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.
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