country may have far reaching implications for government-related factor to consider when deploying
trading partners or the globalised business community FDI. Before entering a new market, you should evaluate
at large. The response to the global financial crisis with the risk based on the future outlook for the country or the
stimulus programs around the globe illustrated this. region, not just the status quo or historic events. Ensure
Most governments appreciate that globalisation is the that you take note of any early signs of social unrest.
motor of economic expansion.
However, as the graph below illustrates, concerns are If you were to plan a foreign direct investment in
now emerging about new protectionism, regulations developed or emerging markets over the next year,
which of the following would you consider to be the
and trade issues. More than 50% of Globalization Index
most important government related-factors?
respondents believe that major economies will adopt
limited protectionist measures in certain key sectors.
Political stability
Furthermore, the burden of sovereign debt may force
Macroeconomic stability
a country to abandon business friendly programs.
Currency stability

Host government support

Which of the following assertions about the impact for inward foreign investment
of protectionism in coming years most closely reflects Host government attitude
your view? (% who agree with each statement) towards domestic enterprises
Corporate and other
relevant taxes
Major economies will adopt
Clarity and predictability
limited protectionist measures
of the legal system
in certain key sectors
Strength and fairness of
Global markets will remain or legal system
become more open as governments
try to restore economic growth Risk of nationalisation or
expropriation
Domestic political expediency
will override claims by world 0% 20% 40% 60%
leaders to resist protectionism
‘Tit-for-tat‘ protectionism Developed
 Emerging
will trigger a dangerous
downward spiral in global trade Source: The Globalization Index Survey 2009

The world economy will repeat the

protectionist errors of the 1930s

Don’t know

0% 10% 20% 30% 40% 50%

Source: The Globalization Index Survey 2009

10 Business briefing series: 20 issues for businesses expanding internationally

5. Local tax and regulatory environment does not rule out the possibility of government support
for certain industries to protect domestic markets against
Is the tax regime business friendly and/or
competitive? foreign competition, through subsidies or other forms of
protection. An extensive double tax treaty network may
Does the country have free trade agreements
likewise look impressive; however it is necessary to look
or double tax treaties?
beyond withholding tax rates and test how the treaties
Does the regulatory regime set the scene for deal with mutual agreement procedures and arbitration
a sound corporate governance framework?
around transfer pricing, permanent establishment issues
A low headline corporate tax rate is always appealing2. and a global work force. Not all double tax treaties are
However, this can also be deceptive due to many the same and some countries may try to assert taxing
factors including the existence of state based taxes, rights beyond what investors would ordinarily expect
withholding taxes and consumption taxes such as a under OECD guidelines.
value added tax (VAT). Your market analysis should A country’s regulatory framework will be considered
include commercial discussions with a local market open to FDI, if it can strike the right balance between
tax expert taking into account your specific facts and
creating a secure environment for effective corporate
circumstances where possible.
governance across all industry sectors, without
Free trade agreements generally indicate an open and stifling entrepreneurial freedom or discriminating
investment friendly economy. However, their existence against foreign investors.

Legal systems around the world

Civil Law
Common Law
Muslim Law
Customary Law
Mixed System

Source: Legal systems around the world, University of Ottawa: www.juriglobe.ca/eng/index.php

2. Ernst & Young Passport (includes the 2010 Worldwide Corporate Tax Guide, the 2010 VAT Guide, the 2009 Global Executive and the
2009 Transfer Pricing Global Reference Guide)

Business briefing series: 20 issues for businesses expanding internationally 11

 Choosing the location (continued)

6. Legal system 7. Innovation and incentives

Is it a common law system? If not, are you Should you develop your products in emerging
sure you understand the outcomes? or fast growth markets?
Do the laws and the legal and judicial Should you have a presence at global
system provide support for and protection innovation clusters?
of commercial activities? Are generous grants and incentives available
for innovative organisations?
An effective legal system that provides a balance
between protecting the commercial interests of Maintaining an environment that supports innovation
business, whilst also protecting the consumer, can is critical for future business growth. Innovation can
provide you with a level of confidence that you can be centralised, or decentralised and driven locally. As
legally enforce your commercial agreements. demonstrated in the chart below, organisations with
A common law legal system can be a huge advantage a centralised strategy are just about as likely as those
as you will be much more likely to understand the with a decentralised approach to regard it as essential
framework and outcomes. The map on page 11 shows to apply innovative ideas from local markets.
however that the number of countries with a pure
common law system is limited.
Innovation is critical to growth whether
Civil law is the prevailing system in much of Europe centrally or locally driven
and in many of the emerging markets, while Muslim law Please rate your agreement with the following statement
may be encountered when doing business in the Gulf regarding innovation activities within your business
States, the Middle East and parts of Africa and Asia.
Maintaining an environment
65%
where people can be innovative is
The legal system will affect every aspect of your critical to future business growth 68%

international expansion. For example: We adapt products and services 48%

to the needs of local markets 67%
• It will affect merger and acquisition activity We believe process
58%
itself and will set boundaries through anti-trust innovation is as important
61%
as product innovation
or competition law
Applying innovation ideas from 44%
• It will be instrumental for the protection local markets is essential 52%

of trademarks, commercial design or plant We create product and services 36%

innovations (including copyright or distribution specifically for local markets 49%

law, data protection and privacy)

• It will set the scene for litigation, arbitration Innovation centralised in headquarters
Innovation decentralised to local markets
or mediation
• It will provide guidance with respect to Source: The Globalization Index Survey 2009

information technology
• Labour law will regulate employment matters
For many businesses, the decision to relocate research
• There is real estate, planning and construction
and development activities to an emerging market will
law to consider.
be influenced by a number of strategic and business
drivers. These may include using the target location as
a strategic hub for market expansion into that region.
Conducting research in emerging and fast growth
markets can drive new ideas by tapping into a new pool
of innovative and market leading talent.

12 Business briefing series: 20 issues for businesses expanding internationally

An understanding of the various government incentive of potential considerations such as the target location’s
regimes ranging from tax holidays and incentives, size and accessibility, transport, utilities and information
to discretionary government grant support may help systems, access to financial services and other factors.
sweeten the deal for many organisations3. In addition
to any formal programs, the host country’s government 9. Cultural compatibility
may be interested in attracting your investment in
order to boost the local economy and create jobs in Are there significant cultural differences that may
impact the way you conduct your business?
strategic sectors. In most jurisdictions, governments
may be receptive to specific negotiated concessions Are there likely to be language barriers?
and incentives, depending on the circumstances and
Entrepreneurial organisations through their very nature
the nature of the investment. It is important to consider
can achieve growth and develop a global footprint
these possibilities at an early stage before committing
relatively quickly. However, it can take a long time to
to the target location. This ensures that an effective
create a diverse workforce that reflects the variety of
strategy can be developed that places your organisation
markets in which the organisation operates, and cultural
in a strong bargaining position.
customs can impact significantly on business practices
in the chosen location.
8. Location and infrastructure
Without early attention to these issues, your
Is economic infrastructure secure and reliable? management team may be left behind in terms of
How would you deal with power outages, cultural awareness and diversity. This can generate a
telecommunication down time or traffic congestion? competitive disadvantage as the management team will
Is the location central to your regional markets, be required to make rapid decisions, while at the same
suppliers of goods and services? time ensuring that they have a clear understanding of
the local customs and operating conditions.
It is important to understand the infrastructure that will
be at your disposal in the target country and assess its
reliability and the positive or detrimental impact it may Cultural business etiquette
have on achieving success in your target market. • Bringing your host in Tokyo a bottle of American
Particular attention should be paid to the target country’s whiskey is a thoughtful gift. It’s a major offense in
Dubai. American whiskey is revered in China and
communications infrastructure. In the digital age this Japan. But in the Islamic Middle East, and among
is arguably more critical than ever before, given the Muslim hosts in Asia, alcohol is strictly taboo
importance of information technology to the effective • In the Middle East and Asia, gifts must always be
operation of modern businesses. You should consider given at the end of the meeting so they are not
the capacity and efficiency of telephone and mobile regarded as bribes. In Latin America, however,
networks, and also data delivery mechanisms such gifts are a great icebreaker and can be given at
the start of a meeting
as fibre optic cable and broadband internet. Is the
• Business cards in Japan, China and other parts of
infrastructure modern, reliable and safe? How vulnerable
Asia are considered a representation of one’s self –
is it to being compromised for example from power offer and receive cards with both hands, and always
failures and cyber attacks, and are there emergency look at it as if you’re studying it carefully
systems and disaster recovery plans in place? • In most of the Islamic Middle East, it’s the norm to
keep visitors waiting. This is not considered rude,
When expanding into the target location, consider but an extension of the Middle Eastern custom to
whether the attributes which have made you successful mix business with pleasure. It is also acceptable
at home can be leveraged to drive success abroad. Your to ask about your host’s children, especially sons,
ability to shift wealth, products, people and information, but never their wives.
will be heavily dependent on accessing adequate social
and commercial infrastructure. There are a wide range Forbes: www.msnbc.msn.com/id/35986024/

3. Ernst & Young, R&D incentives in the new tax landscape.

Business briefing series: 20 issues for businesses expanding internationally 13

 Choosing the location (continued)

In this respect, the importance of language cannot be 10. Local workforce

overstated, as it will underpin everything the business
What is the availability, skill-set and cost structure
does in the target location. Effective communication
of the local work force?
(or the lack thereof) has the ability to make or break the
business. It is a key foundation upon which the success When expanding into a global market, your human
of the business may be built. Your management team resources can mean the difference between success
will need the language skills to communicate effectively and failure. As your organisation grows off-shore,
with those who will interact with your business including getting the right people in the right location can
government, regulators, financiers, suppliers, staff and provide a vital competitive advantage. The quality of
customers. Even in countries where English is commonly the local workforce may often be the deciding factor
spoken or is the language of business, regional nuances in determining whether to expand your business to
can be a source of misunderstanding and can lead to that location and also in determining how successful
more serious problems. such an expansion will be.
As demonstrated in the diagram below, the level of
tolerance and understanding of cultural and ethnic ‘Companies are viewing the labour market
differences and language barriers in foreign markets more through a global lens, and in many cases,
ranks highly amongst Globalization Index respondents off-shoring decisions, especially in higher,
when asked about the most important cultural factors
value-added functions, are being driven by talent
when conducting business internationally. The top
shortages at home as much as by cost-cutting.‘
ranked issue related to the level of international
experience of the workforce is discussed below. A.T Kearney, Global Services Location Index 2009

Which of the following cultural factors do you expect to

When setting up a local workforce in your target
be most important when conducting your international
business over the next year? (% of respondents) location, there are numerous practical issues to consider.
You will need to think about the education level and
Level of international experience of your prospective workers and how much
experience of workforce
you will need to invest in training. You will need to
Degree to which products
and services need to be adapted
determine the terms and conditions of employment
to suit foreign markets and you may need to negotiate with individuals, labour
Level of tolerance and
understanding of cultural/ethic
unions or other bargaining agents. There may be local
differences in your foreign markets legislation or regulations concerning working hours,
Language barriers in weekends and public holidays and there may also
foreign markets
be local customs or practices that will impact on the
Tolerance of foreign business operation and activities of your workforce. In addition
influence in host markets
you will need to consider your global remuneration
Cultural similarity to approach and whether short term and long term
home market
incentive programs will be offered to your overseas
Degree to which advertising
and cultural imagery can be employees, as well as the tax and regulatory implications
understood internationally
associated with this.
Press and media freedom
in foreign markets

Openness to foreign cultural

influence (e.g. through
television, cinema etc.)

0% 10% 20% 30% 40% 50%

Source: The Globalization Index Survey 2009

14 Business briefing series: 20 issues for businesses expanding internationally

Doing business overseas
11. Global management team • Will some members of your management team
be required to spend a lot of personal time in the
Who will negotiate with government, customers,
new location?
suppliers and business partners? How should you
manage risks such as bribery and corruption? • Will Australian expatriates be sent to run the
business or can the services of local managers
Who will be responsible for the recruitment of staff?
be relied upon?
Do you have an international management team or
do you need to build one? To be prepared, you must consider the challenges your
business will face during the start-up phase, and who
Commencing business operations in a new market can from a management perspective is best placed to deal
involve significant risks, and therefore it is important to with those challenges. In determining this, consider
have a strong management team that understands the any potential negotiations with the government or other
challenges ahead. Having established the business in a local officials in the host country. Negotiations might be
new country, a variety of issues may present themselves required over issues such as licensing arrangements, tax
such as: concessions, labour conditions and local joint venture
• How to ensure that your business operations partners. The right negotiating technique will be essential.
run smoothly?
Does your organisation have sufficient knowledge of the
• How much hands on involvement is required by host country and expertise to conduct negotiations or
your management team? will you need specialists with expert local knowledge to
• How much time and resources will it consume negotiate on your behalf? The graph on page 16 shows
setting up your operations? that organisations that operate in more than 10 countries

Corruption Perceptions Index 2009

9.0 – 10
8.0 – 8.9
7.0 – 7.9
6.0 – 6.9
5.0 – 5.9
4.0 – 4.9
3.0 – 3.9
2.0 – 2.9
1.0 – 1.9
0 – 0.9

The Corruption Perceptions Index (CPI) measures the perceived level of the corruption in 180 countries and territories around the world. The CPI is a ‘survey of
surveys’, based on 13 different expert and business surveys. Scores range from 0 (perceived to be highly corrupt) to 10 (perceived to have low levels of corruption).

© Transparency International. All rights reserved.

Business briefing series: 20 issues for businesses expanding internationally 15

 Doing business overseas (continued)

are highly likely to have a diverse management team 12. Global human resources considerations
whilst those with only domestic operations are unlikely
What benefits will you provide to expatriates and
to have a significant proportion of senior management
what are the tax consequences? Do your employees
from another country. require security protection?
Do you have a team that can deal with assignment
More global companies are more likely management, immigration and tax compliance?
to have international management
Should these functions be outsourced?
Roughly what proportion of senior management are
nationals of another country? Although expatriates know your business and may
Foreign
enjoy the opportunity to work overseas; they may also
operations in
11 or more 30 16 19 9 26 lack local knowledge. Relocating and remunerating
countries expatriates can be more expensive than local hires,
Foreign
operations
% so you should first consider the objectives of the
in 1 –10 55 22 9 6 5
countries
assignment and your desired return on investment. If
Domestic
you decide to use expatriates rather than local hires, you
operations
only
88 5 1 4 must also consider what happens when the assignment
is finished. A repatriation plan should be implemented
0% 100% so the knowledge and skills gained on assignment are
Senior management from another country: retained within your organisation. You must also ensure
Less than 5% 5 – 14% 15 – 24% 25 – 49% 50%+ that you have the resources to manage the related local
and international compliance obligations, particularly if
Source: The Globalization Index Survey 2009
you are expanding into more than one country.
* Figures may not add up to exactly 100%, due to rounding.

To ensure your expatriate staff are not distracted from

the job at hand, organisational support will be required
Have you also considered the possibility of corruption to deal with relocation and immigration issues. This level
in your host country? Is it common for local officials of support will vary from organisation to organisation;
or business people to demand bribes, facilitation fees however this along with the development of an incentive
or kick-back payments? How will you deal with such plan should be factored in, even if the new host location
demands while protecting the interests and integrity of is attractive. Generally, most organisations develop formal
your business? Will the local authorities be of assistance mobility policies that consider issues such as the level of
or will they be complicit in the process? Failing to remuneration, relocation benefits and other incentives.
identify and deal with such risks can bring serious Increasingly organisations are also linking their mobility
consequences; as such practices may be criminal programs with their talent management strategy. The tax
offences under the laws of both Australia and the affairs of your employees will also get more complicated
host country and punishable with heavy fines and/or with tax exposure in more than one location, specifically
prison sentences. due to the revised rules in Australia for the taxation of
The map on page 15 illustrates the perceived levels employment income. Benefits provided to your Australian
of corruption in countries around the world. workforce whilst working overseas could potentially be
assessable both abroad and domestically. Tax equalisation
arrangements are a common mechanism used for
employees who work abroad for a period of time.
Another important consideration (and cost) will be
that of security for your employees. In some countries,
expatriate employees may be the target of extortion
threats, kidnapping attempts or other forms of violence.
They will need to be assured of their safety, which
may include specific accommodation, transport
and protection arrangements as part of their overall
remuneration and benefits package.

16 Business briefing series: 20 issues for businesses expanding internationally

13. Financing The map below depicts how Islamic finance is
available worldwide.
What are the cash flow needs of your business?
What is your projected revenue growth? Are your How you manage your ongoing finance raises significant
financial models sound or overly optimistic? taxation considerations both in Australia and your target
Do you need strong partners to finance your country. You should test your assumptions by using
expansion? Have you considered Islamic finance financial modelling to determine if you can achieve the
as a source of funds? desired debt to equity ratio recommended by your financial
advisors. You should confirm that your treasury function
What is the debt equity mix of funding? What are
the tax consequences? is permitted under local and Australian law to ensure that
the terms of your finance arrangements do not breach the
It is important to stress test your financial models and transfer pricing rules or thin capitalisation thresholds. Hybrid
revenue targets to ensure you can service your debt. financing arrangements, changes to the non-portfolio
This testing should involve hypothetical parameters such dividend exemption and withholding tax implications,
as an interest rate hike, currency deflation or difficult need to be reviewed carefully from a tax perspective.
market conditions. During the global financial crisis,
You should stress test assumptions made in financial
successful businesses continued their growth path due
models to ensure that you can still service the
to the establishment and implementation of realistic and
recommended debt levels if certain factors turn to
effective business models that had been stress tested.
the worse. You should also confirm that the proposed
There are many options available for raising finance debt to equity ratio on both the Australian and foreign
for your global expansion. There are, of course, well entity balance sheet is permitted under the relevant
established conservative options including bank or taxation law as potential breaches of the transfer
intercompany loans, however, you may wish to consider pricing or thin capitalisation rules can result in the
emerging financing options such as Islamic finance. denial of tax deductions.

Global Islamic Funds by Home Country of Asset Manager (QI 2010)

5
8 2
34 14
8 1
4 5

3
1
USA 3 1
6
~2.7 2 2 100
24 27
1 7 2
181 82 6
4
Malaysia
~5.1
1 KSA Kuwait
~22.8 ~4.0 177
13
Bahrain UAE 3
Islamic AuM ~1.2 ~6.1
26
by Country
(US$ billion):

10+
1

1 – 10 9

0.5 – 1
0.1 – 0.5 Note: Funds per country include those managed by
0.01 – 0.1 players headquartered in that respective jurisdiction.

Indicates total AuM of Islamic funds in US$ billion

Source: Eurekahedge, Zawya Funds Monitor, Ernst & Young analysis Indicates the number of funds

Business briefing series: 20 issues for businesses expanding internationally 17

 Doing business overseas (continued)

14. Choosing the operating structure 16. Foreign exchange management and
Are you looking for slow organic growth? currency risk/controls
Will you start out with a sales office or are you Is the local currency stable or volatile?
looking for a green field development?
Is currency hedging available at a reasonable cost?
Are you looking to establish an immediate local
Could currency restrictions inhibit or even prohibit
presence? If so, will you set up a joint venture
the flow of international funds?
or will you acquire an existing local business?
Organisations generally can hedge international internal
There are a number of factors that will determine the
transactions effectively without adverse outcomes,
method of entry into your chosen location. The market
although the tax and accounting treatment can be
conditions and the opportunities to capture immediate
complicated. The risk and commercial exposure rises
market share will impact the design of your initial
exponentially where transactions with external suppliers
business model and structure. For example, you may
and customers are involved.
have time to establish various operating entities and
build up your infrastructure such as factories or, you may The diagram below illustrates the fall of the Euro against
only have time to set-up a simple representative office the US Dollar initially triggered by the sovereign debt
from which you can immediately negotiate customer crisis in Greece. The fall of the Euro accelerated when
contracts. These factors may in turn drive your choice the crisis spread to other European countries. The rise
of legal operating structure and also the method you and fall of a currency can impact the economics of an
adopt to gain a foothold in the market. For example, entire project or production set-up. It can significantly
will you establish a joint venture with a host country alter the margins of goods sold on the world market, as
partner or operative and/or set-up various contracts well as the cost of overseas sourced inputs. The hedging
to establish your operations? There will be costs and of cross currency supply or loan contracts may remove
benefits associated with these choices which must be some of the risk but will also come at a cost.
considered, including those concerning commercial,
legal, regulatory and tax issues.
1.55

15. Implementing the operating structure 1.50

What are the legal and administrative procedures 1.45

and regulatory requirements for setting up the
1.40
operating structure and starting the business?
1.35
Should you outsource the set-up to corporate
secretarial service providers? 1.30

How easy is it to start-up your business in the host 1.25

country? What is the level of red tape and how will 1.20
you go about cutting through it? You may have local
accounting and reporting obligations and other legal
Nov Dec Jan Feb Mar Apr May Jun Jul Aug
statutes that you must comply with at start-up and on 2009 2010
an ongoing basis. Penalties for non-compliance may
Source: Yahoo Finance
be severe, including criminal prosecutions and prison
sentences. How will you make sure that you have
identified all obligations and how you will satisfy them?
In addition to foreign exchange management, you need
It may be cost effective to outsource your corporate
to ensure that the target location does not impose
secretarial, accounting and tax functions to local experts.
limitations on the movement of currency in and out of
the country.

18 Business briefing series: 20 issues for businesses expanding internationally

17. Business and international taxation 18. Supply chain, transfer pricing and
Are you aware of how the new Australian attribution intellectual property
regime in relation to controlled foreign companies Have you identified all possible supply
may allow you to take better advantage of chain efficiencies?
efficiencies overseas?
Have you considered potential Australian tax
How will profits be taxed in your target location? issues as you move functions, intellectual
What is the treatment of losses? property and risk offshore? Is your intellectual
property and data protected?
Consider how tax is assessed and paid in the host
country. The timing and quantum of tax payments The development of an effective supply chain process
will impact your cash flow. Ensure that start up losses is vital to establishing efficient operations and achieving
can be carried forward to reduce future tax liabilities. maximum profitability. You should consider local and
Payment of withholding taxes will typically be required international commercial contracts, the adequacy of local
on cross-border payments of interest, dividends and physical infrastructure beyond that which was assessed
royalties. In certain jurisdictions, taxes will be triggered during start-up and the reliability of associated services
on the payment of technical services fees and other on which the business will rely.
payments to non residents. Double taxation agreements
You could also explore the possibility of vertical
may operate to allocate taxing rights between the host
integration such as the acquisition of key suppliers or
country and Australia. Detailed tax due diligence is
distributors. However in doing this, you should give
recommended if you are acquiring a foreign business.
consideration to any potential infrastructure, regulatory
or other constraints that may hinder such an expansion.
If you have operations in multiple countries, you may
‘The reform of the Australian CFC rules will
consider the suitability of the target location for a shared
improve the competitiveness of Australian services centre. An example may be moving your
businesses expanding overseas. Overall it existing production or other business functions from
will be the catalyst for better efficiencies in Australia and/or other locations to your target location.
foreign operations.’ Such decisions may result in the shifting of risk and/or
Daryn Moore, Ernst & Young Australia, Partner intellectual property from the target location to another
Oceania Leader – International Tax Services location. This may have an impact on the cost structure
and profitability of your business from an international
perspective and give rise to transfer pricing and other
Australian international tax rules such as the controlled tax issues. Revenue authorities often focus on these
foreign company (CFC), thin capitalisation and transfer types of transactions.
pricing rules must also be considered. Australia has
and is continuing to reform the CFC rules to ensure
that Australian organisations are not disadvantaged in
competing overseas. Non-portfolio dividends paid by the
foreign organisation to Australian corporate shareholders
are not taxable in Australia at the corporate level and also
do not generate franking credits. Australia does allow for
certain tax deductions for a loss or outgoing incurred in
deriving foreign dividend income.

Business briefing series: 20 issues for businesses expanding internationally 19

 Doing business overseas (continued)

19. Risk management an emerging market for example, moved from rank 12
in 2009 to rank 5 in 2010. You should also recognise
Have you identified areas of risk and how you
that in such an environment, to manage existing and
will address them?
newly emerging risks, an effective risk management
Are your foreign operations susceptible to fraud? strategy and process should be implemented. Obtaining
appropriate insurance in your selected host country is
There are a number of business risks that should be
an important consideration to mitigate against potential
considered when entering an emerging or international
business risks.
market. To identify these risks, Ernst & Young conducted
You should also consider your organisation’s exposure
research to ascertain the top 10 business risks facing
to potential fraud. Are you at greater risk if the control of
multinational firms.
your organisation resides in only a handful of managers,
The Ernst & Young Business Risk Report 2010 4 is based rather than a structure with a board of directors and
on interviews with industry executives and analysts policy and process around corporate governance,
representing 14 industry sectors. The survey asked internal/ external audit and other external controls?
each interviewee to identify and rank the top business
risks for 2010. Aggregating the results worldwide
20. Exit or wind-down
and across industry sectors, resulted in the following
top 10 business risks for multinational firms ranked Will you continue to maintain a presence
by importance: in this location?
1. Uncertainty around regulation and compliance What are the legal and commercial issues
associated with terminating business
2. Access to credit and the impact of rising levels
and employment contracts?
of government debt
What is your strategy for redeploying
3. The withdrawal of global stimulus programs
your resources?
4. The global war for talent and compensation
structures There are different ways to exit or wind-down your
5. The strategic imperative of succeeding in an operations in a host country. You will need to take into
emerging market, as these markets continue to account local laws, tax and financial issues. You must
drive global growth also determine if you wish to maintain a presence in the
host country. Options may include liquidation, the sale
6. Increased cost pressures as the result of commodity
of shares or even floating the business. The exit strategy
price inflation and low cost competitors
should be part of your overall business plan.
7. Incumbent firms in transitional sectors adjusting
to non-traditional entrants There are also reputational risks to consider, particularly
if your business was an important employer in a country
8. Staying ahead of consumer preferences and
or region. To avoid costly litigation or compensation
government regulation on environmental issues
payments you must also be aware of the industrial
9. Political backlash and reputational risks triggered relations environment. Consider whether local
by corporate social responsibility breaches regulations restrict the transfer of funds overseas.
10. Rescue mergers and regulatory changes that may
force new transactions.

The above list has changed considerably in both order

and content from the 2009 report, which demonstrates
that businesses operate in a dynamic, ever-changing
global environment that requires constant monitoring.
The business risk associated with not succeeding in

4. Ernst & Young Business Risk Report 2010

20 Business briefing series: 20 issues for businesses expanding internationally

20 issues for businesses expanding internationally
Table based on the top 20 issues and related questions.

Planning for expansion Yes No

1. Strategy • Clearly define and stress test your strategy

• What are the implications of your international expansion for your
existing business operations?

2. Global trends • Is your organisation exposed to new and emerging markets?

• Has the composition of your major competitors changed?

• Is foreign direct investment in your industry sector clustered

in locations where you do not have a presence?

3. Market research • What research is available to provide you with information

on market and industry conditions?
• Is this information up-to-date and what is the future outlook?

• Create a short list of new and emerging markets, tap into existing
networks, talk to your advisors and visit your short listed locations

Choosing the location Yes No

4. Political and • Is the political system stable? How do you assess sovereign risk?
social climate
• Does the country suffer under high levels of sovereign debt?

• Is there likely to be social unrest or are workers organised in

powerful unions?

5. Local tax and • Is the tax regime business friendly and/or competitive?
regulatory
• Does the country have free trade agreements or double tax treaties?
environment
• Does the regulatory regime set the scene for a sound corporate
governance framework?

6. Legal system • Is it a common law system? If not, do you understand the outcomes?
• Do the laws and the legal and judicial system provide support for and
protection of commercial activities?

7. Innovation and • Should you develop your products in emerging or fast growth markets?
incentives
• Should you have a presence at global innovation clusters?

• Are grants and incentives available for innovative organisations?

8 Location and • Is economic infrastructure secure and reliable?

infrastructure
• How would you deal with power outages, telecommunication
down-time or traffic congestion?
• Is the location central to your regional markets and suppliers of goods
and services?

9. Cultural • Are there significant cultural differences that may impact the way you
compatibility conduct your business?
• Are there likely to be language barriers?

10. Local workforce • What is the availability, skill-set and cost structure of the local work force?

Business briefing series: 20 issues for businesses expanding internationally 21

20 issues checklist (continued)

Doing business overseas Yes No

11. Global management • Who will negotiate with government, customers, suppliers and business
team partners? How should you manage risks such as bribery and corruption?

• Who will be responsible for the recruitment of staff?

• Do you have an international management team or do you need

to build one?

12. Global human • What benefits will you provide to expatriates and what are the tax
resources consequences? Do your employees require security protection?
considerations
• Do you have a team that can deal with assignment management,
immigration and tax compliance?

• Should these functions be outsourced?

13. Financing • What are the cash flow needs of your business? What is your projected
revenue growth? Are your financial models sound or overly optimistic?

• Do you need strong partners to finance your expansion?

Have you considered Islamic finance as a source of funds?

• What is the debt equity mix of funding? What are the tax consequences?

14. Choosing the • Are you looking for slow organic growth? Will you start out with
operating structure a sales office or are you looking for a green field development?

• Are you looking to establish an immediate local presence? If so, will you
set up a joint venture or will you acquire an existing local business?

15. Implementing the • What are the legal and administrative procedures and regulatory
operating structure requirements for setting up the operating structure and starting
the business?

• Should you outsource the set-up to corporate secretarial

service providers?

16. Foreign exchange • Is the local currency stable or volatile?

management and
currency risk/controls • Is currency hedging available at a reasonable cost?
• Could currency restrictions inhibit or even prohibit the flow of
international funds?

17. Business and • Are you aware of how the new Australian attribution regime in
international taxation relation to controlled foreign companies may allow you to take
better advantage of efficiencies overseas?

• How will profits be taxed in your target location? What is the

treatment of losses?

18. Supply chain, • Have you identified all possible supply chain efficiencies?
transfer pricing and
• Have you considered potential Australian tax issues as you
intellectual property
move functions, intellectual property and risk offshore?
Is your intellectual property and data protected?

19. Risk management • Have you identified areas of risk and how will you address them?

• Are your foreign operations susceptible to fraud?

20. Exit or wind-down • Will you continue to maintain a presence in this location?

• What are the legal and commercial issues associated with

terminating business and employment contracts?

• What is your strategy for redeploying your resources?

22 Business briefing series: 20 issues for businesses expanding internationally

Contact details
Ernst & Young The Institute of Chartered Accountants
Ernst & Young Centre in Australia
680 George Street, Sydney 33 Erskine Street, Sydney, NSW 2000
GPO Box 2646, Sydney NSW 2001 GPO Box 9985, Sydney, NSW 2001
Phone +61 2 9248 5555 Service 1300 137 322
Fax +61 2 9248 5959 Phone 02 9290 1344
www.ey.com Fax 02 9262 1512
Email service@charteredaccountants.com.au
Graham Frank, Partner
charteredaccountants.com.au
Asia-Pacific Chief Operating Officer – Tax
Phone +61 2 9248 4810 Lee White
Email graham.frank@au.ey.com Executive General Manager – Members
Phone + 61 2 9290 5598
Daryn Moore, Partner Email lee.white@charteredaccountants.com.au
Oceania Leader – International Tax Services
Phone +61 2 9248 5538
Email daryn.moore@au.ey.com

Greg Logue, Partner

Oceania Leader – Strategic Growth Markets
Phone +61 2 9248 5870
Email greg.logue@au.ey.com