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The U.S. Business Environment

Q: What sort of business opportunities exist in the U.S. market?

A: The United States has the largest economy in the world, with a per capita GDP of approximately $51,371 and a population of over 317 million people. The systems of regulation and taxation in the United States give foreign investors ample operational freedom. The 50 states, District of Columbia, and the 5 U.S. territories comprise a continental economy in which virtually every industrial sector has a major presence – regardless of your company’s business function, you will find great opportunity in the vibrant, multifaceted U.S. economy.

Q: How do opportunities for success in the U.S. compare to those in other countries?

A: Because of the size, dynamism, and international linkages that characterize the U.S. economy, there is arguably much more opportunity for success in the U.S. than in any other country in the world. The sheer size of the U.S. market means that firms even with a small total market share can realize significant revenue streams and profits in the U.S. Furthermore, U.S. firms have easy access to export markets since the U.S. is one of the most internationally engaged economies in the world. The U.S. is a superior platform for companies in virtually every industry, both for sales to U.S. consumers and as a production base for export to global markets.

Q: Tell me about Intellectual Property Rights (IPR) protections in the U.S.

A: The U.S. has a world-leading Intellectual Property Rights (IPR) regime. Talented people and innovative companies are more successful in the United States than many other countries in the world because their innovations are strongly protected, enabling them to reap greater rewards. Investors from around the world come to the U.S. to invest in research and development and to commercialize the results of their creativity. The U.S. provides a strong regime of intellectual property rights protection and enforcement. Of the 277,835 patents granted by the U.S. Patent Office in 2012, 52 percent of the applications originated in a foreign country .(PDF) Many U.S. and foreign firms partner with America’s world-class universities to develop and profit from innovations in engineering, bioscience, and physics.

Q: How does the U.S. legal system compare to other countries’ legal systems?

A: The overall quality and fairness of the U.S. legal system is widely recognized as one of the great strengths of the United States. This outlook is not just a domestic view, but one that is recognized internationally. Several aspects of the U.S. legal system are unique to the United States.

Since the founding of the United States, the country has had a unique role and reputation among nations. It was the first nation founded on principles of limited self-government. Rejecting monarchy, the founders created a Federal Government with three separate branches: executive, legislative, and judicial. Each branch, while performing its own assigned function, holds the other two branches in check. This structure is closely connected with and, in many ways, found its expression in the U.S. legal system, which draws on principles of English common law regarding a Federal system, where power and sovereignty are shared with the various State governments.

Q: Where can I obtain U.S. market research? A: The United States provides potential investors with a variety of investment opportunities, and chances of an investment’s success are greatly increased when companies carry out due diligence and market research. SelectUSA’s website provides Industry Snapshots that give an overview of opportunities in specific U.S. sectors.

General information on industry trends within the U.S. can be found at the Bureau of Economic Analysis’ (BEA) Industry Economic Accounts Page .

A breakdown of inward foreign direct investment by industry can also be found through the Bureau of Economic Analysis.

Examining exports and imports over time can also give a sense of industry trends. U.S. export and import data can be found at TradeStats Express. through the International Trade Administration.

Many reputable private firms, from consulting companies to banks to market research firms, already compile industry analyses, usually available for a fee. Industry associations can also provide valuable information to members.

Q: Is skilled labor for my enterprise available in the U.S.?

A: Through higher education and workforce training, the U.S. cultivates one of the most skilled labor markets in the world. Seven of the top ten universities in the world are located in the United States. which is home to more than 4,000 universities and colleges. Moreover, the U.S. attracts students from across the globe, and more than 819,644 international students were enrolled in American institutions in the 2012-2013 academic year. There is an extensive network of community colleges that can help firms train their workforce for new job skills in an ever-changing marketplace, many of which have tailored training programs to investors who locate facilities in their area. Federal, state, and local governments also spend billions of dollars on workforce training each year. Importantly, the U.S. also has a large pool of skilled workers in the manufacturing sector.

Q: How does the U.S. transportation infrastructure network compare to that of other leading nations?

A: The U.S. is well-connected to the world via its network of ports, airports, roads and railways. In 2012, 46.9 percent of international trade traveled by water, nearly 25 percent by air. and the remainder by surface and additional modes. U.S. cities, regions and rural areas are connected by over 47,000 miles of interstate highway and 140,000 miles of freight railroad. as well as tens of thousands of miles of state and local highways and roads. As of 2011, the U.S. had 547 certificated civil airports and was home to six of the world’s top 20 busiest passenger airports and seven of the world’s top 20 busiest cargo airports in 2011. U.S. ports processed over 27 million twenty-foot equivalent units (TEUs) in 2010, with the ten largest ports handling 59.7% of all shipments. U.S. transportation is highly intermodal, with hubs connecting the rich networks of road, rail, ports and airports that crisscross the country.

Expanding Your U.S. Business

Q: As a company in the U.S. what organizations should I turn to for logistical help in expanding?

A: There are many government and private sector organizations that can help your company expand in the United States. Individual U.S. states’ economic development offices are eager to see local businesses expand. Local chambers of commerce, national and local industry associations, International Trade Centers, the U.S. Commercial Service. and professional service firms are all eager to assist companies that are looking to grow.

Q: How can I expand my business by exporting?

A: Visit Export.gov to learn how you can increase your firm’s revenues by exporting products or services to foreign markets.

Q: To expand my U.S. business through exports, where can I obtain market research on overseas markets?

A: The U.S. Commercial Service’s Market Research Library on Export.gov contains more than 100,000 industry and country-specific market reports, authored by our specialists working in overseas posts.

The Library Includes:

Country Commercial Guides Industry Overviews Market Updates Multilateral Development Bank Reports Best Markets Industry/Regional Reports

These market research reports are available only to U.S. companies and students/researchers that are registered with Export.gov. Register above to get access. Individual U.S. states, regional chambers of commerce, and International Trade Centers also make these resources available.

Q: How can I determine if moving part of my business overseas will save me money?

A: Many companies think that moving part of their business functions to a foreign country will help them realize significant cost savings. This is often not the case, for several reasons. Many countries actually have higher labor and land costs than the U.S. Even some emerging markets have, in recent years, witnessed significant labor and land cost increases that have tilted the economic calculus in favor of keeping U.S. operations in the U.S. There are infrastructure costs associated with foreign countries that lack a fully developed modern, intermodal transportation network. There are international trade costs associated with some countries’ policies that limit the free flow of products, services, and capital. And there are political risk costs. Any decision to move part of a U.S. business overseas should take these additional considerations into account.

Q: I have read that many U.S. firms that sent some business functions to foreign countries are “re-shoring” them back into the U.S. Why is this?

A: U.S. firms are “re-shoring” because they are realizing, often the hard way, that when all cost factors are considered (and not just labor and land costs) operating in the U.S. actually makes their company more competitive. Technology is employed more widely in the U.S. economy, enabling, for example, just-in-time delivery logistics to lower the cost of production. The U.S. has less political risk and more stable costs than arguably most foreign countries. Furthermore, exchange rate risks can erode much of the cost savings that “offshoring” firms originally realized, motivating their “re-shoring” to the U.S. market.

Moving Your Business to the U.S.

Q: What is foreign direct investment (FDI)?

A: Foreign direct investment implies that a person in one country has a lasting interest in and a degree of influence over the management of a business enterprise in another country. For the United States, in accordance with international guidelines, ownership or control of 10 percent or more of an enterprise’s voting securities or the equivalent is considered evidence of such a lasting interest or degree of influence over management. Thus, foreign direct investment in the U.S. is ownership or control, direct or indirect, by one foreign person of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise. Direct investment in a U.S. business enterprise can result from direct or indirect ownership by a foreign person. In direct ownership, the foreign person itself holds the ownership interest in the U.S. business enterprise. In indirect ownership. one or more tiers of ownership exist between the U.S. business enterprise and the foreign person.

Q: Why do foreign firms choose to locate in the U.S.?

A: Foreign investors invest in the United States because we have an open and welcoming investment climate. The United States has experienced the fastest acceleration of productivity growth among major industrialized countries, enjoys an unparalleled higher education system, benefits from world-class infrastructure, and has the strongest intellectual property rights protections globally. Among others, these factors put the U.S. economy in a position to innovate and quickly take advantage of the rapid advancement in information technology and other new technologies. We believe that international investors in the United States enjoy the best risk-adjusted return on investment globally.

Q: Is the U.S. open to foreign investment?

A: Yes! President Obama has been clear with regard to U.S. openness to investment, particularly during this period of global economic upheaval. The activities of SelectUSA support this long-standing commitment, as the primary U.S. Government mechanism to coordinate inward investment promotion.

Q: As a foreign investment, will my company be treated differently than American companies?

A: No. Both domestic and foreign owned companies are treated equally in the United States and must follow the same laws, rules, and procedures for acquiring or administering an investment. Foreign investors benefit from an open, transparent, and nondiscriminatory investment climate. In the United States, foreign investors will find free transferability of capital and profits, advanced physical and financial infrastructure, and nondiscriminatory legal recourse in the event of an investment-related dispute. Additionally, there is no mandatory screening body to review and approve foreign investments in the United States. Unlike other countries, there are no regulations of minimum investments required or other stipulations in the United States.

Q: Do I need formal approval from the U.S. government to invest in the U.S.?

A: No. The United States does not maintain a mandatory investment screening body. The Committee on Foreign Investment in the United States (CFIUS) has the authority under a voluntary review mechanism to review individual FDI transactions to determine their effects, if any, on national security. The overwhelming majority of FDI in the United States does not necessitate a CFIUS review. Where CFIUS reviews have been conducted, risk mitigation assurances are requested for only a few transactions per year, and when these assurances are met the transaction is allowed to proceed. The United States is open to foreign investment and is committed to affording all foreign investors fair, equitable and nondiscriminatory treatment.

Q: Where should I invest in the U.S.?

A: All 50 U.S. states are eager to introduce you to their unique cultures, histories, and attractive business climates. State representatives will be able to answer all questions with regard to site selection and other aspects of establishing an investment in the United States. Representatives are listed by state on SelectUSA’s homepage .

Q: How should I structure my U.S. operation? LLC, branch, etc.?

A: The way you structure your U.S. operation is largely up to you. The type of structure you choose can determine the taxes you have to pay as well as the personal liability business owners may bear, and the U.S. gives you the ability to choose the structure that best fits your business. There are several general business structures, and descriptions of these can be found here .

Q: What steps do I need to take to establish a presence in the U.S.?

A: Most likely the process will differ depending on the location and type of your investment. You can find general guidelines in any of the Investment Guides under the “Useful Links” category in our toolbar. The guidelines include the statutes outlining the incorporation process and how to obtain appropriate permits, licenses and registration. If you have any additional questions, please do not hesitate to contact us at info@SelectUSA.gov .

Q: How long does this process take?

A: The length of the process will vary by type of investment and investment location, but in general starting a business is a rapid process that requires no minimum investment. According to the 2014 World Bank Doing Business Report, opening a business in the U.S. takes only 5 days – well below the world average, and even well below the OECD average of 13 days.

Q: What visa do I need to invest in or do business in the U.S.?

A: The type of visa you will require to enter the United States is defined by immigration law, and relates to the purpose of your travel. The best points of contact are the U.S. Department of State’s Business Visa Center or your local U.S. embassy or consulate. If you have a question about what aspects of immigration law and regulation are applicable in certain cases, the State Department’s Office of Visa Services, Public Inquiries section can usually explain the legal aspects of immigration. Information is available to the public by telephone at the Visa Services, Public Inquiries Division at telephone (202) 663-1225 or by fax at 202 663-3899. The telephone number provides the caller with a selection of pre-recorded information and the ability to talk to a visa specialist during business hours. The Department of Homeland Security is responsible for the approval of all immigrant and nonimmigrant petitions. the authorization of permission to work in the U.S. the issuance of extensions of stay, and change or adjustment of an applicant’s status while the applicant is in the U.S.

Q: Where can I find information about U.S. taxes?

A: The Internal Revenue Service of the United States. which is the U.S. agency for tax collection and tax code implementation, has a resource center for businesses. Taxes are also levied by federal states, so tax rates will vary from state to state. The Multistate Tax Commission provides links to each state’s tax authority.

Additionally, many reputable accounting and consulting firms in the United States provide free or low-cost tax guides for foreign business in the United States. These guides may provide a useful starting point beyond what the IRS has to offer and are easily accessible via the Internet.

Q: How can I find a business partner in the U.S.?

A: Trade associations are a valuable resource for locating potential U.S.-based business partners. Trade associations exist for virtually every industry, and reputable trade organizations are easily located via the Internet. State and local chambers of commerce and investment promotion agencies may be able to assist, as well. Further information on state resources can be found under the “Useful Links” tab at the top of this page. The U.S. Foreign Commercial Service also offers an Industry Focused Promotion Program. which provide links by industry to U.S. firms that are actively seeking to partner with international firms.

Q: How does the quality of life in the U.S. compare to other leading nations?

A: People living in the U.S. lead a high quality of life, enjoying high quality services, education and infrastructure. U.S. GDP per capita in 2009 was $42,486, one of the highest in the world. The United States is famed for its broad spectrum of cultural attractions, from world-class symphonies to top-ranked sports teams, its majestic national parks and its friendly and welcoming residents.

Government Support Once Your Business Is in the U.S.

Q: Are there federal government programs that can help my U.S. business grow?

A: Yes. The SelectUSA website contains a database of government programs available to both U.S.-domiciled and foreign firms [provide link].

Q: Are there U.S. state government programs that can help my U.S. business grow?

A: In the United States, transactional facilitation is carried out at the state level, where the state or local investment promotion officials are ready to serve you. Representatives are listed by state on SelectUSA’s homepage. The representatives listed will be able to answer all questions with regard to establishing an investment in the United States, including permitting and licensing.