When you are considering expanding your business to Asia, you generally have two options: setting up a separate entity in another country or using a PEO. Below, we discuss these two options and how PEOs simplify international business management. 

Complications of Setting Up a Separate Entity

The first option is to set up a separate entity. However, this process is often long and expensive. You may have to purchase or lease commercial space. Some countries in Asia limit ownership of real estate by foreigners. You may also have to deposit a large sum of money into a foreign bank account as your startup capital, making it unavailable for other uses.

The process to set up a business entity is often fraught with complications. You may have to register with multiple government agencies, complete applications, have forms translated into another language, wait for approval before moving forward, and comply with complex regulations that vary by the country where you are expanding and the industry you are in. 

Based on all of these expenses, you may be subject to substantial risk when you set up an entity in another country. You may not know how the local market will respond to your business, product, or service. 

The process can often be quite tedious. You may have to prepare similar applications and submit them to different governmental agencies. You may have to register with local tax and labor authorities. There are costs associated with all of these things. Additionally, you will need to set up foreign bank accounts and may have restrictions regarding their use. 

Once you have an entity set up, you will then need to go about the process of hiring local staff and managing employees. This may require complex rules related to drafting compliant employment agreements, setting up employee benefit systems and complying with immigration regulations. This may also involve working with specialists, such as employment lawyers and tax specialists, which again comes with additional costs. 

Once your business is operational, you will then have ongoing costs associated with running your business, including office rent, utilities, and payroll. You will incur many of these costs regardless of how successful or unsuccessful your business is. If your business objectives are not met, you may need an exit strategy. Some countries will have strict guidelines regarding exiting, which may require you to invest extra time, money, and resources to comply with.

Simplify the International Business Management with a PEO

Even though there are risks associated with running a business in Asia, you do not need to be intimidated about expanding your business at all since there is a much simpler option than establishing a separate entity. You can work with a global PEO who acts as your employer of record. 

As the employer of record, the PEO is responsible for the administrative responsibilities associated with employees. PEOs can recruit the most talented candidates from around the world and also handle any immigration requirements to legally hire them. The PEO uses its payroll system to pay employees and also manages employee benefits. This takes the liability associated with the employment relationship and places it on the shoulders of the PEO so that you can concentrate on the core competencies of your business.  

In addition to being able to transfer liability to the EOR, using a PEO also allows you to set up your business much faster. You do not have to wait months or years for your business entity to be established, so you can take immediate expansion action once the opportunity strikes, often launching within days.  

You can also use the PEO to test the market before making a major investment in setting up an entity. You can see how local customers respond to your business and change your marketing plan to test how it resonates with the local market. You can also gain from the expertise and knowledge of the PEO’s staff who are familiar with different strategies and what has worked in similar applications in the past. 

When you work with a PEO, you also get the benefit of economy of scale. You can access better benefits for your employees because the PEO is considered the employer of record. Because it has more employees, it gets better rates.

Experienced PEOs have ample knowledge in the field, so you can also benefit from their best practices. Automation and workflow tools they employ allow you to further simplify the employee management process and benefit administration. You also benefit from real-time data tracking and make timely decisions based on the most recent information. 

Get the Help You Need with Sky Executive 

As your business rapidly expands, you will need the assistance of partners who can help you accomplish your objectives. Sky Executive provides recruitment services for countries throughout Asia. Additionally, we provide comprehensive services through our innovative PEO platform to help you accomplish your growth plans while minimizing your risk. Contact us to learn more.