Overseas expansion costs are diverse.
In order to start a business overseas or build a factory overseas, you first need funds. In the case of overseas, there may be expenses that would not be incurred in Japan.
Therefore, it is important to know in detail what kind of things cost.
Some of the things that need to be assumed in advance are funds for preparation for overseas expansion, necessary expenses for business after it starts, visas and licenses unique to overseas. You will also need lawyers, accountants, interpreters and consulting fees.
It is also important to spend a lot of money on the necessary parts such as information gathering and advice from experts. Lack of information and preparation can determine the success or failure of an important business.
If self-funding isn’t enough, consider external subsidies, grants, or loans.
Market research costs
In order to expand overseas, you have to do research and planning first. Based on market research, it is important to check whether your business, services, and products will be accepted in the local market and whether there are business opportunities.
Even if we turn our attention to overseas markets in response to the decline in domestic consumption, it will be a waste if we cannot successfully increase our share overseas. Therefore, we must thoroughly investigate competition, local needs, and business practices in advance.
The cost of market research depends on the research method. If you ask a general consulting company for a full-scale investigation, it may cost you more than 1 million yen as a consulting cost, but if you ask a local person directly for a simple investigation, it may be less than 1/10.
The use of communities and platforms related to overseas expansion is also an effective way to keep overseas research cheap.
Overseas corporate registration expenses
When considering overseas expansion, it is attractive to establish and manage a company in a country or region. In fact, many companies have established companies overseas and opened up new markets by managing them, taking advantage of the country’s growth potential and market size.
However, direct investment costs not only to establish a company and hire people, but also to register the company.
Corporate registration is necessary both in Japan and abroad, and of course, registration fee is also required in Japan. However, in some countries, it costs more to register a foreign company than a local company, so it is necessary to investigate in detail.
The cost differs depending on the type of corporation. Some countries and regions do not accept foreign companies, so it is safe to confirm this point in advance, check whether direct investment is possible, and examine the costs.
Labor visa issuance and other licensing costs
When you set up a company overseas, you need to think about the procedures for Japanese employees who are dispatched there. When Japanese companies expand overseas and dispatch employees from Japan, they must issue work visas.
Of course, issuing a visa is expensive, so you will also need to estimate the cost of obtaining the visa. When you ask an agent to get a visa for an employee, it costs an agent fee. Also, it may take more than a few months to get a visa, so you need to be careful.
The necessary documents are different in each country, so it may cost to get a medical certificate or a certificate. Also, there are countries like Thailand where the ratio of hiring foreigners is fixed, so you need to be careful.
Depending on the job or occupation, there are other license fees.
Office rental and local personnel expenses
Because the initial costs for overseas expansion are large, it is necessary to incorporate such costs into financial planning.
Costs such as renting and purchasing offices, factories, tenants, and stores account for a large portion of expenses, both in Japan and overseas. In the case of a rental, a rental fee will be charged as a running cost.
Even if you purchase or build a land or a building, you need to think about the cost of renovation over the long term. Ownership of land is regulated in some countries and regions.
We expect local labor costs to be lower than in Japan when we aim to become an emerging country. However, in recent years, the level of education has risen and labor costs have soared in each country.
It is necessary to consider the labor cost while sufficiently observing the change of the country.
We have to think about transportation costs such as procurement of raw materials, transportation of processed goods and finished goods. Raw materials are procured locally by local railways and transported domestically and internationally by ships and aircraft.
Also, it is necessary to transport goods from Japan to the destination. These transportation costs are always the cost of producing and distributing raw materials and goods.
It may cost several 100,000 yen or more depending on the amount of transportation. If the facilities such as roads and railways are not well equipped, it may cost money to maintain them. Also, if it takes time for customs clearance, you need to pay attention to the storage fee.
I want to estimate the cost when the operation actually starts along with the preliminary research.
Expenses for accountants, lawyers and interpreters
There are also costs to pay professionals such as accountants, lawyers and interpreters. In particular, when we are expanding overseas, we need to hire experts who are familiar with laws and procedures overseas, so it can be costly to find human resources.
Because interpreters are also required for negotiations with local companies, the need for interpreters increases from an early stage. I would like to look for it with local partner companies and coordinators.
Also, consulting companies are convenient because they can take care of a lot of things such as research from the initial stage, but in such a case, it will take a long time from the planning stage of overseas expansion.
As described above, various expenses are incurred, and it is necessary to plan funds with these expenses in mind. Some costs are necessary to protect the company from risks and do not directly generate profits, but they are unavoidable to prevent unexpected losses.