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Global business: Why you need to look beyond Canada and expand internationally

4-minute read

Arnold Leung

Arnold Leung founded Appnovation Technologies when he was just 22 years old and he’s been on a tear ever since.

Sales have doubled every year for the past three years at the Vancouver IT services company and the number of employees worldwide has tripled to 62. It's now a global business.

Guiding Leung is a simple vision he’s had since he started Appnovation after graduating from the University of British Columbia’s business school in 2007.

Success, Leung believes, can’t come just from focusing on the Canadian market. It has to come from expanding internationally.

“The more diversified my company’s markets are, the more stable it is, and the easier it is to grow,” says Leung, whose company specializes in using open-source software to build websites for large corporate and public sector clients.

It’s a vision that prompted Leung to pursue and win lucrative contracts with U.S. organizations such as Intel, Fox News, and the U.S. Department of Health and Human Services.

Over the past year, Appnovation moved into Europe. And then Leung embarked on his most challenging expansion yet—Asia, home to some of the fastest-growing economies in the world.

It was a risky venture, but Leung, 27, also knew he couldn’t afford not to try. It’s where the future lies for companies like his.

But Leung, a former BDC Young Entrepreneur Award winner, also recognized he needed outside help. He approached BDC to help him study the region, decide where to focus his efforts and make contacts.

Big potential

In January, he travelled to Vietnam and realized the country has big potential for his company.

Leung is now looking for a local partner to help him gain a foothold in the market. He is also exploring a deal with the Hong Kong government after getting an introduction from the Canadian Trade Commissioner Service.

Leung’s challenges are common among Canadian entrepreneurs seeking to expand abroad—especially those considering emerging markets, where differences in the business environment, culture and language can be daunting.

But with proper planning, the challenges can be overcome.

Expanding into international markets is not just an opportunity. It’s a necessity. The Canadian market is small and foreign companies are trying to expand here. Entrepreneurs can’t focus only on Canada and let companies from other countries come here and ‘steal’ their business.

Too many entrepreneurs are making easy-to-avoid mistakes that derail their international expansion efforts.

For starters, entrepreneurs usually wait until their product is “Canada perfect” before they think about expanding to other countries.

Start early

The problem with this approach is that it’s based on the erroneous assumption that what works in Canada will work elsewhere. Companies have to start thinking early about how their products may need to be adapted for other markets. This, in turn, can help them become more innovative.

A second common error is poor planning. Canadian companies typically expand to another country haphazardly. Instead, companies should step back from an initial contact with a prospective customer and analyze the entire region.

Look at questions such as setup costs, the tax and regulatory climate, competition, labour availability, shipping costs and insurance questions.

Good planning also means reviewing your company’s readiness to go abroad, looking at your strengths and weaknesses, and being sure that key personnel and stakeholders are onboard with your go-global venture.

One other blind spot for many Canadian companies is failing to study the business culture in their target countries. In Asia, for example, relationship building is vital before a business deal gets off the ground.

At Appnovation, Arnold Leung used many of these lessons when he planned his moves abroad. He knows his expansion involves risk, but the groundwork he’s done lets him sleep at night.

“It is a big investment, and the payoff won’t happen overnight, but there’s huge potential.”