Office space ‘major snag to expanding abroad’
Dubai, January 17, 2012
One-third of firms taking part in a recent survey said the biggest obstacle to overseas expansion is the challenge of setting up a physical presence in a foreign country.
Sixty-three per cent of companies also said that property commitments have to be very short term when setting up a foreign operation, as they do not know how quickly or slowly they will grow, according to the Regus Global Survey, which polled opinion from over 12,000 companies around the world.
Opinion is split over the where senior management for overseas operations should hail from, with 53 per cent favouring a mother country manager, and 47 per cent opting for a local manager, the survey said.
A similar division was seen over management language skills, with 48 per cent of respondents demanding local language fluency.
Companies operating in international markets are reporting better results (revenue trends, or profit trends, or both) than those concentrating on their domestic market, according to the survey.
These findings indicate that foreign expansion is good for business and should be considered urgently by domestically-focused companies who do not want to be left behind in fiercely competitive markets.
There is a gulf between the outlook of companies already operating internationally – where 80 per cent intend to expand still further – and those solely operating in home markets – where only 42 per cent intend to expand abroad over the next few years.
“This report provides hard evidence that, in the current economic climate, firms who have diversified overseas are faring better than those who have stayed with their home markets,” said Mark Dixon, CEO of Regus, a global company that provides serviced office accommodation.
“This applies to companies both large and small and should act as a wake-up call for those still solely focused on domestic markets to find effective and cost-efficient ways of moving cross-border in order to enhance their earnings and spread their risk.
"While ‘property’ and ‘people’ are perceived as potentially major challenges, the wide availability of flexible workspace options around the globe make the ‘property’ element more perception than reality, the ‘people’ issues do require very considerable judgement," he added.
“Decisions about whether to install a local manager or install one from the mother country are critical and, we believe, rest heavily on whether sales are mainly being handled through a few major distributors, or whether direct contact with a wide range of customers is required,” Dixon continued.
“Interestingly, the only exception amongst the major economies of the world is China. Here, state-sponsored infrastructure investment and development is providing disproportionate domestic market opportunity for Chinese firms.
"Nevertheless, such infrastructure development will ultimately turn out to be finite, and we suspect that into the next decade, Chinese firms will once again be looking for export-led growth,” he concluded. – TradeArabia News Service