SPI USA - Irvine United States Market Entry Strategies SPI USA – Irvine 2102 Business Center...

SPI USA - IrvineSPI USA - Irvine

United States Market Entry StrategiesUnited States Market Entry Strategies

SPI USA – Irvine2102 Business Center Drive, Suite 220EPhone: 949.253.5702E-mail: [email protected]

www.usaspi.com

Your Partner in Innovation

United States

• Market Overview

Economic Factors

Demographics

• Import Trends

Trade Balance

Imports by Country

Trade Balance / Imports - Portugal

Sectors

Electrical Machinery & Components

Ceramic Products

Pharmaceutical Products

• Market Approach

Developing Technologies

Traditional Product Lines

• Examples of Services Network with Technology Drivers

Develop Investor Interest

Develop Market Entry Strategies


United States


General Points:

• 9,631,418 sq km, 2 ½ times the size of Western Europe

• 293 million population

• GDP of $10.99 trillion

• GDP per capita of about $37,800

• Population below poverty – 12 %

• Unemployment – 6 %

World Fact Book, CIA, February 2004

United States


Market Overview – Economic Factors

“For our part, the Federal Reserve will pursue its

statutory objectives of price stability and

maximum sustainable employment--the latter of

which we have learned can best be achieved in the

long run by maintaining price stability. This is the

surest contribution that the Federal Reserve can

make in fostering the economic prosperity and

well-being of our nation and its people.”

Alan Greenspan, Testimony before the Committee on Financial Services, U.S.

House of Representatives, Feb. 2005



2004 Highlights:

• Business investment was the largest contributor

– upturn in business inventories and a step-up

in equipment and software.

• Consumer spending increased in purchases of

services and nondurable goods (average life

less than 3 yrs).

• Real disposable personal income increased.

Bureau of Economic Analysis, U.S. Dept. of Commerce, January 28, 2005.



• Real growth in the service sector – accounting for about 2/3 of GDP –

continued trend of strong growth.

• Real growth in the good sector – accounting for about 1/5 of GDP –

sharply increased in 2003.

• Goods sector decline in 2001 – due to a decrease in Real Value added

by Mining, Utilities, Manufacturing.

Bureau of Economic Analysis, U.S. Dept. of Commerce, Dec. 20, 2004.



Gross State Product 1999-2003 Highlights:

• In 2003, GSP accelerated in 38 states and was positive in all states.

• Most states in the highest ¼ are states that specialize in farming and/or mining.

• In 2002, states in the highest ¼ had strong growth in service industries.

• 2001-02, high-tech manufacturing was the largest contributor to growth in Idaho, Arizona, Minnesota, and New

Mexico.

Bureau of Economic Analysis, U.S. Dept. of Commerce, Dec. 2004



2003 Per Capita Income Levels and Ranks:

Bureau of Economic Analysis, U.S. Dept. of Commerce, Dec. 2004

Per Capita GrowthState Level ($) Rank Rank

2004

Connecticut 43.292 1 30

New Jersey 40.002 2 6

Massachusetts 39.408 3 46

Maryland 37.424 4 5

New York 36.296 5 34

Per Capita GrowthState Level ($) Rank Rank 2004

California 33.403 10 26

Utah 25.230 47 1

Wyoming 32.235 15 2

Nevada 31.487 18 3

Hawaii 30.589 21 4

Personal Income Percent Change II-III, 2004



Bureau of Economic Analysis, U.S. Dept. of Commerce, June 2004

• Net investment position became $197.7 billion more negative from 2002 to 2003, due to large net

foreign purchases of U.S. securities (corporate bonds and U.S. Treasury securities).

• Appreciation of most foreign currencies against the U.S. dollar raised the dollar value of U.S. owned

assets abroad – U.S. held foreign stocks.

• Foreign acquisitions of assets in the U.S. were $829.2 billion in 2003 – the second largest on record

after $1,046.9 billion in 2000.


Market Overview – Demographics

The bad news is that 31 million people in the United States were poor in 2000. The good news is that the percentage of people in poverty is the lowest since 1979.

U.S. Census Bureau, Dec. 2004



Population Density, 2000

Population Division, U.S. Census Bureau, Dec. 2004



Population Division, U.S. Census Bureau, Dec. 2004

25.0 to 66.313.2 to 24.913.2 to 24.90.0 to 13.10.0 to 13.1-5.7 (DC)-5.7 (DC)

Percent change in total population from 1990 to 2000 by State

Population Change by component by State (Estimated total US population is 293,655,404):

Net International Net InternalState Migration Migration

New York 562,265 - 771,944

California 1,192,430 - 415,313

Illinois 276,890 - 304,775

Massachusetts 137,394 -173,062

New Jersey 244,994 - 135,483

Net International Net InternalState Migration Migration

Florida 444,726 791,904

Arizona 141,175 281,625

Nevada 55,710 216,322

Georgia 161,522 181,296

North Carolina 131,807 166,865



• Median age of the U.S. population in 2000 was 35.3 – the highest it has ever been.

• Largest generation of baby boomers began passing their 45 th birthday – population

aged 45 to 54 swelled 49 percent during the last decade.

• First time in record keeping history, the population aged 65 and older increased at a

slower rate than the population as a whole.

Population Profile of the United States: 2000, U.S. Census Bureau, Dec. 2004



• Families dominate American households,

but less today than they did in 1970.

• In 2000, the average number of people per

household was 2.62, compared to 3.14 in

1970.

• Decline in married-couple families with

children – falling from 40 percent in 1970

to 24 percent in 2000.

• Significant increase in people living alone

from 17 percent in 1970 to 26 percent in

2000.




• About 10 percent of Americans are foreign

born.

• Increase in migration since 1970 is due to

changes in the immigration laws from

1965 to 1990.

• Since 1970, the share from Europe

dropped from 62 percent to 15 percent.

• The share from Asia grew from 9 percent

to 25 percent.

• The share from Latin America grew from

19 percent to 51 percent. 2/3 from Central

America.



Import Trends – Trade Balance

Is the U.S. Trade Deficit

Sustainable?

Institute for International Economics, Catherine L. Mann


Trade Gap Widens in 2004:

• The deficit increased $121.2 billion from $496.5 billion in 2003 to

$617.7 billion in 2004, as imports increased nearly twice as much as

exports.

• Largest increase in goods exports were in capital goods, industrial

supplies & materials, and consumer goods.

• Largest increase in goods imports were in industrial supplies &

materials, capital goods, and consumer goods.

• Deficit with China increased to $162.0 billion.

• Deficit with Japan increased to $75.2 billion.

• Deficit with the E.U. (25) increased to $110.0 billion.

Bureau of Economic Analysis, U.S. Dept. of Commerce, February, 2005.



• Harmonized System – Developed by the World Customs Organization, similar to NAICS (North

American Industry Classification System – defines sectors).

• Leading positive Trade Balance Countries include (listed by rank): The Netherlands, Australia, Belgium,

Singapore, United Arab Emirates, Egypt, Panama, Greece, Jamaica, Paraguay.

• Leading negative Trade Balance Countries include (listed by rank): China, Japan, Canada, Germany,

Mexico, Venezuela, South Korea, Ireland, Italy, Malaysia, Saudi Arabia, Nigeria, Taiwan.


U.S. Trade Balance of “Harmonized System” Total All Merchandise in 2004

Office of Trade & Industry Information (OTII), Manufacturing & Services, International Trade Administration, U.S. Department of Commerce


Import Trends – Imports by Country

U.S. Imports of “Harmonized System” Total All Merchandise in 2004

Ranking of import source countries:

Imports of HS TotalCountry (in thousands of $)

Rank

Canada 255,927,946 1

China 196,698,977 2

Mexico 155,843,011 3

Japan 129,594,660 4

Germany 77,235,716 5


Rank

United Kingdom 46,402,188 6

South Korea 46,162,695 7

France 31,813,826 9

Portugal 2,243,100 58

Poland 1,828,701 61




Import Trends – Imports by European Country

U.S. Imports of “Harmonized System” Total All Merchandise in 2004

Ranking of import European source countries:


Rank

Germany 77,235,716 5


France 31,813,826 9

Italy 28,088,649 11

Ireland 27,441,697 12


Rank

Sweden 12,686,621 21

Netherlands 12,604,629 22

Belgium 12,448,436 23

Switzerland 11,642,675 25

Spain 7,475,788 31



Import Trends – 2004 Balance with Portugal

U.S. to Portugal Trade Balance

Most Dynamic Harmonized System Categories from 1997 to 2004

-1.2E+09

-1.0E+09

-8.0E+08

-6.0E+08

-4.0E+08

-2.0E+08

0.0E+00

2.0E+08

4.0E+08

6.0E+08

1997

1998

1999

2000

2001

2002

2003

2004

Year

Val

ue

($)

88--AIRCRAFT; SPACECRAFT;AND PARTS THEREOF

12--OIL SEEDS ETC.; MISC GRAIN;SEED; FRUIT; PLANT ETC

84--NUCLEAR REACTORS;BOILERS; MACHINERY ETC.;PARTS

27--MINERAL FUEL; OIL ETC.;BITUMIN SUBST; MINERAL WAX

85--ELECTRIC MACHINERY ETC;SOUND EQUIP; TV EQUIP; PTS

Product Total

• Significant negative trade balance trend with Portugal beginning in 2001.

• Electric machinery and components (HS 85) is the largest contributor to the negative

trade balance trend.

• Aircraft and Parts (HS 88) is the most significant export to Portugal since 1998.



Import Trends – 2004 Imports from Portugal

“Harmonized System” Total All Merchandise 2004 Imports from Portugal

(in thousands of $)


U.S. Imports of HS 85 - Electric Machinery & Components in 2004 (in thousands of $)

Ranking of source countries:

Imports of HS 85Country (in thousands of $)

Rank

China 40,175,671 1

Mexico 37,407,929 2

Japan 22,112,054 3


Malaysia 11,094,754 5


Rank

Taiwan 10,799,402 6

Germany 5,037,752 8

Finland 414,234 26

Portugal 408,300 27

Spain 336,902 31


Import Trends – Electric Machinery & Components


Import Trends – Electric Machinery & Components

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000

1997

1998

1999

2000

2001

2002

2003

2004

Year

Val

ue

$ (i

n t

ho

usa

nd

s)

HS 8509 - ElectromechDomestic Appliances;partsHS 8501 - Electric Motorsand Generators

HS 8502 - ElectricGenerating Sets & RotaryConvertersHS 8512 - Electric Light EtcEquip; w indsh Wipers Etc.,PartsHS 8540 - Thermionic, ColdCathode or PhotocathodeTubes


Trends in U.S. Imports of HS 85 - Electric Machinery & Components Sub Sectors


U.S. Imports of HS 69 - Ceramic Products in 2004

(in thousands of $)



Rank

China 40,175,671 1

Mexico 37,407,929 2

Japan 22,112,054 3


Malaysia 11,094,754 5


Rank

Taiwan 10,799,402 6

Germany 5,037,752 8

Finland 414,234 26

Portugal 408,300 27

Spain 336,902 31


Import Trends – Ceramic Products



Trends in U.S. Imports of HS 69 – Ceramic Products

Sub Sector

Import Trends – Ceramic Products

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,000

1997

1998

1999

2000

2001

2002

2003

2004

Year

Val

ue

$ (i

n t

ho

usa

nd

s)HS 6911 - CeramicTablew are Etc. ofProcelain or ChinaHS 6912 - CeramicTablew are, Kitchenw reEtc, Earthenw are Etc.HS 6909 - Ceramic Lab EtcWares, Agr Tubs Etc &Packing ArtHS 6913 - Statuettes andOther Ornamental CeramicArticlesHS 6910 - Ceramic Sinks,Washbasins, Water ClosetBow ls Etc.


U.S. Imports of HS 30 – Pharmaceutical Products in 2004

(in thousands of $)



Rank

Ireland 5,822,475 1


Germany 4,544,139 3

France 3,263,534 4

Canada 2,117,557 5


Rank

Japan 2,017,781 6

Sweden 1,659,277 7

Spain 435,589 15

Portugal 543 46

Poland 221 49


Import Trends – Pharmaceutical Products



Trends in U.S. Imports of HS 30 - Pharmaceutical Products

Sub Sector

Import Trends – Pharmaceutical Products

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

Year

Va

lue

$ (

in t

ho

us

an

ds

) HS 3002 - Human Blood;Animal Blood; Antisera,Vaccines Etc.HS 3003 - MedicamentsNesoi of Mixtures, NotDosage Etc. FormHS 3004 - MedicamentsNesoi, Mixed or Not, InDosage Etc. FormHS 3005 - Bandages EtcCoated Etc or In RetailMedic Etc. FormHS 3006 - PharmaceuticalGoods; Sterile SurgicalItems Etc.


Market Approach

"Industry networking is vital to success in

this [U.S.] market, ……. firms must be

available to meet clients and potential

partners on a daily basis to reduce the

asymmetry of market information, decrease

incumbent competitive advantages, and

compete purely on the value of their

products or services,"

United States Market Entry Study for Select Technology Sectors in New Zealand, The Anderson School at UCLA, Dec. 2002


Steps to Market Penetration and

Ultimately Market Success:

• Study your competitors

• Know your market (pricing, trends)

• Strategic planning

Market Approach

Developing Technologies

Traditional Products


Approach to the U.S. Developing Technology Market:

Market Approach – Developing Technologies

Drivers of New Technologies

Knowledge Centers

Applications in Public /

Private Sector• Department of Defense

(DOD)• Department of Energy

(DOE)• National Science

Foundation (NSF)• National Aeronautics

and Space

Administration (NASA)• National Institute of

Standards and

Technology (DOC)

• Engineering Research

Centers (NSF)• National Laboratories

(DOD, DOE, NSF)• Industry/University

Cooperative Research

Centers, I/UCRC (NSF)

• Critical Software / Jet

Propulsion Laboratory• Universidade do

Minho / I/UCRC of

Coatings


Drivers of New Technology:

(R&D budgets ‘ 05)

• Department of Defense - $43 billion• Department of Energy - $3.4 billion• National Science Foundation – $4.2 billion• National Aeronautics and Space Administration - $11.1

billion• National Institute of Standards and Technology (DOC) -

$695 million

• Total Federal R&D Portfolio for 2005 is estimated at

$131.5 billion.



Engineering Research Centers:

• There are currently 20 ERC’s within four general topic areas:

• Bioengineering (6 ERC’s)

• Design, Manufacturing, and Product Development Systems (5 ERC’s)

• Earthquake Engineering (3 ERC’s)

• Microelectronic Systems and Information Technology (6 ERC’s)


ERC’s are supported by various

sources of funds:

• NSF (the largest contributing

entity)

• Industrial partners

• Host academic institutions


National Laboratories (18):

• 17 Department of Energy:

– Lawrence Livermore National Laboratory: energy, environment, bioscience, biotechnology.

– Los Alamos National Laboratory: nuclear weapons and strategy.

– National Renewable Energy Laboratory: solar, biomass, wind, geothermal, advanced vehicles & fuels.

– Princeton Plasma Physics Laboratory: fusion science.

• 1 National Aeronautics and Space Administration:

• Jet Propulsion Laboratory: technologies developed for space.


Spirit & Opportunity Mars

Rovers


Industry/University Cooperative Research Centers, I/UCRC :

There are currently 50 I/UCRC’s within eleven general topic areas:

• Advanced Electronics (4)

• Advanced Manufacturing (4)

• Advanced Materials (7)

• Biotechnology (4)

• Civil Infrastructure Systems (3)

• Information and Communication (9)

• Energy and Environment (4)

• Fabrication and Processing Technology (9)

• Health and Safety (3)

• Quality, Reliability and Maintenance (2)

• System Design and Simulation (1)


Organized research units with strong

industry guidance and financial

support:

• 75 % of budget must be supported

by a minimum of 6 companies.

• 25 % of budget supported by NSF.

• University based / cross-discipline

activities.


JPL - Remote Exploration and Experimentation (REE) project:

• The REE project aims at moving commercial scalable supercomputing technology into space applications, in a form that meets the demanding environmental requirements.

• Due to price, weight and power constraints, the computers delivering the high processing capability cannot have redundant systems. This raises concerns about the correctness of the results because of data corruption caused by cosmic rays.

• Xception technology is considered the best tool to test these systems. The Xception technology allows the REE project’s developed systems to be thoroughly tested and refined before deployment.


Established Critical Software in the aerospace

development field.

Established the Xception technology in the

aerospace field through the exposure and

the credibility JPL brought to the

technology.

Established Critical Software in the European

Space Agency (ESA). In 2000, the

company joined a consortium that won a

contract on software dependability.


Innovative Polymer U.S. Materials Oriented Company

High Performance Polymer based on developed dynamic injection mold

process

Department of Polymer Engineering Cooperative Research Center in Coatings

Injection mold tooling to support the developed process

Portuguese Tooling Industry

Part production to support applications in new markets

Portuguese or U.S. Part Production Companies

High Performance Polymers:

• Partnership between:

– Department of Polymer Engineering, Prof. Antònio Cunha, Universidade do Minho.

– Industry/University Cooperative Research Center in Coatings (Michigan/Mississippi).

• To utilize U.S. and Portuguese based research results to the benefit of:

– U.S. companies oriented towards innovative materials.

– Portuguese companies oriented towards manufacturing injection mold tooling and injection molded part production.


Department of Polymer Enginnering


Main conclusions from our activities:

• Knowledge Centers are an excellent point of contact for leading edge R&D (public/private sectors).

• Knowledge Centers can provide the industry networks to market developing technologies.

• A strong interest from U.S. R&D to establish collaborations in Europe – can lead to unique technology markets for Portuguese R&D entities.



Reverse Supply Chain Approach:

Market Approach – Traditional Product Lines

Retail DistributionManufacturer

/ Producer

• Discount• Warehouse• Department Stores• General

Merchandise• Specialty Stores• Mail Order /

Internet Based

• Regional Agents• Importers /

Distributors• Retail Buyers

• U.S. Based• Foreign Based


Retail Channel:• Discount – Dollar General

• Warehouse – Sam’s Club, Costco, Home Depot

• Department Stores – Macy’s, Kohl’s

• General Merchandise – Sears, Roebuck & Co., Bed Bath

& Beyond, J.C. Penney

• Specialty Stores – Pier 1, Williams-Sonoma, Pottery

Barn

• Mail Order / Internet Based – B2C’s


Product Pricing

Product Trends

Promotional Activity

Added value due to

manufacturing region,

brand, etc.


Distribution Channel:• Regional Agents – Large national retailers

• Distributors / Importers – Medium / small

retailers, normally regional retailers

• Retail Buyers – Large / Medium retailers, in

large markets


Leading Distribution

channel by retail segment Importer/Distributor/Buyer

interests (designs/patterns) Decision Factors – Price,

Quality, Manufacturing

Region, Etc.


Manufacturer / Producer Channel:

• U.S. Based – as seen by the Import Trends, U.S.

based manufacturers are being replaced by

foreign suppliers.

• Foreign Based – market influence is extremely

dependent on sector.


Percent of market by

region Leading manufactures

by region


Main conclusions from our activities:


• Large retailers are accessible through their Corporate Buyers.

• “Made in the US” does not provide added value.

• Importers / Distributors are open with information – (i.e. pricing, product styles, regions of interest).

• Market Approach varies depending on the product

– national or regional focus

– need for local customer support


Examples of Services

SPI’s presence in the U.S. provides

an ability to:

• Develop Collaborative

Opportunities

• Develop Investor Interest

• Develop Market Entry Strategies


Examples of Services – Develop Collaborative Opportunities

Objectives - Identify needs and subsequent opportunities for collaborations

between Portuguese and American companies and other relevant organisations (universities, research centres, and science parks) within specific sectors:

- Information Technology

- Biotechnology

- Materials, Moulds & Polymers

- Environmental Technology

- Create an overview of key policies, program and institutions that have successfully promoted innovation activities in Portugal and the US.

- Develop project summaries that leverage the identified opportunities.



Sector Opportunities

Needs and subsequent opportunities for collaborations:

- Identify companies and relevant organisations active in the innovation area.

- Survey the identified companies and relevant organisations for opportunities that would benefit through collaborations with the US.

- Assess and structure the identified opportunities.

- Develop an overview of the current level of activity and potential for international collaborations to the benefit of Portuguese companies.



Relevant Best Practice Case Studies

Overview of key policies, programs and institutions that have successfully promoted innovation activities:

- Identify effective policies, programs and institutions.

- Develop a detailed understanding of the factors for success through interviewing key representatives.

- Identify cases of successful collaborations between Portuguese and US organisations.

- Develop detailed Case Studies (10) that will encourage further collaborations within the selected sectors (4).



Recommended Projects

Project summaries that leverage the identified opportunities:

- Select the opportunities that have the greatest potential for success.

- Develop project summaries (4) that include: objectives, methodology, and the suggested international consortium.


Examples of Services – Develop Investor Interest

Main Objectives:

- Identify U.S. based company’s that have an interest in developing business opportunities in the E.U.

- Develop “Statements of Interest” for the selected high potential opportunities.

APPROACH POTENTIAL INVESTOR’S

ONSITE VISIT

SELECTION PROCESS

STATEMENTS OF INTEREST



- Develop investor profiles specific to four (4) targeted sectors.

- Select investor’s that match the sector specific profiles.

- Approach potential investors and develop initial interest:

Access to the Portuguese and other European markets

Technology transfer to and from Portugal

Access to a highly educated labor workforce (i.e. Biotechnology & Information Technologies)

APPROACH POTENTIAL INVESTOR’SAPPROACH POTENTIAL INVESTOR’S



ONSITE VISITONSITE VISIT

- Visit potential investors that respond with interest. The objective of the visits will be to further determine the level of interest and assess the true opportunity.

Note:

The Irvine and Baltimore offices are well located for this service.



- Select a manageable group of potential investors to further develop the collaborative opportunities with Portuguese business sectors.

The selection is based on:

The level of interest and opportunity determined by the individual visits.

The potential interest of Portuguese entities to be determined by the client.

SELECTION PROCESSSELECTION PROCESS



STATEMENTS OF INTERESTSTATEMENTS OF INTEREST

- Investor Profile

General Business Plan

Products/Services

Infrastructure

- Opportunity

Detailed Description (objective, methodology overview, expected short/medium/long-term results)

US investor’s contribution

Portuguese entity (client) contribution


Examples of Services – Develop Market Entry Strategies

Main Objective:

Identify and analyze the necessary requirements to create or reinforce the client’s presence in relevant U.S. markets.

United States Market Strategy

Business Profile and International Goals

United StatesMarket



Business Profile and International Goals

-Develop an understanding of the Client’s relevant activities and structures.

Products / Services

Current Markets

Distribution Channels

Sales & Marketing Structure

-Develop an understanding of the Client’s international activities and goals for the North American Market.



- Develop an overview of the United States market, focusing attention to the Client’s product line.

Market Structure

Distribution Channels

Pricing

Principal Importers and National Producers

Positioning of the Client’s Products

United StatesMarket



United States Market Strategy

- Develop a strategy that leverages the United States Market to meet the Client’s international goals:

Select Alternative Sales Channels

Analysis of the Opportunities

Develop Conclusions and Recommendations


USA Contacts

USA - Irvine2102 Business Center Drive, Suite

220E

Irvine, CA 92612

Tel: +1 949 253 5702

Fax: +1 949 253 5703

[email protected]

USA Inc.

5523 Research Park Dr., Suite 325

Baltimore, MD 21228

Tel: +1 443 543 5530

Fax: +1 443 543 5533

[email protected]

California Maryland

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SPI USA - Irvine United States Market Entry Strategies SPI USA – Irvine 2102 Business Center...

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