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Richard Northcote (former North American Market Advisor, UKTI North West England) was a long time friend who passed away several years ago. In 2017, I asked Richard a series of questions about the efforts of U.K. exporters to break into the American market. Richard's replies were very insightful into the strategic decisions that were necessary for the successful entry into the American market. Plus, these insights provide an excellent starting point for a discussion of the legal issues and strategic decisions that you should consider. This is the fifth in my series of insights from U.K. Exporters.
Richard Northcote, former North American Market Advisor UKTI North West England
Richard was a contractor for United Kingdom Trade & Investment, North West England, the government agency for international trade liaison which advised U.K. companies on their strategic plans for entering the North American market. He had 20-plus years of experience in this position and advised more than 150 U.K. companies during his tenure. During this period, Richard has also assisted over 80 U.S. companies with their business development in the United Kingdom. United Kingdom Trade & Investment has been replaced by the UK Department for International Trade.
1. What leads U.K. companies to their decision to sell to the American market?
Response: “I would suggest that the majority of the clients that I meet tend to believe that the U.S. represents a fairly logical extension to the U.K. market. Much of this is I believe based upon both a sense of tradition and a belief that with at least a relatively "common" language. There is I believe, an all too common misconception that the US is a relatively easy market.
Something that far too many eventually find to their cost, is not actually the case. When compared to some other countries, the US does actually look to be a relatively easy market to enter. At least the language while it does nevertheless have some slight differences, it is at least a lot easier to understand than most others!”
2. What key factors were considered in making this decision?
“a. In looking at entering the U.S. market, many companies site the general downturn in both the U.K. home market the European market in general.
b. For those companies with either an IP or a particular technology, they often feel that it is essential for them to be involved in the U.S. market.
c. A “fascination" with the U.S. market in general. This is of course not the most solid of reasons to try entering one of the most demanding markets of all though definitely one that exists.
d. Their key customers could quite easily be based in the U.S. anyway.”
3. What one issue/concern/problem keeps people up at night? Why?
“a. U.S. immigration and the apparent growing difficulties/obstacles presented to business people trying to enter the U.S. genuinely just to do business.
b. Re the above, a missing link in the Visas that are available. A visa that could enable people to enter the U.S. to conduct their business without the constant fear that every time they stand in front of an immigration officer, they are simply at the whim of an individual's subjective opinion.
c. Many view the state tax system as unclear and are therefore confused as to when and where individual state taxes may or may not be due.
d. Finding out the correct U.S. import taxes/duties where applicable. Many companies seem to find this to be both difficult and complicated too.
e. Incorporation in the U.S. – whether to incorporate or not and if so, which jurisdiction should they incorporate within and what type of company is most suited to their purpose.
f. U.S. banking and banking arrangements – even what should be the relatively simple task of opening a U.S. bank account.
g. Many fear the litigiousness of the U.S. system and for some, this fear is more than enough to put them off entering the U.S. market altogether.
h. Many overlook the need (essential) for the correct and quite different insurance requirements. Insurance for both product liability and PI liability cover can at times be at the best expensive and in many cases, difficult to obtain. In many cases, their usual U.K. based insurance brokers are unable to obtain correct or adequate cover for the U.S.
i. Fear of involvement with a U.S. lawyer and being totally ripped off (over this side of the Atlantic, U.S. lawyers do have this kind of reputation!) j. Fear of employing U.S. citizens, the potential “liabilities” that this could bring and in particular, fear of involvement with the IRS. Fear of the U.S. tax system which to an outsider can at least look to be particularly daunting.”