The only way for a company to avoid any offshore problems is to refrain from conducting any business offshore. This might sound like an obvious statement, but it’s important to understand that, given American policies and governance, as well as the patriotic sensitivities of American citizens, there’s likely to be some degree of risk in any activities or strategies that involve offshore businesses or employees.
Offshore tax havens have long been a source of conversation and concern among business owners. There are risks involved that require the counsel of an expert tax professional. Although the goal is to minimize tax impact legally, the stress and expense of poor advice can make the entire topic confusing at best, and dangerous at worst.
These days, many of the benefits of offshore strategies can often be found at home. Cheaper labor has become available via remote workers in the newly connected rural areas of countries, and booming economies abroad are beginning to command higher prices for nearly every type of product, service, or employee.
How offshore practices could be problematic for your branding
There’s also a huge risk in offshore sourcing and strategic investments, when it relates to a company’s brand management and reputation. In the US and any other countries whose consumers are very patriotic (or at least patriotic enough to notice where products are made and jobs created), it’s wise to make sure your brand promise matches the bulk of your operations.
A great example is the controversy regarding Apple’s offshore strategies. Brand damage occurs when consumers suspect a brand is using overseas labor practices that are questionable in terms of safety and civil humanity.
Offshore practices may look good on a spreadsheet and sound like an advanced and impressive strategy to enhance a company’s financial gains, but the damage they can do to your brand if unethical offshore practices become generally known could very well prove counterproductive and harmful to brand equity and consumer loyalty.
If your product contains messaging that strongly emphasizes that it’s built in the USA, for instance, then it would be smart to base a majority — if not 100 percent — of your employment and financial assets in the country your brand promises to benefit.
There is an implied promise in this patriotic messaging: This product is made in your country, it benefits your nation, and you will help your fellow citizens by buying it. If consumers discover the product isn’t manufactured in the country after all, the primary employment isn’t located within its borders, or the financial assets are not kept in the country, then you may have a brand crisis on your hands.