2002 Speeches
Doing Business in the United States
Franklin L. Lavin - U.S. Ambassador to Singapore
November 21, 2002
Allow me to thank IE Singapore, and Morrison & Forester for inviting me. I spent a number of years in banking between my government assignments, and the question of new market entry was perhaps the most important strategtic question companies faced. Which markets should a company enter? On what basis should that decision be made?
This is an auspicious moment to be looking at this subject because our two countries just finished negotiations for a Free Trade Agreement (FTA) yesterday. This is a substantial step ahead in business opportunities for each country, offering both of us a range of best practices, some quite innovative. With the FTA, the U.S. will stand as perhaps the easiest market in the world for Singaporeans to enter, at least from a regulatory point of view. This still leaves you important commercial questions to be dealt with in deciding whether to enter the US market or not, of course, but two FTA initiatives -- zero tariffs and visa preferences -- should be considered when making your decision.
I'm actually a bit ambivalent about this speech, because it is not for me to say whether you should or should not be in the U.S. market. Logic suggests that there are some in this room who probably should be in the U.S., while there are probably others who need to wait a bit. The point is this: I am not helping you, and I am not helping my country, if I indiscriminately encourage people to participate in the U.S. market, and failure is the result. We want you to come to the U.S., but only if there is a reasonable prospect of success. In my opinion, the most important part of targeting a new market is how you ask the questions, how you establish the criteria. If there is integrity to your approach, you should be indifferent to which country is selected - because you know that you are targeting the most promising market.
Francis Bacon said something that sounds almost Confucian, and perhaps that's why I like it. "If you start your journey with questions, you will end up with certainties. But if you start your journey with certainties, you will end up only with questions." So my first bit of advice is, "Let's think about how to ask the question." Business people must be governed by rationality. Make your decisions by the numbers, not by impulse. Look at data and not anecdotes. Guard against personal preferences.
You want to make a decision in such a way that you are allocating your resources against the prospect for appropriate risk adjusted returns. Thus the first step in sizing up a potential overseas market is to size up yourself. In a sense, strategic planning is a somewhat introspective exercise. What is the analytical framework you will adopt to help you think through prospects in foreign markets? What resources can you bring to bear? What additional costs are associated with new market entry? What management complexities are involved in a new market? What is the competitive environment in the new market?
If the U.S. does not end up high on your list after you finish this process, that is perfectly fine. It probably just means more growth is in order before you take a crack at the U.S. market, or the product slate needs to be modified, or perhaps some other adjustments need to be made.
But I suspect for many companies represented here, the U.S. will end up high on their list of attractive overseas markets. Particularly if a company has already enjoyed some international expansion and demonstrated the capability to deal with foreign markets, the U.S. comes quickly into focus.
It is up to you to assess how these opportunities and challenges should be weighed in your particular situation. But the good news is that IE Singapore is here to help. Across the Singapore government there are other sources of information and advice. We will be launching in a moment this marvelous book, which in my view should not be saved for in-flight reading on your trip to California.
We can quickly reflect on why the U.S. is usually the first or second export market for Singapore. It is not just the staggering size of the market, with almost one-third of the world's GDP. It is also the fact that its easy for Singaporeans to operate quite effectively in America. Both nations are former British colonies, predominantly English speaking, with similar business practices. There is a high degree of cultural familiarity among Singaporeans for the U.S. And the U.S. has a high appetite for innovation, and an openness to foreign manufacturers.
We have to be honest in this discussion and observe that the U.S. has attributes that Singapore business people might find uninviting. The sheer size of America can be daunting. The robust popular culture can be intimidating to Americans, as well as to the usually more reserved Singaporeans. The distance from Singapore, the time zones, and the jet lag, can all make U.S. operations less inviting. And a mature and successful business sector can make not only for a promising customer base, but also for powerful competition.
Let me close by leaving you with this final thought. We can call to mind business people, not too different from all of you, who had to grapple with similar challenges over the past decade or two. I am thinking in this instance of some U.S. firms, but they could just as well be from Singapore or some other market. These are people who began with little more than a product, or an idea and were able to take that idea and conquer America with it. We can think of Dell Computers, FedEx, Starbucks, CNN, and Microsoft as companies that, after false starts and missteps, were able to enjoy unparalleled success. They prospered, not in spite of America's distinctive business environment, but because of it. Because not only does the U.S. have the largest and most competitive market in the world, but it also has the best marketing channels, best logistics and distribution networks, and best financing capabilities. In short, if you are ready to step on the gas pedal, there is no other market like America. We would be delighted if you were to come visit, and bring your business with you.
To IE Singapore, to Morrison & Forester, thank you for inviting me to come by today. It has been a pleasure to participate in your seminar.