Why Do Business in the United States?
Recently, the president of a European company asked my advice on whether to branch into the USA or another country. He’d heard stories that doing business here is difficult, competitors are fierce, and it’s expensive. Other people have asked me similar questions. All wondered whether the USA was in decline. The “land of opportunity,” it seems, has not been living up to its reputation for offering prosperity and personal happiness.
Yes, there’s no doubt the image of the USA has diminished over the past decade or so. Some might say our gold standard brand has tarnished. Certainly, we’ve had plenty of problems: divided political tribes; intensified racial unrest; deeper income disparity; too many guns. Heck, even Superman has shied away from being a U.S.-only superhero. In 2021, DC Comics announced that it was changing the Man of Steel’s motto from “Truth, Justice, and the American Way” to “Truth, Justice, and a Better Tomorrow.”
Nonetheless, the United States still promises more opportunities for business growth and personal fulfillment than anywhere else in the world. Here are eight reasons why you should consider exerting the time, resources, and effort on the U.S. market.
Reason #1: Biggest Market in the World
The most obvious reason to do business in the U.S. is the size and consistent growth of its economic market. Market size determines the total revenue potential as it sets a ceiling or upper limit to expansion. The bigger the market, the bigger the opportunity. In the words of one global investment banker, the U.S. market offers “almost infinite upside.”
Reason #2: Strong and Stable
The strength and stability of the U.S. economy and dollar make it exceptionally conducive for doing business. The U.S. economic expansion, starting in 2010 and running for over a decade, was the longest on record. Moreover, the future looks bright: The Economist has predicted continued economic expansion well into the current decade, due to rock-steady growth in consumer spending coupled with higher wages for workers.[i]
Reason #3: Access to Customers
Access to a large pool of potential customers is important for companies that need to grow very quickly. If you are selling a food, fashion, entertainment, or any consumer product then you’ll want to sell to U.S. customers. Americans love to shop and spend money. U.S. families purchased more than $13.3 trillion in goods and services in 2017. While comprising only 4% of the world’s population, U.S. consumers account for more than one-quarter of the entire world’s household consumption.[ii]
Reason#4: Pro-Business Environment
The U.S. has been, and always will be, conducive to business and commerce. Throughout the nation’s almost 250 year history, one of government’s primary roles has been to facilitate the growth and prosperity of our free market economy.
While there might be talk about protecting U.S. manufacturing jobs from foreign competition, in reality the country has made it relatively easy for international companies to build U.S. factories. Two of the top three automobiles with the most U.S.-made components and assembly in 2018 were from the Japanese Honda Motor company.[iii] Foreign companies have a U.S. presence in virtually every category, from financial services and food to pharmaceuticals. In fact, 7.9 million U.S. citizens are employed by international companies.[iv]
Reason #5: Access to Money
Since money is critical to fund business activities, another U.S. strength is the amount of available capital, the diversity of money sources, and the risk appetite of the investment organizations. With the largest economy and largest financial institutions, there is an ample pool of liquid capital to tap. In addition, many U.S. government organizations offer tax incentives and access to capital.
In addition, many states, regions, cities, and municipalities offer international companies tax incentives to place their business in their location. They know that new businesses help the local economy and employ local citizens. Some locales have an Economic Development Organization (EDO) to help manage government processes and secure funds with local banks and private investors. Increasingly, EDOs have focused on helping start-ups and entrepreneurs. They have created many programs, such as New York State’s Start-up NY, to help entrepreneurs and early-stage companies with funding, education, office space, and other resources.
Reason #6: Access to Talent
Capable and talented people are the heart, soul, and lifeblood for every company. All the leading digital technology companies are in competition to attract the best talent. Some claim that a computer programmer who ranks among the top 10% can produce ten times more code than an average programmer. Management, sales, and legal skills are also in high demand. The U.S. is home to millions of the brightest and highest skilled workers. They include U.S.-born and immigrants who arrived to study or to work.
Communities of talented people share ideas, resources, and best practices. Healthy competition among peers also leads to stronger companies and innovative new products. Justin Kan, founder of Twitch—bought by Amazon for $970 million—talked about the value of the U.S. entrepreneurial ecosystem. It’s a “massive secondary ecosystem of people who have scaled before. They've scaled the technical side. They've scaled the operations side. That knowledge isn't as readily available in the rest of the world. Coming here and talking to experts who have done it before, learning from them, and getting them on your side through an investment is a great way to accelerate your progress.”[v]
Reason #7: Openness to New People and Ideas
Despite some political rhetoric about “America First” and reports of cultural discord, the U.S. has, and always will be, open to immigrants. Americans recognize the country was founded and built by immigrants over the past 300 years. Each year, millions of people immigrate to the U.S. for purposes ranging from studying, working, or escaping persecution in their home country. Some are here temporarily, while others seek permanent citizenship.
Moreover, the majority of U.S. citizens support the idea of immigration. A 2018 Pew Research study found that 68% of U.S. citizens believe “openness to people from all over the world is essential to who we are as a nation.” This was especially true among young adults (aged 18-29 years old): 80% agreed with that statement. Among people with college or post-graduate degree educations, 76% agreed. Only 26% of the people surveyed believed that “if America is too open to people from around the world, then we risk our identity as a nation.”[vi]
Reason #8: Proven Global Leadership
Because the level of competition and market demands in the U.S. require strong organizations and leaders, people view business success in America as proof they can be successful anywhere.
Proof of product viability and market penetration is particularly important for technology and science-driven products. Only products of the highest quality and value are able to succeed in the USA, said Sree Sivanandan, a venture growth partner and investor based in India. He explained that doing business in the USA provides a level of safety for risk-averse purchasers of sophisticated technology.[vii] For example, if the U.S. Federal Drug Administration (FDA) approves the medicine, that “OK” provides every medical practitioner in the world with the confidence they need to prescribe it safely. Similarly, if a software company based in South Asia has clients in the U.S., it will lead to sales in other countries.
NOTE:
This article was excerpted from my book, Make It In America, How International Companies and Entrepreneurs Can Successfully Enter and Scale in U.S. Markets, which was published by Wiley in December 2022.
[i] “Wage gains for low earners have helped sustain America’s economic expansion,” The Economist, February 15, 2020, https://www-economist-com.ezproxy.cul.columbia.edu/finance-and-economics/2020/02/13/wage-gains-for-low-earners-have-helped-sustain-americas-economic-expansion
[ii] “Why Invest: World's Largest Market,” SelectUSA, Accessed April 05, 2021, https://www.selectusa.gov/largest-market
[iii] Kelsey Mays, “Cars.com 2018 American-Made Index: What’s the Most American Car?” Cars.com, June 21, 2018, https://www.cars.com/articles/cars-com-2018-american-made-index-whats-the-most-american-car-1420700348632/
[iv] “National FDI Data,” Global Business Alliance, December 2, 2021, https://globalbusiness.org/factsheet/national-fdi-data
[v] David Teten, “Why International Startups are Attracting U.S. Venture Capitalists,” Financial Poise, January 05, 2021, https://www.financialpoise.com/international-startups-attracting-us-venture-capitalists-2/
[vi] Hannah Hartig, “Openness to foreigners essential to U.S. identity, say most Americans,” Pew Research Center, May 30, 2020, https://www.pewresearch.org/fact-tank/2018/10/09/most-americans-view-openness-to-foreigners-as-essential-to-who-we-are-as-a-nation/
[vii] Interview with Sree Sivanandan, CEO of Networkonomy, on February 11, 2021
