Starting a business in the USA

NAF Breakfast

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Introduction

Marcel Birkhoff – 38yr, married and a daughter

Business/Marketing & technical background,MBA Marketing management

13 years with Hyva on international business development – pioneering new markets

Moved in 2005 to USA & Since 2005 managing director of Hyva Corporation

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Contents:

Company History & activitiesOur move to the USAMain prerequisites Main obstaclesCultural differences!Long term <-> short termSurprisesMain tax implicationsMain Lessons & conclusionsQuestions

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The Hyva Group

From a tiny spot on the map in 1979…

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… to a world leading company in 2008 …

Hyva moves your world!

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Companies everywhere in the world

Technamics B.V. Hyva China

Hyva India Hyva altatec Australia

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In 29 years Hyva reached

Export to more than 130 countries

28 fully owned subsidiaries

2000 employees

Sales of 135.000 telescopic cylinders (2007)

Sales of 15.000 tipper bodies per year (India)

Sales of 2.500 Hyvalift systems (2007)

Turnover of € 475 mio in 2007

Expected turnover of € 600 mio in 2008…

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Hyva is producer of

Hydraulic telescopic cylinders

Hydraulic truck kits

Hyva Lift container (un)loading systems

Hyva Floor horizontal (un)loading floors

Truck mounted cranes

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Hyva on USA dumptrailer

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hydraulic kits super structures all necessary components

Hyva Hydraulics

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Major drivers of our business

GDP development of countries

Infrastructural investments & projects

Mining & heavy off road tipping applications

Environmental developments

Developments of labour costs

Sales numbers of trucks & trailers

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Our move to the USA

Started from Chicago apartment in beginning 2005Company founded in end of 2005“Corporation” as legal entity, registered in DelawareMain office in Chicago, with various satellite

warehousesUsd. 6 mio Estimated sales - 2008Market-scope is US and CanadaCurrently serious market decline in USAConstant growth – increasing market shareHyva has far more modern & efficient product

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Prerequisites to enter NA

Safeguard yourself against currency fluctuations risks

Investigate product liability risk

Structure the company in such a way that parent company can not be touched

Have patience and full stakeholder support

Local presence & fast product availability

Product offering must have an competitive edge

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Main obstacles

Geographic size & regionalismDifference in technology & market standardsDifferent customer expectationsNot “Made in USA”Liability issuesDifferent laws & regulations on company and

employeesReluctance to deal with foreign companies Don’t fall for the transatlantic trap!

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Transatlantic vicious cycle

Reconfirmation of the American’s Concern

about European Commitment

Entry

American Concern Regarding priorities / US Commitment of the

European

Withdrawal of the

European from the USA

Refusal to Purchase

Due to Perception of

Lack of commitment

Disappointment

of the European

Investment limit reached

Product introduction

Positive initial response

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Cultural differences

There is a bigger culture difference than most people think

US customer is polite, and does not say no

Dutch people can be perceived as too direct and pushy

Intercultural training definitely helps!

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Short term<-> Long term

US is short term focused, NL long term

This emerges in different areas:- Economy has higher highs & lower lows- Quality & technical sophistication is less important- Lower price is more important then lower cost- Shorter timeframe on ROI’s- More importance on short term shareholder value- The dollar is paramount!

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Surprises

US customers generally perceive European products as superior – nice!

Banking system old fashioned and inefficient in Dutch view – majority payments with checks

Certain industries very low tech, others very high techLower environmental awareness & concernsMore bureaucracy than you expectVISA application process not so easy anymoreCanadian market presence eases introduction in US

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Tax issues

Consider international transfer pricing rules

Consider federal tax and state tax

Sales in different states = paying tax in different states

You need good local advise and global tax strategy

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Lessons & conclusions

Do not underestimate geographic size Setting up takes 3x longer and cost 3x more as in

business plan!Good preparation on all fronts is keyCover your self against currency/liability risksFocus on long term and be patientSustained local presence is key in breaking the

transatlantic vicious cycle

If you succeed the rewards are great!

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Thank you for your attention!

Any questions?