This is part two of a series on foriegn corporations establishing a US presence. Read part one here.
Method #3: Independent Sales Representatives and Distributors
Whatever your company’s product or service , whatever it sells or offers, chances are there are companies in the U.S. who already do something similar. Instead of investing to set up your own branch or a subsidiary in the U.S., you can choose to sell your products to U.S. companies who then bring them to market.
This method could result in your surrendering much of your control over distribution and sales. Your profits per sale will be reduced by the U.S. company taking its share, but the investment required on your part is much less than if you were to open a branch or subsidiary operation. In addition, this method allows you to capitalize on existing distribution networks and refined knowledge of the U.S. market.
There may also be significant tax benefits to this method, specifically the possibility of reducing your exposure to U.S. taxation. This will be influenced by many factors similar to those affecting subsidiary operations.
Because of the relatively minimal investment of capital and personnel needed and because of the benefits of partnering with an already established sales and/or distribution network, most companies looking to bring their products to the U.S. choose to do so by selling them to U.S. distributors or by partnering with U.S. sales representatives.
Method #4: Partner with a U.S. Company
An option halfway between a subsidiary and working with independent U.S. companies is that of partnering a U.S. company to bring your products or services into U.S. markets. Such joint ventures can provide similar tax benefits to working with independent distributors and working with an established U.S. company affords you the advantage of its existing networks of distribution and its experience in the U.S. market. As compared to working with independent distributors or sales representatives, a joint venture provides increased control over the sales and distribution process at the price of increased investment cost. For some companies this may be a worthwhile trade.
Entering into U.S. markets and establishing a U.S. business presence can be a very profitable move for a foreign company. Every situation is different and ensuring you reap the maximum possible advantages of any given method can be complicated and likely requires an adept touch. For more information on establishing a U.S. operation or for other corporate law concerns, contact the Chicago corporate attorneys of Horowitz & Weinstein.