Best Countries to Start a Business for International Expansion

How do you decide which country should be your next international expansion destination? 

Many factors, such as economic growth, operational efficiency, cost, etc., help decide the best country for business expansion. However, a country with low operational costs but a poor infrastructure wouldn’t be an appropriate choice. Hence, a good indicator for choosing the country is its gross domestic product (GDP). 

GDP is the monetary value of goods and services produced in an economy within a specified period. So, a country with a higher GDP reflects economic stability and growth prospects for new business. 

This post will delve into the top 10 growing economies to list the best countries for international expansion.

‍

10 Countries Best For International Business Expansion

While GDP can indicate business favourability, other factors should also be considered when picking your final destination. This includes:

1. Connectivity with the rest of the world
2. Skilled talent pool
3. Government initiatives
4. Market size
5. Operating costs  

Let’s see how each country matches up to these criteria:

United States 

The United States provides a favourable business environment with the following:

• A hub for innovation and technology, offering opportunities for collaboration and access to cutting-edge resources
• A strong financial ecosystem, including venture capital, angel investors and public markets for fundraising
• A well-defined legal and regulatory system that provides stability and protection for businesses
• A skilled and educated workforce across various industries

However, some cautionary factors before expanding to the United States are:

• Compliance with federal, state and local laws, which can be complex and vary by location and industry
• Being mindful of cultural differences and consumer behaviour; adapt your business strategies accordingly
• Intricate US tax system; seek professional advice to navigate tax implications

Advice for founders:

Remember that the country's eccentricity lies in its diversity. What works in one region may not in another, so be open to a strategic pivot.

China 

China provides a favourable business environment with:

• efficient manufacturing capabilities and supply chain infrastructure
• access to cutting-edge technologies and innovations with its continuous investment in research and development
• government incentives and support to encourage investment and expansion in the country
• rising middle-class economy, presenting a growing market for various consumer goods and services

Points to note before expanding to China:

• Navigating China's complex regulatory environment can be challenging. So, invest time to understand and comply with local laws and regulations.
• Cultural nuances play a significant role in business interactions in China, such as the importance of hierarchy or gift-giving. 
• Intellectual property protection can be a concern in China. So, take measures to safeguard your company's innovations and assets.
• China has stringent cybersecurity and data privacy regulations, so ensure compliance with these rules.

Advice for founders:

Chinese consumers favour local products and services, so consider adapting your offerings accordingly. Additionally, take time to understand the significance of "Guanxi," which refers to the concept of personal connections and relationships. It can enhance your business prospects in China.

Japan 

Japan provides a favourable business environment with:

• an ideal place to tap into technological advancements and innovation with its research and development
• high-quality workforce, known for their strong work ethic, discipline and skill, which can benefit the business operations
• strong intellectual property laws, safeguarding your innovations and products

Before expanding to Japan, here are some things to consider:

• Japan has a unique culture, so understand and respect local customs and etiquette.
• Language can be a significant challenge, as many business transactions and documents are conducted in Japanese. Hire or partner with bilingual professionals for assistance.
• Navigating Japan's regulatory framework can be complex. Be prepared for paperwork, permits and compliance issues.

Advice for founders:

Recognise the country's strong emphasis on hierarchy and respect. In business interactions, show deference to senior individuals by using appropriate titles and formal language. Also, be aware of the concept of "nemawashi," which involves consensus-building and careful decision-making. It takes time to reach agreements, but patience and relationship-building are valued.

Germany 

Germany provides a favourable business environment with:

• the largest and most stable economies in Europe, providing access to a robust consumer base and a well-developed infrastructure.
• highly skilled and educated workforce, offering a pool of talent for various industries.
• a gateway to the European Union, making it an ideal base for expanding to other European markets.
• strong trade connections worldwide, facilitating international expansion.
• a stable and transparent regulatory environment, with support for business growth and foreign investment.

However, here are some cautionary factors:

• Understand local regulations and compliance requirements, as Germany has strict rules regarding taxation, employment and data privacy.
• While English is widely spoken in the business world, understanding the local language (German) and culture can facilitate networking and business relationships.
• Germany has relatively high labour costs and a complex social security system, so budget accordingly.

Advice for founders:

Beware that punctuality is a vital aspect of German business culture. Additionally, hierarchies are respected and decision-making can be slow due to a consensus-driven approach. Also, Germans place a high value on sustainability and environmental responsibility. So, consider incorporating eco-friendly practices into your business model to align with local values and regulations.   

India 

India provides a favourable business environment with:

• a steadily growing economy, creating opportunities across various sectors, including technology, manufacturing and services.
• a pool of skilled, cost-effective labour, which reduces operational costs for your business.
• a diverse population, allowing you to test a variety of products and services. This helps you tailor your offerings to different customer segments.
• government initiatives like "Make in India" and "Digital India" to promote business growth and investment.

However, you should know these points before starting a business in India:

• India is a diverse country with multiple languages and cultures. Understand and respect these differences.
• Navigating India's regulatory landscape is challenging. Have a local partner or legal counsel to help with compliance and bureaucracy. 
• While urban centres have developed infrastructure, rural areas lack basic facilities. Consider your target market and logistical requirements.
• India is a competitive market. Understand local competitors and market dynamics well.

Advice for founders:

Focus on building strong relationships and networking with local partners. Invest in an employer of record like Rapid if you want to save yourselves from getting lost in legal obligations. With state-specific laws, it becomes challenging to run a business smoothly without legal assistance.  

United Kingdom 

The UK provides a favourable business environment with:

• access to capital, investors and a well-developed financial infrastructure.
• the cultural diversity that makes it an excellent test market for international products and services. 
• a springboard to access the European market. 
• a well-established legal system that protects intellectual property rights and enforces contracts.

However, a few points to note before expanding to the UK:

• The UK can be expensive, especially in cities like London. Assess the budget for the cost of office space, labour and other operational expenses.
• The UK's exit from the EU has introduced trade complexities. Ensure you understand and comply with new customs and regulatory requirements.
• The value of the British Pound can be volatile. Develop strategies to hedge against adverse currency movements.
• Recruiting and retaining talent is competitive, so have a clear human resources strategy in place.

Advice for founders:

Prioritise etiquette, punctuality and a formal demeanour in business interactions. Be patient in relationship-building due to the reserved nature of the culture.

France 

France provides a favourable business environment with:

• easy access to other EU markets with central location in Europe.
• A skilled and educated workforce, especially in sectors like technology, healthcare and engineering.
• numerous incentives for innovative businesses as they invest significantly in research and development.
• excellent transportation and communication infrastructure, making it easier to conduct business.

However, before expanding to France, you should know these things:

• France has a regulated business environment. Navigating labour laws and bureaucracy can be challenging. Also, the cost of labour and taxes in France is relatively high.
• Depending on your industry, you can face fierce competition from both local and international companies.

Advice for founders:

France prioritises work-life balance, which extends to business interactions as well. So, don't rush negotiations; allow time for relationship-building. 

Also, understand the importance of the "déjeuner d'affaires" (business lunch) – it's not just about the food. It's a part of French business etiquette where deals can be subtly sealed.

Canada  

Canada provides a favourable business environment with:

• access to the US market, thanks to its geographical proximity and the USMCA trade agreement
• a diverse, skilled labour force, which can benefit your company's innovation and adaptability
• a universal healthcare system that reduces the burden of providing healthcare benefits to employees
• a reliable legal system, ensuring business contracts and transactions are well-protected

However, remember these points before expanding to Canada:

• Be prepared for varying regulations between provinces and territories, necessitating careful compliance management.
• Even though it is stable, the Canadian market is smaller than the US
• Depending on the location, extreme weather conditions can disrupt logistics and operations.
• Ensure you understand the tax implications, including federal and provincial taxes.

Advice for founders:

Understand and embrace the benefits of diversity and inclusion in the workplace. Also, acknowledge the cultural nuances and bilingual nature of the country—English and French—to access both markets effectively, especially in Quebec. Don't underestimate the importance of understanding regional differences. The business culture can vary significantly between provinces. 

Russia

Russia provides a favourable business environment with:

• natural resources, making it attractive for businesses in sectors like energy, mining and agriculture
• a central geographical location that bridges Europe and Asia, facilitating trade across both continents
• a growing consumer base for various industries with the rising middle class
• a well-educated and skilled workforce, particularly in technology and engineering fields

However, before expanding to Russia, note these points:

• Understand and respect Russian culture for building trust and lasting business relationships.
• Language can be a significant obstacle; having a local partner or hiring bilingual staff is advisable.
• Russia's economy is sensitive to global factors, so be prepared for fluctuations in currency and market conditions.
• Ensure your intellectual property is protected, as Russia has had issues with IP rights enforcement.

Advice for founders:

Russians prioritise deep personal connections in business. Building trust through socialising and showing genuine interest in your Russian counterparts is as important as your business proposal. Also, be patient; business negotiations in Russia take time and rushing can harm your chances of success.

Italy 

Italy provides a favourable business environment with:

• a strong tradition of creativity and innovation, particularly in design, fashion and high-end manufacturing. 
• a thriving market with millions of tourists. 
• a well-developed banking and financial sector which can support your business's financial needs.
• strong intellectual property protection, essential for businesses relying on patents, trademarks and copyrights.
• an educated workforce, with a particular strength in fields like engineering, fashion and the arts.

However, expanding to Italy has the following challenges:

• Italy's bureaucracy can be complex and time-consuming. Be prepared for red tape and legal hurdles.
• Italy has a complex tax system; consult with local experts to navigate it effectively.
• Different regions have distinct business cultures and regulations; understand local variations.
• While English is spoken in business, it's essential to grasp the Italian language for effective communication.

Advice for founders:

Italy's business environment is influenced by its cultural idiosyncrasies. Also, be patient and adaptable, as schedules may be flexible and negotiations can be lengthy. 

Make Global Business Expansion Easy 

Each of these countries has its own eccentricities. Understand your business needs and create a global expansion strategy. It helps you make informed decisions and ensures each expansion step brings more growth and success.