As more companies explore new or alternate production sites across Southeast Asia, India, and the Americas, managing global expansion is becoming a core business competency – one that many don’t possess. And that’s a problem given the strategic importance of these expansion initiatives. The fact is that entering a new market requires more than a location and cost analysis. It takes a detailed look at the logistics, regulatory, and practical limits of operating in unfamiliar markets.
Exactly what are these legal and logistical roadblocks that can undermine your expansion efforts? Check out the following infographic to find out. If you want to dive even deeper, read Dimerco’s detailed eBook on Mastering International Growth.
Logistics Factors That Increase Risk in Global Business Expansion
Shifting production or setting up new distribution centers brings new layers of complexity. What looks feasible on paper can become a problem in execution. Based on Dimerco’s work with companies expanding across Asia-Pac and beyond, these logistical challenges tend to surface across five key areas:
-
- Freight availability and routing options
- Local warehousing limitations
- Labor availability and productivity
- Trade compliance gaps
- Inbound supply chain risk
In many cases, delays and cost overruns come from overlooked operational issues. For example, a manufacturer relocating to Penang found that outbound air capacity was limited compared to what they had in Hong Kong. Without an alternate plan in place, that move would have seriously disrupted timelines.
A 3PL helped them reroute shipments through Kuala Lumpur and Singapore to maintain delivery commitments. This is a common scenario in global business expansion when logistics assumptions don’t match market realities.
Another common pain point in expansion is trade compliance. Misclassifying goods or misunderstanding country-of-origin rules can lead to inspections, fines, or even shipment rejections.
These risks can affect both setup timelines and long-term performance, especially when they involve valuation, documentation, or foreign ownership policies that are unfamiliar or inconsistently enforced.
Legal Factors That Increase Risk in Global Business Expansion
In the context of global logistics, failing to adequately research and understand the legal and regulatory requirements of a new market or jurisdiction can create significant barriers to successful expansion or entry. Each country has its own (sometimes very complex) framework of laws governing areas such as customs procedures, import/export restrictions, taxation, product standards, and employment regulations. Poor preparation can lead to delays in supply chain operations, penalties for non-compliance, and even the seizure of goods.
One example is packaging requirements. From material restrictions to labelling standards and customs/import rules, compliance with destination-country regulations is essential. A company expanding from one market to another can’t simply plan to duplicate their existing assembly and packaging process in the new market. They must adapt it to adhere to local regulations or risk fines or restrictions on market access.
Whether it’s packaging, employment law, tax and duty assessments, licensing or other regulatory issues, it makes sense to seek tailored legal advice well before a planned expansion to understand the requirements in the new market.
