Factors Affecting International Business

Since the financial crisis, the world’s political economy has returned to instability, nationalism, protectionism, and trade wars. The global economy seems to be at a difficult time, making it difficult to predict the situation in each country and bilateral relations, creating new challenges for organizations that want to do business internationally.

Companies investing and operating around the world still have great rewards, especially in many ways, that technology can help make it easier. However, with regard to rules and regulations ranging from labour law to tax, accounting, and standard obligations, there is an increase in the fragmentation and complexity of the rules and the penalties for not dealing with the complexity.

Unfortunately, for companies looking to grow, market opportunities and complexity often come together, and some of the most attractive investment locations ie business setup in the UAE are the most difficult to do business safely and compliantly. That is not a reason to avoid those opportunities. However, this means that you must bear the costs and penalties for violating local rules and be careful not to underestimate the operational challenges there.

The factors that drive complexity are:

Information requirements These are tightened to increase transparency and investor confidence while dealing with money laundering, tax evasion, and other crimes.

Law amendment These are becoming more and more frequent. Your intentions are often positive. For example, to boost the economy or make the country more attractive to investment. Regardless of your intent or the policies behind it, they all require corporate work to meet the standards.

Labour law Legislators often respond to local political pressures and pose difficulties for companies seeking to do business globally. If we do business setup in the UAE, certain reporting requirements, and employment obstacles before the business is incorporated as a legal entity are major obstacles to the business.

Penalties for violations The penalties imposed by the authorities are considered disproportionately high in many jurisdictions. Serious breaches threaten the reputation and even survival, as illustrated by the multi-million dollar fines that apply to banks arrested in money laundering and market abuse cases.

There is no easy solution other than working with field experts who are familiar with what they need locally and are ready to respond when rules change. When managing such complexity in multiple locations, it is important to have a single report and control in those locations to manage risk.