Regulatory and government-related support services are most commonly offered during the early stages of the establishment process. However, the qualitative research suggests that this support is useful and highly valued especially by foreign-owned companies as long as they are doing business in the U.S.
Examples of services in this category that are particularly valuable to foreign companies (navigating a system that is unfamiliar to them) include tax and intellectual property rights advice, complying with regulatory requirements or seeking government approvals, and support with legal issues.
Potential Activities
- Track and monitor relevant changes that might impact foreign-owned firms
- Provide referrals to address legal issues, including business incorporation and operational permits
- Assist in acquiring permission for facility development or expansion
- Assist new firms in understanding tax regimes and intellectual property rights
- Provide new-to-US managers with training to help adapt to US labor laws and work culture
- Assist with visas and work permits for foreign national executives, workers, and spouses
Examples
La Costeña, Faribault, MN
Faribault, Minnesota is a small city (25,000) located about an hour’s drive south of Minneapolis. For generations it was the home of Faribault Foods, a family-owned food packaging company with two facilities in the city. The Faribault Foods owners had a relationship with the owners of La Costeña, a family-owned business in Mexico, and decided to sell Faribault Foods to La Costeña’s owners in 2014. The community immediately reached out to the new owners and welcomed them to Faribault. The pre-existing relationship and warm embrace from the community increased the likelihood of a smooth transition and potential follow-on investment.
Shortly thereafter, during a Governor-led trade mission to Mexico, representatives from the state Department of Employment and Economic Development met with La Costeña ownership and learned about an effort to reinvest in the plant. The community rallied around the reinvestment plan and worked to make the process as seamless as possible, including holding joint meetings to increase the efficiency of the permitting process. Ultimately La Costeña invested more than $120 million in a state-of-the-art facility that will see the growth and diversification of the business in the community. Today, the company employs over 600 in Faribault.
Santa Clarita Valley (CA) EDC
Santa Clarita Valley took a very proactive approach to providing useful information to investors by publishing a Soft-Landing Toolkit, which provides several relevant chapters on assistance with regulatory and government-related services. This includes Capital and Banking (Chapter 6), Human Resources and Employment Law (Chapter 9), Immigration Law (Chapter 10), Taxation and Liability (Chapter 12), and Legal Considerations (Chapter 13).
Imperial Valley (CA) EDC
Imperial Valley EDC covers a large, mostly rural area located within 2-4 hours of both San Diego and Los Angeles. IVEDC CEO Tim Kelley sees great value in fostering connections between businesses (including FOEs) in the region and resources available in the big cities. To develop those relationships, he regularly invites representatives from federal and state agencies to update local businesses on changes in government policies and procedures as well as new programs that may reduce their cost of doing business or encourage expansion. Recent programs have addressed procurement, new incentives, services available from USDA Rural Development and US Commercial Services, tax credit programs, and SBDC services.
Investissement Québec
The Québec investment promotion agency regularly provides a dedicated contact to facilitate networking opportunities with government officials and provide strategic advice. Working with Morgan Stanley, Investissement Quebec kept firm leadership aware of changes to relevant policies and programs. Investissement Québec also facilitated meetings with local companies, which contributed to the firm’s decision to expand in the local market by hiring additional developers and engineers. By late 2016, Morgan Stanley employed nearly 1,000 people at its Montreal facility, more than twice the number initially projected for the location.
DeskItalia
Ecorys Netherlands reports (p. 89) that, in 2012, Italy initiated a new way of cooperation in the pre- and aftercare activities of the 20 regions and the central authorities in Rome engaged in FDI promotion. The pre-care part of the cooperation focuses on the regions to prepare the grounds and to reduce regulatory obstacles that emerge at the local level once a foreign investor comes in. With regard to aftercare, DeskItalia is to ensure that foreign investors’ reactions to policy changes are communicated to policymakers at the national level.
Resources
Steve Olson, O’Melveny & Myers LLP, “Foreign Direct Investment into the United States.” This 2013 power point presentation, while outdated in its presentation of FDI trends and the prior Administration’s priorities, contains other useful information on a variety of topics relevant to aftercare and supporting investors on legal and regulatory issues. Specifically, it highlights legal considerations in FDI (slides 19-21), antitrust considerations (slide 23), Foreign Corrupt Practices Act & Bribery (slide 24), labor laws (slide 25), intellectual property laws (slide 26), and mitigating political and legal risks (slides 31-33).