Exporting to the USA? Arnab Dutt offers some advice
31 August 2012
I cannot stress highly enough the importance of developing personal relationships with your potential customers when conducting business in the US, writes Arnab Dutt.
It is vitally important to realise that American businesses begin with the default position that they want to buy from other US companies. So your company needs to take this into account and develop a compelling offer – which could be in terms of product or service - that American businesses are not able to source at home.
Fortunately, the UK is well respected and looked on favourably in the US business community so make sure you fly the Made In Britain flag – metaphorically at least – and take full advantage of the available goodwill and trust built up by the British businesses that have successfully marketed across the Atlantic before you.
Of course, no matter how much your US customers love you, there is still the not-so-small matter of red tape to overcome before your products and services are allowed onto American soil.
It is absolutely vital you ensure you check the customs classification for your product or service when exporting to the US. This can be a full-on minefield, and getting this part of the equation right or wrong can be the difference between paying, or not paying, potentially deal-breaking import duties on your products.
At Texane, we have found that when shipping polyurethane wheels to the US for use on escalator drive systems, we can avoid costly import duties by describing them as escalator parts rather than polyurethane tyres or wheels.
Once you are up and running, your newfound export success may lead to new challenges at home. If you are successful and start exporting a great deal directly to the States, your product liability insurance in the UK could rise substantially. So it is always worth looking at ways to limit any potential liabilities, and one approach to this would be to register a limited liability company in the US and trade through that entity.
Setting up a separate legal US entity also makes it easier to bid for US Federal or State funded contracts. Controversially, the US Government adopts a Buy American approach, and until and unless the EU succeeds in getting it to open up to foreign competition, having a US entity is a good way to jump through the hoops for contracts where the default position is that US companies are the preferred bidders.
Naturally, you need to take into account US law in whatever you’re doing, especially in one particular area. If you are thinking of using sale agents or distributors, the law in the US is very different and complex, so get proper legal advice on the contracts to avoid long-term liabilities and disasters.
Exporting has its challenges, and exporting to the US has some particular ones, but even in its relatively subdued current state, it is such a massive market, it’s worth the effort to get it right.
Arnab Dutt is managing director of Texane, an SME manufacturer based in Leicestershire that regularly exports to the US.