Main Legal Issues In International Business Expansion

Author:Ms Catherine Nommick
Profession:Soulier Avocats

Expanding internationally is most of the time critical for businesses wishing to break into other markets. However, international expansion is not without posing a number of risks, in particular legal and financial ones, that need to be identified and addressed upstream when designing the overall expansion strategy.

While the choice of the most appropriate legal structure or export business model is essential, companies must also keep in mind other legal considerations.

This article is a follow-up to the conference on "Successfully establishing a presence abroad: The legal and financial basics" organized by our Firm together with Banque Rhône-Alpes on May 31, 2018.

Establishing a presence in, or breaking into, a foreign market is not something that can be done overnight as it can represent a real risk for any company that is not adequately prepared or that has not chosen the legal structure or approach best suited for its expansion project and the target market.

Any business operator wishing to expand internationally has a wealth of possibilities, but to ensure a successful expansion it is necessary to identify the key factors and to properly delineate the project to subsequently determine the best structure to be put in place.

  1. The choice of the structure depends on the objective pursed by the company

    The choice of the structure that will be used by the company requires above all the proper identification of the project and the pursued objectives.

    Indeed, does the company wish to engage into prospecting activities, to sell or buy products on a specific market, or even to manufacture its products directly in such market? Is the contemplated expansion part of a short-term or long-term business project? Moreover, does the company already have relationships with local partners and does it intend to set up a partnership or a joint venture with one or more of these partners?

    Before embarking on any international expansion project, it is also vital that the company carefully assess its export potential and identify its strengths as well as the means and resources that it can deploy and assign to such project.

    Developing an export activity is costly and the company must promptly determine the human and financial needs that it can allocate to this form of expansion. In addition, its capacity to manage the project (legal expertise, language skills, existence of an export department or internal export expertise, etc.) and any past international...

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