Sitting on the Hedge Event – Howard Jackson

Howard Jackson, MD, FD Solutions

International expansion – The Finance Director’s View

1. Tesco, M&S and Sainsbury’s all expanded in America and made substantial losses. This shows that there is risk no matter how much research you do or how big you are at the outset.
2. What’s the commercial rationale?
   – Low cost production?
   – Acquiring local company overseas to access overseas market?
3. It is important to make sure you know what the commercial sense is, to fit in with a long-term strategy.
4. Consider changing economic environments of those areas you have identified, e.g. inflation in China means that production can now be cheaper elsewhere, e.g. in Vietnam or even back in the UK.
5. Consider your corporate structure, making sure the UK business and its intellectual property is always protected.
6. Contact as many experts as possible, both domestically and overseas, in order to discuss your plans with them. Don’t be afraid to chat with similar businesses of similar sizes.
7. Plan for long term.
8. Consider all local issues. E.g. setting up in Holland requires several visits including going to a public notary; in the US it is necessary for at least one of the signatories of your bank account to be in possession of a Social Security number.
9. What you can measure, you can manage:
   – Effective and on-time reporting, and
   – Seconded finance staff as it may pay to have an existing team member based locally.
10. Consider local employment laws, especially payroll and redundancies:
    – In Europe redundancy is more expensive than in the UK.
    – Be sensitive to race/gender issues, especially in Europe and the USA.
    – Make sure your staff have the right to work in those overseas locations.
    – Right to decide.
11. What’s the point?
    Make profit. You can’t make profits if you can’t repatriate to the UK in some form. So consider:
    – Getting good advice
    – Double tax treaties
    – Currency hedging
    – Withholding taxes
    – Transfer pricing agreements
12. Have a ‘get out of jail card’ that favours the UK company.
13. Update your intellectual property, trademarks.
14. Know the local language, or employ someone who does.
15. Have the right team.
16. Consider non-financial risks:
    – Reputation
    – Health and safety
    – Quality.

Find out more about FD Solutions at fdsolutions.uk.com

To read overviews of Carl Hasty’s and Simon Carter’s presentations, please click on the links.