We recently looked at some of the most significant global expansion developments in 2020. As we ring in the new year, it is worth taking a moment to consider the global expansion trends that may ramp up in 2021. We set out five key trends below.
- ‘Glocalization’
This is the adaption of global products and services to reflect local differences. The phenomenon is not, in itself, a new thing: Global chains like Starbucks and McDonalds have long altered their menus to suit local tastes (e.g., few beef products in India and kosher products in Israel). But a more recent upsurge in this behavior is arising from the dominance of global e-commerce. For example, Netflix continues to increase its localized offerings in Asia-Pacific markets.
- Strategic global expansion
Some predicted that Covid-19 would prompt a movement away from the global, and back towards the local as a response to supply chain interference. This hasn’t been the case: The free flow of goods and services has largely remained intact. In fact, Covid-19 economic pressures have meant many enterprises becoming smarter and more strategic about how their business is distributed. Where efficiencies and cost savings can be made by expanding business into overseas locations, we can expect more enterprises in 2021 to move their focus accordingly.
- Data innovation
The focus of regulators in recent years has been on protection of personal data (e.g., the EU’s GDPR). But in 2021 we expect to see a greater emphasis on how personal data can be utilized to the benefit of both society and individual businesses. This can be seen in the European Commission’s ongoing work creating data markets which would make it easier to utilise EU personal data. We can also see this in the embedding of China’s social credit system which will provide a high level of transparency over the dealings of business partners.
- Tax changes
Facebook’s recent announcement that it is shutting down its Irish holding company subsidiaries is an omen of things to come. Vigorous enforcement action from regulators, as well as the rise of new ‘digital services’ taxes will result in global enterprises reducing their reliance on traditional ‘tax havens’.
- Regulation of independent contractors/freelancers Businesses are increasingly relying on independent contractors and freelancers to better line up with dynamic and ‘Agile’ project and strategic management approaches: Contractors can provide services as and when required, without locking the business into employment contracts. However, governments and regulators are increasingly pushing against ongoing ‘employee misclassification’: Businesses treating an individual as if they are an independent contractor when the true nature of the relationship is one of employment. We can expect this to continue into 2021.
We can’t know in advance exactly what 2021 will have in store for global expansion (who would have predicted 2020?). Nevertheless, it is clear that there will be an ongoing need for a knowledgeable expansion partner to support a compliant international expansion.
