Trading Abroad

Trading abroad is the first step you are likely to undertake in your pursuit of lucrative foreign markets. The desire to pursue a new exciting market is almost never the sole reason for a physical presence overseas and that in fact it is often not necessary. Trading abroad is, more often than not, sufficient. Yet, this relatively simple way of having an international presence, is itself risky and careful planning is necessary. Business owners frequently overlook the commitment involved in trading abroad be this financial, management time, IT or administration. Worse still, the implication on the core business is often not considered until after the event – can you meet the orders, finance the cash flow, support the product or protect your intellectual property?

Ask yourself ‘does the move fit into our strategy?’ Check the market – will you be able to compete against local suppliers or do you have a strong brand that will impress foreign consumers? Always seek independent professional confirmation of your beliefs by talking to people who already know the business environment in which you plan to operate. Grant Thornton, with its world-wide network, is able to provide the expertise you need in this field.

When establishing an international trading foothold, often the simplest and, initially, the lowest cost option, is to set up an agreement with a local agent who can give you access to local market knowledge and may share the cost and risk. Usually, it will also mean that you won’t be liable to pay tax in the local jurisdiction or comply with other regulations – that will be the local agent’s responsibility. However in many countries, there is a fine line between selling into a market and actually doing businesses there, so you will need to know the local rules in order to ensure that you don’t find yourself burdened with unexpected costs.

You will also need to check all your documentation to ensure it meets local requirements. For example, if your agent is using a price list, are your conditions of sale binding in that country, does you product insurance cover you?

The downside of using an agent is that, should the business boom and you want to set up your own operation, an agent can be expensive to remove. You must also take care to ensure tat your IP rights in the product have not become blurred.

Establishing a physical presence overseas may offer greater potential rewards than exporting goods from the country in which you are presently producing or from which you deliver your service. For one thing, you won’t need to share the profits with a local agent. On the other hand, the risks are likely to be greater too.

Grant Thornton in Malta is a member of Grant Thornton International, a network of firms with representation world-wide, so wherever you decide to expand to or to trade with, we can assist you both in your base country and in your target market or location.