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Doing business in the United States
Breaking the US market into manageable sectors can be done in a variety of ways, the most common methods are a mix of geographic, demographic, psychological and behavioural indicators.
Introduction P2
TheUSmarket P3
UnderstandingUSbusinessculture P5
Choosingadistributionchannel P7
Pricingstrategy P10
Regulatoryenvironment P12
Legalenvironment P13
Guerrillamarketing P14
CaseStudy:Force10—AustralianinnovationaidsGulfCoastreconstruction P15
Theimportanceoftradeshows P16
Checklist P17
Contents
Introduction
The United States is home to one of the world’s most complex and competitive economies. As one of the largest and richest consumer markets the chances are high there is a market for your product or service in the US.
TheUSisAustralia’slargesttradeandinvestmentpartnerwitharoundA$48billionintwo-waytradeandmorethan9,000AustraliancompaniessellingoroperatingintheUS.Mostofthesecompaniesaresmall-tomedium-sizedbusinessesthathavefoundsuccessbybeingsmart,creative,preparedandpersistent.
ThisguideprovidespracticalinformationandadviceintheareasthatAustralianexportersshouldconsiderwhenlookingatbusinessopportunitiesintheUnitedStates.
Alabama
ArizonaArkansas
California Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois Indiana
Iowa
KansasKentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
NebraskaNevada
NewHampshire
New Jersey
New Mexico
New York
North Carolina
NorthDakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
SouthCarolina
SouthDakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
WestVirginia
Wisconsin
Wyoming
Alaska
Washington, DC
Hawaii
Doing business in the United States2
Doing business in the United States 3
TheUSisinfactmadeupofhundredsofdifferent
geographicanddemographicconsumermarkets–many
withdistincttastes,purchasingbehaviours,distribution
systems,regulationsandclimates.
Forexample,ifyoudoabasicgeographicalsegmentation,
you’llfindthecountryconsistsof50states;thecapital
cityWashington,DistrictofColumbia(DC);andvarious
territoriesincludingPuertoRico,theUSVirginIslandsand
areasofthePacificOcean.
Sevenofthesestateshaveeconomieslargerthan
Australia’snationaleconomyand24haveeconomieslarger
thanthatofNewSouthWales.Californiaaloneproduces
asmanygoodsandservicesinsixmonthsasAustralia
producesinayear.
Ifyousegmentongeographyandindustry,you’llfindthe
UnitedStatescanbedividedintosixdistinctregions.
> The Northeast (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont).Thisregionisknownforitsculture,educational
systemandmedicalinstitutions.
> The Middle Atlantic (Delaware, Maryland, New Jersey, New York, Pennsylvania and Washington, DC).Finance,communicationsandpharmaceutical
industriesaremostprevalent.
> The South (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and parts of Missouri, Oklahoma and Texas).Duetothearea’stemperateweatherandsprawling
lands,agriculturehasbeentheprimaryindustry
butmanufacturingandtourismhavealsobecome
important.
> The Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota and parts of Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin).Theregionisoftenreferredtoasthenation’s
breadbasketbecauseofitsabundantproductionof
oats,wheatandcorn.Theareaisnotdenselypopulated,
withfewerbigcitiesthanitsneighbourstotheeast.
ThelargestcityisChicago,amajorportand
transportationhub.
> The Southwest (Arizona, Nevada, New Mexico, western Texas and parts of Oklahoma). Thelandinthisregion
isgenerallyflatanddry,andtheweatherisveryhot.
TheregionhasmanydesertsandishometoLasVegas,
oneofthefastestgrowingcitiesintheUSanda
premierglobalgamblingcentre.
> The West (Alaska, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming).Thisareaofthecountryisbestknownfor
itsnaturalbeautyandadventuresportindustries.
Californiaisthenation’smostpopulousstateandis
famousforitsmovieandhigh-technologyindustries.
Evenafterdividingthecountrybyregion,industry
andpopulation,manyAustralianexporterswould
stillbeoverwhelmedbythescaleofsupplyneededto
meetconsumerdemandsintheUS.
Sometimesevenlookingatasinglecustomerinthe
UScanbestaggering.
Toillustrate,asupermarketchaincalledBristolFarmsin
theUShas13storesinLosAngelesandisconsideredto
beasmall,boutiqueretailercateringtotheupper-endofthe
market.Eachoneofthesestoreshasanannualturnoverof
betweenUS$20–50million,andasinglemonth’sorderfrom
BristolFarmsforaproductlikeanAustralianbiscuitcould
representatotalyear’sproductionforanAustraliansupplier.
The US market
Withover300millionconsumers,theUSmarketmayoverwhelmmanysupplierswhoassumetheUSisasingle,homogenousexportmarket.
Doing business in the United States
Doing business in the United States4 Doing business in the United States
Withsuchscaleandvolume,itbecomescriticalfor
Australianexporterstosegmentthemarket,become
highlytargetedandidentifyaniche.
BreakingtheUSmarketintomanageablesectorscan
bedoneinavarietyofways,themostcommonmethods
areamixofgeographic,demographic,psychologicaland
behaviouralindicators.Themethodusedwilldependon
theindustryandproduct.AsimpleSWOT(strengths,
weaknesses,opportunitiesandthreats)analysisofa
marketsegmentcombinedwithbasicinternetresearch
canprovidevaluableinformationandoftendrivethe
decisionofwhetherornottoenterthemarket.
Fortunately,theUSisinformationrichandthereare
freemarketresearch,industrypublications,statistics,
associations,databasesandstudiesreadilyavailableto
helpyouidentifyyoursegment.Thisinformationcan
helpyoudetermineeverythingfromtheageandwealth
ofyourtargetcustomerstotheirpreferencesand
shoppingbehaviours.
Forexample,ifyouproduceanorganicenergybarsuitedto
themalefitnessmarket,youarelikelytobeabletousethe
internettoidentifythemosthealth-consciouscitiesinthe
US,cross-referencedwithcitieswiththehighestnumberof
fitnessclubsandlargestmalepopulationsundertheageof
40.Thesefindingswouldthenhelpyoufocusononeortwo
citiestoconductmoresystematicandtargetedresearch.
Forfurtherinformation
www.locationusa.com USregionsandindustryclusterinformation.
www.factfinder.census.gov
IndexofdataprovidedbytheUSCensusBureau,including
population,ethnicandeconomicstatistics.
With established supply and distribution channels in place, relative wealthy consumers and access to entry across a broad range of industries, the US market attracts the attention of businesses from around the globe
Landmass 9.3millionkm2
Population Over300million
GDP US$13trillion
(annualgrowth>3%)
GDP per capita US$44,000
Defence budget US$481.4billion
States 50,DistrictofColumbia
andterritories
Supermarkets 67,219
Airports 19,854
Interest rates 6.5%(Oct2007)
Gas per gallon in LA US$3.37
(89UScentsperlitre)
National unemployment 4.7%
*Allfigureswerecurrentattimeofprint,February2008.
THE US MARKET
Doing business in the United StatesDoing business in the United States Doing business in the United States 5
Understanding US business culture
WhileAmericansandAustraliansmayappearsimilarin
languageandculture,thetwonationsareactuallyquite
different.Understandingtheseidiosyncrasieswillensure
youarebetterequippedtonegotiatedealsanddevelop
long-termbusinessrelationships.Belowaresomeprimary
aspectstoconsider:
> Americansoftenbuildrelationshipsthroughbusiness,
notbusinessthroughrelationships.Workoutthedetails
ofthedealfirst,therelationshipsmaycomelater.
> Activesellingisexpected,oftentoadegreethatmay
beregardedasexcessiveinAustralia.
> Timeismoney,sobewellpreparedwithsamples,
packagingandsalessheets.Knowyourreturn-on-
investmentcalculationsorsalesforecasts,pricingand
logistics.Deadlinesarerealandshort;respondquickly
orrisklosingthebusiness.
> KnowyourcompetitiveadvantageoverspecificUS
suppliers,aswellasyourdomesticandinternational
trackrecord.
> Beingdirectisavirtue;askforwhatyouwant,saywhat
youmeananddoasyousay.Beingshyandunassertive
maybeseenasaweaknessintheUS.Americanswon’t
takeoffencetowell-phrased,directquestionsbecause
theyalwaysreservetherighttosayno.
> Bepositive.TheAustraliantendencytobeself-effacing
ordownplayachievementscanclashwithAmericans’
can-doattitudeandtendencytotakeinformationat
facevalue.
> Effectivefollow-upisessentialandofteninvolves
persistentandrepetitiveattemptstomakecontact.
Ifyouhavecalledoremailedsomeone2–3timesand
havenotheardbackfromthem,donotassumethey
aredisinterested.Instead,rememberthatpersistence
isexpectedintheUS;itmaytakeyouasmanyas
10–12attemptstogetaresponse,whetherpositive
ornegative.
> BusinessconductintheUSisgenerallyconservative,
politeandsuccinct;itisimportanttoclarifybenefits
fortheprospectivecustomer.
Articulatingyourcompetitiveadvantage
ThemajorityofAustraliancompaniesdoingbusinessintheUSaresmalloperationsthatoftenhaveonlyahandfulofemployeesandalimitedbudget.Thekeytosuccessisnotbeinglargebuthavingastrongproductorserviceofferingandbeingabletoclearlyarticulateyourcompetitiveadvantage.
USbuyersaretimepoorandbombardedwithmarketingcollateralandsalespitchesfromhundredsofcompanies.Asaresult,itisextremelydifficulttogettheirattention.SuccessintheUnitedStatesisoftenbasedonpersistence.Itisnotuncommonforabuyertoneedtohearyourmessagenumeroustimesbeforetheycandifferentiateitfromalltheothers.
Youshouldincreaseyourchancesofgettingnoticedbykeepingthemessageconciseanddiversifyingthechannelsyouusetodeliverit,suchasemail,telephone,publications,thirdpartiesandpersonalvisits.Americansweretheinventorsofthe30-secondsalespitch.Whetheryoulikeorloathetheidea,thelevelofmarketingnoisebombardingbuyersandthenumberofcompetitorsmakesitanecessity.YouneedtobesureyoucanmoveaUSbuyerfrompassivedisinteresttocuriousengagementasquicklyandeffectivelyaspossible–ideallyin30to60seconds.
Thisconcisepitchshouldincludethefollowingfourelements:
> Articulatetheproblemyourproductaddresses,thesolutionitprovidesandwhyit’sbetterthanitscompetitors.Forexample,“Mysoftwaresolvestheproblemofproducttrackingintheretailindustryandprovidesa30percenthighersavingsratethanmytwotopcompetitors”.
> UseAmericanEnglish.Itsoundslikecommonsense,butmanyAustralianexportersspeakinmetricunits,referenceAustralianlocationsanduseAustralianslanginUSpitches.
> TrytoreferencecompaniesthatarealreadyactiveintheUSwhenestablishingyouradvantageorcredibility.Whetherpresentingtestimonialsorclaimsagainstcompetitors,theUSbuyerneedstoquicklyunderstandwhoyouareincontextofhisorhercurrentenvironment.
> Bespecificaboutthebenefits.Avoidusinggeneralitiessuchasimprovedreturn-on-investment,productivityorsales.Insteadprovidespecificnumbers,dataandpercentageincreasesonaspectsofbusinessthatshow
youunderstandthebuyer’sconcerns.
Doing business in the United States6 Doing business in the United States
In the US some industries and states may have regulations that dictate a specific distribution channel for your sector.
Doing business in the United StatesDoing business in the United States Doing business in the United States 7
Every distribution channel you can possibly think of,
and a few you probably haven’t, exists in the US. This
is hardly surprising considering the sheer volume
of people and companies spread across a landmass
(contiguous 48) comparable to that of Australia.
Everyone wants their products and services delivered on
time and at the lowest possible cost. As a result, the US
distribution sector is highly fragmented and complex.
Selecting the right distribution channel involves
considering several factors, including at the most basic
level, the final price of your product. Exporters using
a traditional distribution channel in the US, such as
importer to distributor to wholesaler to retailer, often
find the product’s price has doubled or tripled by the
time it reaches the retailer.
Factorstoconsider
Examinethefollowingaspectsofyourbusinessandgoals
beforechoosingachanneltomarket:
> Number of customers.Ifyouonlyhaveafewcustomers,you
maywishtoselldirectlytothem.Ifyouhavealargenumber
ofcustomers,youmaywishtoselldirectlytothelargerones
anduseothermeanstoserviceyoursmalleraccounts.
> Location of customers.Ifyourcustomersaregeographically
concentrated,youmaywanttosetupyourown
warehousefacilityorofficenearthem.Ifyourcustomers
aregeographicallydispersed,itmaybemoresensibleto
usetheservicesofafulfilmentwarehouse,wholesaleror
distributor.
> Price of product/service.Ifyourproductorservice
isahigh-volume,low-pricedunit,yourdistribution
optionswillbeconsiderablydifferenttoahigh-priced,
low-volumeproduct.Higherpriceditemsareoften
bettersuitedtosellingthroughaspecialistbrokeror
manufacturer’srepresentativewiththesupportofdirect
shippingorafulfilmentwarehouse.
> Complexity of product.Fulfilmentwarehouses,
wholesalers,distributorsandmanyotherplayersinthe
distributionchanneldonottypicallyprovideintensive
supportandtechnicaladvicebeforeorafterthesale.
Ifyourproductorserviceinvolvesalotofrelationship
management,consultativesupportortechnicalservices,
youwillneedtoconsidersettingupyourownlocaloffice
ormanagingasalesforceofagents.
Choosing a distribution channel
OneofthemainchallengesforanynewentranttotheUSmarketliesinunderstandingthechannelstomarketanddeterminingthebestentrypoint.
Doing business in the United States8 Doing business in the United States
ThediagrambelowisfromtheEntrepreneur’s Guidebook Seriesandshowshowsomeoftheseconsiderationsmightaffectyour
distributionchoice.
CHOOSING THE RIGHT DISTRIBUTION CHANNEL
Selectthedistributionchannelthatbestmatchesyoursituationandneeds
Sell directly yourself Use an agent or broker Use a wholesaler Use a retailer
Number&typeofcustomer Few Specialised Hundreds Diversified
Concentrationofmarket Concentrated Concentrated Scattered Scattered
Priceofproduct Expensive Lessexpensive Inexpensive Inexpensive
Complexityofproduct Highlytechnical Lesstechnical Simple Simple
Financialresources Extensive Adequate Limited Adequate
Needforcontrol High High Low Low
> Regulations affecting distribution in your target state or industry.IntheUSsomeindustriesandstatesmayhave
regulationsthatdictateaspecificdistributionchannel
foryoursector.Anexampleisthewineindustrywhere
AustralianwinecanonlybeimportedintotheUSbya
licensedimporter.Inaddition,individualstatesandcounties
oftenhavetheirownsetsofrulesandregulationsaffecting
winedistribution,rangingfromnotallowinganywinesales
torestrictingwhichretailerscansellwineandwhen.
> Type of sales channel being used. Somesaleschannels
aresimple.Productsorservicesthatcanbedownloaded
onlinehavestraightforwarddistributionthatletthe
supplierretainmaximumcontrol.Otherchannels
whichatfirstmightseemsimple,suchasasingle,large
retailerlikeNordstrom’s,canprovequitecomplicated.
Manyoftheseretailersareunwillingtobuydirectfrom
aninternationalsupplierandinsteadfunnelbusiness
throughpreferredfulfilmentwarehouses.
> Importance of price, quality, timing and brand control to your marketing strategy.Essentially,themore
controlyouwantoverthesefactorsthelessattractive
multi-layered,traditionaldistributionchannelswillbe.
Ifyouareunabletosetupyourownoperationsin
theUS,youmaypreferfranchisingorlicensingyour
intellectualpropertytoacompanythatalreadyhas
establishedproductionanddistributionfacilities.
Ifyourbrandisnotimportantbutyourproductquality
is,considersellingyourproductunderprivatelabelto
aspecialistretailer.
> Transportation and storage costs.Forsomecompanies,
itmaybemorecosteffectivetosourceorassemble
someorallofyourproductsintheUSratherthan
shippingfromAustralia.
CHOOSING A DISTRIBUTION CHANNEL
Doing business in the United StatesDoing business in the United States Doing business in the United States 9
Differentmodelsinpractice
AllbusinessmodelsrequireclosemonitoringofyourUS
presencetoensurethemarketpositionisproperlynurtured.
Marketentryoptionscanvarywidelyacrossindustries;
usetheoptionthatmakesstrategicsensetoyouand
reducesriskforyourcustomers.Belowaresomeofthe
mostpopularmarketentryanddistributionoptionsused
byAustralianexporters.
> Selling direct.Itmaynotalwaysbepossibleorefficient
toselldirecttooneormoreofyourUSbuyers.However,
whenitispossible,itisoftenthepreferredandmost
cost-effectiveoption.Duetoaneedtomanagesmaller
supplyvolumes,itisnotuncommonforAustralian
exporterstoworkdirectlywithoneortwocorporate
customersintheUS.
> E-commerce, catalogues and television retailing. Sellingdirectisalsoagreatoptionforexporterswho
selltheirproductsorservicesthroughvirtualchannels
suchastheinternet,cataloguesandtelevision.These
virtualchannelsareoftenoverlookedbyAustralian
exportersenteringtheUS.Morethansevenpercent
ofUSretailsalesalreadyoccuronlineandmorethan
70percentofUShouseholdsregularlypurchasegoods
andservicesthroughthesechannels.
Settingupphysicaldistributionsystemstosupport
thesesaleschannelscanbeaseasyaspay-per-click
downloads;courieringsuppliesdirectlyfromAustralia
viacommercialcompanieslikeDHLandFedEx;selling
directlytothecatalogueortelevisionretailer’spreferred
distributor;orusingtheservicesofafulfilment
warehouse(seebelow).
> Fulfilment warehouses. Thesesmartwarehouses
havecombinedseveraltraditionalrolesintoasingle
service.Australianexporterstendtolookforfulfilment
warehousesthatcanprovidecustomsclearance,
warehousing,pick-and-packorderfulfilment,processing
ofinvoicesandcreditcards,tollfreecustomersupport
lines,returnservicesandinventorytracking.Fulfilment
providersnevertakeownershipoftheproducts,sothe
inventoryremainsyourasset.
> Sales agents, brokers and manufacturer’s representatives. Companiesintheserolesactasyour
salesforce.Theircentralroleistocompletetheorder
andbuildongoingcustomerrelationships.Theyoften
specialisebygeography,industryortargetcustomer.
Typicallytheseagentsoperateonsalescommissions,
thoughtheirroledoesnotincludetakingownership
ofthegoodsorservices,andtheyarenotresponsible
forwarehousingordeliveryoftheproduct.
> Distributors. AustralianexporterscomingtotheUSoftenthinkdistributorsarethebestoptionbecausetheylookafterallaspectsofUSbusiness,fromimportingtomarketingtobearingthecostofpoorsalesordebts.However,distributorsintheUSoftenwantexclusivedistributionrights,high-discountorpreferentialpricingandfullcontroloverthefinalpricing,servicingandmarketingofyourproducts.
Exclusivedistributioncontractslimityoutosupplyingonecustomerinagivenmarket.Itisveryimportanttounderstandthemarketwellandtoknowthekeystakeholdersbeforeenteringanexclusiveagreement.Itwouldbedisastroustoenteranagreementwithafuturecompetitorthatwantstolockyououtofthemarket.
Anexclusivedistributionagreementshouldhavestrictperformanceguidelinesandboundaries.Itshouldusuallyonlybeconsideredafteryouhavedonebusinessinthemarketforsometime.
While the list above provides a quick description of
many of the most common forms of market entry
and distribution channels, other more traditional
options might also be suitable. These include opening
a branch office, joint ventures, licensing agreements,
co-operative production and marketing, selling under
private label and taking orders at trade shows.
Doing business in the United States10 Doing business in the United States
InsteadyoushouldconsiderwhereyouwanttobepositionedintheUSmarketplace–lower,middleorupper-endofthemarket–andtheninvesttime,evenifonlyontheinternet,lookingattheretailpricesofcompetitors.
DonotassumethatpremiumpricepointsinAustraliawill
beroughlysimilartopremiumpricepointsintheUS.
Forexample,intheUSanAustralianwinewithaprice
pointofmorethanUS$12maybeconsideredtobeinthe
upper-endofthemarket.Adesignercostume-jewellery
piecemightbeconsidereddiscountatUS$180.Priceyour
producttoohighortoolowforyoursegmentandyoucan
veryeasilydamageyourchancesforsuccessintheUS.
Thebeststrategyistoidentifyyourpreferredprice
positioningintheUSandworkbackwardstoseeifyou
candeliverthegoodsorservicesatthatprice.
Whencalculatingyourpricingstructures,besuretoconsider
whetheranyofthefollowingcostsneedtobebuiltinto
yourcalculations:
> Exportcertificationanddocumentation.
> Shippingandinsurance.
> Productliabilityinsurance.
> Customsduty.
> Customsbrokerfees.
> Exchangeratefluctuations.
> Translationcostsforpackaging–USEnglish,
measurementsandpapersizes.
> Labellingcosts–UPC(barcodes)andEDIcapabilities.
> Transportationfromtheportofentrytotheimporter’s
ordistributor’swarehouse.
> Warehouseandfulfilmentcapabilitiesandcost
ofinventory.
> Importer’sordistributor’smark-up.
> Retailer’smark-uporslotting(placement)fees.
> Retailsalestax,whichvariesbystateintheUS.
> Handlingwarrantiesorreturns.
> Marketingsupportcostsandsalesincentives.
WhenpricingforUScustomersitisimportanttoremember
manyofthemhaveneverdealtwithaninternational
supplierbeforeandmaynotunderstandexportpricing.
Thereforeyouneedtobesureyouarebothspeakingthe
same“language”andunderstandthepricingstructure.
QuotingshouldbeinUSdollarsanditisessentialtobeclear
aboutwhereinthedistributionchainresponsibilityand
ownershipofthegoodsorserviceschangeshands.
Forexample,manyUSbuyerswillaskyoutoquotein
USdollarsFOB(freeonboard).Withoutclarification
surroundingwherethebuyeractuallywantstoshift
delivery/ownership,itispossiblethatanAustralianexporter
willassumetheUSbuyerisusingthecommonshipping
termwhichreferstoFOBportoforigin,suchasSydney.
However,intheUS,FOBcanoftenmeanfreeonboardtoa
USinlandcarrierofchoice,whichcouldeasilybeNashville,
Tennessee.Thusmajormisunderstandingscaneasilyarise.
ThemostcommonformofpricingisCIF(cost,insurance
andfreight)totheportofentry,althoughmanyUSbuyers
maystillaskyoutofactorintransportationfromtheportof
entrytotheirimporterwarehouseorinlandcarrier.
Pricing strategy
Whileanypricingstrategyhastotakeintoaccountthebasicneedtocovercostsandprovideareasonableprofitmargin,AustralianexportersshouldavoidthetemptationtousetheirAustralianpricepointsasthefoundationofaUSpricingstrategy.
Doing business in the United StatesDoing business in the United States Doing business in the United States 11
When pricing for US customers it is important to remember many of them have never dealt with an international supplier before and may not understand export pricing.
Doing business in the United States12 Doing business in the United States
Regulatory environment
USlawsandregulationsmayrestrictorlimitentrytocertainportsorstatesandrequirespecifictreatment,labellingorprocessingasaconditionofentry.
ItisimportanttonotethattheregulatoryenvironmentaffectingAustralianexportersmayvarysignificantlybetweeneachstate.Whilestatescannotimplementaframeworklessstringentthanthefederalframework,theyoftenimplementadditionalguidelines.Exportersshouldtakegreatcaretocomplywithfederal,stateandindustryregulationstoavoiddelays,extracostsortheprohibitionofgoods.
MostrequirementscanbeobtainedonlinedirectlyfromtheUSregulatoryagencies.Thefederalagenciesmostlikelytoimpactyourtransactionsinclude:
> US Customs and Border Protectionwww.cbp.gov— forregulationsaffectingtheimportationofall
articlesintotheUS.
> Food and Drug Administration (FDA)www.fda.gov— forregulationsrelatingtoUSbioterrorismlawsand
thelabellingoffood,dietarysupplements,cosmetics,drugs(bothprescriptionandover-the-counter),medicaldevices,itemsthatemitradiationandanimalfoods.
> US Department of Agriculture (USDA) www.usda.gov— throughitsFoodSafetyandInspectionService(FSIS)
isresponsibleforensuringthattheUScommercialfoodsupplyissafe,wholesomeandcorrectlypackagedandlabelled.
> Consumer Products Safety Commission (CPSC)www.cpsc.gov— forregulationsandvoluntarystandardsaffecting
consumerproductsthatmayposeariskofinjuryordeath,suchasflammableproducts,toys,itemscontainingleadanddefectiveelectronics.TheCPSCcomesundertheumbrellaoftheFederalTrade
Commission(FTC)–www.ftc.gov.
> Environmental Protection Agency (EPA)www.epa.gov
— forregulationsaffectinganyproductthatmaybe
consideredtoxicorhazardoustotheenvironment
suchaspesticide,fungicide,ratpoisonor
anti-microbialagents.
> Australia-US Free Trade Agreement (AUSFTA)
www.austrade.gov.au/AUSFTAor
www.dfat.gov.au/trade/negotiations/us_fta
— informationonAUSFTArulescoveringawiderange
ofsubjects,includingmovementandoriginofgoods,
quarantine,competitionregulation,e-commerce,
intellectualpropertyandbusinesstravel.
Just as most federal and state level regulations can be obtained directly from the relevant agencies, most industrial standards are also readily available. Some of the most common standards affecting Australian exporters are issued by the following US organisations:
American Society for Testing and Materials (ASTM)www.astm.org
Institute of Electrical and Electronics Engineers (IEEE)www.ieee.org
National Fire Protection Association (NFPA)www.nfpa.org
Society of Automotive Engineers (SAE)www.sae.org
Underwriter Laboratories (UL)www.ul.com
American National Standards Institute (ANSI)www.ansi.org
TheUSisahighlyregulatedsociety.Assuch,Australianexportersneedtobeawareofthemanyregulations,standardsandguidelinesthatmayaffectthesaleoftheirproductsorservices.
Doing business in the United StatesDoing business in the United States Doing business in the United States 13
Whetheryouareadomesticfirmoraforeigncorporation,
spendingmoneyonUSlegaladviceupfrontcanhelpavoid
expensivelawsuitsdowntheroad.
SomeofthemostcommonareasofUSlawthataffect
Australianexportersandforwhichyoushouldideallyseek
USlegaladviceinclude:
> Trademark and patent protection.Protectingyourbrand
orintellectualpropertyshouldbeapriorityintheUS.
Evenifyoufeelyouwouldn’thavethefinancialcapacity
toprosecutetrademarkorpatentinfringements,
youshouldstillregisteryourtrademarkorpatent
withtheUSPatentandTrademarkOfficeonlineat
www.uspto.govorviaalow-costserviceprovider.
> Incorporation.Itispossibletoincorporateacompany
onlineforaslittleasUS$100.Therearealsovarious
locationsintheUS,suchasDelaware,where
incorporatingcanbedonequickly,easilyandcheaply
throughalawfirmonyourbehalf.Itisimportant,
however,torememberthestructureofyourcorporation
intheUSwillhavelegalandtaximplications,making
properlegalandfinancialadviceasoundinvestment.
> Product liability.Insuranceforeveryone in the
distribution chainisabsolutelycriticaltomany
industries,suchasfood,cosmetics,toysandelectrical
equipment.Alternatively,itmightbearequirementof
yourUSvendorthatyouhaveproductliabilityinsurance.
Intheseinstancesyouwillhavelittlechoicebuttoseek
adequatecoverageinordertoprotectyourself.Before
automaticallyseekingproductliabilityinsuranceyou
shouldtrytoevaluateyouramountofriskandwhat
levelofinsurance,ifany,isnecessary.Forexample,if
yousell10to15piecesofhigh-endjewelleryeachyear
throughafewboutiqueretailers,youmaydetermine
thatproductliabilityinsuranceisnotanecessary
investmentforyourcompany.
Itisalsoimportanttoshoparoundforcoverage.Some
reputableorganisationscanprovideinsuranceforas
lowasUS$5,000–6,000ayearforuptoUS$2millionof
coverage.Directors’andofficers’insuranceshouldalso
beaconsiderationtoprotectagainstpersonalliability.
> Contract advice. Whetheritisasalesagent,distributor
orjointventurepartner,Australianexportersshould
alwaysconsiderobtainingsomeformofUS-based
legaladviceoncontracts.Thisdoesn’talwayshaveto
meanextensivelegalfees,as3–4hoursofreviewbya
reputablelegalfirmonaproposedagent’scontractmay
besufficient.
Forexample,ifyouwereabouttosignamanufacturer’s
representative,youcouldgototheManufactures’
AgentsNationalAssociation(MANA),whichprovides
freedraftcontractsthatarefairlystandardacrossthe
nation.WithafewhoursofUSlegalinputyoucould
ensurethecontractclearlymeetsyourspecificneeds
andperformancerequirements.
Legal environment
TheUnitedStates’reputationasalitigiousnationisnotunfounded,butitisnotasmuchabarriertoentryasastandardcostofdoingbusiness.
Doing business in the United States14 Doing business in the United States
ThesolutionforAustralianexportersisoftenguerrilla
marketing,whichinvolvesusinganunconventional,
low-costapproachtomakeanimpactonconsumers.
Guerrillamarketingtechniquesrelyoncreativityandthe
dedicatedallocationofavailableresources–evenifthose
areonlypeople,energyandflexibility–tomarketing
activitiesthathelpyouachievethesalesvolumeand
customerloyaltyneededtorunaprofitableandsustainable
businessintheUS.
SomeofthemostcommontechniquesusedbyAustralian
exportersinthemarketinclude:
> Website/internet strategies.Awebsiteisagood
foundationforanyguerrillamarketingapproachand
isavaluableopportunitytobuildyourbrand,inform
customersandimpactbuyingdecisions.Americans
demandextremelyhigh-qualitywebsites,andyoumust
meettheseexpectationsorsaleswillsuffer.Thinkabout
waystouseblogs,e-newsletters,specialoffers,viral
campaignsandotherincentivestomaintainimpact.
Formoreinformationontheimportanceandsimplicity
ofusinginternetstrategiesintheUS,seeAustrade’s
E-commerce in the US – a practical guide for Australian
exporters atwww.austrade.gov.au/eguideUS.
> Publicity instead of advertising.Attractingeditorial
coverageinmediathatreachesyourtargetaudience
isgenerallyafarmoreeffectivewaytoinfluence
buyersthanpurchasingadvertisingspace.Editorial
endorsementscarryincredibleweightintheeyesof
theUSconsumer,andmediaattentionwillhelpdrive
salesandcreatebrandawareness.Identifyindustry
publicationsinAustraliaandtheUS,makecontact
witheditorsandsendpressreleases,samples,articles
andreviewsofyourproductorservice.
> Influential users or recognised reference sites.Pickone
ortwowell-respectedreferencesitesandfocusyour
energyongettingthemtoendorseyourcompany.
Forexample,ifyouproducemedicalequipment,getting
theCedars-SinaihospitalinLosAngelestobuyyouritem
wouldgiveyoucredibilitywithjustaboutanyother
hospitalinthecountry.
> Celebrity endorsement. Thebestwaytoapproach
celebritiesistotargettheirpublicistsormanagersand
passonafreegiftofyourproductorservice.Ifyou
includeasmall,self-addressedenvelopeandcomment
card,youmaygetfeedbackfromthecelebritythatcan
beusedinmarketingmaterials.
> Memberships in associations and chambers.Thisis
atraditionalbutstillhighlyeffectivewaytoaccess
networks,informationandbusinessinanynewmarket.
> Sponsorship.TheUSmarketattachesalotofcredibility
tocharityeventsandtheorganisationsthatsupport
them.Yourcompanymaybeagoodmatchforalocal
non-profit.Commercialeventscanalsoofferworthwhile
sponsorshipopportunitieswithgoodlogoplacement,
mediaexposureandaccesstocaptiveaudiences.
> Small gifts or incentives for your sales force. Thankingyourcustomersandrewardingyoursales
forcewithAustraliangiftssuchasaqualitybottleof
winecandeliverremarkableresults.
UScorporationsregularlyspendmillionsonadvertisingcampaignsinanattempttogainordefendmarketshare.Unfortunately,mostAustraliancompanieshavedramaticallysmallerbudgetsforUSpromotions.
Guerrilla marketing
Doing business in the United StatesDoing business in the United States Doing business in the United States 15
HurricanesKatrinaandRitastrucktheUSGulfCoastinAugustandSeptember2005,combiningtocreatethebiggestandmostexpensivenaturaldisasterinUSHistory.AsaresultofKatrinaalone,inexcessof200,000homesweredestroyedinLouisianaandanestimated50,000plushomesinMississippiandAlabama.
Whilsttherebuildingofdevastatedcommunitieshascreatedhugedemandforhousingconstruction,localauthoritieshavealso
acknowledgedtheneedforadvancedbuildingandconstructionsolutionsforelevatedandhurricaneresistanthousingsystems.
ThemonumentalreconstructioneffortisbeingaidedbytheexpertiseofaninnovativeAustraliahousingcompany,Force10
InternationalPtyLtd,whodesignandmanufacturecycloneandhurricaneproofhouses.Force10proprietarymaterialsinclude
theForce10FloorSystem,WallSystemandRoofSystem.
BasedinBrisbane,theirsturdyanduniquedesignsutilisetheverylatestenvironmentallyfriendly,rawmaterialsandare
exportedtoregionspronetoextremeweatherconditionsaroundtheworld.
Force10representativeswereinvitedtovisittheGulfCoastbyAustradeinJune2006.Asaresult,Force10hasnowbeenableto
forgeapartnershipwithaFloridabasedgroupwiththegoalofmanufacturingForce10productsunderlicenceintheUS.
Asafirststep,Force10builta2,500footsquarehousewith“SouthernMansion”architectureinBiloxi,Mississippi.The
constructiongeneratedenormousinterestinthelocalcommunityandbeyond,andtheUSpartnersofForce10havereported
highlevelsofinquiriesfrombuildingcompaniesandcorporations.
WiththeUSGovernmentcommittingUS$200billionforeconomicrevitalisation,repairsandreconstructionintheregion,
Force10areshowcasingtheroleAustralianconstructionexpertisecanplayinrestoringGulfCoastcommunities,andthemany
lucrativeopportunitiesavailabletoAustraliancompaniesasaresultofreconstructionefforts.
Formoreinformationvisitwww.force10.com.au
Case Study: Force 10 — Australian innovation aids Gulf Coast reconstruction
Doing business in the United States 15
Doing business in the United States16 Doing business in the United States
The importance of trade shows
ThemaintradeshowcapitalsoftheUSincludeAtlanta,
Chicago,LasVegas,LosAngeles,NewYorkandOrlando,but
eventsareheldthroughoutthecountry.
Tradeshowsprovideaone-stopshopwherecompanies
canmeetnewandexistingbuyers,distributors,agents
andmedia.Theyalsoprovideagreatopportunityfornew
supplierstotestproductorserviceofferingsonthemarket,
observetheircompetitionanddiscusstrends.However,this
exposuredoescomeataprice.Australianexportersshould
thinkcarefullyaboutwhetherexhibitingisthebestoption
fortheircompany.
USbuyersareawarethatthemajorityofnewexhibitors
areshort-livedoperationsthatwillbeoutofbusinesswithin
ayear.Asaresult,buyersoftentestacompany’sviability
bywaitingtoseeifitreturnstothetradeshowasecond
orthirdyear.Thistrendisconfirmedbythemanyexporters
whobegintomakesignificantsalesintheirthirdyear
ofexhibiting.
Ifyouaren’tgoingtocommittoexhibitingforseveralyears,
considerattendingratherthanparticipating.Manytrade
showswillevictattendeestheyfindtryingtoactivelysell
onthetradeshowfloorwithoutactuallyexhibiting,so
concentrateongatheringmarketintelligenceandattending
seminarsandnetworkingeventsinstead.
Ifyoudodecidetoexhibit,besuretoresearchtheavailable
tradeshowstoensuretheyattractthesortofattendees
youneed,egtradeversusconsumers.Mosttradeshowswill
haveattendeenumbers,profilesandexhibitorlistsontheir
websites.Youcaneasilyseewhicheventsyourcompetition
ortargetpartnersareattending.
Below are some links to relevant articles that can help you review your objectives and activities before, during and after a trade show. These are only a sampling of the thousands of free articles and checklists available on the internet. You should also be sure to review the many additional marketing and promotional support activities provided by the show organisers for exhibitors.
http://directory.trade showweek.com/directory/index.aspComprehensivelistingofUStradeshowsbyindustry,
locationanddate.
http://downloads.uktradeinvest.gov.uk/exhibitingatustrade shows.pdfUKguidetoexhibitingatUStradeshows.
www.sbinfocanada.about.com/cs/marketing/a/trade showtips.htmCanadiansmallbusinessadvisorysite.
www.welcomebusiness.com/articlesDisplay.asp?articleID=77&deptID=3USmarketingresourcesite.
www.tldp.org/LDP/Linux-Media-Guide/html/trade_show.htmlAguideusedtoeducateatechnologycompany’s
globalcommunityonhowtomakethemostof
tradeshows.
TradeshowsarestillanimportantpartoftheUScommerciallandscapeandtherearethousandsofeventsheldeveryyearforeverythingfromgamingtechnologytoquiltingsupplies.
Doing business in the United StatesDoing business in the United States
Is Your Business Ready For Export?
Doing business in the US 17
ThischecklistisdesignedtoassistyouinyourUSmarketentry.
Yes No
How’s your Intellectual Property ?
HaveyouregisteredyourTradeName/MarkintheUS?
Haveyoucopyrightedyourprintedandelectronicmaterials?
HaveyouappliedforaUSPatent?
Have you obtained Product Liability coverage?
Have you secured the services of a legal team?
DoyouhaveaNon-DisclosureAgreement?
DoyouhaveacontractappropriatefortheUSmarket?
Have you met all Regulations and Standards?
State?
Federal?
Industry?
Have you defined your market entry strategy?
Direct?
Distributor?
Manufacturer’sRepresentative?
JointVenture?
ManufacturingUnderLicence?
Businessentity–subsidiary,branch,corporation?
How’s your IT department?
DoyouhaveyourownAmericanisedwebsite/domainname?
Doyouhaveprofessionalimagesonyoursite?
Yes No
How’s your marketing department?
DoyouhaveAmericanisedcatalogues,brochures,writtenmaterials?
Doyouhavepricing(wholesaleandretail)workedout?
IsyourpricinginUSdollars?
DoyouuseImperialmeasurementsfortheUS?
How’s your customer service department?
Areyoupreparedtoofferafter-sales-serviceintheUS?
Doyourespondtoemail/telephoneinquirieswithin24hours?
Canyouquicklymail/couriermaterialsout?
How’s your shipping department?
DoyouhaveaFreightForwarderorCustomsBrokerinplace?
DoyouhavesomeoneestablishedastheImporterofRecord?
DoesyourpaperworkmeetUSCustomsrequirements?
Haveyoupackedyourproductssotheyarriveundamaged?
Haveyouallowedforpossibledelaysindelivery?
Doyouhaveaguarantee,warrantyorreturnpolicy?
Do you have an exit strategy?
Note: Not all of these items on the checklist will apply to you or your business. For more in-depth information on these and other requirements for the US market, contact your nearest Austrade office – we will be happy to assist.
Seattle
San Francisco
New Orleans
Las Vegas
Los Angeles
San DiegoPhoenix
Austin
Denver
Kansas City
Chicago
u
Washington DC
Atlanta
Charlotte
New York
Boston
MiamiHonolul
For further information
Call 13 28 78
Email [email protected]
Visit www.austrade.gov.au
Austrade has a network of Export Advisers based in Australia and 19 points of service in the United States. We are here to understand your needs and help you grow your business in the US market.
