EMEA growth strategy is not a simple problem to approach; it’s a daunting objective to take on a region as broad as Europe, Middle East and Africa in one swoop. When we break down the most important factors in the growth strategy one by one, it becomes a more realistic opportunity for high-growth companies to access an incredible global shift in demographics. Now, we are not advocating to drop everything and set up shop in Kumasi. But, it is a small example of the market opportunity to be targeted as a part of a larger regional strategy in EMEA.
“Few people from the developed countries of the west have visited Kumasi, about 160 miles northwest of Ghana’s capital, Accra. With a population of about two million, Kumasi, is roughly the size of Houston…Only a few companies from developed economies have a presence in Kumasi. But Kumasi — and the thousands of emerging cities in emerging markets like it – is the future of where many companies will lie.”
No Ordinary Disruption – The Four Global Forces Breaking All the Trends. Dobbs, Manyika, Woetzel.
In our ever-shrinking global marketplace, clients increasingly approach us with a simple inquiry. “I know we should focus on EMEA, but we don’t know where to begin…”
So let’s keep it simple, shall we?
1. Proximity: Location, Location, Location
- Europe – A natural draw for US companies based on cultural familiarity and experience. Europe’s proximity to the broader markets, workforce, and stability make it an appealing place to begin your EMEA growth execution. Ireland offers very appealing corporate tax structures. Germany, more specifically Bavaria, offers a very business-friendly environment and arguably the most central location possible. Comparatively, French labor law and employer burden may cause you to rethink Paris as your EMEA hub.
- Middle East – Bridging the geographic and cultural gap between Europe and the Middle East, Turkey offers interesting opportunities for companies looking for nimble access to the region. Into the heart of the Middle East, Abu Dhabi and Dubai in the UAE are logical defaults and rightfully so. UAE offers a recently diversified economy and extremely low employer contributions for expatriates.
- Africa – Many companies are naturally attracted to South Africa and Kenya. However, we are seeing lots of opportunities in the North African countries of Morocco and Tunisia. Shifting demographics of Africa make it a more viable market for your EMEA growth than ever before.
2. Employment Considerations
Regardless of which part of EMEA you determine as home-base to your growth strategy, securing talent the right way is likely your next task. You essentially have three options regardless of location.
- Contractor – If the individual you are employing is truly a contractor, proceed under an independent contractor (IC) arrangement. Our experience shows this is less frequently the case. International IC compliance is a huge area of risk exposure. Including litigation, loss of intellectual protection and potential permanent establishment triggers, proceed with caution.
- Setting up your own entity to employ – The costs and time to first set up a foreign legal entity outweigh the costs and time to maintain it and pale in comparison to the cost and time to break it down in the end (See exit strategy below). If your EMEA growth strategy begins with a small headcount and nimble approach, which most successful endeavors there do, take a cautious and deliberate approach to setting up your legal entity for only a few employees. The US Commercial Service is a good place to start.
- FSaaS – Rather than running the risk of contractor engagements and the cost and burden of entity ownership, a perfect bridge solution to support your EMEA growth strategy is an alternative employment structure called Foreign Subsidiary as a Service. You maintain all managerial control of a small headcount of valuable employees without the heavier footprint of a legal entity or risk of independent contractors, learn more here.
3. Exit Strategy
And lastly, if the plan doesn’t quite hit the mark as planned, have an exit strategy. This will save you a ton of time and money in the long-run if the worst case happens. On average, it takes three times as much time and money to break down a foreign legal presence as it did to establish it.
Give us a call to chat through your EMEA growth strategy, challenge, and opportunities.