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The Changing Face of International Expansion, Part 2

Article by: Mark Rawlins | Founder & CEO, InfoTrax
August 28, 2015

Legal issues

Opening multiple international offices creates a number of legal issues that a company must deal with. Although there are some ways to get around labeling and product approval laws, a company still needs to plan for different legal environments and regulations in each country.

For example, the “Not for Resale” business model allows people in other countries to buy product direct from a U.S. based company, as long as they don’t resell the product to people in that country. The company ships directly to them and thus bypasses the labeling, import, and product approval laws.

Although changes have been and are being made, Korea strictly regulates the total percentage a company may pay out in commissions; a company cannot pay more than 38% of the wholesale price paid. This is a vigorously enforced law. So any company that enters the Korean Market that pays more than 38% must change their commission plan to meet this requirement.

Worldwide commission plans 

In the last 15 years, the standard in the industry has been for companies and distributors to push for seamless worldwide commission plans. Companies bragged about their worldwide plans, and distributors demanded them.

The problem was that people assumed that if their plan was the best in the U.S., then it would naturally be the best anywhere in the world. But as we saw in the example about a distributor in the Philippines selling ten times as much, the same commission plan will not work everywhere. It has become apparent that the real goal for companies should be a seamless worldwide downline, instead of a seamless commission plan.

A worldwide downline means that a distributor can sponsor new recruits anywhere that the company is doing business, but he is being paid based on the rules of the country where the recruit lives. This allows a company to make changes in the commission plan for each country’s specific needs, but still allows the distributors to sponsor whomever they want.

A company should consider whether they want to create a truly seamless compensation plan or make adaptations for local offices. In most companies, the different commission plans will still be recognizable from country to country; they will most likely be based on the same general ideas.

Technology and pressure from distributors has made it easy and imperative for a company to move into the international arena, but that doesn’t mean that a company should just jump in with both feet. Making the transition takes patience and maturity and a good hard look at the issues that will come up in each country. In the world of tomorrow, more and more companies will change their commission plans to handle the extreme differences in the countries they move into.

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Mark Rawlins | Founder & CEO, InfoTrax

With a career managing MLM/network marketing companies that spans more than 30 years, Mark Rawlins is recognized as one of the pioneers and...

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