Five Reasons Why Companies Will Go Global In 2022 - Economic Analysis - Worldwide (2024)

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Asia remains an attractive destination for many businesses. TheRegional Comprehensive Economic Partnership (RCEP) – theworld's largest trade deal – will take effect in January2022 and is expected to boost the region's post-pandemiceconomic recovery.

RCEP, signed by 15 Asia Pacific countries, will cover a marketof more than 2.2 billion people or 30 per cent of the world'spopulation.

According to market research firmEuromonitor, AsiaPacific's e-commerce sales is expected to double by 2025,reaching $2 trillion.

There are clearly significant growth opportunities forbusinesses embarking on international expansion in 2022.Inthis article, we cover five reasons why going global should be apart of your business plan.

#1 Increase revenue potential

The world's largest companies are global.International expansion offers the chance to explore newemerging markets, expand the customer base and thus, increaserevenue potential.

Cross-border e-commerce is rapidly becoming the new norm.The rise of the platform economy has made it easier for bigor small brands to sell directly to the customer without atraditional storefront.

The internet economy is expected to triple in size to $300billion in Southeast Asia by 2025. Lazada, Southeast Asia'se-commerce owned by Alibaba, recordedover90%year-over-year order growth for the 2021 Q1quarter. Even with lockdowns lifted in some countries, manyshoppers continue to shop online.

#2 Diversify your supply chain to overcome disruptions

The supply chain shock that first started during COVID-19has exposed vulnerabilities in the production strategies of manybusinesses.

According to an April 2020 survey by theInstitute ofSupply Management (ISM), 95 per cent of US organisationsexperienced supply chain disruptions across their supply chain dueto the COVID-19 pandemic. China reported a 222 per cent uptick inthe average time for materials to be delivered. Koreafollowed closely behind at 217 per cent.Ascompanies canno longer rely on a small group of suppliers, diversifying the poolensures resilience in case of a similar global shock.

For example, manufacturing multinationals, such as Infineontechnologies and Micron, base their regional and global supplychains out of Singapore. These businesses leverageSingapore's global network of logistics multinationals to buildresilience in their supply chain. At the same time, they can caterto regional customers with speedy fulfilment and faster responsetime.

#3 Build your brand presence and grow your footprint

Social media has eased brand recognition across borders.

MINISO is a Japanese-inspired Chinese retail brand, which firstemerged in 2009 and had over4,587 storesworldwide in2020. By focusing on low-cost aesthetic items, it was able totranscend cultural barriers and target value-conscious customers inover 70 countries.

The main challenge MINISO faced was to target a market thatexisted across diverse countries. By partnering with brandambassadors that are recognisable in their target markets, MINISOwas able to increase social media interaction by300percentand boost online and offline sales in the middle of apandemic.

Building an international brand presence can also act as astrategic boost for businesses, allowing them to overcomedependency on domestic markets while effectively addressing theiroverall market position.

#4 Gain a competitive advantage

A competitive advantage can distinguish a company from itscompetitors and build stronger brand loyalty.

Thailand, for instance, is actively promoting technology-driveninnovation.

In the first nine months of 2020, Thailand's electronics andelectrical (E&E) industry has attracted106newinvestments, rising from 94 projects in 2019. Companies with anappetite for innovation can benefit from the privileges offered bythe Thai government to grow their innovation arm. Firmsspending more than oneper centof total sales onresearch and development (R&D) in the first three years will beeligible for corporate income tax exemption for up to fiveyears.

For more information about business expansion into Thailand,pleasedownload our guide.

#5 Balance out seasonal fluctuations

Foreign markets can counter dips in demand in your home market.Going global allows companies to tap into additional revenuestreams and normalise the production peaks and troughs to meetvarying seasonal demand in different markets.

While going global brings attractive market diversification andexpanding market share, there is an added layer of complexity withnew regulations, administrative requirements, and overheadcosts.

There are many reasons why companies may look to go global. Todo it successfully, however, it requires strategic planning, time,resources and on the ground partners.

Hawksford, can provide you with the local expertise to addressyour in-country and around the clock needs, while supporting yourbusiness as it grows internationally. Through a combinationof offices in major financial hubs and an extensive network ofpartners in established and emerging APAC locations, we can adviseyou on all aspects of business set-up and management, from marketentry to keeping your business compliant with the changingregulations in multiple jurisdictions.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.

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Five Reasons Why Companies Will Go Global In 2022 - Economic Analysis - Worldwide (2024)


What are the five reasons why companies expand into international markets? ›

Some of the most common reasons include seeking growth opportunities, taking advantage of new market opportunities that have arisen, diversifying one's customer base or supplier base, accessing new technology or resources, and hedging against risks associated with domestic markets.

Why would a company want to go global? ›

Gain competitive advantage

Expanding overseas is a strategic way to outpace current business competitors. Global expansion pioneers obtain a first-mover advantage by leaving their existing saturated markets and gaining new customers. Moreover, it also allows companies to create brand awareness among local consumers.

What is a reason companies decide to enter the global market? ›

Opening up to new target customer groups

Sometimes, companies have exhausted all the possibilities for growth in their native market. This is one of the main reasons why companies decide to enter a foreign market where they hope to expand their potential customer base.

What are the five factors that should be considered before making the decision to expand internationally? ›

There are five key considerations for successfully going global: Language, infrastructure, payments, legal requirements, and cultural norms.

Why must US companies go global? ›

Why go global? The advantages of international business. Done right, globalization delivers sizable advantages for your business, including expanding your customer base, opening up new talent pools, driving revenue, and increasing profits.

Which of the following could be a motive for a company going global? ›

Which of the following could be a motive for a company going global? It can earn additional profits. It has a unique product or technological advantage not available to other international competitors. Management may have exclusive market information about foreign customers.

Which of the following is a reason for a company to go international? ›

Increase your turnover. Going international is an excellent opportunity to reduce your risks and increase your revenues. Indeed, exporting gives access to markets with greater potential and thus increases your customer portfolio. There are different situations that can lead your company to international development.

What are some of the reasons a company has for going global quizlet? ›

Companies that move into international business can reap many benefits, including increasing sales and profits; extending their products' life cycles; lowering manufacturing costs; improving competitive position; raising quality levels; and becoming more customer oriented.

Why are companies moving towards global operations? ›

Expanding into global markets gives a business a competitive advantage by giving it access to new customers and markets. This is because a business operating in one market may be disadvantaged compared to its competitors operating in multiple markets.

Which is a main reason for a company to enter the international market? ›

Increased revenues – resulting from entering larger markets and revenue streams. Decreased competition – products and services find a home in markets that aren't crowded and are warmly received by potential customers in foreign countries.

What are the four key factors in selecting global markets? ›

Four key factors in selecting global markets are (a) a market's size and growth rate, (b) a particular country or region's institutional contexts, (c) a region's competitive environment, and (d) a market's cultural, administrative, geographic, and economic distance from other markets the company serves.

What are the five factors contributing to the spread of Globalisation? ›

Broadly speaking, economic, financial, political, technological and social factors have paved the way to globalization. Economic factors mainly include lower trade and investment barriers.

What are the 5 factors to consider before starting international business operations? ›

5 Things to Consider When Expanding Internationally
  • Find a Business Partner. ...
  • Consider the Length of Time the Expansion Will Take. ...
  • Conduct Market Research. ...
  • Research the Local Culture. ...
  • Hire Local and International Talent.
May 10, 2023

What are the 5 factors that can affect international trade flows? ›

A country's balance of trade is defined by its net exports (exports minus imports) and is thus influenced by all the factors that affect international trade. These include factor endowments and productivity, trade policy, exchange rates, foreign currency reserves, inflation, and demand.

Why do companies enter international markets? ›

Some of the most common reasons behind a move to internationalisation and expansion into foreign markets include: extending the life cycle of a product or technology. reducing business costs by outsourcing larger-scale production at lower costs, for example in developing countries (driving economies of scale)

What are the 4 motives for a company expanding internationally? ›

5 good reasons to expand internationally
  • Increase your turnover. Going international is an excellent opportunity to reduce your risks and increase your revenues. ...
  • Expand your customer portfolio. ...
  • Improve your brand image. ...
  • Better access to local talent. ...
  • Competitive advantage.

Why do companies engage in international trade? ›

The benefits of international trade for a business are a larger potential customer base, meaning more profits and revenues, possibly less competition in a foreign market that hasn't been accessed as yet, diversification, and possible benefits through foreign exchange rates.

Why do firms pursue international expansion? ›

#1 Reason why companies expand into international markets:

The most common goal of companies going international is to acquire more customers, boost their sales, and increase their revenues. By entering a new country, your company gets access to customers that were not on your radar yet.

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