Dealing with the institutions in a country where you have no knowledge of how things are done and where who you know is as important (or even more so) as what the law says means you have to be vigilant from day one.
The biggest error in this case was that they did alright on the 'trust' bit but they failed the 'verify' bit right from day one.
If there had never been so much room for maneuvering in the first place then this would have likely never happened. It's sad but in situations like this you're setting yourself up for long term trouble if you do not actively seek to control things right from day one.
I have a couple of cases quite comparable to this one in my immediate surroundings and some of it sounds eerily familiar.
The OP is in good company, big corporations fall for things like this and usually it costs a lot more than it did here. Chalk it up to your educational fund.
If anybody is in a position to attempt to replicate this experiment you may want to do the following:
- incorporate through a lawyers office and if local law requires a resident or national as a director make sure they are accountable
- prepare to go there when incorporating and get yourself educated with respect to the local situation (corruption, graft, how foreign companies usually get plucked)
- be prepared to spend a lot of time in the target country from the moment that you incorporate
- get your ducks in a row, don't put the responsibility of doing that in the hands of someone at arms length.
- if you want to keep things simple do not create a subsidiary, instead aid someone else in creating a company and hire them for a service they provide. This makes departures so much easier to deal with. It removes all of the responsibility from your end but you keep control at the level of the customer. Not happy? Then deal with someone else.
- spread the responsibilities over several people, make sure they check up on each other and report to you.
- trust but verify, repeatedly, continuously
This is not meant as a 'Philippine people can't be trusted' line, or even a 'foreigners can't be trusted' one. The sad fact is that if you, a rich western company lands to do business unprepared in a foreign country you are simply a very fat goose waiting to be plucked. So you need to be aware of that and act accordingly.
As these lessons come this one was remarkably cheap.
I've had something similar happen and I wished I could take my own advice above retroactively, my lesson was a lot more expensive than the one detailed here:
I think you're right - we got off relatively cheap here. Much more than that and we likely would have just shut down the Philippines corp and would have run it from the US side.
We ended up having our ducks in a row on all later hires, but we were SO early with her that things were messy from the start. (As they often are) We should have cleaned up that paperwork and documentation as soon as we were able to do so.
Dealing with the institutions in a country where you have no knowledge of how things are done and where who you know is as important (or even more so) as what the law says means you have to be vigilant from day one.
The biggest error in this case was that they did alright on the 'trust' bit but they failed the 'verify' bit right from day one.
If there had never been so much room for maneuvering in the first place then this would have likely never happened. It's sad but in situations like this you're setting yourself up for long term trouble if you do not actively seek to control things right from day one.
I have a couple of cases quite comparable to this one in my immediate surroundings and some of it sounds eerily familiar.
The OP is in good company, big corporations fall for things like this and usually it costs a lot more than it did here. Chalk it up to your educational fund.
If anybody is in a position to attempt to replicate this experiment you may want to do the following:
- incorporate through a lawyers office and if local law requires a resident or national as a director make sure they are accountable
- prepare to go there when incorporating and get yourself educated with respect to the local situation (corruption, graft, how foreign companies usually get plucked)
- be prepared to spend a lot of time in the target country from the moment that you incorporate
- get your ducks in a row, don't put the responsibility of doing that in the hands of someone at arms length.
- if you want to keep things simple do not create a subsidiary, instead aid someone else in creating a company and hire them for a service they provide. This makes departures so much easier to deal with. It removes all of the responsibility from your end but you keep control at the level of the customer. Not happy? Then deal with someone else.
- spread the responsibilities over several people, make sure they check up on each other and report to you.
- trust but verify, repeatedly, continuously
This is not meant as a 'Philippine people can't be trusted' line, or even a 'foreigners can't be trusted' one. The sad fact is that if you, a rich western company lands to do business unprepared in a foreign country you are simply a very fat goose waiting to be plucked. So you need to be aware of that and act accordingly.
As these lessons come this one was remarkably cheap.
I've had something similar happen and I wished I could take my own advice above retroactively, my lesson was a lot more expensive than the one detailed here:
http://jacquesmattheij.com/stick-to-what-you-know-a-tale-of-...