Are there good reasons to invest overseas?
There are four main reasons for an SME to invest in overseas.
In the past five years, there has been a trend of SMEs expanding into SE Asia and Western countries.
Please tell me the reasons for this.
- Requests from existing customers to expand
- Cost-benefit
- New customer development
- New business development
I see. But I heard recently SMEs have been requested by existing customers to expand overseas only to have a hard time afterwards.
That’s a good point.
In recent years, the percentages of (3) New customer development and (4) New business development have increased.
Why is this so?
The contributing factors are improved standard of local, in-country production technology and the associated rising labor costs.
As a result, it is not as easy as in the past to secure cost-benefits of investment and orders from existing customers.
That’s right.
Please tell me the four main reasons to make overseas investment and the respective level of difficulty for each.
Compared to expansion aimed at fulfilling (1) requests to expand from existing customers, and (2) labor cost reduction, it is much harder to succeed at expansion for the sake of (3) developing new customers, and (4) developing new business.
I’ve heard in the past five years there’s been a trend of growing expansion into SE Asia and Western countries. Could you please give me some concrete country names?
The increasing trend is seen in the following countries;
SE Asia
Myanmar, Cambodia, Sri Lanka, Vietnam, Indonesia, Thailand, Malaysia, Singapore, Philippines, Taiwan, Korea, China, Hong Kong, India, Bangladesh, etc.
Western Countries
U.S.A, Mexico, Germany, U.K., France, Spain, Holland, Australia, Turkey, Czech Republic, Poland, Romania, etc.
Where should I begin if I want to make overseas investments?
First, you must formulate an international expansion business plan, but there are many elements of this you won’t understand or can’t be sure about if your research is entirely on paper.
These elements will only become clear once you go to the locality, meet the related companies and get a firsthand account of their situation.
In other words, a feasibility study in the overseas country, right?
Yes. But it cannot just be superficial. It’s important to conduct an appropriate feasibility study that will enable you to make decisions with confidence.
>4B-1 Have you conducted a feasibility study in the overseas country?
