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A Better Partnership

Ahead of the Curve Auto Supplier Blog

April 23, 2015

Foreign Companies Considering a U.S. Presence Need a Good Game Plan

With the SAE World Congress in Detroit this week, automotive executives from all over the world are getting a taste (some for the first time) of what the United States, and specifically Michigan and Detroit, have to offer. Many foreign-owned automotive companies already have a presence in the U.S. and new companies are setting up shop here on a nearly daily basis. If you work at a company that is considering a U.S. presence, it’s important to know there are multiple ways to accomplish this. Establishing a presence in the U.S. is not a one-size-fits-all proposition. Establishing a presence in the U.S. can take many forms:
  • Your company could test the waters by hiring a distributor or sales representative (or by contracting with an entity to serve that role) in the U.S. as a starting point for entry into the market;
  • If you want a larger presence, but don’t want to be solely responsible for U.S. operations, you could consider a strategic alliance or joint venture with a U.S. entity, or become a passive investor for a U.S. entity;
  • Companies more interested in “starting from scratch” could form a new U.S. entity that is affiliated (usually as a wholly-owned subsidiary) with such entity’s foreign operations;
  • Finally, acquisition of a U.S. entity is a way to enter the U.S. market and take advantage of established automotive supply chain relationships.
Determining whether to have a presence in the U.S., and what form it will take, can be a very fact-specific inquiry. Each of the options outlined above has inherent risks and requires a careful review of multiple considerations, including tax issues, labor matters, environmental concerns, economic incentives, corporate structure, intellectual property issues and many others.
The attorneys in our Automotive Industry Practice Group are well-positioned and have significant experience assisting foreign-owned automotive companies in working through these matters and settling on a U.S. presence that works best for them. Contact us and we will help do the same for you.

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