Expanding into Foreign Markets: Tips and Suggestions

Shaking Hands, Handshake, Contract, Conclusion, Rules

If your business is doing very well and you are looking to expand into foreign markets, there is a lot to consider. First you must choose a foreign market to penetrate, and that would require a lot of on-site market research, which would enable you to make an informed decision, and once you have made a decision regarding which market to penetrate, you would need a local law firm to facilitate the setting up of your new business.

South East Asia

If you are looking for company registration in Malaysia, for example, there are online law companies that specialise in setting up a business in Malaysia, and with their expert advice, your new business will be fully compliant. Thailand is another strong market that is attractive for European companies that are looking to expand into South East Asia, as both countries have thriving economies.

Penetrating Malaysia

There are three types of business that you can open in Malaysia, which are as follows:

  • Offshore Company – This entity enjoys many advantages, as it is not bound by local compliance, with very low tax rates, which is ideal for a holding company, or as an entity to acquire real estate.
  • Private Limited Company – This is a trading entity that is bound by local laws, and the shareholders have limited liability, with the option of a private or public company. This allows you to trade, enter into business agreements, tender for contracts, and, of course, acquire assets.
  • Representative Office – An RO is the perfect way for a foreign business to have a presence in Malaysia, as this non-trading entity can carry out market research and gather information on investment opportunities. This is a 2-5-year licence, which is more than enough time to make a decision on whether you wish to enter the Malaysian marketplace. While in Malaysia, you might want to take a unique holiday, by staying at a 5-star resort.

Representative Office

The business activities of a RO are as follows:

  • Gathering information on investment opportunities.
  • Planning & organising business activities.
  • Sourcing raw materials.
  • R & D projects.
  • Act as a co-ordinating centre for subsidies in other countries.
  • Other business activities that do not involve commercial transactions.

The Malaysian government understands the importance of foreign businesses with regard to aiding the export sector, and when you set up a representative office, there is no tax levied. Here is some further reading on managing a business in Malaysia.

The Limitations of a Representative Office in Malaysia

There are some limitations for a representative office, which include the following:

  • Restrictions on business activities.
  • Cannot engage in commercial activities or transactions.
  • Cannot lease warehousing.
  • The entity has a lifespan of 2-5 years.

The Advantages of a Representative Office in Malaysia

The benefits include:

  • Easy to comply with local authorities.
  • Foreign workers (and their family) can obtain visas for Malaysia, which are valid for 3 years.
  • Minimal capital costs.

Whatever your business needs, sourcing a local lawyer to facilitate your business registration is a must, and with their assistance and advice, your new business will be fully compliant with Malaysian law.

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