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Establishing a physical presence outside of your country may be motivated by one or more factors. The desire to pursue a new lucrative market is almost never the sole reason for a physical presence overseas, in fact it is often not necessary. More often than not it is the competitiveness of your products or services in existing national capability to another country where costs are lower. In many cases, production is relocated to countries without a market simply because producing in that country for export back to your own or to third countries is the most profitable option.
The availability of human resources – at all levels, from shop-floor to managerial – at the right levels of cost, quality and productivity is a major reason why many owner-managed and fast growing entrepreneurial businesses seek to enhance their competitiveness – if not their very availability of training facilities and programmes. Social stability, industrial relations, trade union practices, absenteeism levels and the local work ethic are all elements of a jig-saw puzzle that needs to be completed before a location decision can be fully understood and appreciated.
It may also be a matter of cost of raw materials, parts and components. It may be a question of customs duties on these when imported from their country of origin or of duties on your final product in the countries where you are presently exporting to (or are planning to export to). Incoming and outgoing transport costs and logistics, rents and purchase prices of industrial premises and land and their availability, local planning regulations, availability and cost of public utilities: all of these, singly or in combination with other factors, have been known to determine location decisions.
Last, but certainly not least, corporate and personal taxation is a major consideration leading to the option of an international presence.
Most countries today compete with each other to attract foreign direct investment with attractive incentives’ packages. Once you have that you will benefit from a physical presence overseas and that you are capable of such a move, you will need to examine these carefully in conjunction with all of the above before you decide upon a particular location.
A number of locations in the Mediterranean region have distinguished themselves over the past forty years for their international competitiveness, Malta itself being a case in point. Thousands of foreign direct investors, global firms as well as owner-managed fast growing businesses have chosen one or more of these locations as bases for a manufacturing and service provision on local as well as export markets. Grant Thornton in Malta specialises in assisting foreign direct investors seeking to establish bases in this region irrespective of their country of origin.
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