As companies in direct selling and multi-level marketing grow large enough to consider international expansion, there are some important aspects of globalization that should be considered. Doing so will reduce risk and cost during the process. I will share with you the important factors to be evaluated and we will review them in this article. I have been assisting companies with international expansion for over 35 years. The advice I give is determined by factors such as, where the base corporate office is located:
International from a base in the USA
Most countries will allow you to process your customer and distributor charges in USD currency using your merchant account in the USA. It’s not always ideal, but it’s a way to start. Your customers and distributors will be charged in their local currency with a currency conversion, and will be assessed something like a 3% charge for this service. If you’re sending the money back into the country to pay commissions either you or the distributor will have a currency exchange rate applied. Even with these added expenses of currency exchange, many companies operate this way for many years.
The second way to expand internationally
There is a second way to expand internationally: create a company in each country, get a local bank account for each, and then obtain merchant processing in the local market. Choosing this way affords your distributors and customers to pay in local currency, and you receive the same local currency. This scenario is commonly referred to as “like to like.”
The third way to expand internationally
A third option is also available in many countries with some merchant processors (typically these processors are in the Eurozone, Hong Kong, or Singapore and require you have an entity in one of those places). In this option, they charge the distributor and customer in local currency but deposits your funds in Euros, or Hong Kong dollars.
There are complexities in all these cases that require you to consult with your international tax advisors and international direct sales legal advisors. Consider first, how you will ship the product to the customers and distributors. Some places allow for “NFR-Not for Resale” and you can ship from the US. Some countries may require you to ship products from local warehouses.
Product regulations can vary extremely from one country to another. If you need a better understanding of international regulations, I recommend turning to David Rowden, an expert in the area of import, export, and international tax. I have worked for several years with David Rowden. He provides over 20 years of hands-on experience in the health & wellness direct selling industry. Any company looking for international product registration, product regulatory affairs, or import and export processes would be wise to seek his input during or before international expansion.
Recently I spoke with David; he said “Expanding internationally provides a unique and exciting opportunity for any fundamentally solidly grounded US / North American direct sales or network marketing company. Global markets are diverse in culture and can add real value to companies with the desire to optimize our modern e-commerce environment and effectively remove all boundaries. To achieve this realistic goal, a strategic plan needs implementing promptly; and having partners in Glen and myself will help you navigate the right path. By so doing you will likely avoid all pitfalls and meet any sales goals.”
In conclusion, growing into international markets is a great way to find more and new business. Through my analysis, David Rowden and I can give wise advice to help companies navigate the complexity of countries for products, fulfillment, order processing, and commissioning in a multi-currency and multinational environment.