Overcoming 6 Top Challenges of International Business Expansion

Expanding your business internationally means opening new opportunities for your company, such as being able to reach out to new potential clients and boosting your profits. Still, with any new growth opportunities, new challenges emerge too, and if you want your transition to a foreign market to be successful, you’d better start well-prepared. Here are the top 6 challenges of international business expansion you should expect.

In this article, we will explore six key challenges of international business expansion and provide actionable strategies to overcome them, ensuring smoother operations and sustainable growth in foreign markets.

1. Consider Using A Recruitment Agency

Whether you’re expanding your business across the Americas, Asia, or Europe, you have to realise that hiring and recruiting talent isn’t going to be easy. Take China, for example. There are vast differences there culturally, in language, and legally – and that’s why so many companies use recruitment agencies to hire and headhunt in China. International recruitment isn’t easy – and that’s exactly why you may have to outsource this part of your expansion. Sky Executive is the perfect recruitment agency when you want to expand in Asia.

2. Communication barriers

Good communication is essential for your success in foreign markets, and to be able to make a breakthrough, you have to speak the language of your customers. Even minor differences in languages, such as those in Anglophone countries basically sharing the same common language, can create great confusion, so imagine all the trouble a language barrier can cause when doing business with customers whose language is completely different. 

Enabling quality translation of all your products and marketing materials is one of the first things to consider before entering any foreign language market, as mistakes and glitches can be costly in terms of your profit and your reputation. A well-known brand giant, such as Mercedes Benz, can survive such a glitch. When they first entered the Chinese market their name was rendered Bensi, meaning “rush to die”, but they spotted the error quickly and changed it to Benchi, meaning “run quickly as in flying.”

To avoid the risk of failures caused by language barriers, refrain from using affordable translation solutions, and ensure that all of your translations have been checked by a native speaker.

3. Cultural differences

When making plans for doing business internationally, be ready to face some cultural differences too. Apart from the language barrier, non-verbal communication can differ significantly depending on culture too. In Russia, for example, too much smiling can be seen as insincere, while in France, you should avoid firm handshakes with your customers or partners.

Many other rules of business etiquette vary from one country to another. So before heading abroad on a business trip, if you want to seal a deal without risking your reputation, make sure you’re properly prepared and understand their cultural norms and values.

4. Know the local market

You might be successful doing business in your local market, as you’ve already distinguished yourself from the competition. But chances are high that, when expanding internationally, you’ll need to face new competition too and deal with their well-established positions in the target market.

To be able to face this challenge, thorough market research is needed, as well as a fresh marketing approach based on clear insights into both your potential customers and your competition. One of the good ways to get yourself familiar with the local trends in a target market, as well as with their economy, culture, and people, is by following relevant news portals in those countries, such as the website Week in China, if you’re considering expanding to the Chinese market.

Nurturing good relations with partners in the target market, like shipping or storage companies, can boost your odds of success too, as with their local expertise and knowledge, they can make your transition much easier.

5. Foreign laws and regulations

Paying fines for breaches of laws and regulations can be quite costly sometimes. Back in 2014, the famous San Francisco-based Airbnb had to pay a € 33000 fine for breaching the local law in Barcelona, requiring any property rented to tourists to be on the tourist registry. To avoid a similar undesirable outcome, you have to be certain you have a comprehensive understanding of any relevant laws and regulations you might be subjected to. Dealing with international taxes, tariffs, and fees can also be a complicated matter, but with an unrushed and well-studied approach to your expansion, you can minimize the risk of such problems.

6. Supply chain challenge

If it’s your first time entering a foreign market, ensure you’re able to handle a supply chain beyond your national borders. There are many risks related to the geographical distance and time needed for shipping your products overseas, which can sometimes result in understocking or overstocking of your merchandise, significantly increasing your costs. You can overcome such issues by developing a proper business plan and using it as a tool to prevent such unexpected situations, which can put your business in danger.

When expanding your supply chain, your chances of working with suppliers that have illegal or unethical practices will increase too. Some of these practices may be unsustainable or even include modern slavery, such as labor exploitation and forced labour. When considering new suppliers abroad, make sure they’re meeting ethical standards and that they’re making an effort to develop sustainable business models.

Expanding your business internationally can bring many great benefits to your company, but is also a big decision and a great challenge, so take your time to prepare for it, strategically.