Doing Business in the USA: Easy or Deadly?

Transcription

1 Doing Business in the USA: Easy or Deadly? Introduction to US Business University of Zurich Zurich, May 18,

2 Six topics The first floor is not the first floor! US Business: World s locomotive or Proud Titanic? The myths and the real dangers of doing business in the USA Do s and Don ts for success Excellent business relationship between CH and USA What to expect in the future April

3 USA: It s a whole world! Source: IMF, US Census Bureau (The Economist) April

4 USA - Switzerland Massachusetts + Connecticut = Switzerland, Texas is 17x, Alaska 41 x USA 238x Switzerland April

5 The first floor is not the first floor! April

6 The biggest myths are not always right USA will soon be surpassed by China We are in the final days of the economic superpower USA No more entrepreneur spirit! Growing protectionism Weird laws makes doing business in the USA extremely dangerous You can t make money in the USA April

7 United States (1) China (2) Japan (3) Germany (4) United Kingdom (5) France (6) Brazil (9) Switzerland (20) Europe Union BRICS US Economy is the largest and it will stay there for some time GDP 2016 in % of world economy (est.) 25% 20% 24.9% 20.7% 24.3% 15% 15.1% 10% 6.2% 5% 4.4% 3.2% 3.1% 2.7% 0.8% 0% Source: CIA The World Factbook April

8 20 th century dominance of US/Europe was an anomaly Relative GDP share development of key economies (Billion 1990 US$) Source: OECD, % 694 1'101 2'705 5'336 16'059 33'726 80% ROW 60% US 40% 20% Western Europe India 0% China 1998 April

9 US dominant is key aspects >50% of Nobel prizes 45% of global market capitalization Approx. 70% of financial trades have at least one US counterpart 94 of the 100 top trading partner of the USA have a trade surplus 18% of the Global GDP is US consumers (savings anyone?) World reserve currency: Who else?! April

10 The US economy is in trouble, but just wait! April

11 Serious problems a plenty Government deficit (Corporate) Tax Reform Immigration Bipartisan fighting, plus intra-party fighting Health reform (Obamacare) (Real) unemployment Banking regulations Foreign and security policy Alternative energy Trade policy April

12 Government debt is out of control April

13 Government debt is out of control April

14 But key strength are looming Economy has massively restructered Record cash levels at companies and banks Flexibility and mobility still much better than other economies Entrepreneurship still world class Energy revolution and remanufacturing April

15 April

16 Separate the how and the what! April

17 April

18 What are following closely in the next 6 months? Corporate Tax Reform: DBCFT Immigration Budget Obamacare Trade policy (NAFTA, China, Mexico) Infrastructure program April

19 Swiss companies are in the pole position. Large investments in USA provide Swiss companies with a great competitive advantage in a growing and dynamic US market Infrastructure programs Remanufacturing Vocational Training (Lehrlingswesen) April

20 but not toatlly devoid of risks! Short and medium term: Corporate tax reform: DBCFT Medium and long-term: Actions against countries with large trade surplus or those suspect to currency manipulation Protectionism Global trade war April

21 Key Messages: Need to communicate actively! Balanced trade balance (goods and services) US$ 51bn USA-to-CH, US$ 52bn CH-to-USA Swiss companies are the 7th largest foreign direct investor nation In all 50 states 47% in Manufacturing Largest R&D spender, 6th largest tax payer, highest average salaries Last 5 years: +58% CH Export tousa; +82% Import from USA Big Mac Index 2016: CH 131; China 54 April

22 USA could have been at the center of the largest reorganization of trade TPP TTIP AUSTRALIA, BRUNEI, CHILE, CANADA, JAPAN, MALAYSIEN MEXIKO, NEUSEELAND, PERU, SINGAPUR, USA, VIETNAM; MAYBE SOUTH KOREA AND TAIWAN April

23 EU-USA Freetrade: Amcham s Scenario There will be a treaty on the table; first USA-UK Not this year, but probably 2018 EU will be under large pressure to follow suit Switzerland would have to accept a non-negotiated treaty with a broad liberalization of agriculture Ratification in Swiss Parliament and through a referendum will be difficult (agriculture!) April

24 Business in USA: Everything is different! No, you cannot appeal. I own all the lawyers. April

25 Founding a company is easy Most important differences US-CH law No capitalization necessary at incorporation No minimum capital No offical act necessary for incorporation No deposit bank No requirement of nationality or residence for BoD members No registered shares No Handelsregister Necessary details for "Articles of Incorporation" Name of company Business objective of company Type and number of share BoD is permitted to issue after incorporation Name and address of founder Name and address of members of BoD (if BoD is defined at incorporation) Address of seat and name of agent with powers to act (person or company) April

26 Founding a company is easy The 3 acts of incorporation 1.Founders sign "Articles of Incorporation" 2."Articles of Incorporations" are delivered to mayor s office 3.Incorporation Tax and Filing Fee are paid April

27 Treaties and conventions Overview 1. Atomic Energy 2. Aviation 3. Commerce 4. Deblocking of Assets 5. Defense 6. Drugs, Inspection of 7. Education 8. Environment 9. Extradition 10.Judicial Assistance 11.Mapping 12.Narcotic Drugs 13.Nationality 14.Pacific Settlement of Disputes 15.Patents 16.Permanent Resident Status 17.Postal Matters 18.Privileges and Immunities 19.Publications 20.Social Security 21.Taxation 22.Telecommunication 23.Trade 24.Trademarks 25.Traffic 26.Visas April

28 Develop a market entry strategy 3 key questions Which markets? Market segmentation? Most important forces in the market? Architecture of business system? Which success factors? Value chain and cost structure Customer needs and reasons for these needs Comparison of own products with US products Differences of success factors US-CH? April

29 Develop a market entry strategy 3 key questions Which resources? Cost of changing product? Market entry cost until HR resources? Resource gap? April

30 Tips of practitioners(i) Extremely competitive market Very sophisticated clients Close personal contact is key «The American Way» is the only way to succeed in America Business and life is generally more entrepreneurial Speed is higher than in Europe Time is money April

31 Tips of practitioners(ii) Everybody is open to change Good social competence and humor are necessary American accept risk in a positive manner American are proud to be American Be as American as possible, do not Swissize American April

32 My personal summary Very large and open market Information easily accessible, people open for a first meeting Clients are ready to test the better mousetrap (esp. In B2B) Employee hard-working, little influence of unions Founding a company very easy, government offices businessfriendly No employee loyalty! No client loyalty! USA is so near and still so far! US-market is very large, but it is not one market! Champions League! You are liable even if you don t know! April

33 Excellent Business Relationship between Switzerland and the USA April

34 A few important numbers to remember 240:1 40:1 30:1 1:4 1:1 April

35 Broad US-Swiss Relationship Core Values Diplomacy Multilateral Institutions Humanitarian Initiatives Science and Education April

36 Swiss or American? April

37 Interlocking Swiss and U.S. Economies America is important for Switzerland: USA is the 2nd most important export market (behind Germany); high positive trade balance and fast growth USA is the most important foreign direct investor in Switzerland by far! Switzerland is important for the USA: 7th largest foreign direct investor Small, but fast growing export market Important management platform for US multinationals April

38 Die wichtigsten Exportländer der Schweiz % of Total 18.1% 6.9% 6.3% 5.8% 2.8% EU: 2016: 53.8% 2.6% 2.6% 2.3% 11.5% 13.5% USA: 2016: 14.9% 4.4% 2.8% 3.1% 1.6% 1.1% BRIC: 2016: 7.3% Figures: Total Export 2015 (Mio. CHF) Source: Swiss Federal Customs Administration April % 0.9%

39 USA: The new «Export Locomotive» Land CH Exporte Deutschland 0% Italien -18.6% Frankreich -2.8% EU +0.8% USA +58.3% BRICS -11.6% Total Export: +6.6% Quelle: Eidg. Zollverwaltung April

40 Growth of Swiss exports since 1995 In CHF bn Datenreihen Brazil China India Russia USA April

41 Impressive growth in FDI % % r 2011r 2012r 2013r 2014p Total Swiss direct investment in the U.S. Total U.S. direct investment in Switzerland Source: U.S. Department of Commerce, Bureau of Economic Analysis April

42 Switzerland is a Magnet for Multinational Companies and Organizations Global Fortune 500 Companies per mio inhabitants 1. Switzerland Netherlands France Japan United Kingdom Belgium Ireland United States Germany Singapore Sweden Italy 0.17 Additionally, Switzerland is home to: Foreign regional HQs: P&G, Medtronic, Philipp Morris, Dow, Amgen, Caterpillar, ebay, Colgate, HP, IBM, Mondelez, Amgen, Google, Biogen, Alcoa, Du Pont and many more. International NGOs: FIFA, ICRC, UNO, WHO, WTO, UNICEF, ITU, WWF and many more. Please note: Luxembourg is listed with one Global Fortune 500 Company and would therefore lead the ranking with a value of 1.99 Source: Fortune, Wikipedia (Inhabitants) April

43 USA market key for large Swiss Multinationals Note: US revenue in % of total revenue Source: Bilanz Zurich FS >50% Swiss Re 45% Novartis 42% Roche 39% Credit Suisse 37% Syngenta 34% Nestlé 30% Schindler 30% SGS 21% Clariant 28% Holcim 20% ABB 18% April

44 Swiss SME Successes in the USA April

45 Swiss direct investors in the USA April

46 US companies invest into the Swiss knowledge economy April

47 Outlook is cautiously positive April

48 April

49 «It is economic warfare against Swiss banks!» Since January 2008, banks have paid more than $ 200bn fines in the USA >75% paid by US banks < 5% paid by Swiss banks Fine against Credit Suisse is not a record fine Bank of America: $ 16.7 bn in 2014, $ 9.5 bn in 2013, total of US$91 bn JP Chase: $ 13.5 bnin 2013 BNP Pariba: $ 8.9 bn in 2014 It is a campaign against banks, but not against Switzerland or Swiss banks. Resolution well under way with pragmatic solutions. Pro memoria: Swiss companies have repatriated approx. CHF 100bn from the USA since the start of the financial crisis April

50 «Extraterritorial Application» of US Laws: Basis of the CH-USA Conflict USA When doing business in the USA: US rules! Otherwise you do whatever you like. CH The US market is vital for our business Why should that be our problem? For that reason we are obliged to apply US laws: This is extraterritorial application of US laws! April

51 Many axes of extra-territoriality FCPA Aiding and abetting tax fraud RICO Violation of embargos Violation of SEC rules Ground rule: «Non-discrimination» between US and foreign companies April

52 Sometimes we feel a bit intimidated April

53 But hey! The outcome is not always clear... April

54 Switzerland USA: more holes than cheese! Further broad and friendly relationship Business relations with growth potential Infrastructure Clean Tech, Green Tech, Sustainability, Energy efficiency Transportation Precision Engineering And furthermore: everything else! But solving legacy issue first is a necessity! April

55 Learning from the USA? Google Twitter Skype Apple Microsoft Amazon ebay Facebook LinkedIn Uber AirBnB Where are similar firms from China, Russia, India, Europe? April

56 April