central south mid market report


INTERNATIONAL ECONOMIC


ENGINE GROWING AMBITIOUS


As our Central South Mid Market focus enters its third year, our latest research identifies the Top 20 companies growing fastest overseas in the past three years.


One of these is Andover- based CloudPay – a global business for two decades. The digital payroll systems provider has offices in the US, Singapore, France, Hungary, the Philippines and China.


While CloudPay owes its existence to digital communication, face to face is also crucial, says CFO John Leese.


“For example, in Hungary you must appear in person to open a bank account. There’s a pile of paper I’ve got to go over and sign, because a managing director has to be there.


“In all these countries it’s hard to set up a corporate entity;


it requires lawyers and lots of people to turn up and sign bits of paper.”


CloudPay is better rehearsed than most for managing global unpredictability.


“We have constant challenges in different countries, be it the president in the Philippines, Singapore’s economic downturn or what’s happening in the States.


“For two months every year the Philippines gets bad weather but as long as I’m monitoring and managing those risks it should be ok. It won’t stop me doing business. Bad weather – and presidents – are transient.”


A parent company in the US doesn’t necessarily make life easier.


“Tax legislation, franchise tax, income tax; it’s very complex because every state has


Malcolm Thixton, BDO lead partner, presents TW Metals’ Top 20 Company Performance award to Gail Thomas


different rules on what they call ‘presence’. Presence could be as simple as a sales guy attending a trade show in that state. Other states you have to have an office there.


“It’s incredibly diverse and there are material penalties if you don’t comply with the regulations.


“It’s so much easier to do business in the UK compared to other countries we’re in, from electronic filing to clarity of legislation, substance over form approach, transparency... You do realise how lucky you are to be in the UK.”


Another of BDO’s Top 20 is Southampton-based TW Metals. After 40 years with the company, MD Gail Thomas knows the business inside out.


“Expect something to come at you from left field, because it will,” says Thomas, who has set up in both the East and West.


“At our new facility in Houston, Texas, I noticed a black wall. It was moving; shimmering… Turns out you have to spray new buildings once a month to stop the black widow spiders coming. They can kill you. I knew all about the permits but nobody told me about that.


“In China – IT infrastructure of the world – we engaged a local company for the wiring. They drilled a hole through the window ledge, ran a wire from outside and just poked it through.”


Shockers like these aside, Thomas has fundamental rules for success.


THE BUSINESS MAGAZINE – SOLENT & SOUTH COAST – MARCH/APRIL 2017


“I am not a believer in the ‘build it and they will come’ philosophy. When you go in make sure you have a solid contractual commitment from one of your regular customers you can rely on. A lot of things will take your time and attention and it will take a great deal of grit and determination to succeed.”


Some cultural differences are simple, such as the myriad permits in the US. “You needed a licence to breathe when I was setting up in Houston.”


Others are more nuanced – especially in the East.


“It’s not what’s said that tells you the story, it’s what’s not said. If you’re not from that culture you won’t understand the subliminal messages. So get somebody there to teach your systems and your company ethos, then get out and let them manage locally.”


Profit retrieval is another Eastern issue, says Thomas. “You must pay a percentage, in China, for example, for staff accommodation. If you make more profits they’ll keep putting those costs up. So you’re better off keeping profit to a minimum there and keeping the bigger profit wherever you’re shipping from, be it the UK or the US. Be very careful how you manage this.”


To see the list of the Top 20 mid- market companies in the Central South growing globally, contact Cheryl Martin.


023 8088 1754 cheryl.martin@bdo.co.uk


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