Doing Business Abroad? Consider Hiring a Professional to Help

According to a recent announcement from the Conference Board, more than 50 percent of U.S. companies surveyed are either currently doing business abroad, or have a strategy in place for diversifying their business interests to foreign locations. Companies doing business across U.S. state lines have found a dizzying amount of new rules, taxing regulations, and differences between states, so one can only imagine the complexities of setting up operations across the world. What is the best answer to efficiently set up overseas operations?

According to High Street Partners Founder and President Larry Harding, his employees and their global service partners spend every day determining the most efficient ways for companies to implement their globalization strategy. High Street Partners is a consulting firm that specializes in helping U.S. companies do business abroad, as well as foreign companies that do business in the United States. Harding, a CPA, has a large network of specialists across the world that work to help companies with handling all the local details of setting up shop and handling ongoing operations in an unfamiliar country.

During an interview with Mr. Harding, I asked his opinion on a number of topics of interest to companies with overseas operations.

Regarding the adoption of International Financial Reporting Standards (IFRS) by U.S. private companies, Harding feels business owners and their CFOs need to become familiar with the changes that are coming to the U.S. accounting world. However, he stated, “For the private company the changes aren’t going to be too rigorous. The changes aren’t stunningly dramatic or different, but there are some revenue recognition issues especially that companies will want to be on top of. That is probably the biggest one that many CEOs are concerned with.” Harding believes that companies that do business across borders will find that IFRS will actually make life easier for them because IFRS standardizes accounting principals across multiple countries.

Since High Street Partners is at the forefront of private business in many countries, its advisors have a front row seat to what is happening with the global economy. Harding says, “The overseas markets are still robust in a lot of places. China, for example, has retrenched from their 12 percent growth a few years ago to about 6 percent growth today. That is still pretty robust. It is still a thriving market. Japan is still the world’s second largest economy and while growth may be flat, there is still a lot of buying of U.S.-made products there.”

Markets that Harding’s advisors and clients have seen significantly suffer during this recession include Russia and the UAE, which were both very hot 18 months ago. If oil prices continue to rise, however, Harding believes both Russia and the Middle East could see renewed growth.

One of the most significant trends High Street Partners and their consultants have seen in the last year is the stepped-up efforts by governments all over the world to enforce and collect taxes and fees that are due. China, for example, just initiated a mandate for provincial taxing authorities to go into certain types of businesses and insure collection of a handful of specific types of international taxes. According to Harding, “China is at the forefront of what they are doing to collect international taxes, but this is really the trend everywhere.”

I asked Harding about his experience with the credit markets in countries his company provides services. Harding indicated that there is no reliable pattern that points to a global thawing of the credit market.

“We have seen companies defer decisions involving capital expenditures as long as they possibly could. In the last several months we are seeing more money being spent by our clients to prepare for recovery,” Harding stated.

Harding believes most companies should have some focus on a sound international strategy. He believes that many foreign companies are interested in buying U.S. goods and services, especially since their currency can buy more American-made goods today as a result of the position of the dollar against other world currencies.

Nearly all well-run companies have a few trusted advisors, such as their accountant, lawyer, and insurance risk manager. If your business has interests globally, you will want to add a “globalization” expert to your list. Doing so will dramatically increase your company’s ability to succeed in a foreign land.