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Business owners considering expanding their operations abroad need to be aware of a growing set of compliance issues to scale their operations globally. In a 2018 survey, business executives worldwide identified regulation compliance as the number one issue they are facing. In fact, over 70% of international business leaders consider regulatory compliance a significant impediment to their global operations. Unfortunately, this critical component of expansion is often an afterthought, but when it rears its head, it can become an existential crisis.

Scaling a business to new countries only makes the complexity of compliance that much worse. As a company expands to more markets, it has to wade through an ever-growing web of region-specific legal frameworks that it must adhere to. If a global business fails to comply with the laws in a specific jurisdiction, then it could be on the hook for millions of dollars in fines. GDPR penalties, for example, are up to €20 million or 4% of annual global turnover, whichever is greater. International companies like Google and Amazon discovered this the hard way in 2020, when both companies received hundreds of millions of dollars in fines for non-compliance. Money can only buy you so much security in that regard.

Penalties for failing to adhere to local regulations are not only financial. Depending on the crime, there could be criminal penalties or business operations that touch on bribery, money laundering, or financial malfeasance. Expansion plans need to be paused, entry into a new market might be delayed, and reputational harm can have long-term effects.

Growing companies may need to start worrying about new compliance issues as they surpass certain size-based thresholds. For example, compare the Americans with Disabilities Act, which applies to private employers with 15 or more employees, vs. the Family and Medical Leave Act, which only kicks in at 50 or more employees. As a company scales, new laws that may not have been applicable in the past may suddenly apply.

Operating in new jurisdictions is only part of the complexity of managing compliance with global laws. Every new region introduces a new set of unique rules that strain internal legal teams. Even with excellent corporate governance, international compliance is a complex and intricate process. Global law firm Simmons & Simmons found that at least 51 countries across 12 surveyed regions changed laws in 2020 in areas such as paternity leave, gender pay, and minimum wages.

Product managers working with localization companies must account for additional friction when adapting their products for a global market. Localization partners must understand both language differences and the regulatory nuances that influence the approach to a product in each market. To be successful, they need to select localization partners with strong regional expertise in these compliance areas.

Businesses that attempt to enter new markets may do so on a wing and a prayer, utterly unaware of what regulations to adhere to or what cultural norms may trip up their operations. Meanwhile, growth and scaling remain the business goals of the hour, and compliance is often put on the back burner. This is a recipe for dangerous blind spots that are realized only at the worst times.

Why One Global Policy Won’t Cover Every Market

The fallacy that most organizations try to avoid is having a universal compliance playbook that is akin to a golden rule, which can be applied to all target regions. If such a thing works, it is an improbable scenario. As much as there are similarities in compliance requirements, there are even greater differences in laws and regulations from one jurisdiction to another.

The differences are in more than just linguistics. For example, the GDPR in Europe, the CCPA in California, and the LGPD in Brazil share some key similarities but also exhibit many significant differences in their compliance requirements. Tax regulations, employment laws, and consumer protection laws, among others, all have different requirements from one jurisdiction to another.

The same applies to other compliance standards, such as digital accessibility. For example, specific font sizes or color contrast ratios may be mandated in one country by law, but are considered only as a guideline in another region. Product managers dealing with products that have to be adapted for different markets all over the world must keep all these in mind, and this is where the role of a localization company becomes essential.

Differences exist in many other regulations that product managers must take into consideration while developing a product:

• Employment laws – Hiring and firing rules, benefits, compensation, etc.
• Finance-related compliances – Transaction processing and reporting requirements, etc.
• Industry-specific requirements for the type of business for which the product is being developed.
• Cultural nuances that may not be legal requirements, but, in effect, act like one.

A competent localization company can help products make sense in different locales by conforming to both legal requirements and user expectations. The product must be designed to resemble and feel like a local product, as sales may not meet the targeted goal otherwise.

The trick is not in chasing the elusive dream of a global compliance playbook that all regions must adhere to. Instead, companies create frameworks for compliance that are modular in nature. While core requirements are standard across all areas where the product will be sold, there are also provisions for each market’s specific requirements. Localization companies can be a valuable asset to a company by serving as a guide and support for product managers who must deal with varying requirements from one region to another.

The diversity in regulations and laws is a reality of doing business internationally. Failing to comply with local norms and rules is an easy way to gain a bad reputation. In fact, the reason to do business in different locales is precisely that. Companies that design localized compliance as a part of their product development strategy find themselves with a competitive advantage. Faster market penetration, better regional business relationships, reduced risks of running into expensive compliance mishaps – these are some of the more significant benefits of having a regionalized compliance strategy as part of a global localization plan.

Product managers must also remember that while they have to deal with varied product features, support resources, and content issues, they must also ensure that they work closely with the legal teams and localization service providers to comply with local requirements before a product is launched. It is not something they can think about at the last minute.

Localization Meets Legal: Adapting Content Without Compromise

Translation is a starting point for globalization, but effective localization involves tailoring content to meet local regulations and standards. By doing so, organizations can avoid hefty legal fees, fines, and product recalls. Businesses aspiring to a global presence have a significant challenge before them: the intersection of localization and regulatory compliance. 

Poorly executed localization efforts can have dire consequences. Consider the case of the Mars Climate Orbiter in 1998. The spacecraft disintegrated upon re-entry into Earth’s atmosphere due to a failure in unit conversion between imperial and metric systems. The error, which cost $320 million, occurred as a result of human error in the localization of data. Another example is an instance of mistranslation of a medical device instruction that had a more severe impact on human life in 2007. The instructions for the usage of a knee prosthesis included the phrase “non-modular cemented”, which was mistranslated as “non-cemented.” A total of 47 people suffered adverse medical events during surgery as a result of the mistranslation. The products had to be recalled. 

In order to guide companies in the right direction, a qualified localization company should examine various areas of compliance, including but not limited to:

• Data Privacy Regulations: Different jurisdictions have their own data protection laws, ranging from the stringent General Data Protection Regulation (GDPR) in the European Union to China’s Cybersecurity Law and Russia’s data localization rules.
• Content Censorship: Content that is acceptable in one country might be censored in another. Organizations must have a content verification strategy that takes this into account.
• Intellectual Property Protection: Copyright and trademark laws vary significantly from one jurisdiction to another. Businesses must check for these laws before adapting their content to new regions.
• Advertising Standards: Guidelines on truth in advertising, decency, and specific targeted audiences differ across the globe.

Localization must be done in such a way that marketing teams are fully aware of the legal compliance of campaigns with local cultural and legal requirements of target audiences. This requires collaboration with localization partners and often assembling dedicated compliance teams with expertise on specific regions or working with local subject matter experts.

Product managers have a significant leg up when they partner with experienced localization companies. This goes beyond building cultural bridges with cross-cultural training. It also includes the creation of compliance matrices, which illustrate how healthy products are aligned with relevant regulations. Quality localization companies do more than translation. They are also a means to compliance with international standards, all while preserving brand consistency and values.

Localization, when appropriately executed, becomes both a legal safeguard and a competitive advantage. Businesses can expand and scale confidently while remaining compliant with a variety of regulatory requirements.

Scaling Smart: Processes That Keep Growth and Compliance in Sync

In today’s regulatory landscape, companies are realizing that compliance can be a competitive advantage rather than a “check-the-box” exercise. This marks a shift in how organizations approach governance and is also a result of well-managed compliance programs that demonstrate their business value beyond risk mitigation.

The figures are impressive: the average organization spends $5.47 million on compliance, while non-compliance issues can cost up to $14.82 million. Savvy enterprises are building flexible compliance processes that scale with their business operations.

Businesses that lead the way adopt five key compliance best practices to make compliance work for them rather than against them:

• Creating centralized systems of record for a single source of truth.
• Automating critical compliance processes for less human error and faster response times.
• Focusing on user-friendly tools for consistent adoption and ease of use.
• Moving to continuous monitoring as opposed to periodic reviews.
• Embedding compliance into the broader business strategy. 

Product managers who partner with a localization company also gain additional subject matter expertise to manage these localization nuances. Localization companies are equipped to implement best practices in several markets concurrently.

Businesses can kickstart a risk-based approach to compliance by conducting a comprehensive risk assessment across functions, including operations, finance, compliance, and cybersecurity. This holistic methodology enables better prioritization of compliance requirements based on their potential impact and likelihood.

Leading compliance programs are underpinned by technology: for example, cloud-based platforms can centralize oversight to help enforce consistently and manage policy across teams, business units, and geographies.

Partnering with a localization company, product managers gain streamlined regulatory processes that can free up resources, improve fraud prevention, and accelerate time-to-market. When done well, compliance management can be more than just mitigating risk; it also streamlines processes, supports growth, and enables a competitive advantage.

Conclusion: Fast Growth Lasts Longer When It’s Built on Compliance

Scaling globally is both an opportunity and a challenge for product managers, especially when it comes to maintaining compliance. Regulatory requirements differ from one region to another, and a one-size-fits-all strategy will neither work nor be cost-effective. Savvy product managers recognize that compliance is not a hurdle to overcome; it is an asset that enables sustainable international growth.

Partnering with an experienced localization company offers tremendous benefits throughout this process. These strategic partnerships enable product managers to identify regulatory barriers in advance, potentially saving millions in fines and safeguarding the company’s reputation. A reputable localization company also provides a breakdown of regional requirements that impact data privacy, marketing collateral, and user interfaces.

The data speaks for itself when it comes to the benefits of proactive compliance management. The companies that invest in resilient compliance frameworks report an average of $5.47 million in compliance-related expenses. In contrast, non-compliance costs can reach nearly $15 million. Savvy product managers understand that compliance is a competitive advantage, not a burden.

Medium-sized companies with a global vision have more at stake than most. They can’t afford to compete with larger enterprises that have full-time legal teams in every market. These organizations need strategic partnerships and scalable processes. A trusted localization company becomes an extension of the product team, offering specialized expertise that internal teams may lack.

Product success hinges on treating compliance and localization as integral components of product strategy. Product managers who adopt this mentality will enter markets more quickly, establish stronger regional partnerships, and encounter fewer compliance issues. A great product isn’t enough; it must seamlessly fit within the legal frameworks of each market.