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Doing Business with the U.S.

Shiumei Lin

International Trade Policy Analyst

U.S.-Vietnam Forum

Presentation Outline

I. Finding a Partner and Breaking into the U.S. Market

1. Finding a Partner for Your Product

· Look in databases available at Chambers of Commerce, Trade Associations, Business Directories

· Join trade associations

· Attend trade fairs – list of trade fairs in the U.S. obtainable from MOT, VCCI

· Government Services e.g. FCS, VCCI

· Search on the Internet

· Read Industry Magazines – e.g. Bobbin Magazine http://www.bobbin.com

· Be part of the Internet world – have a website, join a B2B e-marketplace

2. Choosing a Partner for Your Product

· Having a partner is the best way to make sure that a first time exporter to the U.S. not only knows and abides by U.S. regulations, a partner will also know how to function within the marketplace, know what consumers like, and can do follow up work like tracking consumer response to a product.

· Important to figure out what kind of partner will most benefit your needs. Typically, an exporter can deal with sales agents, distributors or wholesalers.

· Retailers – Large companies that buy directly and have their own stores e.g. Gap, Levis

· Agents – Transfer of title not until product is sold.

· Distributors – Distributors work for you, but may have competing products, conflicting interests

· Wholesalers – Advantages (takes the burden of risk, title of goods are transferred) and Disadvantages (lose control of marketing)

· Department Store Buyer – e.g. Sears, Nordstrom’s – buyers of a variety of products

· Mail Order Catalogs -- e.g. Victoria’s Secret – do marketing for you.

3. Investigating Business Reputation and Credit Ratings

· Checking with local Chambers of Commerce for complaints

· Checking with Credit Bureaus – file for credit history of company

· Government Resources – e.g. FCS

II. The U.S. Market

4. Characteristics of the American Market

· Demographics – physical and environmental

Lifestyles in the US have become more diverse.

Households are smaller and more transitory.

Population composition is more diverse than ever before.

The big spenders are aging.

Higher salaries are becoming more closely tied to higher education levels.

Customers are becoming increasingly aware of global, national, and regional environmental and social concerns.

Labor intensive production is being de‑emphasized.

· Psychographics -- taste

Americans have varied and diverse taste. You can just about find a buyer for any kind of product. Key is to find a partner that will know where to channel your goods. For example, lacquerware may not sell well among the masses in large stores like K-Mart and Walmart, but a small store that caters to more sophisticated clients who find Asian housewares “exotic” could help bring you buyers to you.

· Buying Patterns – Consumer habits and practices

Not ask if there is a market, but what is the best market? And then tailor it according to your targeted market. For example, Vietnam makes a lot of platform shoes. In the U.S., and in most countries, platform shoes are most popular among teenage girls. An exporter should therefore target teenage fashion stores, not high end sophisticated shoe stores. Also keep up with the styles and preferences that are most trendy. Teenagers follow trends. They also spend more on clothes so turnover should be high.

2. Opportunities for Exporters

· Footwear

U.S. imports 76% of Men’s Casual and Dress Shoes (1998)

U.S. imports 90% of Women’s shoes (1998)

Average consumption is 5.65 pairs per year

Imports mostly from Brazil, China, Korea, Taiwan, Italy

Emphasis is on comfort, functionality and style

What’s in: Outdoor Look (water resistant hiking shoes, sport sandals)

· Leather Goods

$18.9 billion in imports (1998)

71% of this is from China and developing countries

Developing countries have cost advantage over U.S. suppliers

Hot items include belts, gloves, handbags, jackets, luggage, shoes

· Furniture

14% imported home furniture

7% imported office furniture

Mainly from Canada (NAFTA benefits), Mexico Taiwan, Italy, China, Wood, metal or upholstered products

Hot items include entertainment furniture, office furniture (mobile), computer stations

What’s in: Ergonomic furniture

· Toys

70% of toys bought by Americans are imported

These include dolls, toy trucks, small balls and video games

Pay close attention to safety regulations of the U.S.

Check with Consumer Product Safety Commission

What’s in: Video games, internet related games, educational toys

· Food and Agricultural Items

U.S. imported $23.8 billion in processed foods and beverages (1998)

Market is immense and demand for imported food products will always be high

Americans are very health conscious and will want to know every ingredient, element, vitamin and mineral in product

Strict labeling and food regulations

Importers will have to check closely with FDA

Packaging is important because product will have to capture the attention of buyers in large supermarkets with lots of competing products

What’s in: Healthy foods, organic foods, ethnic specialty foods (increasing immigrant population and adventurous consumers

· Household Audio and Video Equipment

70% of U.S. domestic household audio and video equipment is imported. Almost no VCRs, camcorders, tapeplayers or CD players are manufactured in the U.S. This is interesting considering many of these were originally invented in the U.S. (product cycle)

Imports come primarily from Japan, Mexico, Malaysia, South Korea and China.

Most popular items are TVs and CD players. (both high end components and low end portable boom boxes)

Growth potential in big screen TVs, projection TV, home theater products such as surround sound speakers. High definition TV is also being introduced.

Many countries like Malaysia, Taiwan and China have started out exporting primary products, and then shifted to secondary manufacturing (value-added exporting). And these do not necessarily have to be production of foreign brand names. Taiwan started out making foreign brand computers, and now is manufacturing ACER computers from Malaysia. Vietnam will eventually graduate from a primary products exporter to exporting value added manufactured products like electronic goods. When this happens, the U.S. will be one of your largest markets, because current manufacturers would have shifted to tertiary industry exports e.g. financial services.

IV. Useful Internet Resources

1. U.S. Trade Policy and Statistics

U.S. Trade Representative

http://www.ustr.gov

U.S. Legal Code

http://www.gpoaccess.gov

U.S. Department of Commerce International Trade Administration

http://www.ita.doc.gov

U.S. Foreign Agricultural Service

http://www.fas.usda.gov

5. U.S. Trade Import Regulations and Procedures

U.S. Customs Department