Last week, I had the privilege of speaking at the American Bar Association’s Business Law Section Annual Meeting in Boston.  The title of my presentation was:  “Key Considerations for Foreign Manufacturers That Wish to Sell Products to the United States” which was presented at the meeting of the International Expansion and Cross-Border Transactions Subcommittee.

Here are some of the key takeaways from my presentation:

1. CONSIDER THE BRAND:  Although the tax implications often drive foreign investment and the corporate form selected, I often focus on things beyond the “mechanics” of the deal.  For instance, if a manufacturer is launching a product in the United States, we need to consider intellectual property protection.  The key here is often not just coming up with a name that can be trademarked, but considering whether the product will actually sell.  For that reason, we often engage consultants on our client’s behalf to consider these business issues.
2. LOCATION, LOCATION, LOCATION:  There are three considerations that often are most important for foreign manufacturers when selecting a location for their U.S. subsidiary:  (1) access to a distribution network; (2) geographic proximity to key customers; and (3) access to skilled labor.  Often times, executives at foreign manufacturers also heavily weigh quality of life issues for those executives that will be leading the U.S. operations.
3. GLOBAL COMMUNICATION:  Not surprisingly, there is always an extreme sensitivity about maintaining corporate formalities so that the assets of the foreign parent are protected from liability that may arise in the United States.  While it is important to respect these lines, there can be overkill.  Specifically, manufacturers often struggle at having the various departments talk to each other about product development and experience in the marketplace.  When a company has global operations, these challenges only increase as it is not uncommon for a lack of communication between engineers/quality in the United States and the rest of the world.  For that reason, we have helped several companies establish a process that allows for communication with the goal of minimizing liability risks.

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