Watch out for US pitfalls in the rush to get a slice of the action

Date: Tue 13/06/2006
Published in: The Daily Telegraph
Spokesperson: Thayne Forbes
Position: Joint managing director of Intangible Business
Service area: Market researchMarket mapping

From Scotch whisky to stair lifts, Americans love products from the old country. The US snapped up pounds 30.7bn worth of British goods last year, an 8pc increase on 2004, making it the UK's largest export market.

UK Trade & Investment (UKTI), the government body that assists British exporters, says our top exports to the US include machinery and transport equipment, manufactured goods, chemicals, fuels and lubricants, drinks and tobacco. British industry in general enjoys a good reputation for quality, heritage and innovation. But a market already crowded with indigenous producers, whose lines of supply are 3,000 miles shorter than ours, is no pushover for British firms, and me-too products stand little chance.

"You have to identify what makes you different - your unique history, functionality, manufacturing process etc - and produce a distinctive and well marketed offering,'' says Paul Madden, UKTI's group director for international sectors. "Don't be fooled by the common language. America is still a foreign country.'' Not so much one country as 51, since each state has its own laws, taxes and market characteristics. This can require detailed research - tax variations may render your product profitable in one state but not in its neighbour. UKTI gives free advice and paid-for consultancy to would-be exporters.

But the fractured market can work in favour of smaller firms, says Thayne Forbes, joint managing director of branding consultancy Intangible Business. "You don't sell into the US. It's a collection of different markets,'' says Mr Forbes. Novice exporters can therefore cut their teeth in a single state or city. ''Generally, Americans prefer to buy from people who they think are based in the US,'' he says.

If opening a US branch is beyond your means, you can set up a "virtual'' office with a 1-800 freephone number connected directly to your UK switchboard (allow for the time difference). An American distributor or agent can be a big help in penetrating new markets, but don't sign an exclusive agreement without good reason, warns UKTI.

The internet is ideal for testing the market if your product can be sold by mail order, but an American feel to your website - dollar prices, American language etc - is helpful, says Mr Forbes. Americans are litigious and you will be expected to deliver on any small print. An American lawyer could be your best friend, says Mike Horner, chief executive of the Institute of Business Advisers. A US or international patent is a must, he says, and British firms should "be aware of all the controls in the US, even packaging and country-of-origin labelling''.

Americans tend to be impatient, I-want-it-now types, so you may need to over-stock your US operation to ensure short delivery times and provide replacement products if originals are being repaired. Mr Madden says product liability is a big issue in the US, so have appropriate insurance and give clear user instructions and warnings. Despite recent weakness of the dollar, currency fluctuations can wipe out profits on an export sale, so exporters should take advice on hedging their deals.

Marketing Brand Valuation Services Financial Brand Valuation Services Legal Brand Valuation Services Banking Brand Valuation Services
Tel: + 44 (0) 20 7089 9236