Doing Business in the US - Fundamental Considerations For International Companies

In these challenging economic times, international businesses need to find new markets for their products and services. Although some of the developing economies have shown signs of rebounding, many companies from our traditional trading partners will probably re-visit the U.S. as a market. Even in the midst of a severe recession and with the importance of emerging economies, the U.S. remains a safe haven and a relatively affluent and established market.

The basic question for international companies wanting to do business in the U.S. boils down to "what do I need?" A business thinking about doing business in the U.S. will of course need to assess the market demand for its product or services as well as sales and distribution channels. If this research demonstrates an opportunity, the business will need to determine where to locate its business.

One thing that often surprises even experienced international visitors is the geographical vastness of the United States. For example, the state of Texas is substantially larger than Germany, one of the largest countries in Europe. An international company should consider locating its U.S. operations in an area that is convenient to the home office. For example, companies in Europe should consider locating their U.S. operations in or close to a city with easy air connections to Europe.

Companies should also consider time differences in relationship to where they locate. For example, all things being otherwise equal, European companies should consider locating their U.S. operations within the Eastern time zone in the U.S., where the five to six hour time difference allows communications during regular business hours with Great Britain, Ireland, Scandinavia and the Continent. Conversely, the nine hour time difference between central Europe and the West Coast can create issues. Of course, Asian companies might prefer to locate their U.S. operations on the West Coast for similar reasons.

Although I am arguably biased, Georgia should definitely be on the short list, with the world's largest airport, multiple daily flights to Europe and other international destinations, two deep water ports (Savannah and Brunswick), a strong rail and road transportation system, and a strong university system led by the University of Georgia in Athens and the Georgia Tech in Atlanta.

Atlanta, the host of the 1996 Summer Olympics, has a strong international business community. Add in a moderate climate and an attractive lifestyle, it is not surprising that many international and domestic companies, such as Kia and NCR, have chosen to locate or relocate facilities or headquarters in Georgia.

Once a decision has been made on where to locate, a business will need to engage professional assistance to establish business operations in the U.S. Many small businesses seem to think that all they need is an accountant. Certainly, an international business setting up in the U.S. does need a good accounting firm, preferably one with international tax experience.

A company should also engage experienced counsel, preferably before it starts doing business. In this respect, please keep in mind the one almost universal rule regarding legal services: It costs less to deal with an issue properly on the front end (such as properly setting up a business) than trying to fix it on the back end. In addition to helping set up the business properly, a lawyer should be involved in helping the company draft contracts and establish terms and conditions of sale that will help minimize the risk of disputes with customers or suppliers.

A company should also engage an experienced insurance broker. It is no secret that the U.S. is more litigious than other countries. Liability insurance is a key to minimizing litigation risk for product liability and other claims. A good insurance broker with international experience can help develop a logical insurance program and risk management strategy.

To sum up, make sure that there is a market for your product or services in the U.S. Understand that the U.S. is a large country. Choose a geographic location that makes it easy to communicate with your home office and to sell into the parts of the U.S. that best fit with your products or services. Finally, do not overlook the need for professional services in three key areas. Make sure that you have:

  • An experienced accountant, particularly one with international tax experience.
  • An experienced lawyer, preferably one experienced in dealing with international companies.
  • An experienced insurance broker experienced in dealing with international insurance issues.

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