The 5 opportunities and challenges of doing business in Europe

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If you’re looking to expand globally then the EU is hard to beat: The biggest single market in the world with 500 million consumers, standardisation of rules and regulations and geographically well located.

Doing business in Europe – the top opportunities

1 Generally homogenic

One set of rules, 27 countries: the EU is at the moment the world’s biggest single market. With around 500 million consumers, once you’re in the EU you have access to all those customers, with standardised product regulations and the like.

2 Data privacy

The EU has recently updated its data protection laws - already quite stringent, these new powerful data protection laws go to create a more secure environment for companies to do business in.

3 Little to no corruption

Anti-bribery compliance: Just as the US has the Foreign and Corrupt Practices Act, Europe also has strict rules on anti-bribery compliance. In fact, in Transparency International’s annual Corruptions Perceptions Index, countries in the EU managed an average score of 66 (0 being utterly corrupt, 100 being absolutely not corrupt) - while the global average is only 43.

4 The possibility of selecting a business-friendly territory as country of origin

Some kinds of EU regulation apply on a “country of origin” basis. This means if a company is established in one member state, the company can take advantage of its preferable regulations, even when selling products in other European states.

5 A strong institutional framework and long-term stability

Being in the EU means that a country has in place a set of institutions and policy arrangements which give an amount of certainty to investors. This implies that companies investing or working in an EU member state know what they’re going to get. – a strong institutional framework and long-term stability.

Major challenges

A mass of bureaucracy

Brussels is famed for being top-heavy and over-bureaucratic and those living far from Brussels see the construct as elitist and over-regulated.

Financial crisis

Europe has still not recovered from the 2008 financial crash and while Greece is slowly pulling out of its state of recession, the new sick men in Europe include Italy and Portugal. While even France, the biggest member after Germany, also has a lot of problems with reinvigorating an outdated and eventually unworkable social work contract.

Rise of nationalistic tendencies

The current rise in populism has brought with it an equal emergence of parties standing to the political right, who speak of withdrawing from many of the trade agreements put in place by the EU. The threat seems quite remote, but it’s worth keeping an eye on when you’re choosing which region to place your offices and factories. Germany for example is still seen as the most moderate and stable region for outside investors.

Differences between national legalities, regulations and culture

While the EU is set up to allow for the free movement of goods, services and workers, and its legal regime theoretically ensures consistency between the laws of its various member states, still noticeable differences remain between the countries in terms of national legalities, regulations and culture.

BASCH Consult 12/2016