Having a great product or service isn't enough in today's increasingly competitive global market. Whether you are considering spinning off your business overseas or thinking of internationalizing your company, here are the views from two Canadian business owners on how to ensure operations run smoothly.
Understand the economic geography and demographic composition
Marco Yu is the president of Canada Sinosky and has been running his own import and export business from various parts of the world to North America since 2003. With offices in the United States, Canada, Italy and China, Yu's endeavour has grown to a wholesale business in designer goods, with a specialization in business-to-business contracts. More recently, he has also been involved in the medical supply business from Southeast Asia to the U.S.
Yu highlights the importance of understanding the country in which one plans to set up a business. And for Yu, that country is Canada.
Canada is the second-largest country in the world, yet more than 80 percent of the country's land is uninhabited.
“The majority of the population lives in a few big metropolitan centres close to the U.S. border,” he says. In addition, there are six different time zones across Canada, which, according to Yu, means the logistical cost of doing business in the country is higher than in most countries around the world.
Yu adds, “Canada is also known for its cultural and linguistic diversity.” He points out that this needs to be factored in when building a team. “Your team needs to be able to cater to the ethnic and cultural diversity of the target market. So your team has to be diverse and they have to speak different languages.”
However, he also reminds business owners to keep the costs in check. “Canada may be a smaller market in a big country, but the costs could really mount, so keep things in perspective.”
Tap into the local expertise
In order for a business to succeed on local soil, business leaders should also seek to be culturally aware of the country. A lack of cultural knowledge may limit a firm's ability to further develop its business.
William Cheng, president of Premier Candle Corporation - the largest privately owned candle manufacturer in Canada - notes the difficult decisions he had to make when he took over the reins from his father.
Cheng grew up in Hong Kong and studied abroad in Canada. His father began Universal Candle in Hong Kong in 1979 and subsequently started Premier Candle Corporation in Canada.
When Cheng took over Premier Candle, he decided to restructure the company to include more Canadians in its staffing.
“I think the most important thing is to consider the business environment,” he says.
“We started hiring a lot more local North American talent, who understand the economics of the business as well as the labour environment,” Cheng recalls when he took over the reins more than 13 years ago.
He says Premier Candle now operates as a Canadian company instead of an overseas firm that has a division in Canada.
A little networking goes a long way
It is important to stay current on new ideas and emerging trends no matter what type of business you run. Interacting with like-minded individuals and hearing the experiences of others within the industry may prove helpful when setting up shop in a foreign land.
Cheng recommends engaging with the business community and building a broad and deep network.
He suggests also informing others of the intent of setting up shop in the area so people know you are keen to invest in the country. Networking can create opportunities, from meeting potential collaborators to cultivating new clients.
Meanwhile, Yu's personal experience when doing business in Canada includes being involved in the country's popular sports scene.
“I do find that it helps me tap into the local business networks expediently,” he explains.
Yu says since arriving in Canada in 2001, his biggest hobby is ice hockey. “I became very active in my hockey networks and have developed close relationships with fellow hockey fans,” - many of whom went on to become facilitators of his fashion business.
Business becomes fun again when you share common interests and hobbies with clients and potential partners, “so open yourself up to different sports and cultures,” he advises.
Maximizing the potential of a cross-border business
In addition to the various legal and foreign exchange implications for their companies, business owners should consider the tax and estate-planning implications of holding personal assets - such as real estate and investments - in another country.
When it comes to managing assets, Cheng suggests tapping into the expertise of local private wealth groups. He says partnering with them gives one access to experts who are knowledgeable in estate planning.
“The partners at the bank as well as the legal advisors—they know what to do. I say start with your banker – they can provide you with support and guide you through the management of both personal and company assets.”
For business owners who are contemplating expanding overseas through mergers and acquisitions, Yu says conducting due diligence is vital.
“Engage a good lawyer and team to do the due diligence on the entity you are eyeing, as well as a thorough analysis of the targeted business partner,” he says.
The character and ethics of the partner matter as much as the business model. Yu adds that one needs to be sure of both the business and human aspects of the targeted firm before going through with a deal.
But he notes that it's not always easy. “They give you the advice; how you interpret and incorporate that is entirely up to you.”
An important piece of advice Cheng offers is to have an open mind but also remember to keep decision-making within a core set of values.
“Trial and error is key. Give it a go and make decisions from there. What works in one country may not work in another,” he notes.
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