International trade is a substantial component of the U.S. economy.  While U.S. policymakers understandably emphasize the importance of U.S. exports; imports and foreign investment also play a crucial role in a healthy economy. In 2009, total trade (exports plus imports) amounted to over US$ 3.5 trillion with imports making up over 55% of this activity.  At the same time, foreign direct investment in the United States equaled over US$2.3 trillion.  While these are big numbers and many companies are already doing well in the U.S. market, many others would like to know more about how to be successful in the United States.  Before you get started, remember that the U.S. market is extremely demanding and competitive so you will need to continuously work to improve your quality, costs and delivery.

Assumption: Unlike Europe or Latin America, the U.S. is one large homogenous market.

Reality: The U.S. market is, in fact, many separate markets where customer demand, competition, regulations governing businesses and tax requirements can vary by region and state.  Consumers are made up of many different sub-cultures and ethnicities and your potential market will be impacted by these factors.  Therefore, a ‘one-size-fits-all’ approach is not recommended.

Assumption: If my product or service is cheaper than that of the competition it will be a success.

Reality: While U.S. customers are price conscious, particularly in sectors where there are a number of competing products or services, supplier reliability, professionalism, and customer service are just as important to the customer as the price and quality of the product itself.  U.S. customers also place a high value on the way your products/services compare to other similar products/services.  Through strategic marketing campaigns your customers should be informed about why they should buy your product/service instead of your competitors’.

Assumption: Unlike some countries, I don’t need to worry about “cultural factors” when doing business in the United States.

Reality: Not true.  There are several cultural factors that you should take into consideration when exploring a new business venture in the United States.  For example, while overall Americans are more informal than many other cultures, American business attire is formal – a business suit should be worn to all initial meetings – and cell phones should be turned off or muted.  Americans also place a high value on time and therefore it is important to be on time for meetings or business entertaining.

Assumption: My product or service meets all the U.S. safety and regulatory requirements so I don’t have to worry about being sued.

Reality: While the overall legal environment is favorable towards business, lawsuits are common and even the smallest issues can be brought before a court.  In fact, the United States is one of the most litigious societies in the world.  Its civil justice system costs about US$2.5 billion per year in direct costs – nearly 2% of U.S. GDP.  And, just like an export strategy, not every U.S. state is the same.  According to the Institute for Legal Reform’s “2010 State Liability Systems Survey”, 67% of business executives or senior litigators for America’s largest firms believe the litigation environment in a particular state is likely to impact their business decisions – including whether to grow jobs or even do business in that state.[i]

Given this legal climate, when wading into the U.S. market, it’s important to secure legal counsel from an attorney who specializes in your industry or sector.  In fact, it’s a good idea to also use your lawyer as a business advisor from the start.  And contracts are essential.  Get everything in writing and be aware that contracts are only negotiable until they are signed.

As the world’s largest importer, there are a multitude of opportunities for doing business in the United States.  This brief article only touches the surface of the various factors you should consider in order for your new venture to be a success.  Good luck!

A few useful resources:

A listing of trade shows in the United States organized by state and / or industry sector: http://www.biztradeshows.com/usa/

U.S. government site with resources aimed at facilitating foreign direct investment: http://www.investamerica.gov/home/index.asp

Key contacts at state and local chambers around the country: http://www.uschamber.com/chambers/ccc/members.htm

U.S. government site with data and analysis on trade and investment: http://www.ita.doc.gov/td/industry/otea

U.S. government agricultural trade policy and information: http://www.fas.usda.gov/ustrade.asp

National, regional, industry and international economic statistics: http://www.bea.doc.gov

U.S. Customs and Border Protection site with information on regulations regarding entering the country as well as processes involved with importing: http://www.cbp.gov/

Detailed information on duties and tariffs on goods being imported into the U.S.: http://www.customs.ustreas.gov/xp/cgov/import/duty_rates/

Administers services to immigrants including work authorization and other permits: http://www.uscis.gov/graphics/index.htm

[i] A complete breakdown and ranking of the 50 U.S. states can be found at: http://www.instituteforlegalreform.com/images/stories/documents/pdf/lawsuitclimate2010/2010LawsuitClimateReport.pdf