Doing Business in America 2014

Wednesday, 12th February 2014

Scottish Enterprise

Doing Business in America 2014

Scottish Enterprise

Edinburgh

Welcome & Introduction

By Carl Gardiner


By Carl Gardiner

Scottish Development International


Time Item Speaker

09:00 Welcome and IntroductionCarl Gardiner, Scottish Development International

09:10SelectUSA – Highlighting the US government’s initiatives, investment programmes and services

John Breidenstine,US Embassy, London

09:30Cultural considerations from a marketing prospective & Q&A

Allyson Stewart-Allen, International Marketing Partners

10:35Legal – Addressing the IP and corporate legal issues associated with doing business in the US

Dan Glazer, Fried Frank & Robert Mollen, Fried Frank

11:00 Networking Break

11:20Finance & Investment Considerations – Raising funding for Jon Boyce, UK Export Finance &

11:20growth & export Catriona McCracken, SIB

11:40 SDI Missions to the US Paul Clark, BE Group

12:00 Tips & experiences for Trading in the US Gordon Cunningham, GlobalScot

12:25 Case Study: Experiences of Doing Business in the US Malcolm MacMillan, Peach Digital Ltd.

12:50 Q&A session

13:00 Networking lunch

13:30 End of event

SelectUSA

By John Breidenstine,

US Embassy, London


US Embassy, London

America is open for business!

Coming to America Series 2014

February 10-12, 2014

Edinburgh and Glasgow, Scotland

John D. Breidenstine

Minister Counselor for Commercial Affairs, U.S. Embassy London

SelectUSA | U.S. Department of Commerce

SelectUSA.gov© International Trade Administration 2013

U.S. Open Investment Policy

“The United States reaffirms our open investment policy, a commitment

to treat all investors in a fair and equitable manner under the law.”- Statement by the President Obama, June 20, 2011

� Policy upheld by administrations throughout U.S. history

� Core obligation in bilateral investment treaties (BITs)

� Investors and investments ensured to receive treatment no less

favorable than the U.S. affords to its own investors and

investments

© International Trade Administration 2013

www.SelectUSA.gov

AT Kearney’s 2013 FDI Confidence IndexChina: #2 Germany: #7 UK: #8#1

IESE Business School’s 2011 Venture Capital

and Private Equity IndexCanada: #2 UK: #3 Germany: #7

#1

Ranking: FDI Confidence Index

1 United States

2 China

3 Brazil

4 Canada

5 India

6 Australia

Global FDI Trends

World Economic Forum’s 2012-2013 Global Competitiveness rankingsUK: #8 France: #21 Germany: #6#7

#4 World Bank’s Ease of Doing Business 2012

RankingSingapore: #1 Hong Kong SAR: #2 New Zealand: #3

6 Australia

7 Germany

8 United Kingdom

9 Mexico

10 Singapore

Source: AT Kearney

© International Trade Administration 2012 SelectUSA.gov

Global FDI Trends

The United States remains

the largest recipient of FDI

in the world.

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000In U

SD M

illion

s

$3

.9 T

rillion

20 largest country recipients by FDI stock in 2012; Currency displayed at current market value.

Source: UN Conference on Trade and Development

$0

$500,000

$1,000,000

$1,500,000

U.S. FDI TrendsTop 15 FDI Stock Positions, 2012

10% | $261.1b 21% | $564.7b

10% | $272.3b

8% | $221.7b

2% | 41.4b

1% | 30.8b

12% | $309.4b

5% | $130.1b

5% | $127.7b

5% | $126b

2% | $47.7b

2% | $51.9b

1% | $29.2b

Largest Country Sources of FDI in the

United States by 2012 Stock Position

Rank Market

% of Total Stock

($2.7 trillion) Million USD

Source: Department of Commerce, Bureau of Economic Analysis – FDI Position by Ultimate Beneficiary Owner


2%|$51.1b

1%| $33.2bRank Market ($2.7 trillion) Million USD

1 United Kingdom 21.30% 564,714

2 Japan 11.67% 309,383

3 Germany 10.27% 272,262

4 Canada 9.85% 261,133

5 France 8.36% 221,724

6 Netherlands 4.91% 130,075

7 Ireland 4.82% 127,674

8 Switzerland 4.75% 126,007

9 Spain 1.96% 51,894

10 Australia 1.93% 51,051

11 Belgium 1.8% 47,728

12 Sweden 1.56% 41,449

13 Italy 1.25% 33,194

14 Norway 1.16% 30,814

15 Mexico 1.10% 29,175

25.8% | $127.7b

63.5% | $193m

14.7% | $126b

70.8% | $10.5b

U.S. FDI TrendsTop 15 FDI Growth Markets, 2012

31.2% | $30.8b

15.5% | $41.4b

15% | $10.7b

15% | $2.4b

17.8%| $9b

Fastest Growing Sources of FDI in the United States, by

Compound Annual Growth Rate (CAGR) 2008-2012

Rank Market CAGR

2012 Stock

million USD

1 China 70.82% 10,465

14.9% | $24.3b

38.1%| $425m

26.4%| $1.7b

Note: Figures denote 5 year compound annual growth rate (2008-2012) of the stock FDI position and the total stock of FDI in the United States

Source: Department of Commerce, Bureau of Economic Analysis – FDI by Ultimate Beneficiary Owner

17.8%| $9b


1 China 70.82% 10,465

2 Hungary 63.51% 193

3 Indonesia 38.05% 425

4 Norway 31.20% 30,814

5 Malaysia 26.37% 1,711

6 Ireland 25.75% 127,674

7 Uruguay 20.77% 234

8 India 17.80% 8,995

9 Colombia 15.82% 1,837

10 Sweden 15.51% 41,449

11 Venezuela 15.48% 4,934

12 Denmark 15.06% 10,709

13 Kuwait 14.96% 2,393

14 Korea 14.86% 24,270

15 Switzerland 14.69% 126,007

15.8% | $1.8b

20.8% | $234m

15.5% | $4.9b

US$

Mill

ion

s

U.S. FDI Trends - Europe

300,000

400,000

500,000

600,000

Manufacturing

Wholesale trade

Retail trade

Information

Depository institutions

Finance (except depository institutions) and insurance

Real estate and rental and leasing

Professional, scientific, and technical services

Other industries

The Stock of FDI from Europe to the United States was $1.7 trillion in 2012


0

100,000

200,000

Other industries

Non-disclosed

Source: Department of Commerce, Bureau of Economic Analysis

SelectUSA Summit 2013

“There is no better place in the world to do business than the

United States of America.” - President Barack Obama


FDI Benefits the U.S. Economy

#1

20.5% of U.S. Exports

~6 million U.S. jobs

Average annual wage

The United States is the largest recipient of foreign direct

investment in the world.

In 2011, U.S. subsidiaries of foreign-owned firms accounted

for 20.5 percent of all U.S. goods exports.

In 2011, subsidiaries employed 5.6 million U.S. workers.

In 2011, subsidiaries contributed $437.8 billion in wages to

Sources: Bureau of Economic Analysis; UN Conference on Trade & Development

Average annual wage

$77,600

R&D Investments

Investments in

Fixed Assets

In 2011, subsidiaries contributed $437.8 billion in wages to

U.S. employees

In 2011, subsidiaries invested $45.2 billion in research and

development in the United States

In 2011, subsidiaries owned $1.6 trillion in gross property,

plant, and equipment (PP&E). They invested more than

$177 billion in PP&E improvements in one year, alone.


About SelectUSA

Housed in the U.S. Department of Commerce, SelectUSA’s mission is to promote

and facilitate business investment in the United States. It is housed in the U.S.

Department of Commerce and represented by the Commercial Service at U.S.

Embassies and Consulates around the World.

SelectUSA is geographically neutral and represents the entire United States. It

uphold the U.S. open investment policy and performs uniquely federal functions.

Our Clients:Our Clients:

� Companies (investors)

� U.S. States and Regions

For more information, visit: www.selectusa.gov


• Mission: Facilitate business investment in the United States in order to

support job creation, spur economic growth, and promote American

competitiveness.

• Established through executive order in 2011. Primary U.S. government-

wide initiative to promote and facilitate business investment in the United

States

About SelectUSA

• Housed in the International Trade Administration at the U.S. Department of

Commerce - leverages staff in 72 markets around the world

• Geographically neutral in the United States

• Clients: Firms and U.S. Economic Development Organizations (EDOs)

15

SelectUSA provides actionable information and counseling to investors

to help them…

SelectUSA Services for Firms:

Information & Counseling

• Incorporate a business in the U.S.

• Understand basic U.S. tax and legal concepts

• Navigate federal rules or regulations

• Learn about incentives available to businesses in the U.S.

• Apply for a business-related visa

16

• Apply for a business-related visa

• Connect with U.S. state, city, or regional economic development offices to

learn about investment opportunities

SelectUSA Services for Firms:

Ombudsman Assistance

SelectUSA works across the federal government on a case-by-case

basis to:

• Address foreign investor concerns and issues

• Connect with a federal agency/ office to seek insight into a

specific case

• Offer to facilitate direct communication between the relevant

federal agency and the client, as appropriatefederal agency and the client, as appropriate

• Identify federal regulations or processes to U.S. policy makers,

that may negatively impact the U.S. business climate

Investor inquiries with SelectUSA are treated as business-

confidential, and the Ombudsman function is conducted by

SelectUSA headquarters.

17

SelectUSA can, when appropriate, promote the U.S. business climate to a potential

investor in an ongoing project that:

• May be at risk,

• May face international competition, and

• When a federal-level engagement can convey the appropriate support

Senior leadership in USG, DOC, or ITA will be asked to engage to help advocate for the

investment being made in the United States. SelectUSA coordinates with the FCS post.

SelectUSA Services for U.S. States and Regions:

Advocacy Assistance

investment being made in the United States. SelectUSA coordinates with the FCS post.

Advocacy Assistance may only be requested by U.S. Economic Development

Organizations. The United States will advocate to the firm on behalf of the entire nation.

Advocacy requests are treated as business-confidential, and the Advocacy function is

conducted by SelectUSA headquarters.

18

SelectUSA.gov© International Trade Administration 2012

FOR STARTUPS

Thank You!

John D. Breidenstine

Minister Counselor for Commercial Affairs

U.S. Commercial Service

U.S. Embassy London

Tel: +44-20-7894-0419

Email: [email protected]

SelectUSA.gov

.gov


FDI in the United States by Industry, 2012

1%

24%

11%

2%7%

41%

14%

FDI Position in Other Industries, 2012:

562.8 billion USD

Agriculture, forestry, fishing, and

hunting

Mining

Utilities

Construction

Transportation and warehousing

Holding companies (nonbank)

Other services

27%

51%

7%

15%

FDI Position in Services, 2012:

721.1 billion USD

Depository institutions

(banking)

Finance (except depository

institutions) and insurance

Real estate and rental and

leasing

Professional, scientific, and

technical services

4% 4%5%

7%

10%

12%

26%

32%

FDI Position in Manufacturing, 2012:

898.9 billion USD

Food

Electrical equipment,

appliances, and componentsPrimary and fabricated metals

Computers and electronic

productsMachinery

Transportation equipment

Chemicals

Other manufacturing

3

18%

14%

18%

50%

FDI Position in Wholesale Trade, 2012:

292.4 billion USD

Motor vehicles and motor

vehicle parts and supplies

Electrical goods

Petroleum and petroleum

products

Other

0%1%

6%

13%

13%

24%

43%

FDI Position in Information, 2012:

123.8 billion USD

Data processing, hosting, and

related services

Broadcasting (except internet)

Motion picture and sound

recording industries

Newspaper, periodical, book, and

database publishers

Software publishers

Other Information

Telecommunications

45%

22%

12%

9%

5%4%

3% 0%

FDI Position in Retail Trade, 2012:

51.7 Billion USD

Food and beverage stores

Clothing and clothing

accessories storesMiscellaneous store retailers

Other retail trade

Health and personal care stores

Furniture and home furnishings

storesNonstore retailers

Source: U.S. Bureau of Economic Analysis


FDI Growth in the

United States by Industry

FDI Growth in the United States by Major Industry Sectors(Compound annual growth rate in FDI position between 2008 and 2012 on a historical cost basis)

Manufacturing: All

Finance and Insurance

Retail Trade

Manufacturing: Chemicals

Professional, Scientific, and Technical Services

Depository institutions (banking)

Manufacturing: Petroleum and coal products

Manufacturing: Petroleum refining & extraction



** “Information” includes “publishing industries, including newspaper, periodical, book, and database publishers.” FDI in publishing industries

experienced -11.6 percent CAGR during 2008-12.

-10% 0% 10% 20% 30% 40% 50% 60%

** Information

Wholesale trade

Manufacturing: Computers and Electronic Products

Primary and fabricated metals

Manufacturing: Fabricated Metal Products

Manufacturing: All Machinery

Manufacturing: Food

Manufacturing: Transportation Equipment

Manufacturing: All

Semiconductors and other electronic components

Glass and glass products

Grain and oilseed milling

Electrical equipment, appliances, and components

Bakeries and tortillas

Asphalt and other petroleum and coal products

Ventilation, heating, air-conditioning, and commercial refrigeration equipment

Basic chemicals

Other manufacturing: Petroleum and coal products

Other manufacturing: Integrated petroleum refining and extraction

CAGR: Manufacturing FDI in the United States, 2008-12

FDI Growth by Industry:Manufacturing FDI in the United States Continues to Grow



0% 10% 20% 30% 40% 50% 60%

Other manufacturing

Chemicals

Other machinery

Converted paper products

Apparel

Printing and related support activities

Pesticides, fertilizers, and other agricultural chemicals

Seafood product preparation and packaging

Soap, cleaning compounds, and toilet preparations

Other chemical products and preparations

Meat products

Navigational, measuring, and other instruments

Agencies, brokerages, and other insurance related activities

Other financial investment activities and exchanges

Nondepository credit intermediation

Nondepository credit intermediation and related services

Finance, except depository institutions

Insurance carriers, except life insurance carriers

Securities, commodity contracts, and other intermediation and related …

Insurance carriers and related activities

Life insurance carriers

Securities and commodity contracts intermediation and brokerage

Funds, trusts, and other financial vehicles

Banks

Activities related to credit intermediation

CAGR: Finance & Insurance FDI in the United States, 2008-12

FDI Growth by Industry:Solid Growth in Banking, Finance, Professional, Technical Services

Source: Department of Commerce, Bureau of Economic Analysis© International Trade Administration 2013

-10% 0% 10% 20% 30% 40% 50% 60% 70% 80%

Scientific research and development services

Management, scientific, and technical consulting

Other professional, scientific, and technical services

Architectural, engineering, and related services

Other

Legal services

Advertising and related services

Accounting, tax preparation, bookkeeping, and payroll services

Computer systems design and related services

Specialized design services

CAGR: Professional, Scientific, and Technical Services FDI in the United States, 2008-12

FDI Growth by Industry:Mixed Growth in Wholesale Trade, Retail Trade and Information

Apparel, piece goods, and notions

Furniture and home furnishings

Lumber and other construction materials

Electrical goods

Metals and minerals (except petroleum)

Miscellaneous durable goods

Machinery, equipment, and supplies

Drugs and druggists' sundries

Other durable goods

Miscellaneous nondurable goods

Other

Hardware, and plumbing and heating equipment and supplies

Motor vehicles and motor vehicle parts and supplies

Professional and commercial equipment and supplies

Paper and paper products

Groceries and related products

Chemical and allied products

Farm product raw materials

CAGR: Wholesale Trade FDI in the United States, 2008-12



-40% -20% 0% 20% 40% 60%

Electronics and appliance stores

Furniture and home furnishings stores

Motor vehicle and parts dealers

Health and personal care stores

Food and beverage stores

Other

Nonstore retailers

Clothing and clothing accessories storesCAGR: Retail Trade FDI in the United States, 2008-12

Publishing industries

Newspaper, periodical, book, and database publishers

Software publishers

Telecommunications

Other telecommunications

Motion picture and sound recording industries

Other information services

CAGR: Information FDI in the United States, 2008-12Petroleum and petroleum products

Apparel, piece goods, and notions

Cultural Differences from a Marketing Perspective

By Allyson Stewart-Allen,


By Allyson Stewart-Allen,

International Marketing Partners

Marketing to AmericansMarketing to AmericansScottish Development InternationalScottish Development International

February 2014February 2014

Allyson StewartAllyson Stewart--AllenAllen

27

Allyson StewartAllyson Stewart--AllenAllenDirectorDirector

International Marketing Partners Ltd.International Marketing Partners Ltd.148148--150 Buckingham Palace Road150 Buckingham Palace Road

London SW1W 9TRLondon SW1W 9TRTel: +44 (0)20 7828 9400Tel: +44 (0)20 7828 9400

E: E: [email protected]@intermarketingonline.comTwitter:Twitter: @@MuseofMarketingMuseofMarketing

© International Marketing Partners Ltd.

Why Have You Invited Me Today?Why Have You Invited Me Today?

� Advise leaders and organisations to successfully span boundaries

� Develop global mindsets to avoid diplomacy faux pas

� BrandTravel™ expert on localisation� BrandTravel™ expert on localisation

� Advisor to leadership teams on building global mindsets

� Author of Working with Americans (Pearson), Marketing in the USA (UKTI)

� International experience (“local knowledge) - Los Angeles, London, French and German languages

28

“The customer rarely “The customer rarely buys what the buys what the business thinks it business thinks it

The Business CaseThe Business Case

business thinks it business thinks it sells him”sells him”

-- Peter DruckerPeter Drucker

�� Clock is KingClock is King

�� You look wonderful!You look wonderful!

�� What’s the bottom lineWhat’s the bottom line

Underlying values: USAUnderlying values: USA

30

�� Business before Business before pleasurepleasure

�� Hip, hip, hooray for our Hip, hip, hooray for our team!team!

Underlying ValuesUnderlying Values

Discuss with your table team…Discuss with your table team…

�� 22--3 implications of these values on how you 3 implications of these values on how you effectively engage American effectively engage American customers/clientscustomers/clients

31

customers/clientscustomers/clients

�� Take 5 minutesTake 5 minutes

��Do it now!Do it now!

��Let’s do lunchLet’s do lunch

Make it my wayMake it my way

Underlying values: USAUnderlying values: USA

32

��Make it my wayMake it my way

��Plan, plan, planPlan, plan, plan

��Guides are goodGuides are good

Underlying ValuesUnderlying Values

Now you have had the next 5 values, again Now you have had the next 5 values, again identify with your table team…identify with your table team…

�� 22--3 implications of these values on how you 3 implications of these values on how you effectively engage American effectively engage American

33

effectively engage American effectively engage American customers/clientscustomers/clients

�� Take 5 minutesTake 5 minutes

�� Select a speaker for your tableSelect a speaker for your table

How to Market to AmericansHow to Market to Americans

�� Low context communicationsLow context communications

–– Evolved in response to melting potEvolved in response to melting pot

• Political correctness

�� WYSIWYGWYSIWYG

34

�� WYSIWYGWYSIWYG

–– speedspeed

–– Take care with irony, double Take care with irony, double entendresentendres

�� HumorHumor as bonding, relaxing as bonding, relaxing tooltool

�� Anchor us in the futureAnchor us in the future

�� Entertain us, teach us somethingEntertain us, teach us something

–– Trivia, facts, something you’d not expect then Trivia, facts, something you’d not expect then to knowto know

�� RATERRATER


35

�� RATERRATER

–– Responsive, Assurance, Tangibles, Empathy, Responsive, Assurance, Tangibles, Empathy, ReliabilityReliability

�� Close the saleClose the sale

–– Call to action, be quant, get to the pointCall to action, be quant, get to the point

�� Reply to Reply to calls, ecalls, e--mails quicklymails quickly–– 48 48 hours maximumhours maximum

�� Tell us your planTell us your plan–– Explain it, bring us with you (“T” in RATER)Explain it, bring us with you (“T” in RATER)

ReferencesReferences


36

�� ReferencesReferences–– Brands/names they will know Brands/names they will know

�� SpinSpin–– Break Break good good news as news as publicly as possiblepublicly as possible

• High positive feedback culture

–– Control Control the the messagemessage

Assessing the Impact of CultureAssessing the Impact of Culture

37

Assessing the Impact of CultureAssessing the Impact of Culture

Troublesome Words…UKTroublesome Words…UK��USUS

�� bespokebespoke�� bolshybolshy�� cackcack--handedhanded�� cockcock--upup�� damp squibdamp squib�� dog’s bollocksdog’s bollocks�� dog’s bodydog’s body

�� naffnaff�� nilnil�� noughtnought�� nousnous�� palaverpalaver�� pearpear--shapedshaped�� quitequite

39

�� dog’s bodydog’s body

�� dog’s breakfastdog’s breakfast�� dog’s dinnerdog’s dinner�� doshdosh�� duffduff�� drossdross�� fortnightfortnight�� “goes down a bomb”“goes down a bomb”�� hole in the wallhole in the wall�� knackeredknackered

�� quitequite

�� quidquid�� sticky wicketsticky wicket�� schemescheme�� teach grandmother to suck teach grandmother to suck

eggseggs�� toshtosh�� turnoverturnover�� tabletable

What the British Say… What the British mean… What the Americans understand…

Oh, by the way/Incidentally

The primary purpose of our discussion is…

This is not very important

I’ll bear it in mind I will do nothing about it They will probably do it

Translation Guide…Translation Guide…

40

I’m sure it’s my fault It is your fault It was their fault

I almost agree I don’t agree at all S/he’s not far from agreement

Could we consider some other options?

I don’t like your idea They have not yet decided

I hear what you say I disagree and do not want to discuss it any further

S/he accepts my point of view

http://en.wikipedia.org/wiki/List_of_Britishhttp://en.wikipedia.org/wiki/List_of_British_words_not_widely_used_in_the_United_words_not_widely_used_in_the_United_States_States

Troublesome Words…Troublesome Words…

41

_States_States

Top tips for your brand localisationTop tips for your brand localisation

� Immerse yourself

� Understand values

� Observe

Difference = difference� Difference = difference

� Know your own position, biases

� Re-purpose/adapt to the culture

42

Want to know more?Want to know more?

�� Check your global mindsetCheck your global mindset

–– Website quiz: Working with the WorldWebsite quiz: Working with the World

–– Website quiz: Working with AmericansWebsite quiz: Working with Americans

Marketing in the USA Marketing in the USA (UKTI)(UKTI)�� Marketing in the USA Marketing in the USA (UKTI)(UKTI)

–– Free download from us and UKTI: Free download from us and UKTI: www.intermarketingonline.comwww.intermarketingonline.com

�� Contact me: Contact me: [email protected]@intermarketingonline.com

43

Comments? Questions?Comments? Questions?

Marketing to AmericansMarketing to AmericansScottish Development InternationalScottish Development International

February 2014February 2014

Allyson StewartAllyson Stewart--AllenAllen

45

Allyson StewartAllyson Stewart--AllenAllenDirectorDirector

International Marketing Partners Ltd.International Marketing Partners Ltd.148148--150 Buckingham Palace Road150 Buckingham Palace Road

London SW1W 9TRLondon SW1W 9TRTel: +44 (0)20 7828 9400Tel: +44 (0)20 7828 9400

E: E: [email protected]@intermarketingonline.comTwitter:Twitter: @@MuseofMarketingMuseofMarketing

© International Marketing Partners Ltd.

Legal – Addressing The IP And Corporate Legal Issues

Associated With Business


By Dan Glazer & Robert Mollen

Fried Frank

Setting Up Your Business in the US:Legal Considerations

Fried, Frank, Harris, Shriver & Jacobson LLP

Dan Glazer ([email protected])

Bob Mollen ([email protected])

February 12, 2014

tech.friedfrank.com / @friedfranktech

Legal Considerations

Attorney Advertising. Prior results do not guarantee a similar outcome. © 2014 Fried Frank Harris Shriver & Jacobson LLP47

US Establishment

� Business/Entity Structure/Tax

Employee/Contractor Issues� Employee/Contractor Issues

� Liability and Compliance

� IP Considerations

48tech.friedfrank.com / @friedfranktech

US Business/Entity Structure

� Establishment of a US subsidiary or branch

� Subsidiary or Branch? A subsidiary!

If subsidiary, you have to consider:

49

Jurisdiction of formation:

Choices among US states � often Delaware. Why --

But you can still do business in other US states if you qualify your business in these states as a “foreign” corporation or LLC

Entity type:

Most likely choices: Corporation, LLC (or LLP)


US Business/Entity Structure (cont’d.)

� Advantages of Corporation (Inc.):

� Widely recognized

� More legal precedent

� Automatically non-tax transparent (no need to “check the box”)

� Advantages of limited liability company (LLC):

� Flexibility

� Avoids need for certain corporate formalities

� Automatically US tax transparent (no need to “check the box”)

� May elect US non-tax transparent status with “check the box” (and flexibility permits tailoring to ensure non-tax transparency from a UK standpoint)


Business Entity Structure/Don’t Forget Tax!

� Types of Taxes

� Federal income tax (income, withholding, branch profits)

� State income tax and similar state taxes

� State franchise tax/annual fees (i.e., Delaware franchise tax; foreign corporation fees)

� Payroll and self-employment tax

� Sales tax


� Property tax (real and personal)

� Import/Duty tax

� Of the above list, the only US tax types explicitly covered by tax treaty are federal income taxes

� Each US State imposes its own rules which may vary considerably from State to State, and may or may not follow US federal income tax concepts; seek specialist State tax advice

� Tax structure requires careful consideration; appropriate arm’s length structuring of arrangements between UK parent and US subsidiaries is critical!

� Annual Accounts - no separate filing or audit requirement, unless listed company

51

Local Hires vs. Secondments from UK

� Local Hire Considerations

� Need to provide for US type terms and conditions

� Need to arrange for US benefit packages, including health insurance

� Need to arrange for US payroll services, withholding of employee taxes, etc.

� Greater control issues/risks associated with new hires in a foreign market� Greater control issues/risks associated with new hires in a foreign market

� Secondment Considerations

� Immigration/Visa issues

� Pre-entry planning critical

� Tax planning – in two jurisdictions

� Expat packages?

� Family issues – schools, etc.

� Lack of familiarity with local market/laws, etc.


US Employee Matters: “At Will” Employment vs. Employment Contracts

� “At Will” Employment (most US states permit it)

� No contract = flexibility

� Terminate at any time without liability, unless an agreement to the contrary

� Make sure that there is no agreement embedded in plan or agreement embedded in plan or written policy

� Still need to address confidentiality/trade secrets/IP, etc.

� Employment Contracts

� Key talent – sign them up!

� Scope

� Term

� $$$

� Termination

� Restrictive covenants53tech.friedfrank.com / @friedfranktech

US Employee Matters: Non-Compete Obligation

� Non-Competition Clauses and Other Restrictions

� “Post-employment” considerations

� General rule: reasonable (time, scope and geography) and not unduly restrictive

� Enforceability differs across the US – employee non-competes not enforceable in California (and employee non-solicits of other employees/customers highly California (and employee non-solicits of other employees/customers highly problematic)


Other US Employee Matters

� Employees Investing in the Company’s Equity

� Federal and State law considerations to be taken into account

� Federal law:

� Every offer and sale of a security must be registered with the SEC unless exemptexempt

� Exemptions

� Blue Sky laws

� Each state has its own securities laws

� Violation of the laws � Rescission right (the employee can get his money back)


The Litigation Landscape

� The US is highly litigious

� Civil, criminal and regulatory actions, class action claims (incl. product liability)

� US litigation generally is not “loser pays”

� Filing a lawsuit can be relatively inexpensive

� “Discovery” can make it expensive to defend a lawsuit� “Discovery” can make it expensive to defend a lawsuit

� Prevalence of jury trials creates uncertainty of outcome

� Result

� Litigation threat often used as negotiation tool

� Most litigation resolved pursuant to out-of-court settlement agreement

� Risk mitigation

� Well-drafted, unambiguous contracts

� Robust compliance programs

� Insurance (e.g., product liability, E&O, D&O, property and casualty)56tech.friedfrank.com / @friedfranktech

Terminology: “Intellectual Property” and “Technology”

� Intellectual Property

� Patents: New and useful inventions

� Copyrights: Original works of authorship (e.g., software)

� Trade secrets: Confidential information, know-how and non-patented inventions

� Trademarks: Brands and logos used to identify goods or services� Trademarks: Brands and logos used to identify goods or services

� Other: Designs, database rights (UK, not US)

� Technology, Data and Software

� Not “intellectual property”

� May be tangible embodiments of or otherwise reflect intellectual property rights


Why IP?

“Venture capitalists [and] angel investors … tend to be obsessed with IP. And for good reason: In the information economy, the core assets of a new venture are likely to be talented people, the IP they create, and little else.”talented people, the IP they create, and little else.”

The Wall Street Journal


Coming to America: Initial IP Considerations

� US trademark clearance search: Company name and other key brands

� Scope of patentable subject matter

� Domain name: .co.uk? .com? .us?

� US form of standard T’s & C’s

� Which state?� Which state?

� Employment agreements

� Confidentiality and IP transfer

� Contractor (developer) agreements

� Unique IP transfer rules

� Commercial Partnerships / Strategic Alliances

� Confidentiality term limits and joint IP ownership

� IP infringement indemnification


Coming to America: The Legal Basics

To help protect your privacy, PowerPoint prevented this external picture from being automatically downloaded. To download and display this picture, click Options in the Message Bar, and then click Enable external content.

“Coming to America: The Legal Basics,” is now available as a free download on iTunes (search keywords “Coming to America”).

The guide is also available as an eReader file and as a PDF through our microsite,


and as a PDF through our microsite, tech.friedfrank.com.

The guide summarizes key legal issues that companies looking to expand to the US should consider, including sections on US tax, IP, employment, immigration, corporate, financing and litigation considerations.

Contact

Daniel Glazer

E: [email protected]: +1.212.859.8674 (New York)P: +44.20.7972.9159 (London)L: www.linkedin.com/in/danielcglazer

Robert Mollen

E: [email protected]: +44.20.7972.9604 (London)W: http://tech.friedfrank.com/members/robert-mollen/


Networking Break

20 min.


Finance & Investment Considerations

By Jon Boyce, UK Export Finance &


By Jon Boyce, UK Export Finance &

Catriona McCracken, Scottish Investment Bank

Scottish Investment Bank -Overview

February 2014

Remit• Support the development of Scotland’s private sector SME

funding market to ensure that both early stage and established SMEs with growth and export potential have adequate access to growth capital

SIB Overview

Rationale• To address specific market failures/gaps in the growth capital

market for this cohort of companies where intervention will have a demonstrable positive impact

SIB’s Current Interventions

• Financial Readiness Advice

• Growing the Investor Base

• Suite of Equity Investment Funds

• Scottish Loan Fund

• Delivery of the Scottish Plastics Loan Fund

• Delivery of the Renewable Energy Investment Fund• Delivery of the Renewable Energy Investment Fund

• Investment into a Scottish Life Sciences Venture Fund

• Portfolio Management

Financial Readiness Advice

• Recognised source of independent business advice for growth companies

• Team of specialist advisors work with companies to

• guide through complexities of various finance options

• identify appropriate finance

• support on securing finance• support on securing finance

• provide access to relevant public sector support

• 350 – 400 companies assisted pa

SIB’s Equity Investment Funds

Targeted at early stage deals, external

investors usually required, debt and Up to £250kUp to

£500k+Scottish

Seed Fund

Key FeaturesSIB

Participation

Transaction Size

Maximum transaction size £500k £2m £10m

SCF

Up to £1m

SVF

Up to £2m

SSF

Up to £250k

Partners introduce deals to SE to be

matched subject to diligence and negotiation.

£500k - £2m£2m - £10mScottish

Venture

Fund

Partners are vetted, the SCF will match

all qualifying investments from registered partners subject to

eligibility.

£100 - £1m£500k - £2mScottish

Co-investment Fund

investors usually required, debt and equity options.

£500k+Seed Fund

SIB’s Equity Investment Funds

• Co-investment with private sector partners

• Gap investors – no displacement or crowding-out

• Fully Commercial – equal rights

• Commensurate economic benefit

• Restricted activities• Restricted activities

• Public sector contribution ≤50%

• Voting shareholding <30%

• Annual investment c. £30m

For all general enquiries telephone Scottish Enterprise on 0845 687 8787

Contact Email [email protected]

Catriona McCracken

Transaction ManagerScottish Investment Bank

[email protected]

0141 228 2022

Scottish EnterpriseAtrium Court

50 Waterloo Street

Glasgow

For more information about The Scottish Investment Bank visit www.scottish-enterprise.com/sib

Scottish Enterprise can also be followed on Twitter at twitter.com/Scottish Enterprise

GlasgowG2 6HQ

10 Feb- 13th Feb 2014

Doing Business In USA

Trade Finance and Insurance

UK Export Finance

Government Support to UK Government Support to UK

ExportersDeveloping for our customers

Objectives

– Tell you who we are

– What we do

73

– How we do it

– How to contact us

Who we are in UK

UK Export Finance is the UK’s export credit agency

formally the Export Credits Guarantee Department

We complement the private market by providing

government assistance to exporters and investors, in

74

government assistance to exporters and investors, in

the form of insurance policies and also guarantees

on bank loans, performance bonds & confirmed

LOC’s

Provide Political Risk Insurance on overseas

investments

Who we can support

Deals done range from c.£25k to £2.3bn (smaller

amounts considered on export credit insurance £10K)

Expanded remit to cover all sectors, goods & services Expanded remit to cover all sectors, goods & services

not just capital goods and capital services

Minimum UK content of 20%

Unconditional AA1 guarantee

75

Export insurance policy (EXIP)

Insures exporter against risk of not being paid or of not being able to

recover costs of performing export contract due to specified events

All sectors and up to 95% cover, min contract value £10K

Can be introduced by a qualified credit insurance broker

Not for EU / rich OECD markets below 2 year risk horizon

Not whole turnover cover

It is conditional cover, so the terms of the policy must be met to have a

valid claim

Exporter completes application form and send to UKEF

For indication of premium rate, 12 simple questions

76

EXIP Case Study – TCB Arrow Ltd

"We had a long-established relationship with our main Customer in Russia,

but got our fingers burnt during the economic downturn when they ceased

trading and we suffered a significant loss. UK Export Finance’s EXIP has

enabled us to grow sales from a restrained base due to a lack of credit

terms. We have been able to provide credit terms with some degree of

confidence. We have seen this business grow as a result by 132% year to

date.“

Murray Humphries

Managing Director

TCB-Arrow Ltd

77

Contract Bond Support Scheme

Where a participating bank issues a contract bond (or

indemnifies another bank issuing the bond) for UK export

contract

For advance payment, progress payment and all

other performance bonds we normally guarantee up to 80% of

the bond

Exporter and Bank complete application form and submit to

UKEF along with:

– Last 3 years accounts, Management accounts, Business

plan/forecast

78

Bond Support Case Study – Stage Technologies

“Using this scheme has increased our ability to bid and win

contracts in new and developing markets. The process was

quick and painless, thanks to the co-operation and expertise

of both our Bank and the UK Export Finance team. Securing

contract deposits is vital for SME companies when starting on

long term contracts”

David Colbert

Financial Director

Stage Technologies

79

Export Working Capital Scheme

We provide guarantees to banks to cover the credit risks associated with

export working capital facilities in respect of specific export contracts.

UKEF formally guarantees up to 80% of risk

Useful where a UK exporter wins an overseas contract that is higher in

value than is typical, or succeeds in winning more overseas contracts than

it has done before.

Last 3 years accounts, Management accounts, cash flow forecast

Max term loan is 2 years, working capital facility to contract value is max

75%

80

Export Working Capital Case Study

UKEF’s Export Working Capital Scheme meant museum display case

maker ClickNetherfield had enough working capital to sustain its contract

and look for further work overseas

The overseas contract was really good news for us. But the payment terms

agreed with the client meant that we would have had difficulty maintaining

a consistent cash flow over the period of the contract, which would have

had an impact both on this new project and on our work elsewhere.

Jim Stewart M.D

ClickNetherfield

81

Letter of Credit Guarantees

UKEF can provide 50-90% guarantee to a UK Bank on a confirmed letter

of credit The confirmed letter of credit gives exporter a double guarantee,

one from the Issuing Bank and a confirmed letter of credit from UK

Confirming Bank.

With our guarantee, the UK Bank is able to confirm a letter of credit even if

it does not have the risk appetite on the foreign issuing Bank

The exporter is protected against a default of the foreign buyer and the

foreign bank

Bank makes application to UKEF

*Goods must touch UK shores!

82

Buyer Credit, Supplier Credit Facilities

UKEF provides a guarantee to Bank that makes a loan to an overseas

buyer for capital goods and/or capital services

Value of export contract on buyer credit facility is min £5M and covers

capital goods and services

Value of export contract on supplier credit facility is min £25K and covers

capital goods and services. UKEF may cover up to 85% of contract value

We can also look at providing guarantees under Bills of Exchange and

Promissory notes

Exporter makes application to UKEF

83

TAKE YOUR BUSINESS FURTHER.FURTHER.

Jon Boyce

0141 228 2329 (07990 887852)

[email protected]

85

[email protected]

[email protected]

www.ukexportfinance.gov.uk

SDI Missions To The US

By Paul Clark,

BE Group


BE Group

SDI Cross Sector

Trade Missions

2014 - 15

Paul Clark

BE Group

� Background

� Funding

� Notes from previous mission

Cross Sector Mission Programme 2014 / 15

� Notes from previous mission

� Programme information

� Benefits of attending

• SDI Cross Sector Missions are aimed primarily at SMEs who

are either new exporters or wish to develop and grow

their business in a particular market.

• It is not aimed at large companies or very experienced

Background


• It is not aimed at large companies or very experienced

exporters who are already well established in a

market. Although larger companies will still be considered.

• We are targeting between 15 and 20 companies for each

of the missions. SDI are running 5+ such missions per year

up until end March 2015.


Background…

• There is a set subvention grant for specific markets,

covering travel and hotel costs.

• Countries visited so far:

– South Africa Nov 2012

– India Nov 2012

– USA & Canada Apr 2013


– USA & Canada Apr 2013

– Brazil Jun 2013

– China Sep 2013

– UAE & Qatar Apr 2013

• Funding is provided by UKTI’s MVS (Market Visit Support)

service.

• The MVS funding level depends on the destination

• Funding is provided retrospectively.

We collect bank details and send the subvention direct to the

Funding


• We collect bank details and send the subvention direct to the

company.

• No travel receipts or complex documentation is required.

• The completed Mission Application Form and Mission

Feedback Form is all that is needed.

• Perfect introduction to market

• Connect with SDI and further UKTI support

• Meet new customers

• Non-competitive environment

Benefits of attending


• Non-competitive environment

• Space for your own agenda / business meetings

• Pre-mission research / support can be provided

• Follow up support provided

Notes from trade mission to

USA and Canada, April 2013New York and Toronto

2-9 April 2013


12 companies attended

Mission programme consisted of:

• Market Briefing Sessions in USA and Canada

• ‘Reality of doing business in USA/Canada’ clinics with case study and GlobalScot

input


• Networking Receptions specifically organised for the trade mission

• Participation in ‘Whisky Live’ event

• One-to-One business meetings

Quotes from attendees of USA and Canada trade mission

“The whole market visit has been extremely inspiring and educational. I believe you have given me more insight in the

world of successful networking; furthermore I have been introduced to the rules and diversities of the market and have

been introduced to relevant contacts. Thank you!”

Silvia Pellegrino, Chouchou

“As ever, this visit was well organised and the pre‐visit preparation/briefing was excellent. We found the market briefing

session in New York to be especially useful – the advice given by Fried Frank was especially worthwhile in making us


session in New York to be especially useful – the advice given by Fried Frank was especially worthwhile in making us

realise exactly what hurdles we will have to clear in doing business in USA and the implications for our business in doing

so. The product positioning session by Joe Rowan was also excellent.”

Mike Breewood, Restaurant Diary

“The visit was well co‐ordinated and provided a full itinerary for all attendees. There were networking opportunities and

an eclectic mix of potential contacts presented for the wide spectrum of attendees. “

Arthur Rennie, Hawick Knitwear


2014 / 15 Programme:

Trade Mission to USA – New York, 6-9 April 2014 (Focus on ‘Premium Goods’)

Trade Mission to Denmark, May 2014

Trade Mission to Turkey – Ankara & Istanbul, 16-20 June 2014

Trade Mission to India, 15-19 Sept 2014

Trade Mission to USA & Canada, October/Nov -2014

Trade Mission to China, 23 - 27 March 2015


Trade Mission to USA

New York, 6-9 April 2014

(Focus on ‘Premium Goods’)

• Not an entirely cross sector trade mission.

• Food and Drink

• Textiles• Textiles

• Tourism

• Other Premium Goods

• Target of 10-15 companies


Trade Mission to USA – New York, 6-9 April

2014 (Focus on ‘Premium Goods’)

Sunday, April 6

•Welcome reception

Monday, April 7

Tuesday, April 8

Theme: Reaching Premium Consumers

•Breakfast Presentation – Marketing to Luxury

Customers in America

•One-to-One Business Meetings

Monday, April 7

Theme: Defining Premium in America

•Panel discussion with high level invited guests

•Seminar: Expectations of the Premium

Consumer in USA

•Market Visits

Wednesday, April 9

Theme: The Scottish Experience

•Panel discussion with high level guests

•Seminar: Legal Issues / doing business in USA

•Whisky Live – A chance for Scottish companies to

exhibit their goods


For more information about any of our trade missions please speak to me today or email:

[email protected]

I have further information about the New York trade mission that you can take with you today

I also have application forms, should you wish to apply for a place on our trade mission

For more information:

Paul Clark

[email protected]

0191 4266333

Tips & Experiences For Trading In The US

By Gordon Cunningham


By Gordon Cunningham

GlobalScot

(no slides)

Case Study:

Experiences of Doing Business in America


By Malcolm MacMillan

Peach Digital Limited

| 103

Hello, we’re Peach Digital and we love digital.

| 104

we love digital.

A slice of Peach

Over 10 years oldIndependently-owned

digital marketing agency

33 digital experts

| 105| 105

33 digital experts

In house

Focus on ROI for our clients

85+ clients in UK, Europe & now US

Glasgow -based but

highly mobile

Complete digital solutions

We have the people to provide the “full digital service”

| 106| 106

Who wedo it for

| 107| 107

Cinema strength

| 108| 108

Apollo ROI

| 109

| 109

From booking fee

Website RedesignWebsite Redesign

Experienced 90% increase in revenue taken through the website over first two years.

Website RedesignWebsite Redesign

Experienced 90% increase in revenue taken through the website over first two years.

| 110

New website designNew website design

Meet brand objectives by creating a high level of sophistication and primarily driving enquiries via the site.

• + 38% visitors

• +30000% revenue

• 1 million dollars in first second



• + 38% visitors

• +30000% revenue


website over first two years.

• Website

• Search marketing

• Content management

• Social media integration

• Mobile site

• Newsletter/film times emails

• Vista POS integration (formerly Radiant)

website over first two years.

• Website


• Content management


• Mobile site


• Vista POS integration (formerly Radiant)

| 111



• + 38% visitors

• +30000% revenue




• + 38% visitors

• +30000% revenue


New websiteNew websiteand email suiteand email suite

Total consistency between the 2 mediums. Both testing modern build and development techniques to the limits to create the ultimate user experience.

New emails are three times more effective that the old emails

New websiteNew websiteand email suiteand email suite

Total consistency between the 2 mediums. Both testing modern build and development techniques to the limits to create the ultimate user experience.

New emails are three times more effective that the old emails

| 112



• + 38% visitors

• +30000% revenue




• + 38% visitors

• +30000% revenue


| 113



• + 38% visitors

• +30000% revenue




• + 38% visitors

• +30000% revenue


Vista integration and Vista integration and designdesign

Grand Cinemas previous attempt at integration with Vista had taken 14 months –and failed.

On recommendation by Vista, Peach completed the integration and redesign of the site within 4 months.

Vista integration and Vista integration and designdesign

Grand Cinemas previous attempt at integration with Vista had taken 14 months –and failed.

On recommendation by Vista, Peach completed the integration and redesign of the site within 4 months.

| 114



• + 38% visitors

• +30000% revenue




• + 38% visitors

• +30000% revenue


Website & marketingWebsite & marketing

• Website

• Technical support

• SEO

• PPC scheduled later in 2012

• Social media management

Website & marketingWebsite & marketing

• Website

• Technical support

• SEO

• PPC scheduled later in 2012

• Social media management

This is all great, but exporting has its own issues...

• Expensive

• Knowledge gap

• Needed to be there

• Needed a long term strategy

| 115

Enter SDI...

| 116

20122012Business Development TripBusiness Development Trip

| 117

Business Development TripBusiness Development Trip

Objectives

• Identify opportunities

• Make connections

• Understand how to do business

| 118

Our packed schedule

| 119

Results of the trip

• One client signed/one more in negotiation

• Opening up new conversations – National Amusements, + 10 others

| 120

• The confidence to return to look at new markets

| 121



• + 38% visitors

• +30000% revenue




• + 38% visitors

• +30000% revenue


We have experience developing mobile-optimised websites and mobile apps. Our iPhone app for Camelot (UK Lotto) was top of the download chart in 2010.

We have experience developing mobile-optimised websites and mobile apps. Our iPhone app for Camelot (UK Lotto) was top of the download chart in 2010.

Website Redesign Website Redesign (in progress)(in progress)

• Website



• Mobile site


• Vista POS integration

Website Redesign Website Redesign (in progress)(in progress)

• Website



• Mobile site


• Vista POS integration

Learnings from our trip

• We are more advanced than US in generating ROi for cinemas

• Potential clients like overseas visitors – it shows your serious!

• Got to get out there – SDI can make the difference

| 122

• Got to get out there – SDI can make the difference

• Be confident!

International Strategy International Strategy WorkshopWorkshop

| 123

WorkshopWorkshop

Objectives

• Set realistic aims

• Understand where the value is in your business

• Define our compelling case

• Generate an action plan

| 124

• Generate an action plan

What we did

• Moderated by Strategem/funded by SDI

• Key stakeholders in the business

• Half day prep/full day workshop/halfday feedback

| 125

• Half day prep/full day workshop/halfday feedback

Manage development in Glasgow

Attend key sector exhibitions

Work in progress?

| 126| 126

Develop the technical platform

Generate and service new leads

Results (end 2012)

• A new, profitable focus for the business.

• Moving to next phase – selling to international markets underway

| 127

• Reseller agreement signed with 2x POS suppliers

20132013Business DevelopmentBusiness Development

| 128

Business DevelopmentBusiness Development

CinemaCon – further bizdev trips

| 129| 129

International lead generation• Hired a new business development consultant

• 50% of cost met by SDI

• Lead generation and email marketing

| 130

The current shape of our world…2014

| 131| 131

What next?• Local representation in the US

• Open up new markets - South America

• Product development – SAAS offering for the independent market

| 132

| 133

Q & A


Followed by

Networking Lunch

Education

Doing Business in America 2014