Many companies are looking to expand internationally. But these desires to conquer foreign markets include different aspects to be taken into account; we’re talking about different currencies, habits and lifestyles. For many American companies, Europe seems to be a promising market, but one with many dangers.
First of all, the North American market is characterized by its homogeneity. In other words, there is a single language, currency and virtually the same legislation. In contrast, the European market is much more diverse, with its multitude of languages, currencies, laws and cultures.
1- DIVERSITY OF LANGUAGES AND CULTURES
Of course, the first barrier is language. It’s hard to sell a product in a language you don’t master. As for “international” English, which some have called “globish”, while it enables exchanges to take place, it quickly hampers the quality of relationships by its poverty, and even the misunderstandings it generates.
What’s more, you’re not going to sell a product the same way in France as in Germany, because customs change from one border to the next. So you need to adapt your marketing strategy to suit each country.
McDonald’s, for example, adapts its menus in each country; you won’t find exactly the same foods or the same s. So you need a great deal of cultural flexibility for each country, but also for each major region. The French in the North don’t always have the same lifestyle as those in the South. Can an American easily understand the essence of a hit film like “Bienvenue chez les Ch’tis”?
So it makes sense to put people who are native to each country, or at least extremely well aculturated, in charge of foreign subsidiaries. You probably won’t gain much (or even worse) by putting an American at the head of the McDo France subsidiary, or even a Frenchman at the head of the Japanese subsidiary. We all remember the difficulties RENAULT had with MITSUBISHI in Japan (and how that ended.) A person born in the country will have a higher degree of understanding, having seen developments in terms of history and crises, and is already familiar with consumer habits.
It can be a good idea to surround yourself with companies specialized in developing sales strategies specifically adapted to the European market, as they are familiar with local cultural and economic norms and specificities, country by country.
2- REGULATIONS AND STANDARDS
The European continent has a strong reputation for its strict regulations, particularly on consumer protection and, in recent years, on the environment. Failure to comply with certain rules and laws can result in additional costs, or even financial penalties.
Here is a guide to the main French administrative procedures for setting up a foreign company in France: https://www.economie.gouv.fr/entreprises/etranger-creer-entreprise-france
Here are some European regulations to take into account:
The RGPD (General Data Protection Regulation). Concerns the processing, storage and use of personal data of consumers in the European Union.
VAT: imposed on many businesses, particularly on the sale of cross-border goods and services. Note that in America, VAT is calculated at the checkout, whereas in Europe, it is calculated directly into the sale price (a habit to be taken into account in changing cultures).
Polluter pays principle: in Europe, environmental protection has taken on a very important role and is based on four fundamental principles: precaution, prevention, correction of damage and payment for damage.
This means that companies must implement as many solutions as possible to reduce their environmental impact, particularly in terms of carbon emissions, at the risk of being overtaxed.
3- PERSONNEL MANAGEMENT
If an American company wants to set up in Europe, it will still need to send people there at some point, sometimes for a long time, sometimes indefinitely. In this case, the American employee must be in possession of a work visa, which varies from one European country to another, authorizing him or her to work and reside in the given country. They must also be registered with the social security authorities.
In France, for secondments exceeding twelve months, the company must make a prior declaration to the Dreets (Direction Régionale de l’Economie, l’Emploi, du Travail et des Solidarités) in conjunction with the Ministry of Labor.
In theory, employees must be able to speak the language of the host country, or take courses to ensure that they are not left at a disadvantage.
Take the example of the “Emily in Paris” series, which perfectly illustrates the difficulties encountered by an American employee who moves to the French subsidiary and finds herself lost amid the change of language and culture.
There are no easy ways to expand abroad: you have to surround yourself with foreigners. To avoid wasting time, money or even reputation, calling on local professionals will enable a company to better understand the needs of consumers in each country and establish an appropriate commercial strategy.