An Interview with Marta Andreu, ITC Consultant in Boston: How to Export to the US.
Has it been your experience in international trade and, especially in the States, that European companies have an ever-increasing presence?
Very definitely. In US is a huge market of 323 million consumers which of itself would be extremely attractive, but when you add in their propensity to consumerism it becomes doubly alluring.
Since the start of the economic recovery, the has been a steady upsurge in the number of European companies reaching agreements with their US associates and partners. These accords can take the form of working with importers or distributors, and sales agents or representatives. Increasingly, however, these collaborations are acquiring more sophisticated forms including: technology transfer, licensing, and even OEM manufacturing under US brands or DOB arrangements.
Given the very large distances involved, if a company intends to establish a country-wide presence, logistics and after-sales service and maintenance are of prime importance. How to choose which set-up is ideal for you will depend on the product or service you are offering.
Another phenomenon which is becoming more evident of recent years is the move from working through intermediaries to setting up their own operations which, from the point of view of the paperwork involved, is very simple. This trend is, by no means, limited to large enterprises, rather it is the path taken by companies of all sizes and shapes. This path to the market is especially popular amongst technological companies as their products and services are born global.
“Doing Business – Measuring Regulatory Quality and Efficiency”, the World Bank classification of doing business in 189 countries ranks the USA number 7.
In which industries will be find the most and best business opportunities?
The USA is a very diverse and technologically sophisticated Market. European firms from all walks of industry can find a niche here. However, it is important to bear in mind the preponderance of the service sector which accounts fro 75% of GNP and 70% of employment.
Industry represents about 20’7% of GNP and is made of of a very wide range of sectors. Some that are especially remarkable are electrical and electronic machinery, chemicals and machinery as well as food processing and the automotive industry. The US is, of course, world leader in pharmaceuticals and aerospace. The States is also fortunate to possess vast mineral wealth and natural resources which give rise to many and diverse industries which include, but are not limited to: liquid natural gas, aluminium, electricity and nuclear energy, and is number three in the world for oil.
As far as agriculture is concerned, the US is one of the world¡’s leaders in efficiency and production boosted by the use of high-tech machinery. The main crops are corn, soya beans, beef and cotton.
Europe continues to be a very important partner for the US with the main exports being the aero-spatial industry, general machinery, mineral (oil) fuels, optical and medical equipment and products, pharmaceuticals organic chemicals.. The main agricultural exports encompass wine and beer, essential oils, snacks – including chocolate, vegetable oils and processed fruits and vegetables. Furthermore, the traditional sectors of banking and insurance are now being joined by more and more firms from very diverse service industries.
NdelT No sé si us agrada, però m’ha semblat interessant destacar el paper tradicional d’aquests dos sectors.
A relatively new industry that is now becoming firmly established is that of renewable energies and fuel efficiency. A concerted effort by the US government has spurred development in this market. These endeavours were epitomised last February when a bipartisan group of governors from 17 of the 50 states signed the “Governors’ Accord for a New Energy Future” in which they set out the need to modernise energy infrastructures to promote non-contaminating transport (electric vehicles), to establish criteria for clean energy and energy efficiency standards and to speed up the approval of transport and infrastructure projects. They also propose to pressure the federal government into promoting the investigation of developing energy storage, cleaner fuels and the electric grid.
The US is renowned for its technological innovations, will European firms find their niche in the field?
Yes, there are many opportunities in cutting-edge technologies. As a case in point we can look at biotechnology in medicine, agriculture and industry, health, energy efficiency, TIC, security, etc. as opportunities for European exporters.
Led by Boston, Massachusetts was recently elected most innovative state in the US, closely followed by California, New Jersey, Connecticut, Oregon, Maryland, Colorado, Delaware and Minnesota.
It is widely believed that the creation of knowledge is global and this notion is a stimulant for international cooperation and the interchange of technology between international organisations, both public and private, with the aim of achieving scientific and commercial advancement and, as a result, economic development.
Is price a determining factor when exporting to the States?
As a large and diverse markets the US offers opportunities for all tastes and budgets meaning companies not only have to take into consideration pricing, but also quality and service. An important factor to always keep in mind that this huge diverse and saturated market offers something for all which means that customers are very demanding when purchasing goods or services. We would, therefore, conclude that any European firm planning on entering this market must be at least as good as the local and foreign competition.
When talking of entry channels, does the US have a very structuralised organisational system?
The sheer size of the market there makes distribution more complicated than in other regions. For example, the States has 4 continental time zones and 6 in total. Physical and cultural differences between regions are enormous. These factors mean that one of the vital elements when approaching the market is to give very careful consideration to the point of entry and the organising of logistics from the point of origin. .
Briefly, could you tell us the keys to commercial success in the US?
Adapt to the US Market: some of the things companies must bear in mind are: language; design; uses and customs; values; etc. One area in need of very special attention in that of legislation regarding standards, packaging, forbidden ingredients, etc. as these may be very different from European norms and, even, totally contradictory. This will often involve you adapting before presenting products in the US. A case in point is that regarding eggs. In Europe it is obligatory to wash them before putting them on sale; in the States washing is totally prohibited. (NdelT: Altre afegitó de collita pròpia si voleu fer-ho servir.)
Put it in writing: As testified to by innumerable articles and anecdotes, the US in a very “legalistic” society with a propensity to sue at the drop of a hat. Make sure that agreements with distributors, agents and customers are all perfectly recorded and documented. We would highly recommend employing the services of local experts to assure a level playing field regarding your local competition.
Seek the advice of local market experts: selling in certain sectors can involve certain complications, whether this be due to protective legislation (as is the case of agricultural products, pharmaceuticals and medical products and services), or as a result of fiscal, customs or normative issues. Once these barriers have been overcome, it is time to get the US consumer interested and to introduce into the different states with their diverse cultures. This is not an easy task, which is why we consider expert local advice is essential and you would be well advised to follow informed local consultants.
We interviewed Marta, a senior consultant in ITC based in Boston, on 22nd February.