1. International Entrepreneurship
By, Dr. Nina Radojevich-Kelley
Metropolitan State University of Denver
School of Business
Department of Management

2. International Entrepreneurship
Definition
“process of an entrepreneur conducting business activities across national boundaries” (Hisrich, 2013)
Exporting, licensing, having a sales office in another country

3. STATS 85% of the world’s population lives in developing countries
infrastructure development is needed
Over half of world’s population lives in Asia
China has 20% of world’s population
India twice the size of Latin America
Many new market opportunities and transitioning countries…huge opportunities exist
Russia, Serbia, China, Malaysia, Peru, Vietnam, Iraq, countries in Africa

4. International Entrepreneurship
Many potential markets and prospective countries available
Foreign market selection is critical issue
Should you…
enter the top country,
select the largest potential market or one that is easier to navigate?
Should you go into a developed market? Or developing market?
Decision….
Based on past sales, competitive positioning and assessment of EACH foreign market alternative
Collect data on a regional (EU) and country basis (Southeastern China)

5. BEFORE expanding abroad: Entrepreneurs should…..
Assess key indicators
Collect and analyze data (primary and secondary)
Look at stats for 3 year period of time (or more) to see trends
Secondary Data
NAICS codes- look for equivalent industry reports
Doing Business Abroad reports
GEM reports
STAT-country (STAT-USA)
CIA World fact book
Index on Economic Freedom
Humanitarian Response Index
GLOBUS
National Trade Database
Look at country rankings & cultural perceptions

6. Motivations for GOING International?
Increase profits
95% of world’s population lives outside of USA =$
Competitive pressures
Can’t keep up with low prices…need to manufacture abroad
To avoid increased government regulations
Car manufacturing, chemicals & toxins
Unique product/service
Similar markets elsewhere
Aging population, obesity, autism
Excess production capacity
Have a ton of extra stuff and local market doesn’t want it
Declining home country sales
In latter part of life-cycle
If your technology is obsolete in your country….take it to another country which might see it at revolutionary…new sales opportunities
Take advantage of lower costs
Lower costs in labor, raw materials, manufacturing overhead
Nike, Reebok, Disney
Technological advantage
Tax benefits
Have advantage of having sales office and distribution

7. Things to Consider When Selecting a Country?
Language
Economy and type of economic system
Political and Legal environment
Labeling requirements, advertising claims, ingredients, packaging, types of legal ownership, pricing decisions (if Value-Added-Tax)
Culture
How open is the culture to entrepreneurship?
Perceptions of local entrepreneurs
How similar/different the culture is from your own
Technological Environment
Local competitors
Opportunity perception
Entrepreneurs motivation for expanding international
Proximity to customers (physical and psychological closeness)
Trade Agreements (regional and free trade)
How long does it take to actually form/create a business

8. Best Place for Entrepreneurs to Research Foreign Markets?
World Bank
Doing Business Abroad Report
Ease of doing business
Global Entrepreneur Monitor (GEM)

9. Doing Business Abroad World Bank
Ranked 185 economies on Ease of Doing Business in 2013
Environment is more or less conducive to starting and operating a business in a given country
“TOP” ranked countries have less RED TAPE…
More attractive to entrepreneurs…….but is this the complete picture?
Concerns with JUST using these reports?
Does not take into account the culture, perception among entrepreneurship among citizens, perceived opportunities for starting ventures

10. Doing Business Abroad: Averages a country’s percentile rankings on 10 topics
Starting a business
# payments, time in days, costs% income per capita, paid-in min. capital (% per capita income)
Dealing with construction permits
# procedures and # days to obtain permits to build warehouse, cost (% per capita)
Getting electricity
# procedures and # days to obtain permanent electricity, cost (% per capita)
Registering property
# procedures and # days required to register property, cost (% per capita)
Getting credit
degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and facilitate lending, borrowing history, rules & practices
Protecting investors
Liability, stakeholder ability to sue directors/officers, transparency of transactions,
Paying taxes
# payments per year, time it takes to file, % of tax paid on profits, upkeep labor, % tax paid for mandatory contributions (Federal corp income tax, State prop. tax, Sales, federal unemployment tax, other (truck-lease tax, fuel tax)
Trading across borders
total # documents required per shipment to export/import goods, costs associated with exports/imports (including documents, admin fees for custom clearance, broker fees)
Enforcing contracts
# of days to resolve dispute, # procedures to enforce contract, and costs of attorney fees and court fees
Resolving Insolvency
Average time to close a business, average cost of bankruptcy proceedings, recovery rate cents-to-$
documents required for clearance by government ministries, customs authorities, port & container terminal authorities, health and technical control agencies & banks, costs associated with export & import
The cost associated with all procedures required to import goods, including for documents, administrative fees for customs clearance and technical control, customs broker fees, terminal handling charges and inland transport.

11. Top 10 Countries for Entrepreneurship http://doingbusiness
Economy
Ease of Doing Business Rank
Starting a Business
Dealing with ConstructPermits
Getting Electricity
Register Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
Singapore 1 4 2 5 36 12
Hong Kong, China 6 60 3 10 17
New Zealand 32 21 25 13
United States 19 69 22 16
Denmark 33 8 14 23 34
Norway 43 7 70
United Kingdom 20 62 73
Korea, Rep. 24 26 75 49 30
Georgia 9 50 38 81
Australia 11 37 48 44 15 18
Finland 40

12. Top 10 Countries for Entrepreneurship http://doingbusiness
Economy
Ease of Doing Business Rank
Starting a Business
Dealing with Construct Permits
Getting Electricity
Register Property
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
Singapore 1 4 2 5 36 12
Per Capita
$ 42,930
3 days
3 proced
.6% Cost per capita
26 days
11 proced
16.7% cost
36 days
4 proced
28% cost
21 days
5 proced
2.9% cost
5 pymtsYR
82 hrs/yr
6% profit tax
27.6% total Tax
4 docu
Exprt $456
150 days
21 proced
.8 years
Cost 1% estate
Hong Kong, China 6 60 10 17
$ 35,160
1.9% Cost per capita
67 days
6 proced
16.3% cost
41 days
1.6% cost
4% cost
3 pymtsYR
78 hrs/yr
17% profit tax
23.% total Tax
6 docu
Exprt $923
360 days
27 proced
1.1 years
Cost 9% estate
New Zealand 3 32 21 25 13
$ 36,648
1 days
1 proced
.4% Cost per capita
89 days
29.8% cost
50 days
76.1% cost
2 days
2 proced
.1% cost
8 pymtsYR
152 hrs/yr
28.8% profit tax
33.5.% total Tax
5 docu
Exprt $870
216 days
30 proced
1.3 years
Cost 4% estate

13. Top 10 Countries for Entrepreneurship http://doingbusiness
Economy
Ease of Doing Business Rank
Starting a Business
Dealing with Construct Permits
Getting Electricity
Register Property
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
United States 4 13 17 19 25 69 22 6 16
Per capita
$48, 850
6 days
6 proced
1.4% Cost per capita
27 days
15 proced
14.4% cost
68 days
4 proced
16.1% cost
12 days
3.5% cost
11 pmtsYR
175 hrs/yr
27.6% profit tax
46.7% total Tax
4 docu
Exprt $1090
370 days
32 proced
1.5years
Cost 7% estate
Denmark 5 33 8 14 34 10
Per Capita
$ 60,390
.2% Cost per capita
PLUS 24.2% capital saved
8 proced
57.1% cost
38 days
119.6% cost
10 days
3 proced
.6% cost
10 pymtsYR
130 hrs/yr
20% profit tax
27.% total Tax
Exprt $1744
410 days
35 proced
1 years
Cost 4% estate
United Kingdom 7 20 62 73 21
$ 37,780
13 days
.7% Cost per capita
99 days
9 proced
62.4% cost
105 days
5 proced
108% cost
29 days
4.7% cost
8 pymtsYR
110 hrs/yr
22% profit tax
35.5.% total Tax
4docu
Exprt $950
399 days
28 proced
Cost 6% estate

14. Top countries Can’t just take top 10 countries and go forward
Doing Business Abroad does not tell entire story
Must look at culture (fear of failure), perception among entrepreneurship among citizens, perceived opportunities for starting ventures
Funding opportunities (VC, Angel investors)
Opportunity for women in entrepreneurship
GDP per capita (strength of the economy)
Free Trade Agreements
Immigration laws
Workforce-strength, skills, age
Size of market
Cultural support
Some of the largest countries are the best countries for entrepreneurs, but some of the smaller economies made the list (New Zealand, Chile)
Some of the smallest HAVE the great opportunities WITH LESS competition

15. Remember
Just because it is easy to start a business in a country does not mean that small businesses are being started
Example: Japan, France
Always rank in top 20% of countries to start a business in
Yet have low rates of entrepreneurship
Fear of failure
Not supported by culture

16. GEM Report 2012 http://www.gemconsortium.org
Looks to understand societal attitudes, participant levels, characteristics of entrepreneurs, etc.
Entrepreneurship is a good career choice
In the EU only 50% of respondents agreed that entrepreneurship was a good career choice
In Latin America/Caribbean, the Middle East/North Africa (MENA) and Sub-Saharan Africa regions, over 75% of respondents considered entrepreneurship to be a good career choice
Asia Pacific/South Asia region estimated 30% of the population saw opportunities for entrepreneurship
Only 17% intended to actually start a business in next 3 yrs

17. Fear of Failure http://www.gemconsortium.org
Sub-Saharan Africa exhibited the lowest levels of fear of failure.
Only 24% of all respondents indicated that fear of failure would prevent them from starting a business.
Latin American and Caribbean economies (28%) had fear of failure which would prevent them from starting a venture
Fear of failure generally increases as one moves from early-stage to advanced development levels
Greece (61%) and Italy (58%) showed the highest fear of failure levels

18. Perceived Opportunities http://www.gemconsortium.org
factor-driven economies (those relying on agriculture or extraction businesses with a heavy reliance on (unskilled) labor and natural resources) had highest perceptions of opportunities for entrepreneurship and intention to start business
Middle East & North Africa
Algeria, Egypt, Iran, Palestine
Sub-Saharan Africa
Angola, Botswana, Ethiopia, Ghana, Malawi, Nigeria, Uganda, Zambia
Asia Pacific & South Asia (Pakistan)
70% of sub-Saharan African economies had high perceptions about the presence of good opportunities AND 76% believed they have the skills and knowledge to start a business
Sub-Saharan Africa reports high levels of entrepreneurship

19. Entrepreneurship Intention http://www.gemconsortium.org
The intention to start a venture in next 3 years
Factor-driven economies (48%)
Middle-East and North African countries, Sub-Saharan Africa
Iran, Egypt, Ethiopia, Ghana, Nigeria
Efficiency driven economies (26%)
European Union (Hungary, Romania, Poland, Lithuania), Non-European union (Croatia, Serbia, Russia, Turkey), Asia Pacific & South Asia (China, Thailand, Malaysia), Latin America & Caribbean (Argentina, Brazil, Chile, Costa Rica, Peru, Panama)
Innovation-driven economies (11%)
North Africa & Middle East (Israel), South Asia & Asia Pacific (Japan, Singapore, Taiwan), European Union (Austria, Belgium, Denmark, Germany, France, Ireland, Greece, Spain, UK, Sweden, Slovakia, Portugal), non-European Union (Norway, Switzerland), United States

20. Perceived Opportunity Perceived Capability Fear of Failure
Economy
Perceived Opportunity
Perceived Capability
Fear of Failure
Entrepreneur
Intention
Good Career
Brazil
52%
54%
31%
36%
86%
Nigeria 82 88 21 44
China 32 38 36 20 72
Japan 6 9 53 2 30
Singapore 23 27 42 16 50
Rep. of Kor 13 43 59 UK 33 47 10
New Zealand 62 24 61
Australia 48 12 54
Denmark 31 39 7 NA
Greece 64
Croatia 17 19
Russia 60
USA 56 92

21. Total Entrepreneur Rate (18-64 yrs) Necessity Driven
Economy
Total Entrepreneur Rate (18-64 yrs)
Necessity Driven
Opportunity Driven
Brazil 15 30 59
Nigeria 35 53
China 13 37 39
Japan 4 21 66
Singapore 12 54
Rep. of Kor 7 46 UK 9 18 43
New Zealand 17 79
Australia
10.5 73
Denmark 5 8 71
Greece 32
Croatia 34 36
Russia 31
USA

22. Conclusion: Top Countries
New Zealand
Australia
Denmark
Republic of Korea
Canada
Singapore
Chile UK
South Korea
Look at Doing Business Abroad
Ease of starting business
Culture (fear of failure), perception among entrepreneurship among citizens, perceived opportunities for starting ventures (GEM)
Funding opportunities (VC, Angel investors)
Opportunity for women in entrepreneurship
GDP per capita (strength of the economy)
Free Trade Agreements
Immigration laws
Workforce-strength, skills, age
Size of market
Cultural support

23. Top Countries New Zealand Australia Canada
Fast to start (1 day, 1 procedure, costs $ 127), strong GDP ($ 162 Bill), maintained high percentage of companies started annually, strong opportunity driven, strong perceptions, good angel/VC. Stable business climate, good personal freedom, lacks red tape and corruption, corporate tax (28%), good FDI
Australia
Fast to start (2 days, 2 procedures), strong GDP ($ 1.1 Trill), maintained high percentage of companies started annually, strong opportunity driven, strong perceptions, good angel/VC, Negatives—high tax rates (47.7%), but 50% believe there is excellent opportunity, Australian Free trade Agreement, strong personal freedom and strong business climate
Canada
Fast to start (5 days, 1 procedure, costs $ 195), strong GDP ($ 1.6 Trill), maintained high percentage of companies started annually, strong opportunity driven, strong perceptions, good angel/VC, low tax rates (28.8% on profits versus USA 46.7%), NAFTA, not many Canadians starting businesses. But lacks innovation, but has strong investor protection

24. Top Countries Denmark Chile Singapore
GDP is one of highest in world ($59, 684 versus USA $ 48,442)(World Bank, 2012), business-friendly climate, easy to start and run businesses and strong opportunity perceptions, good angel/VC opportunities
Chile
More VC/angel funding available, growing economy, is one of least restrictive systems in South America for starting a business, good perception for opportunity
Start-up Chile- programs created by government to promote innovation..provides $40,000 equity (seed-capital) and a 1 year temporary visitor visa. Tax rate is 25% (lowest of all OECD nations)
Singapore
Good perceptions and opportunities, economy depends on exports, trade surplus (24% of GDP), BUT scores low on personal freedom, easy to start and run business

25. Top Countries UK South Korea
Trying to lure entrepreneurs with new type of visa, hard to get a bank loan (only 64% success rate), can settle into UK with in 2 years…depending on how much money you inject into economy, good VC/Angel opportunities, easy to start business, good business climate . Costs $ 257 to start business, takes 13 days, 6 procedures
South Korea
Fast to start (7day, 5 procedures, $36 dollars), strong GDP ($ 1 Trill), cheap and easy to start, fear of failure is biggest concern (45%), 40% of Koreans work for companies with employees

26. TOP Countries USA??? Fell a little…but still top 10
Still very open to FDI, good opportunities for women, and to entrepreneurs in general, great VC/Angel investor potential, minimal red tape, but……tax rates dampen the business interests (highest statutory tax rate in the world-46% which is the published rate—effective rate is lower), strong business climate, little corruption, good protection on IP, complexity of the tax code is troublesome
Good personal freedom and monetary freedom

27. Conclusion: Worst Countries
Philippines
lowest ranked Asian country and most difficult places to do business in. Low FDI, slow economic growth, unstable legal system, violence and bureaucracy
Venezuela
Bottom when it comes to ease of paying taxes, getting credit, investor protection laws, and cross-border trading, nationalization of the economy makes it hard for business., hard to withdraw money from your bank, inflation (26%)
Nigeria
Africa’s largest oil producer, but huge political unrest, growing ethnic tensions, religious tensions make it hard to do business, high corruption, ranks among the lowest in the world for getting electricity (3months) and registering property. Violence, poverty, pollution, political instability

28. Worst Countries Russia
Is one of the world’s fastest growing economies, but also one of most difficult places to do business in. One of toughest places in the to get an electricity connection, (9.5 months). Major power outages and lack of investment in power sector. Trade is slow..takes 3x longer compared to other OECD nations
Argentina
It takes 1 year to get a construction permit, compared to 7 months for Latin American countries. Starting a business takes 26 days. They scared off FDI by defaulting on debt in 2002
Indonesia
One of most difficult to start a business. Need 1.5 months to launch a business in Indonesia, hard to get electricity. 15 million households have no access to electricity. Want FDI to provide 2/3 of $ 150 billion needed for infrastructure development in the next five years

29. Step to Expanding Internationally
Research, research and research (see next slide)
Choose an entrepreneur-friendly environment.
Look at the countries that are the most and least friendly to small business.
Turn to Uncle Sam.
Your local U.S. Export Assistance Center (USAEC) can help you with tasks
such as finding pre-screened partners, agents and distributors; conducting background checks and market research; and tracking down relevant trade events in 85 countries.
Investigate suppliers thoroughly.
Use sourcing sites such as Alibaba.com to search for suppliers by country and product (or service).
Avoid placing orders before you have traveled to meet potential new suppliers and tour their factories.
Do references checks BEFORE you sign a deal.
Hit the trade show circuit.
Participants of shows are well-established suppliers of goods /services or logistics experts, such as freight-forwarders and customs brokers
For leads on reputable trade shows, consult your industry association
U.S. Department of Commerce for non-food related businesses
U.S. Foreign Agricultural Service, which have offices focused on global trade events.

30. Places to look for Data? Other places to research
STAT-country (STAT-USA)
CIA World fact book
Index on Economic Freedom
Humanitarian Response Index
GLOBUS
National Trade Database
Doing Business Abroad
GEM