Inside track on doing business in the USA
The red carpet is out ready to welcome East of England companies into the United States, keynote speakers will tell UK Trade & Investment’s ‘Doing Business in the USA’ event at Newmarket Racecourses on December 6.
UK businesses will ‘get a leg up’ over candidates from other countries, according to top marketer Rick McKenna, who is addressing the event. Both he and American lawyer Scott James, another keynote speaker, stress that ‘the special relationship’ between the UK and US is very much alive and well. And they will argue that a well-researched and focused approach to setting up on the other side of the Atlantic can pay huge dividends for East of England businesses.
Doing business in the US represents a major opportunity at a time of significant macro-economic negativity, they will tell delegates. McKenna, president and co-owner of Wallwork Curry McKenna in Boston, is looking to find partner firms in Cambridge and London to strengthen the firm’s global reach, having pushed into the UK with similar alliances in Manchester and Liverpool.
He is convinced that now is the right time for East of England businesses to target trade in the States. He will tell delegates how not to waste money in the marketing effort and how best to focus.
Rick suggests that companies decide their US target markets based on the sector they are operating in; certain States have developed a specialism in CleanTech, for example. Boston remains a globally important BioMedTech segment. Better to drill down to a couple of markets in which your business has strength rather than take a States-wide scattergun approach, Rick advises. And use the prevailing medium to optimise the marketing message within those targeted territories, he says.
“Massachusetts, for example, has a heavy student population so ratchet up your efforts on Facebook. If you’re targeting the medical profession major on LinkedIn and trade journals. Figure out what gives you the biggest bang for your buck.”
Rick appreciates the niceties of using the focused approach to international marketing, having put down roots in the UK following a trade mission to Liverpool. As a full services boutique, his firm is intent on sharing trade opportunities across the Atlantic rather than taking business away from the UK – hence the partnership approach.
Around 30 per cent of the firm’s client base is involved in green technologies but the business also serves as an accurate bellwether for the broader economy. And Rick detects a high degree of confidence.
“I warn people not to get vertical whiplash, jerking their heads up and down to follow the dips and rises in share prices. There are massive opportunities for two-way trade between our countries – and the special relationship is very much alive. In fact I would say that UK companies above those from any other countries have a positive edge and that we would give them a foot up first.”
Rick will stress at Doing Business in the USA the need to be strategic. “It may be tempting to chase emerging markets like China and Russia but in trade and culture terms the UK and US are closer. It’s easy to follow trends but I would rather follow opportunities – and those exist in abundance in the US.”
The legal niceties of trading in the US are often overlooked as UK companies fool themselves into thinking that it is a straightforward extension of dear old Blighty.
Scott James, an American lawyer with top 100 US business law firm Faegre & Benson, will use the Newmarket event to tell delegates: ‘Know before you Go.’ He says: “Before you even consider setting up in the US you need to understand the rules of the game.”
Scott will brief delegates on five main fields of activity:-• Intellectual Property Rights• The structural issues of setting up a company• Negotiating an agency or distributorship relationship• The terms & conditions of contracts• Reducing product liability risks
Scott helped the 500-lawyer firm – headquartered in Minneapolis – establish the London office in 1985 – its first European operation. It is soon to merge with a 300-lawyer Indianapolis firm so is scaling up on a pretty impressive basis.
Scott said: “The first thing to decide is the business plan. You can keep flying people over and back but that is more expensive than setting up an office. Or you can create a physical presence in the US. It should be said that the American market almost certainly will prefer to buy your product or service if you have made this commitment there.
“You may need an agent or distributor, someone on the ground who understands the market. But you have more control if you set up your own business presence in the US.
“You then need to decide what type of business to establish. There is a legal entity known as a Limited Liability Company which is a terrific US tax reducing device. The problem is that HMRC in Britain doesn’t recognise the transparency of an LLC so this option carries a huge risk of triggering double taxation.
“For this reason, a good many British firms establish corporations from the outset if they decide to put down roots in America. Even here there are potential problems to be avoided.
“Delaware has marketed itself as tax-free haven; that if you open an office in Delaware but don’t do business there you don’t pay any state taxes. The point is you may be trading heavily in New York and you will be hit with taxation there.
“You have to do your homework. It isn’t complex by any means to establish a business in the US but you have to go about it in the right way and with your eyes open.”
Scott is also urging UK businesses to get their IPR in shape before they venture forth. “UK companies need to ensure that there is US protection for their IPR including Trade Marks and Copyright. Having protection in the UK does not give you the best protection in the US market, and may give you none. Last year, a major European company lost the opportunity to recover millions of dollars in damages and attorneys fees from a US infringer because it had not registered for US copyright protection, something that can cost as little as $35 per registration.”
And British businesses must ensure their products are legally registered for sale in the US. Scott had one UK client – from this region as it happens – which had made its maiden sales in the States and within a week found that the labor union that the company had to use would not deliver the product because it was not US certified.
“None of this is rocket science but it is amazing how often the simple issues of trading in the US are overlooked by British companies – hence the title of my talk: ‘Know before you go.’”
Other contributors to ‘Doing Business in the USA’ include Marguerite Meyer, regional head of trade for UKTI East, and Jo Smith – associate director for Citizens Bank, the US division of RBS, who will talk about setting up finance for US business, creating a bank account, withdrawing money and other practicalities.
The event starts at 9.30 am at the Millennium Grandstand, Rowley Mile Racecourse, and continues until 4.30pm. There will be an opportunity mid-afternoon for one to one meetings with specialists as well as sector briefings and workshops covering Life Sciences, Renewable Energy and CleanTech, and Digital Media.
The cost is £40 + VAT. To book you can call +44 (0) 1707 398 382 email: bookevents [at] uktieast.org.uk or visit the website.