Reasons for Companies to Go Overseas

Companies often choose to expand to markets outside North America to become more profitable. Companies can expand their operations and sales to each country where they can legally work.

Expertise

Companies may seek specific expertise they can find only in a different country. For example, an upholstery company might purchase a silk weaving shop in Italy in order to purchase Italian silk at a lower cost.

Labor

If the cost of labor is significantly lower in another country with much lower living and wage standards, such as China or Malaysia, companies can save money by manufacturing there and shipping their final product back home.

Taxes

Taxes and regulations are a primary reason to locate a company in countries that have favorable business tax laws, such as in the Caribbean, or that offer tax incentives for specific industries, such as Vancouver gives to the film industry.

Market

If customers in a different country would be likely to purchase the company's products, they might decide to sell overseas.

Branch offices

In some cases, selling overseas might make it more efficient and inexpensive to create company offices in that country.

References

• World Trade Magazine: Why Companies Go Offshore Can Determine Whether They Succeed or Fail