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Starting a business in the USA NAF Breakfast

Starting a business in the USA NAF Breakfast. Introduction. Marcel Birkhoff – 38yr, married and a daughter Business/Marketing & technical background,MBA Marketing management 13 years with Hyva on international business development – pioneering new markets

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Starting a business in the USA NAF Breakfast

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  1. Starting a business in the USA NAF Breakfast

  2. Introduction • Marcel Birkhoff – 38yr, married and a daughter • Business/Marketing & technical background,MBA Marketing management • 13 years with Hyva on international business development – pioneering new markets • Moved in 2005 to USA & Since 2005 managing director of Hyva Corporation

  3. Contents: • Company History & activities • Our move to the USA • Main prerequisites • Main obstacles • Cultural differences! • Long term <-> short term • Surprises • Main tax implications • Main Lessons & conclusions • Questions

  4. The Hyva Group From a tiny spot on the map in 1979…

  5. … to a world leading company in 2008 … Hyva moves your world!

  6. Hyva China Technamics B.V. Hyva altatec Australia Hyva India Companies everywhere in the world

  7. In 29 years Hyva reached • Export to more than 130 countries • 28 fully owned subsidiaries • 2000 employees • Sales of 135.000 telescopic cylinders (2007) • Sales of 15.000 tipper bodies per year (India) • Sales of 2.500 Hyvalift systems (2007) • Turnover of € 475 mio in 2007 • Expected turnover of € 600 mio in 2008…

  8. Hyva is producer of • Hydraulic telescopic cylinders • Hydraulic truck kits • Hyva Lift container (un)loading systems • Hyva Floor horizontal (un)loading floors • Truck mounted cranes

  9. Hyva on USA dumptrailer

  10. Hyva Hydraulics • hydraulic kits • super structures • all necessary components

  11. Major drivers of our business • GDP development of countries • Infrastructural investments & projects • Mining & heavy off road tipping applications • Environmental developments • Developments of labour costs • Sales numbers of trucks & trailers

  12. Our move to the USA • Started from Chicago apartment in beginning 2005 • Company founded in end of 2005 • “Corporation” as legal entity, registered in Delaware • Main office in Chicago, with various satellite warehouses • Usd. 6 mio Estimated sales - 2008 • Market-scope is US and Canada • Currently serious market decline in USA • Constant growth – increasing market share • Hyva has far more modern & efficient product

  13. Prerequisites to enter NA • Safeguard yourself against currency fluctuations risks • Investigate product liability risk • Structure the company in such a way that parent company can not be touched • Have patience and full stakeholder support • Local presence & fast product availability • Product offering must have an competitive edge

  14. Main obstacles • Geographic size & regionalism • Difference in technology & market standards • Different customer expectations • Not “Made in USA” • Liability issues • Different laws & regulations on company and employees • Reluctance to deal with foreign companies • Don’t fall for the transatlantic trap!

  15. Entry Product introduction Positive initial response Reconfirmation of the American’s Concern about European Commitment American Concern Regarding priorities / US Commitment of the European Refusal to Purchase Due to Perception of Lack of commitment Withdrawal of the European from the USA Investment limit reached Disappointment of the European Transatlantic vicious cycle

  16. Cultural differences • There is a bigger culture difference than most people think • US customer is polite, and does not say no • Dutch people can be perceived as too direct and pushy • Intercultural training definitely helps!

  17. Short term<-> Long term • US is short term focused, NL long term This emerges in different areas: • Economy has higher highs & lower lows • Quality & technical sophistication is less important • Lower price is more important then lower cost • Shorter timeframe on ROI’s • More importance on short term shareholder value • The dollar is paramount!

  18. Surprises • US customers generally perceive European products as superior – nice! • Banking system old fashioned and inefficient in Dutch view – majority payments with checks • Certain industries very low tech, others very high tech • Lower environmental awareness & concerns • More bureaucracy than you expect • VISA application process not so easy anymore • Canadian market presence eases introduction in US

  19. Tax issues • Consider international transfer pricing rules • Consider federal tax and state tax • Sales in different states = paying tax in different states • You need good local advise and global tax strategy

  20. Lessons & conclusions • Do not underestimate geographic size • Setting up takes 3x longer and cost 3x more as in business plan! • Good preparation on all fronts is key • Cover your self against currency/liability risks • Focus on long term and be patient • Sustained local presence is key in breaking the transatlantic vicious cycle • If you succeed the rewards are great!

  21. Thank you for your attention! Any questions?

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