Internationalization is a real challenge and contrary to popular belief it does not always translate into success. An internationalization strategy is a long and complex process that mobilizes the different resources of a company. In order to ensure its success, it then sits essential to know how to prepare it. This will require questioning what form it should take. The company can choose between several possibilities such as the creation of a branch, a liaison office or simply decide to create a subsidiary.
What forms should be chosen for its implementation?
The choice of a method of implementation depends on many factors, it must be chosen among other things according to the objectives set by the company, its human and financial resources and its desire to internationalize.
The creation of a liaison office
This method of implementation meets an objective of gathering information, because it allows a company to make contacts on the spot, to collect all the necessary elements for a future collaboration. However, this status is limited to the extent that the company cannot sell its products or services. This method of implementation has no commercial vocation. The advantage of the liaison office is that it has no existence of its own which means that the expenses are deductible from the results of the parent company.
How do I create it? To create a liaison office, a single declaration of existence with the Chamber of Commerce and Industry is sufficient.
The creation of a branch
A branch is a geographical extension of the parent company. In this sense, this type of implementation allows the marketing in the country of implementation of the products of the parent company. Unlike a liaison office, the branch is considered fiscally a stable institution with no legal autonomy and no assets. If the parent country has not signed an international convention, it may be subject to the principle of double taxation between OECD countries (Organisation for Economic Co-operation and Development).
How do I create it? The formalities are not substantial and they differ depending on the country. The branch will have to be advertised in the register of trade and companies of its location. The parent company will have to appoint a branch manager who will have to have the residence card mentioning its activity unless it is part of the European economic area.
It is a method of implementation allowing a parent company to market its products independently and with a legal entity, and therefore the legal personality. The subsidiary, unlike the branch, acts in its own name, it is fiscally autonomous and has its own assets. The method of taxation corresponds to the tax laws in force in its country of origin. The creation of a subsidiary allows the entrepreneur to isolate his activities in order to take as few risks as possible in terms of deficit. One of the main advantages of the subsidiary is that it protects the parent company in the event of a failure.
How do I create it? There are two possible solutions:
- 1/ Either create a new business in its country of location. A long and expensive process, but one that allows the company to adopt the best legal status for the company.
- 2/ Either take over a foreign company. The company can participate in a buyout of a local company through share purchases, from underwriting to a capital increase.