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Tuesday, Jan 31, 2023
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Trusted Advisors: Going Global? What to Consider Before Doing Business Overseas

 

 

 

 

 

 

 

 

 

 

 

TONY SCIARRINO
PACIFIC SEGMENT HEAD, MIDDLE MARKET BANKING AND SPECIALIZED INDUSTRIES
JPMORGAN CHASE
(310) 201-7723
TONY.SCIARRINO@CHASE.COM
JPMORGAN.COM/COMMERCIAL-BANKING

Los Angeles’s ports see more goods coming from Asia than anywhere else in the country. With this, and our proximity to Mexico, international business activity has always been strong in the region. However, with today’s geopolitical and economic challenges, it’s not surprising that local business leaders who are expanding to or doing business overseas have questions about how to navigate growth in new countries.

One of the most frequent questions we hear from business leaders is how to manage global supply chains. In JPMorgan Chase’s 2022 Business Leaders Outlook Pulse survey, of those businesses that currently or plan to conduct operations outside of the US, more than half (55%) say managing a global supply chain is a top international business concern.

It’s become a critical skill for companies expanding internationally. Streamlining the global supply chain and focusing on visibility can lead to increased agility and profitability. Some of the major considerations we recommend to our clients to make supply chains simpler, faster and more resilient include:

Know what’s changing—and what’s not: With China on track to overtake the U.S. as the world’s largest consumer retail marketplace, the country will continue to play a dominant role in global supply chains. However, companies have moved supply chain relationships into lower-cost, close-border nations including Vietnam, the Philippines and Thailand. We’ve also recently seen companies looking to diversify their partners, including those here in LA, opt for trade partners significantly distanced from Asia, such as Mexico.
Minimize risk by localizing production: To reduce supply chain risk, there is value in having supply chains located near vendors and customers, versus the existing global sourcing model. However, this approach will take years to implement and may increase prices further.
Implement digital automation: Established multinationals and prospective global suppliers have had to adopt emerging digital onboarding tools that quickly add new suppliers, along with mobile-enabled solutions for working capital and cash management.
Consider the region’s infrastructure and labor force: China’s massive investment in physical infrastructure, technology and workforce training since 1980 helped them become the world’s largest producer of manufactured goods. Companies looking to realign, expand or diversify their supply chains should evaluate a potential location’s investment in people
as well as processes and facilities.

Beyond global supply chain considerations, it’s important for Los Angeles companies considering doing business overseas to bring on partners that have intel on the region and its business practices. Understanding the local policies and regulations can help avoid wasted time and resources. The many cultural nuances and varying consumer preferences by country also benefit from local expertise. When acting quickly is critical to success, it’s vital to have someone in your court with first-hand knowledge of the market opportunities and competition.

For businesses navigating expansion in countries experiencing political and economic reform, especially in China, India, Southeast Asia, Latin America and parts of Europe, consider the impact these governments will have on fiscal, monetary, regulatory and foreign policy—and how significantly or quickly this may affect foreign investment opportunities.

Within JPMorgan Chase, my team works hand-in-hand with our International Banking business to help the companies we work with here in Los Angeles benefit from the firm’s global reach and capabilities. With more than 200 years helping companies expand internationally and a physical presence in over 60 markets, we can help your business grow and make payments in any currency, anywhere in the world. In today’s ever-changing environment, connectivity is often the key to success.


Tony Sciarrino is the Pacific Segment Head for Middle Market Banking and Specialized Industries at JPMorgan Chase.

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