The US is the most open, innovative and competitive economic region in the world. With a contiguous area of almost eight million sq km, a population of more than 320 million people (representing almost 30 percent of the world’s consumer goods market), four time zones on the mainland, and a GDP of $18trn (representing about 16 percent of the gross world product and exceeding the GDP of Europe as a whole), the US is surely the most important market and the ‘place to be’ for every business from almost any industry. Current and lasting trends, such as the practice of bringing manufacturing back to the US from overseas (known as ‘reshoring’), and low energy costs further strengthen the US economy and thus its importance for companies intending to grow and expand.

Did you know the US registers more patent applications by far than any other country in the world? That about a third of global research and development is done in the US? That about 500,000 new business start-ups are registered every year in the US? And that 11.5 percent of Americans are entrepreneurs, accounting for about 28 million small businesses, which employ 50 percent of the working population?

These facts emphasise the huge potential of the US market; it is the economic equivalent of a continent rather than just a single country. Consequently, a US market share of ‘just’ single-digit percentages is equivalent to a dominating position in an average European country. But, with this in mind, how come so many foreign companies fail when trying to expand their businesses to the US market?

Tough field
Companies in the largest domestic market in the world face great challenges, which they can rarely solve on their own. They often underestimate the peculiarities and distinctive features of the US market. On a daily basis, foreign companies are confronted with requirements that many fail to meet in the short and medium term. After all, the US consists of 50 federal states with individual laws, rules and regulations. Experience shows that, in many cases, a company’s US overseas business does not provide the desired level of sales and profitability after two or three years. Various factors contribute to this, such as underestimating risks and start-up costs, excessive trust and naivety in contract negotiations, overestimation of the sales activities of sales representatives and distributors, and a loss of market knowledge due to an inability to monitor US personnel.

US overseas engagement thus becomes more of a risky operation, and the opportunities fade into the background. However, there is one very prominent ‘minimum requirement’ that should be met by every foreign company doing business in the US: a fully owned local US company. Ironically, many small and medium-sized companies do not see the need for a fully functional local US company when expanding to the most important market in the world. But why is ‘real’ market participation in the US so important?

Fully present
Quick reaction times and proximity to customers and suppliers are among the fundamental requirements for survival in the US. Customers and business partners, in particular, expect personnel who speak English, who are familiar with American culture and who can be reached locally in the US. Technical service must be at the customer’s site within 24 hours, if needed, and logistics departments must be set up to ship spare parts for delivery the next day. Americans are prepared to invest in high-quality products only if the foreign company has shown it is serious about long-term market engagement with its own US company. Particularly in the B2B sector, US companies will not rely on a supplier located thousands of miles away, no matter how good their products are and how special their USP. A reliable service is a must-have in the US. Thus, an extensive American infrastructure, especially in the area of capital goods, is an absolute requirement in order to survive and to be successful in the long run.

In the course of globalisation, there are special challenges, particularly for small and medium-sized businesses, when it comes to tapping this potential over the long term. In order to take advantage of opportunities while avoiding risks, a structured approach designed for maximum efficiency is required.

Since 1983, gatc has responded to these specific requirements for small and medium-sized businesses, and has supported them with their US operations, regardless of size, industry or home country. Decades of practical experience and local knowledge, paired with a reliable back-office service, make it possible for gatc’s foreign clients to have a transparent, cost-effective and lasting professional presence in the US, offering a complete business process infrastructure that meets the requirements for optimal care of US customers in combination with real market participation. Gatc can also take over any tasks that lie outside the value-added core business of the client.