Many Japanese companies have expanded their businesses into developed countries, with great results. On the other hand, they still face many challenges, such as intensifying competition and the necessity to optimize individual operations.
Japanese companies have seen emerging countries mainly as production bases in the global market. Now, many companies see these countries as consumer markets. Recently, Japanese, companies planning to expand into the BRICS, Indonesia, ASEAN—in particular, Vietnam and Myanmar—and Africa has increased at an accelerated pace.
Our Overseas Business Support Service provides client companies with strong and practical assistance that directly supports their business expansion in foreign countries. Our support is provided in five phases from decision-making on entry to optimization of the local operation.
International Business Expansion Phases
Development of an entry strategy is one of the most important processes in international business expansion. Based on a client’s “willingness to enter” the international market and its “target country,” mostly staff members from our consulting department conduct research on the local market environment (such as customer/channel trends, and competitors), operational environment, taxation and regulations.
The client chooses the business segment it will target, considering our rating for the attractiveness of each market segment. Then we help the client develop an entry strategy, based on our analysis of the client’s advantages in market competition, entry method, globally-linked operational models, investment plans and long-term business penetration/expansion road map.
If a client chooses to acquire existing businesses or facilities (the “brownfield” approach) as its entry method, we create a shortlist of local companies that fit the client’s business strategy and that are suitable for prospective joint ventures or business acquisition. We also consider schemes for alliances with prospective partners, M&A strategies, FDI regulations, tax treaties and other international tax issues.
When we propose an operational model for a client, we consider not only the local procurement/physical distribution/infrastructure environment, but also the impact on the client’s global supply chain consolidation of the local business in terms of efficiency improvements and international tax benefits.
PwC has solid business foundations in emerging countries. By providing fresh and reliable local information and comprehensive reviews on consulting, deals and tax issues, PwC supports its client’s efforts to maximize their investment impact and provides a feasible entry strategy.
Once a client decides to expand its business into a foreign country, specific plans must be created based on the chosen entry strategy. In this phase, mainly staff members from our consulting department develop a business plan (investment, personnel and financial) that takes into account the local taxation and accounting systems. In developing a business plan, we create a marketing strategy to achieve the business targets, including product introduction, pricing, promotions, and marketing channels. To achieve the goals of the business plan, we also draw up a framework for the structure of the supply chain, including specific operating sites, physical distribution and procurement, and other operations supporting the supply chain, IT systems and organizational structure.
If a client chooses the brownfield approach as its entry method, the client must close a transaction in this phase with the local company that it plans to acquire. In closing a transaction, staff members from the deals department provided one-stop M&A advisory services to assist the client in closing the deal, from lead advisory (assistance in negotiation and closure), due diligence and evaluation to modeling. Moreover, to ensure that our clients attain successful results from M&A deals, our professional team provides strong support to clients as they tackle difficult cross-border post-merger integration (PMI), including preparation for Day 1 and assistance in developing and implementing a 100-day plan.
In this phase, it is important to assess how uncertainties can be eliminated before making investments in the next phase or how risks can be identified properly when developing a contingency plan. With our knowledge of local business environments and diverse service lines, PwC can visualize a business plan from a comprehensive viewpoint and make risks and corresponding countermeasures visible for clients.
Based on the detailed operational design created, we assist our client in developing operating systems for their production run. This includes establishing internal operating bases such as a sales organization, overall organization of the supply chain, and IT, personnel, general affairs and accounting systems. We also apply for approval for incorporation and associated permits on behalf of our clients. Since many things must be completed in a short period of time, project management is also important.
If a client chooses an M&A or joint venture as the entry method, internal adjustments after the acquisition/merger are very important in order to ensure stable performance in the medium- and long-term.
After a client manages to close an M&A deal, if it cannot pull results out of the deal, the resources invested in the business will be wasted.
As the local business expands, the company becomes bigger and daily operations are established to some extent, clients may face many problems. For example, they may not be able to complete the account closing quickly. Or the human resources necessary to support the organization may not be developed. Introduction of IT systems may be slow, or the internal control system used in Japan may not work well in other countries. Problems will arise in various areas. We monitor those issues carefully, examine and diagnose business and operating efficiency, and analyze and develop plans for improvement and optimization.
In certain cases, tax reporting or account auditing may become necessary.
It is necessary to resolve problems found by monitoring from a comprehensive viewpoint to achieve optimization. Operational efficiency improvements and cost reductions are achieved through advanced tax management, which results in a more profitable organization that overcomes the competition.
Focused on building a trusted relationship with its clients and as a good and supportive partner, PwC provides high-quality collaborative services to solve problems that growing international businesses may face.