Making the Leap to the United States
When considering a footprint in the United States, international companies are often unsure about how to get started. Common concerns include project finance, tariffs or supply chain considerations, U.S. regulations, political or economic uncertainty, and general uncertainty about whether the U.S. is the best place for their business.
In response, different strategies have emerged. Some companies prefer to start small with a “landing pad” – a sales office or a small warehouse - rather than jumping in with a full-scale operation right away.
For any company, whether homegrown or based abroad, understanding the local business requirements is an important first step. A company needs to make sure that it is checking all the boxes — such as getting the right permits, properly registering the business and following employment laws — as it enters its new location.
It’s critically important at that earliest stage, a company finds the right team — people such as attorneys, brokers, bankers, and consultant — to provide essential information. A local EDO also can help navigate the experience. With the right team, the process is much less daunting, and that team can help create the foundation for the company to prosper.
Another increasingly common strategy is to enter the U.S. market through joint ventures, partnerships, and acquisitions, which can sometimes offer advantages over the “greenfield” starting-from-scratch approach.
The partnering or acquisition approach can especially be common in highly regulated industries such as life sciences, aerospace and food. Working with a partner can help overcome the difficulty of working through a complex regulatory environment and can help to open up new markets more quickly.
That’s where an EDO or the right consultant can provide tremendous advantage. These groups can help make introductions and foster relationships to accelerate the process and help a company position itself for success. Some EDOs are very experienced in working with international companies and can not only help navigate the operational aspects, but also introduce cultural resources that would help transplanted employees feel more at home.
Just as international companies are often interested in the U.S. market, many homegrown companies are looking abroad. These companies, too, often are uncertain about how to get started. Firms selling outside of a region inject external wealth that, when spent locally, creates a multiplier effect in the local economy, spurring new jobs, growth, and further tax revenue. Participating in trade also makes metro areas more productive and innovative. Firms that generate revenue from outside their home market must provide goods and services faster, better, and cheaper than global competitors. This process tends to boost productivity and wages.Evaluating the Local Value of Economic Development Incentives -Metropolitan Policy Program at Brookings, March 20181 For companies interested in boosting their trade activities overseas, one place to start is the trade division within their state EDO. Many state trade offices coordinate with federal government agencies to help U.S. companies pursue overseas opportunities.
For instance, the U.S. Small Business Administration offers the State Trade and Export Promotion (STEP) grant program to help US companies increase their exports. The grants help fund, for instance, company participation in trade shows, meetings with potential customers or distributors, translating marketing collateral into different languages, and other activities that support exporting. A company could, for example, utilize a foreign office of the U.S. Department of Commerce to facilitate meetings in a new market
Navigating the Unknown Takes a Team
Whether a company is seeking new markets domestically or in a country elsewhere, having a strong advisory team can make the difference between success and disappointment. That’s especially true in today’s environment of uncertainty created by the ongoing tension over tariffs and public policies. However, uncertainty can also mean tremendous opportunity, too.Editor's Note: Area Development’s Women in Economic Development Forum featured a presentation on navigating foreign direct investment and exports by Morgan Crapps, a consultant with Parker Poe Consulting. The preceding were some key topics from Crapps’ presentation and subsequent interview with Area Development as compiled by Jennifer Harris, Area Development contributor, Akrete, Inc.
1 Examining the local value of economic development incentives; Joseph Parilla and Sifan Liu; Metropolitan Policy Program at Brookings; March 2018