From New York to Istanbul

So many foreign companies in New York

Why are they here?

What do they do here?

Why do companies invest overseas?

What we know Relevance for New York

Costs A good reason to leave NY

Growth ??

Taxes Dreadful

Resources In NY??

Something special about investment in cities? Global cities?

What do they do when they come here?

Surveys of Foreign Affiliates in New York, 1995, 2005

The research team:Mark ChadwinAndreas Grein

Clifford WymbsLilach Nachum

Why does it matter for a Global Financial Center?

Majority – in financial services

Business services - support

Cluster effect, synergies

Shared infrastructure

Global linkages – global cities.

The SurveysPopulation: All foreign affiliates in New York City The Weissman Center Directory of

International Business

1995: Mailed questionnaire + interviews67 responses

2005: Mailed questionnaire142 responses (~10% response rate).

Why do they come here? % sample

Initially Current

Establish presence in a global center 20% 20%

Serve US clients 19 22Exploit their firm specific advantages 20 12Serve home clients overseas 11 11

Implement a specific activity for the entire corporation

9 11

Access NYC local resources 8 8Tap into industry knowledge pool in NYC 8 8

Counteract or preempt competitors’ moves 4 6

Firms of different size come to NY for different reasons

• Establish a presence

• Leverage own knowledge

• Exploit current suppliers

• Use known processes

• Focus on U.S. customers

• Gain local industry knowledge

• Leverage local suppliers

• Be nimble and opportunistic

Seek disruptive advantage to compete against larger firms

as soon as possible

Small Firms (sales < $100 mm) Large Firms (sales > $100 mm)

Leverage cash advantage and size to create long-term

momentum

Size Breakdown% totals

Number of employees Our sample Total in NYC

Up to 10 37% 54%

11-30 31 21

31-50 13 5

51-100 5 11

Over 100 14 11

Average 144 94

Median 14 10

What do they do here?NY Sales % total sales

0.4

0.17

0.36

0.07% of sample

10%25%50%75-100%

What do they do here?NY purchases % total purchases

0.5

0.15

0.15

0.2

% of sample

10%25%50%75-100%

Industrial Breakdown% sample

Financial Services 34%

Retail 15

Tourism, Eating places 13

Manufacturing 13

Business services 12

Pharmaceuticals/Chemicals 8

Other Services 5

NY competitors % total competitors

0.35

0.3

0.22

0.13

% of sample

10%25%50%75-100%

Competitors located away from NY

Expatriates Employment % sample

None 1--5 6--10 11--15 16+

25%

34%

6%7%

28%

Expatriates as % of total labor force

Frequency meetings with people from other companies

% sample

Monthly22%

Weekly51% Several times

per year22%

Other5%

Monthly23%

Weekly45%

Several timesper year

20%

Other 11%

In the same Industry

In other Industries

Purpose of meetings:% meetings are “very important” and

“important” source of:

Client specific knowledge 76%

Industry specific knowledge 74

Business environment knowledge 69

Resource transfer: NY affiliates/HQs

Most transfers - various kinds of knowledge: Professional Marketing Global market

Knowledge transfer - two ways: parents - affiliates affiliates - parents

NY affiliates recipients of capital.

Profits Transferred to HQs% sample

None 1--25 26--50 51--75 76+

46%

19%

7%

2%

25%

Profits transferred to HQ as % of total profits

Country Breakdown% totals

2005 1995

Our sample

Total in NYC

Western Europe 44% 56% 42%

Asia (Japan) 31 (77) 20 41

Latin America 9 6 3

Southeast Asia 7 3 5

Eastern Europe 5 6 -

Africa 3 6 -

Mode of Establishment

Greenfield: 91.5% Of which 87% wholly-owned (100%)

Acquisitions: 8.5%Of US-owned firm: 7.0%Of foreign-owned firm: 1.5%.

From NY to the World

NYCWashington, DC

Miami

TorontoChicago

Los Angeles

London

ParisTokyo

Hong Kong

Singapore

Sydney

Top Networking Interests (% rated Important)

San Francisco

76%

74%

69%

63%

59%

Where in the World:Top city visits

1. Chicago2. Los Angeles3. Toronto4. London5. Tokyo6. Paris7. Hong-Kong8. Singapore9. Sidney10. San Francisco,

Washington DC, Miami

Choose NY Again?

2005Yes – 90%No - 10%

1995Yes - 82%No - 18%

Leave NY – if yes?

2005Where to (most frequently mentioned): tri-

state area, Chicago, Washington DC, Los Angeles

1995Where to (most frequently mentioned): tri-

state area, elsewhere in New York State, Colorado, Arizona

Why? 57% tax savings

Recommendations for NY Mayor: Affiliates’ voice

20051995Reduce taxes 45%

Improve transportation/infrastructure 23

Improve security 11

Improve quality of service/business 7

Reduce cost of doing business 7

Improve quality of life 5

Reduce cost of living 3

Improve quality of life 24%Lower taxes 16Improve transportation 15Improve bureaucracy 15Develop industrial & social policy 12Develop affordable housing 9Do PR on safety 4Improve infrastructure 4

From NY to IstanbulWhy do foreign affiliates come to global centers?Learning, knowledge acquisitionPlatform to the world

What do they do/don’t in global centers?Customers, suppliers, competitors -

elsewhereLocal knowledge acquisition – own, HQs

What do they contribute to global centers?High value jobs, capital, global links.