Moving a company abroad or expanding a firm’s operations into foreign territories can be a costly, complex, and arduous process. This means that when businesses consider relocation, they do so with good economic reasons. They look for emerging markets to expand to where labor and market conditions support business growth.
This movement of trade creates an opportunity for globality mobility professionals, able to deliver high-quality services in emerging markets (such as AGS Moving (Africa), Asian Tigers Group (APAC), PIR Group (Russia & CEE)) to put talent to practice. And, because these service providers add to a more seamless mobility operation – the idea of relocating to a region where the business climate favors expansion becomes increasingly attractive.
Both large and small businesses can benefit from relocating overseas. In fact, even now, in 2020, when the global economy has been shaken to the core, it’s not impossible for companies to conquer new markets, especially during times when cost efficiency and diversified distribution are essential.
Why Companies Relocate Operations / Open Firms into Emerging Markets
An emerging market features an economy that has yet to fully develop. This means that the economy still has room to grow, and businesses from emerging economies, including China, India, Brazil, or Russia can grab at the opportunity to grow alongside it. This type of relocation has the following benefits:
Innovative Growth Strategy
An emerging economy may be virgin territory for the goods or services you provide. This means that it will be easy to establish a brand. There will be fewer competitors, keeping marketing costs minimal, and you can focus more time on strategizing ways to take the business to the next level.
When you move your business to an emerging economy or expand your products and services to reach new markets, you stand to grow at a faster pace. This is because you can reach customers who have never had the opportunity to purchase your product or use your service/s. You’ll be reaching out to an eager market – and as such, growth may have a fast-paced start.
Access to Talent Pool
Sometimes it’s easier to move to where the talent is than it is to bring the talent to you. In a highly competitive world, talented employees who are driven and knowledgeable are often hard to come by. But where there’s an emerging market, there’s a whole new pool of talent where employees are akin to the customs and culture of the new consumers you’re targeting.
Cost Efficiencies
Companies can realize huge savings in corporate taxes by funneling their profits through overseas countries that have a more lenient tax regime. The same applies to labor costs and properties, which are often more affordable in countries that are trying to strengthen their economy from the ground up.
Reasons Why Companies Relocate Their Employees to Emerging Markets
Expatriation of employees may seem like a costly process, but it all comes down to organizing talent to where it’s needed most.
Using Unilever’s Executive Knowledge Program in Latin America as a case study, the relocation of employees to emerging markets can have many advantages. As Patricia Neia Tavares, the Global Mobility Head for the Americas explains, global mobility programs drive knowledge sharing and intercultural exchange, which are essential components for growth and profit.
The case found that expatriation of employees can increase knowledge and development within a company to target a market using an “up close and personal” strategy.
By broadening employees’ knowledge of culture, diversity, and sustainability (as with Unilever), you subject them to a market where they can put their best foot forward to serve a company and consumers.
Let’s Turn Our Focus on Companies That Have Successfully Integrated into Offshore Emerging Markets:
1. Amazon
Amazon has opened offices across the world, including Eastern Europe. Their strategy to relocate has improved their logistics and has made them more readily available to talent. New facilities are being built in Poland and the Czech Republic to encourage low-cost operations combined with a skilled talent pool. Across Poland, Amazon currently employs some 16,000 people across its logistic centers as well as web technology offices in Gdansk and Warsaw. Amazon has also committed to “to continue its investments in the Lodz region, plans to expand its logistics center, and offer 500 new jobs. This investment is of special significance since it is being carried out in a very difficult period, during the coronavirus epidemic, when many companies reduce their employment, cut wages and halt new projects,” Lodz mayor Hanna Zdanowska.
2. Facebook
Latin America (Latam) has caught the eye of big tech for some time due to its massive growth opportunities. Facebook’s strategy to move to Latam includes the process of recruiting high-performers and nurturing top talent found in the region. Facebook offices are also widespread across Europe and the US.
3. Goldman Sachs
Goldman Sachs has created a fast-growing tech hub in Bengaluru that ticks the boxes for cost-efficiencies, growth, and talent. It’s also successfully integrated itself into Warsaw where it has seen exponential growth.
4. Standard Chartered
This organization’s entire strategy is based on emerging markets. With 85,000 employees and a presence in 60 markets, their network serves customers in close to 150 markets worldwide. They base their success on a diverse network of cultures and people.
5. TransPerfect
TransPerfect, the world’s largest provider of language and technology solutions for global business, announced the opening of a new office in Bucharest in 2019. It chose Romania to expand its technology because it saw it as a hub for innovation and creativity.
6. Clarifai
Estonia is known for its high-caliber talent in the technology industry in addition to the presence of top tech companies. For this reason, Clarifai decided to expand its global footprint using Estonia as a new base.
The Challenges of Expatriation into Emerging Markets
While countries and customers differ, there are common challenges that mobility partners and HR teams may have to overcome when assisting companies to enter emerging markets.
These challenges can include:
– Underdeveloped financial structures
– Political instability
– Domestic infrastructure problems
– Unreliable Distributors
– Fractured supply chains
– Rapid change
Consider requesting the services of a relocation or mobility specialist to help you navigate through these challenges. This contribution has been brought to you by AltoVita, a global relocation partner. As a company, we pride ourselves in providing duty of care compliant services, including accommodation that offers temporary relocations for a few days up to a year in EMEA, US, and APAC.
ALSO SEE:
Employee Experience | What to Consider when Offered a Relocation Package | Talent Mobility Series with Unilever
