europe @ different speeds

Tuesday 31 May, 2011

Much to my surprise, in the aftermath of the fall of Neil Hartigan’s World Trade Center Chicago/Illinois, the Chicagoland Chamber of Commerce has started an international group called Global Connections Council, which hosted this event EUROPE AT DIFFERENT SPEEDS: DOING BUSINESS IN THE EUROPEAN UNION .  I knew that Shufen Zhao, formerly of the WTCC/I, had moved over to the CCC & was organizing international events, but this group was news to me & others.  Pres. Dr. Lance Pressl announced that they had led a trade mission to Turkey a few weeks beforehand.

The event featured Antonio De Lecea, Minister of Economic @ Financial Affairs of the delegation of the European Union to the United States, W. David Braun, Partner @ Quarles & Brady, & David Pistrui, Managing Director of Acumen Dynamics, LLC.  De Lecea was the keynote speaker & addressed 3 issues:

  1. why do business in Europe?-because it leads to profitability & job growth.  @ $210B earnings are 20X that of China & India combined $8.7B, & 40% more than Latin America & the Asia/Pacific combined.  This has created 13-15M onshored jobs, 7.8M of which are directly employed.  The EU is the biggest investor of Foreign Direct Investment (FDI) in Illinois, up 44% to $22B, which has led to 53K jobs, of which 25% are in manufacturing.  In 2009, the EU bought $9.5B worth of chemicals, computers, & machinery.
  2. the financial crisis in Europe-which brought up 4 issues which were addressed head on:  A.  mispriced risk & credit with too little surveillance & cyclical tax bases was addressed by recapitalization & regulatory reform  B.  bloated public consumption & social security net which led to fiscal problems was addressed by consolidation for long term stability  C.  market distortions & lack of access to finance which led to lack of critical mass & competitiveness is being addressed by deep broad structural reforms  D.  lack of policy government coordination led to segmented markets with no sovereign credit mechanisms is addressed by creating a €-area sovereign crisis mechanism, financial supervision & coordination, & enforced surveillance.
  3. European stability & growth with budget austerity-fiscal conservatism is growth friendly as they cut non-productive expenditures & change tax codes & their enforcement.  Portugal has eliminated the mortgage interest tax deduction.  The Europeans are putting an emphasis on innovation, (which mirrors Obama’s State of the Union speech), by encouraging cross-border venture capital, creating a single EU patent, increasing the effectiveness of R&D aid rules, recruiting non-nationals in research, providing open access to published research publications, & national funding of R&D.  They are also pooling EU resources by coordinating R&D, prioritizing infrastructure, opening research to US organizations, creating markets through coordinated public procurement, & creating innovative financial models.  Finally, they are trying to strengthen trans-Atlantic partnerships with the Trans-Atlantic Economic Council.  The collaboration between the FDA & European Medical Agency is 1 example.  In sum, the crisis was an opportunity to change @ the national & EU levels.  The EU has made more structural reforms in 1 year than the prior 10.

A simplistic panel Q&A followed:

  • Europe is complex, so do your research to learn about your potential clientele to get started
  • Network, join chambers, go to trade shows in Europe to seek out like-minded people/partners, engage in daily life there to understand the culture
  • You can structure operations essentially 3 ways:  A.  sales representation  B.  distribution  C.  foreign direct investment to build your own organization.  There are different costs & amounts of work for each.  There is no uniform system of law across countries, so local legal counsel is required everywhere you go.
  • Europe is not repopulating, which is not sustainable & leading to a shortage of technology workers, but Europeans are xenophobic.  This labor shortage is combined with a pension problem.
  • There is no United States of Europe.  You must still meet the particular needs of each market with particular products.
  • We need to change the mindset to pursue foreign markets since, for example, even only 4% of French companies export.

This event proceeded @ different speeds.  The keynote on Europe was very detailed.  The panel discussion was overly simplistic.  Participate with your eyes wide open.

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