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Opening Abroad: Building an Empire

Most agency bosses have, at some point, considered opening an office abroad to bolster their bottom lines (and their tans, of course). But how easy is it to set up shop in a foreign land? Five agencies that have made the move offer some worldly advice.

Stephen Hey Head-First [Manchester, New York] Why (and when) did you decide to make the move?It was an opportunity that came about via a distant cousin of one of our Directors and we thought it too good to miss.

Why that city?New York has a reputation for being much more than just a city. It is like a country in itself and has an atmosphere like no other place on Earth. We loved the city already here and, after having a few meetings over there, love it all the more.

How much research did it take? And how quickly did you make the move?We did a bit of research, but not loads, the opportunity had to be seized quickly which meant that we didn’t have ages to research markets etc. However it was something we had mooted long ago but just didn’t have the time to pursue it. This opportunity came along and offered an office on Madison Avenue, a man on the ground with a great set of contacts and a couple of small, but exciting, projects that we could start immediately.

Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?We are obviously hoping that the New York business will become a profitable business but it will take some time to become established. We already have some US based clients and we will be servicing them from New York in the first instance. We see the office as a first step in the US and hope, in time, to open on the West coast to service entertainment and video game clients out there.

What incentives were you offered to open?The main incentive was that it is a wonderful opportunity in a great city. Once we started looking into things in more detail we were provided with help and advice from the North West International Trade Team at UK Trade & Investment. Although not really an incentive they have been brilliant – able to help with training, contacts and even help towards some expenses with their ‘Passport to Export’ scheme.In addition the Trade & Investment team in New York have been a great help and we will be calling on them in the future to help us promote Head First’s presence in New York.

And what red tape did you encounter?The incorporation process is a bit long-winded but nothing compared to opening a bank account in the US!

How does business etiquette /culture change from that of the UK?A couple of main points here. The culture of business bullshit is pretty prevalent and it is hard to believe that people still us the word ‘synergy’ with a straight face.However, the sheer enthusiasm for business out there is staggering. Everyone seems to be excited about their job and their clients/sales/product. And this is a really genuine excitement. They may use a lot of buzzwords but they are used sincerely and it is refreshing to see. And how are the current trends in your specific sector different?In the sector we specialise in, video games, we are pretty much on top of the global trends. HF NY, though, will be looking to move into other related fields where a European perspective and aesthetic will prove a positive advantage. What surprises are in store for anyone hoping to do the same?For me it is the amount of help available from people like UK Trade & Investment as well as the real ‘can do’ attitude of New Yorkers. We had a meeting with a high up official from City hall in New York and she could not have been more welcoming and encouraging about a company coming to do business in the city. Has the investment been worth it so far?It is too early to say really. I think it will be, but we are looking at a two to three year view on it. When these opportunities come along you can’t refuse them really. Also it is a considered investment – it isn’t costing us an absolute fortune and so far the signs are very encouraging. The other positive is that we get to go to meetings in one of the best cities in the world (outside of Manchester of course). Debbie Longbottom, financial director, Elmwood [Leeds, Edinburgh, London, Melbourne] Why (and when) did you decide to make the move to Melbourne?Elmwood began working in Melbourne during summer 2004 initially with our team based within the client’s office for approx six months.We had been initially asked to create the Housebrand strategy for Coles Myer, a leading Australian retailer. This took approx five months to complete. Once finalized, the strategy then needed to be rolled out into store within a short period of time and our role was to advise and guide our client through this process. How much research did it take. And how quickly did you make the move?The project was won in June 2004 and we had a team in place in July 2004. During the initial stages we were focused on delivering the project for the client with a seconded Elmwood UK team. However after a short period we began exploring the long term opportunity which meant thinking about space, local employment, our own infrastructures etc. We opened our own studio with local resources in Melbourne during June 2005. Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?It is the only reason. Remember when you are opening up in someone else’s back yard you are taking on new competition. They aren’t going to roll over and let you steal their dinner. And opening an office costs lots of money (legal fees, agents fees, recruitment fees, travel and IT set up costs etc etc). So if you have no revenue lined up then you’d better have very deep pockets. And what red tape did you encounter?Local tax laws meant setting up a separate company with separate guarantees and funding. In Australia you have to have certain levels of solvency to trade. And how are the current trends in your specific sector different?There are differences in the two markets not least because of the economic differences. The Australian market is experiencing growth in the service industries whereby in the UK we have seen a downturn. Australia has a land mass larger than the whole of Europe with a population the size of the north of England, which means an agency has to be able to deliver boutique work with boutique budgets. The Aussie dollar is half the price of the pound, so making money is an art form too! What surprises are in store for anyone hoping to do the same?Be well planned but be flexible. Be ready for the telephone calls very late into the night if you are opening somewhere that has a big time difference to the UK. If you thought you worked long days think again when there is an 11 hour time difference and you have to answer the same questions about capacity, late payment or sort out a new credentials presentation in the middle of the night! Has the investment been worth it so far?Absolutely, not just in terms of the financial return on investment but the growth and development opportunities for our people. Elmwood has become a truly international business with a global perspective and that helps set us apart from other competitors who lack the same on the ground insights into the global world our clients now play in. Nigel Hunter, managing director,Fuse8 [Leeds, Chelyabinsk and, soon, Munich] Why (and when) did you decide to make the move?We were working with a client back in 2001 that had a relationship with a team of developers based abroad. The project started to become increasingly difficult for the client to manage so we started interacting with the development team directly in order to ease any miscommunication and make the client’s life easier. The relationship with the offshore team developed and at the end of the project we took the decision to investigate a more established and long-term relationship. During the discussion it became apparent that they would be open to a takeover. Why that city?Although we acquired an existing business, we decided to move its location. After conducting in-depth research we chose Chelyabinsk in Russia, a key university town with an excellent reputation in the fields we wanted to develop. How much research did it take? And how quickly did you make the move?The research process was extremely in-depth. It involved identifying a suitable university town with appropriate accommodation and access. After all, the people based in Russia are part of our team and we need to get back and forth as easily as possible. Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?We didn’t rely on a particular client relationship to make the venture a success. We knew we had found a great team with the skills we were looking for and that itself made the venture worthwhile. What incentives were you offered to open?We weren’t offered any incentives. And what red tape did you encounter?There were a whole host of issues that had to be considered, with most of them outside the realms of planning. For example, when we moved the team to Chelyabinsk and tried to secure our fire safety certificate we were turned down and had no idea why. When we investigated further we were informed that they would happily give us the certificate if we provided them with a computer for them to use in their office!Getting a Russian visa is also a challenge and we have to actually be invited over by one of the team there. It then takes about a month to obtain the visa, which involves them getting a signed agreement from the local authority which we then have to take to the Russian embassy in London. But as long as you plan ahead it doesn’t cause us any major problems. How does business etiquette /culture change from that of the UK?The culture is the most challenging aspect to deal with, but as the same time one of the most fun. Russian culture is massively different to ours, so the only way of making it work is to embrace it rather than trying to change everything to suit us. Probably the most difficult barrier is the language as we don’t even share the same alphabet. However, we have several Russian speakers in our office and most, if not all of the team in Russia, have some understanding of English, which makes communication possible. As our relationship has developed we have also brought most of the team over to the UK for extended working breaks – typically for three months at a time. During this time we put the guys up in our homes, introduce them to the UK and generally encourage them to experience the British culture. This hospitality is extended equally in return, so when we go over there we stay with them in their homes.We have imposed some UK cultural etiquette though. When we initially acquired the business most of the team wanted to be paid cash in hand, but we insisted on paying them legally and also paying their National Insurance. And how are the current trends in your specific sector different?Although we have always been early adopters – specifically in the online sector – the guys in Russia are definitely ahead of those in the UK in terms of their technical ability, their desire to push boundaries and their desire to work in the western arena. What surprises are in store for anyone hoping to do the same?No matter how much you plan, you can’t avoid surprises. However, I think it’s hard to try and envisage what they may be as it’s dependent on the country you’re setting up in. Has the investment been worth it so far?Yes, massively. The development team in Russia now stands at 26. Another benefit is the extension of the fuse8 working day, due to the time difference between the UK and Russia. It’s now five hours longer, which is massively beneficial.In fact, it’s been such a success that we are going to further expand our overseas network. We have been looking into several foreign markets with the help of our clients UKTI and have identified that Germany is lagging behind in terms of the technology we can provide. We’ll soon be opening an office in Munich. Sarah Kerry, director of LA operationsClusta [Birmingham, Los Angeles] Why (and when) did you decide to make the move?Clusta decided to move to the US as we saw huge opportunity out here, the scale and scope of the projects in the US are bigger with the competition more varied.We felt that we could offer a real point of differentiation; distinct European design sensibilities underpinned by excellent production capabilities. Why that city?After researching both the East and West Coast, it was felt that LA would hold most opportunity and had a little less competition than New York. Although there are some great design companies here in LA, there didn’t seem to be as many prolific digital specialists in Southern California. Plus Clusta has a very strong heritage of working within the entertainment industry so LA seemed to be the obvious choice. Thirdly our motion graphics expertise was becoming more frequently utilised, so we felt that we could build strong partnerships with FX and motion picture companies. Finally, we have to be honest, the beach and the excellent weather did have a part to play! How much research did it take? And how quickly did you make the move?We spent around 6-12 months seriously looking the feasibility of the move. We also approached UKTI for support, they helped us to underpin our thinking with proper qualitative research and insight from their contacts on the ground in both LA and New York. The move itself was very quick, we were set up within a matter of weeks and fully operational within a few months, however we were keen to take small steps when entering the market and grow organically from there. We didn’t want to make a huge investment only to find our research was flawed. Luckily the office continues to grow and thrive. Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?We already had clients in the US however whenever we tried to expand our client base we found people were reluctant to employ our services. Their enthusiasm often wavered when it came to signing on the dotted line. We quickly realised that you needed to show a commitment to the market and some kind of physical presence to secure work. We would not advise against making the move unless. What incentives were you offered to open?None And what red tape did you encounter?Setting up a US corporation is relatively easy, as long as you have the right people advising you. We spent several months getting to know the different tax, legal and government requirments, I even took night classes at a local business college to give me a better understanding of best practice and potential pitfalls. The only difficulties we have had encountered was with working visa’s. We wanted core UK team members to manage the set up and lead the growth of the studio as they understood our aims and shared our creative ethos. Getting those visa’s was a very long process and leaves you under the scrutiny of the government who set quite ambitious targets which you must then achieve in a very short time scale.

How does business etiquette /culture change from that of the UK?I think people here are more open to taking meetings and more enthusiastic about your product. It’s very laid back and casual but at the same time there are advantages to the straight talking culture of UK business executives. What surprises are in store for anyone hoping to do the same?The only real surprise is the business etiquette, as mentioned above. When we arrived we were inundated with positive feedback and the overwhelmed by the promise of new work but I think a lot of that is just the encouraging west coast attitude, we found it much more difficult to secure work as the process of finding genuinely interested parties was more arduous. Has the investment been worth it so far?Yes definitely. We are now able to get in front on much bigger brands and can truly offer a global perspective. James Sommerville,co-founder and creative director, ATIIK [Leeds, New York, Los Angeles, San Francisco]

Why (and when) did you decide to make the move?From Huddersfield we opened in 1995 in London to test the water or venture off to pastures new in search of good work. This southward move headed up by Simon Needham was really successful for us and once we’d made solid in-roads into London based firms like MTV Europe, Sony Playstation etc – it felt relatively easy to badger (our London clients) for their US counter-parts so we could give them a call. This happened around 1996 when we (James Sommerville and Will Travis) set off to New York for a week armed with a diary half-full of meetings and 100 copies of Noise2, to see if we could flog them to SoHo bookstores. Why did you choose these location(s)?None of us did great in languages at school – so at the time English speaking was a must. New Labour was in power back then and the fresh-faced Tony Blair was singing the praises of “Cool Britannia” and certainly from a US perspective it worked - they were lapping up the Brit design scene back then, so New York ticked all the boxes for us to open there Jan 1997. From there it was a natural extension (in 1998) to reach across to the west coast especially into the Silicon Valley area where the digital revelation was being spearheaded from, so we did that and essentially created a voice both sides of the country. Then in 1999 Simon headed sfor Sydney ahead of the Olympics arriving. How much research did it take? And how quickly did you make the move?Between 1995 and 2000 we’d opened four new fully functioning ATTIK studios (ie not just sales offices). In terms of research is was pretty much a gut feeling mixed with one or (max) two trips beforehand to scope out the joint. But looking back we always sent the Noise books in first to see if our design product sold. If people are willing to pay over the counter that’s a good indication you may succeed commercially. Actually we nearly opened in Johannesburg in 2000. Ths was our initial first choice before Sydney, but after Simon did a reccé there - he was too scared to go back at the time and opted for the sun-soaked-safety of Sydney. Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?Back then it was all on spec because we were all young and naive in the way we approached it. That naivety was also attributed to our early success but it also came with its problems when things got tough in the market (2001-2003). Today we are much more buttoned-up. There’s plenty of due diligence goes into our decisions to expand or work overseas. Right now we are looking closely at certain markets in Asia and Latin America and yes you need a good client (or 3) and in our case a supportive parent company. What incentives were you offered to open?None. And what red tape did you encounter?None. We avoided all the government based (like DTI) initiatives and programmes or industry exchanges. All you actually need is a valid passport, a decent product and some balls.

How does business etiquette /culture change from that of the UK?Aside from the language – I’d say business etiquette is pretty similar around the world. We all buy and sell everyday of our lives and have done for 1000’s of years. What surprises are in store for anyone hoping to do the same?Always have a ‘Plan-B’, as that’s most likely the plan that will actually happen. Has the investment been worth it so far?Absolutely. Those early risk-taking, cavalier days led to successes and failures at the time like over expansion and over exposure. But these had to be dealt with and we’ve come out the other end still as a small graphic design shop (as we still like to think we are), but who is know by the creative community throughout the world, has long-term global clients such from Coca-Cola to Toyota and has a parent company (Dentsu) who happen to be the largest agency on the planet.

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