Assessing Globalization and the Legal Environment for Possible Business Expansion
The global expansion of the fashion and clothing industry is an essential component
for any fashion entrepreneurs. Extending operations overseas comes with significant
advantages, such as extensive opportunities for business growth (Hamilton & Webster, 2018).
However, going global has its hurdles ranging from financial obstacles, communication
challenges, trade, laws of other countries, among others. It is, therefore, vital to study a
country first before making the big decision of going global. As the project manager in
charge of global initiatives, I am honored to research and present the three best countries that
this company can thrive without so many hurdles and a promising successful future for this
company.
Business in Mexico
One of the most significant risks in starting a business is running out of capital before
the activities of the company begin to make its profits. In regards to this, starting a clothing
business in Mexico is a vast advantage than in the US (Bolotin, 2019). It does not require too
much effort or capital in establishing and maintaining one in Mexico. Therefore, business
expenses will be reduced substantially, allowing the company to invest in the other two
countries. Another advantage of establishing a clothing business in Mexico is the low
operational costs. From legal procedures to accounting procedures and other laborers, what
one pays is considerably just a fraction of what one pays in the US. Being a moving firm, this
is particularly beneficial since it will be easier to compare what services costs are incurred in
each country. The competition of the clothing business is less compared to the US. Also, the
experience of doing fashion business in the US is an added advantage. The reason is that
most companies do not see the need to innovatively change their clothing styles since there is
no intense competition. Getting a legal work permit in Mexico is not a difficult task;
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therefore, getting on with the business as soon as possible is conceivable. Another added
advantage is how the US tax code is helpful in the country. Since the business headquarters is
in the US, taxes are paid to the US government regardless of the business's location. With
consultations from professionals in the Foreign Earned Income Exclusion department, annual
tax payments paid to exclude thousands of dollars if the company is abroad. Exclusion of this
amount of money is a salutary effect increasing the business net worth, especially if the tax is
compounded annually. However, starting a business in Mexico is not easy; it requires
diligence, a good business plan, proper finances, proper execution, among other factors that
favor the successful establishment of a business.
Business in Canada
Canada is one of the best countries in welcoming foreign business investment.
Operating a clothing and fashion industry is no exemption. Thanks to the North American
Trade Agreement, one can still have smooth access to the American market. According to a
study ("Interested in Doing Business in Canada? Here's What You Need to Know", 2016),
Canada remains to record one of the lowest business costs incurred. Other competitive
advantages, Canada provides bank stability. It has one of the best banking systems
worldwide. The country also provides a high number of skilled workforces, which is essential
for the clothing business. The highly educated population ensures a consistent development
of new designs of clothes. The strengths of Canadian industries are recognized worldwide.
Such sectors include textile industries vital in the clothing business. Canada's strategic
location can also allow the company to boom because it is at the epicenter between Asian
countries and Northern America and neighbors in the US. Canadian lifestyles are also an
added advantage. Most Canadians love to dress stylishly and is the home of top fashion icons.
Canada can provide favorable tax credits and incentives for the company. However, some
barriers to establishing a business in Canada in compliance with the Investment Canada Act.
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This Act somehow can deter business operations. The investment review ensures that
Canadians benefit from non-Canadian companies. Non-Canadians must apply within thirty
days of reviewing business investments. So, the bottom line is, the company has to either
team up with Canadian enterprises or permanently migrate its business operations in Canada.
Business in China
China has made substantial progress in the textile and fashion industry for the past
few decades. Recently, doing business in China has become much more comfortable in the
course of the last year (International, n.d.). This easiness is mainly due to new reforms by the
central government in China. These reforms include getting legal permits for foreign
investors, fair taxation, and easy access to utilities (Zhang, Kong, & Ramu, 2016). As a result,
Chinese business reforms on trade and politics have propelled the country to appear top on
the list of Doing Business 2020 (citation). The fact that permits are straightforward to obtain,
the company will have less trouble establishing the business in China. Also, the registration
procedures and getting company seals is quicker due to the one-stop-shop business
registration. Despite the improvements made by these reforms, this company may encounter
issues to do with tax compliance, border trade, and acquiring credits.
Market Entry Strategy in China
Out of the three countries, China's paradigm seems more fresh, new, and
advantageous to this company as far as the clothing industry is concerned. However,
successfully entering the Chinese market is an essential but challenging task (Li, Pinto &
Diabat, 2020).. For this company to successfully break into the Chinese market, here are
some useful insights on global strategies and competitive dynamics.
The first vital step is identifying the market. Owing to the vast landmass than the US,
China's market presents a unique challenge. It is, therefore, important for this company to
ASSESSING BUSINESS GLOBALIZATION 5
understand China's clothing and fashion industry and the opportunity gaps and how to access
them. Most foreign companies have failed due to a lack of sufficient comprehension of
China's market. Secondly, the company needs to predominantly choose the best location for
its business operations. Many foreign companies have opted for China's populated cities
(known as Tier 1) such as shanghai and Beijing. These highly populated cities in most cases
offer a low risk when entering the market but the companies face more competition and very
high operational costs. It is advisable to go for Tier 2 cities whose economic growth is on the
rise and provide an attractive market entry. The advantage of these cities is low operational
costs and small set up. In addition to this, they have a high consumer spending ability thus
creating rapid growth for the clothing business without so much competition. Thirdly, the
company needs to understand China's governmental policies and regulations. The need to
understand this is due to the impact the government regulations have on the company. Lastly,
the company needs to establish an IPR (international Property Rights) strategy. This strategy
employs various tools such as a mixture of legal measures, practical procedures, and
technical actions that are designed to ensure constitutional rights are adhered to and also deter
infringement of these rights. Having entered the market, this will arouse the need to protect
the company's IPR and lead to a successful market entry
Conclusion
Making the first step to taking a business global proves to be a series of potential
pitfalls. But although there are many hurdles in the journey of establishing a thriving global
market, it is essential to note that the rewards of successful navigation are bounty. I want to
recommend China since the country's clothing business is continuously evolving, offering
this company a chance of marketing in the most important international trading centers.
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References
Bolotin, C. (2019). Why It Can Be Easier To Start A Business In Mexico. Retrieved 29
March 2020, from https://www.forbes.com/sites/chuckbolotin/2019/01/01/why-it-can-
be-easier-to-start-a-business-in-mexico/#69f9f8c130c4
Hamilton, L., & Webster, P. (2018). The international business environment. Oxford
University Press.
Interested in Doing Business in Canada? Here's What You Need to Know. (2016). Retrieved
29 March 2020, from https://www.thebalancesmb.com/do-business-in-canada-
2947118
International, B. China Market Entry Strategy: A Guide To Entering Chinese B2B Markets.
Retrieved 29 March 2020, from https://www.b2binternational.com/publications/china-
market-entry/
Li, Y., Pinto, M. C. B., & Diabat, A. (2020). Analyzing the critical success factor of CSR for
the Chinese textile industry. Journal of Cleaner Production, 120878
Zhang, M., Kong, X. X., & Ramu, S. C. (2016). The transformation of the clothing industry
in China. Asia Pacific Business Review, 22(1), 86-109.