What are the most popular options for setting up entities in 2024?
Despite economic headwinds and global unrest, the majority of general counsels (GCs) within multinational corporations predict that they’ll grow their presence in a similar number of markets in 2024 as they did in 2023.
That’s just one of the findings of our latest research with 300 GCs and senior legal professionals representing multinationals in the Americas, Asia Pacific, and Europe. We found that the majority of multinationals surveyed already have between one and 20 global subsidiaries.
When asked which markets they would expand their operations into during 2024, over half of respondents (56%) named North America. The second most popular destination was Asia Pacific (46%), and the third was Europe, excluding the U.K. (44%).
Reasons to expand into North America include the fact that it provides a huge consumer market with potential for growth and that it has a strong reputation for innovation and technological advancement. Barriers to entry when gaining access to the U.S. market are lower than those faced by companies in the EU in particular. However, this could change over time as has happened recently with the Corporate Transparency Act, which is the U.S. answer to beneficial ownership reporting.
What are the most attractive destinations for global entity expansion?
The GCs surveyed said that if they were choosing a new destination to expand into for the first time, it would be South America (46%), the U.K. (45%), or Central America (42%).
Both South America and Central America have abundant natural resources, a growing number of English-speaking professionals, and proximity to the U.S. market. Brazil, in particular, has an excellent IT and telecoms infrastructure. Our team at CSC has noticed a recent increase in U.S.-headquartered multinationals outsourcing resources such as contact centers to South America.
The U.K., meanwhile, is still popular with multinationals expanding into Europe, despite Brexit. There are low language and cultural barriers in the U.K., especially for U.S. headquartered companies, access to skilled professional skills, and an excellent air transport infrastructure for moving goods across the continent.
How global service providers like CSC can help
The process of opening and managing global entities in multiple jurisdictions is now highly complex in terms of new regulatory regimes and different legal frameworks, which demand quick and accurate access to one single version of corporate data.
GCs told us the biggest hurdles they encounter are putting infrastructure in place quickly for new entities, followed by identifying a premises and a process agent, and selecting the right entity type.
As well as supporting multinationals with such tasks, the right global service provider will provide the technology systems that enable them to move more quickly towards a top-down, centralized management model with standardized processes and legal support on the ground. In fact, having a global corporate service provider that delivers a flexible framework, supported by technology, ensures consistency in the delivery of services, while securing full transparency and control over costs and budgets going forward.
A corporate service provider like CSC has in-house legal expertise in 140 different jurisdictions, as well as CSC Entity ManagementSM, a market-leading technology platform that supports centralization and the complete oversight of critical legal entity data, reducing uncertainty and risk.
Our local teams are always on top of the changes in legislation that are coming down the track, and keep multinationals fully informed. So, wherever multinationals choose to expand their operations in the months and years ahead, we can help to maximize their success.
Download our latest General Counsel Global Barometer 2024 report to learn more about how GCs are approaching global expansion and the opportunities presented by external providers.
