Newsletter – January 2019
Pictured: Miles Hansen, president and CEO of WTC Utah, and Saud Al Nowais, commercial counselor for the UAE to the U.S.
Last August in this column I shared some thoughts on how we might enhance Utah’s ecosystem for international trade. At that time, I expressed my ambition to connect with leaders from the Gulf Cooperation Council countries as well as with other key government officials and leaders from some of their companies, and then follow up with a trade mission to their region.
My hopes were partially fulfilled last month when we had the opportunity to host diplomats from the United Arab Emirates (UAE) for a business tour of Utah as well as to embark on an outbound trade mission to Saudi Arabia the following week.
On December 6 and 7, WTC Utah hosted Mr. Saud Al Nowais, commercial counselor for the UAE to the United States of America, and Jonathan Garon, director of commercial affairs for the Trade and Commercial Office at the Embassy of the UAE, for a business tour of Utah. Mr. Al Nowais, who represents the UAE’s economic, trade and investment interests in the United States, focuses his work on assisting countries in identifying mutually beneficial trade and investment opportunities. The UAE serves as the gateway to the Middle East and purchased more than $20 billion in imports from the United States last year.
Hoping to diversify their economy and, particularly, trade and investment with the United States, the UAE diplomats visited Utah to identify potential investment and partnership opportunities. In addition to meeting with more than 30 of Utah’s top companies in the energy, investment, tech and biotech industries, the diplomats met with Gov. Gary R. Herbert to discuss strengthening UAE-Utah ties through increasing trade, investments and visits between Utah and the UAE.
The visit by Mr. Al Nowais and Mr. Garon is a great example of the type of inbound trade missions we hope to do more of to foster international relationships and increase foreign investment. Mr. Al Nowais noted the state’s many parallels with the UAE’s own story while on the commercial fact-finding visit to Utah: “Under Gov. Herbert’s steady leadership for nearly a decade, Utah’s economy has not only boomed, but diversified across a myriad range of sectors – natural resources and clean energy, biotech and life sciences, and shipping and logistics – to name a few. The American spirit of innovation is alive and thriving in Utah, and the UAE looks forward to exploring the numerous opportunities we see for strengthened bilateral trade, joint-partnership, knowledge exchange and commercial investment.”
The following week I took a small group of Utah companies on a fact-finding mission to Saudi Arabia to explore potential Utah-Saudi trade and investment partnership opportunities and to lay the groundwork for a future visit to Utah by Saudi investors and a larger outbound trade mission from Utah to the region. On a whirlwind stay in Riyadh, we met with the Saudi Arabia General Investment Authority, the Ministry of Health, the Saudi Agriculture and Livestock Investment Company, the Prince Mohammed bin Salman bin Abdulaziz Foundation (a non-profit tasked with increasing innovation and entrepreneurship in Saudi Arabia), a leading tech incubator, leadership at the U.S. embassy and several prominent Saudi business families. During these meetings, we discussed potential partnerships on everything from exporting Utah alfalfa to Saudi Arabia (Saudi Arabia will need to increase alfalfa imports by 3-4 million tons next year) to partnership investments from Saudi Arabia into Utah tech companies expanding into the Gulf region. I expect a return visit to the UAE and Saudi Arabia in early 2019 and hope to lead a large Utah delegation to the region later in the year.
I see immense opportunities to develop strong commercial, educational and cultural ties with Gulf Cooperation Council countries. Like Utah, they are working to diversify their economies and to expand their strategic partnerships. Utah’s economic success creates attractive opportunities for us to showcase the state to diplomatic and business leaders from other countries. Hosting the UAE diplomats and connecting with top officials in Saudi Arabia marked exciting first steps. The real work is now just beginning as we follow up with all parties involved to identify and support new partnership opportunities.
I hope you will stay connected with us through social media, this newsletter and our website as we announce future inbound trade missions, which are integral to our international engagement strategy.
Going Global: Maxtec LLC
Salt Lake City-based Maxtec LLC, a leader in oxygen analysis and delivery products for more than 15 years, joined World Trade Center Utah in November for the MEDICA Trade Fair in Düsseldorf, Germany.
MEDICA is the world’s largest event for the medical sector and has dominated the market for more than four decades. The latest fair attracted more than 5,100 exhibitors from 70 countries. Each year, leading individuals from the fields of business, research and politics grace the top-class event alongside tens of thousands of national and international experts and decision-makers from the sector.
Maxtec, a manufacturer of replacement oxygen sensors and SpO2 probes compatible with all major applications in the market, joined four other Utah companies to participate in the MEDICA Trade Fair with support from the STEP Grant awarded by WTC Utah. STEP is funded in part through a grant with the U.S. Small Business Administration. The other Utah companies attending included BioPharm Laboratories LLC, PenBlade, Inc., ScyTek Laboratories, Inc., and Summit Medical Products, Inc.
With a world-wide customer base, Maxtec is well-known for its oxygen analyzers and monitors in both medical and non-medical applications. The company’s range of products also include pulse oximeters, neonatal products, air-oxygen mixers, ventilator and ventilator support products applicable to the hospital, homecare and anesthesia markets. During the MEDICA Trade Fair, Maxtec leaders held numerous meetings with current and prospective customers and partners to discuss its present and future business strategy, provide product training and demonstrate new products.
In a post trade fair follow-up, Maxtec reported to WTC Utah that MEDICA was a very productive fair. It allowed the company to meet with multiple partners from across the globe to discuss training, strategy and planning. What’s more, Maxtec achieved significant product sales while at the fair and expects its annual sales to grow more than 10%, primarily with expanded sales to India, Japan and China, because of its participation as part of Team Utah at MEDICA. The trade fair also provided a significant opportunity for the company to discuss upcoming barriers and current regulatory requirements, and to be introduced to regulatory consultant companies that could offer advice as Maxtec pushes to add new countries to its export list.
In another exciting MEDICA-related outcome, Maxtec was awarded a new partnership with Fisher & Paykel – India, which will account for additional revenue growth over the next 12 months in both India and Japan. Company leaders note that pricing negotiations are complicated in these regions, which see many low-cost devices from China. By adding value in other areas, Maxtec was able to compete with local products and win a very promising partnership with FPH – India.
Founded in 1991, Maxtec is located at 2305 South 1070 West in Salt Lake City, where it is led by Bruce Brierley, co-owner, president and chief executive officer. The company moved to its new, 58,000 square-foot manufacturing and corporate facility in 2015. Located on a seven-acre site, Maxtec is only five minutes from downtown and the Salt Lake City International Airport. The company employs 90+ people and provides each of its worldwide customers with unwavering passion, unconditional trust and integrity, and the highest level of service. For more information visit maxtec.com or call (800) 748-5355.
Market Highlight: Ireland
The following information regarding Ireland was provided by Export.gov.
The Emerald Isle has been the European Union’s highest and best-performing economy four years running, thanks to a revitalized domestic economy and a strong export sector. GDP in Ireland increased by an underlying 7.8 percent in 2017.
The United States and Ireland enjoy a close cultural affinity and longstanding political, economic and commercial relations. The U.S.-Ireland commercial trade and investment relationship, worth $720 billion, is significant by international standards and is particularly impressive given the country’s population of only 4.76 million people.
In 2017, U.S. exports of goods to Ireland exceeded $10.8 billion and included chemicals and pharmaceuticals, computers and electronic products, aircraft and transportation equipment, power generation technology, medical devices, electrical equipment and travel and tourism. The most recent statistics for services from 2016 record the value of U.S. service exports to Ireland at $46.6 billion.
The over-sized U.S.-Ireland investment relationship is particularly noteworthy. The total stock of U.S. investment in Ireland reached $446.4 billion in 2017. More than 700 U.S. firms have operations in Ireland, which currently employ 155,000 people representing 20% of total employment in the country and supporting another 100,000 jobs indirectly.
In 2017, Ireland’s total investment stock in the U.S. was valued at $147.85 billion, making Ireland the ninth largest source of foreign direct investment (FDI) into the U.S. Irish firms employ more than 100,000 in the U.S. in more than 450 companies across a wide range of sectors, such as agri-food, construction, ICT and professional services.
With a GDP of $345 billion in 2017, Ireland is one of the most open FDI and export-driven economies in the world. Ireland remains a wealthy country and a net exporting nation with a per capita GDP in 2017 of $72,485.
Ireland’s economy was forecasted to grow between 5 and 7 percent in 2018, based on an expected increase in exports and solid domestic spending and demand. Estimates for 2019 growth are uniformly lower, although still robust, in part due to the unknown impact of Brexit on the Irish economy.
The U.S. Embassy in Dublin works closely with local partners, such as the American Chamber of Commerce, Irish Exporters Association, Irish Business & Employers Confederation, Enterprise Ireland and other Irish government and national agencies, together with local business associations, to advance the U.S.-Irish economic relationship and forge joint prosperity on both sides of the Atlantic.
According to Irishcentral.com, some key points about the benefits of doing business in Ireland include:
- It’s an ideal entry point for businesses seeking access to the European Union.
- Businesses with operations in Ireland benefit from barrier-free access to the EU’s 28 member countries and its four freedoms – free movement of goods, capital, services and people.
- Ireland has one of the world’s lowest nominal corporate tax rates, 12.5 percent for active businesses.
- Ireland has a median population age of 35, which is the lowest in the EU, and a higher percentage of post-secondary graduates than the U.S. or the United Kingdom.
- Data protection laws are stricter than those in the U.S., however, there isn’t any legislation in Ireland that protects know-how, trade secrets or confidentiality. Furthermore, IP ownership must be specifically established by contract.
- Ireland also provides a 25 percent research and development tax credit for undertaking new and/or additional R&D activity in Ireland.
Toolbox: Tip #10 Part 3 – Tariffs and Taxes
World Trade Center Utah’s “10 Tips to Help you Think, Act and Succeed Globally” provide a deeper dive into topics that will help as you pursue international business opportunities.
Our tenth tip emphasizes maximizing your profits by understanding export costs, the skill of payment negotiation and how to get paid on time. Part 3 details extra costs that may be applied to your product when it is shipped internationally. All additional costs to you as a seller will increase the cost of your product to your foreign buyer and may affect your competitiveness in the market.
Tariffs are taxes collected on imports or exports. Tariffs are specifically intended to guard a local economy by discriminating against foreign goods. Additionally, tariffs may not be applied equally to each exporting country, affecting competitiveness. Tariffs can be quite high for this reason. Tariffs are collected at the time of customs clearance in the foreign port. Tariffs will need to be considered both in your international pricing strategy and in your market selection process.
The US does have free trade agreements with 20 countries which can be found on this page on trade.gov. Countries that have free trade agreements can buy or sell goods amongst each other without tariffs. As an exporter, it is advantageous to sell to these countries because they are more likely to have a competitive advantage in cost to your buyer. Resources for determining your tariff rate outside of free trade agreement countries can be found here. Remember that any figure calculated is only an estimate as tariffs are determined by the foreign buyer’s Customs.
In addition to the tariffs, national sales and local taxes will often be charged on goods. National taxes are commonly referred to as value-added taxes or national consumption taxes. These taxes are applied generally to consumer goods at a standard rate, unlike tariffs which target specific goods. Importers are responsible for paying these taxes once goods are cleared through customs. As costs increase for your foreign buyer, they are less likely to buy your goods and choose local products or products produced in a country with lower taxes.
For more information, or for any other help with your international expansion efforts, please contact the WTC Utah Trade Services Manager Jim Porter at firstname.lastname@example.org.
|Jan. 8||Taking Utah Tech to the World|
|Feb. 3-6||ISPO Munich|
|Feb. 12||World Leaders Lecture Forum: Vicente Fox|
|Feb. 26 – Mar. 3||Avalon|