The fact that you are considering an expansion into the European marketplace says a lot about you and your company. Smart. Successful. And wise enough to recognize you may not know everything needed to make the best possible location decision. It is also often wiser to manage your European business from Europe, rather than remotely from the United States.
We believe you will find this White Paper useful in understanding and navigating the many business factors that will influence your first foothold in Europe. It will cover the following factors:
After reading this, if you wish to look more closely at particular European countries, regions or cities, we invite you to visit www.nfia.com (the Netherlands Foreign Investment Agency) and use its online calculator tool to examine and compare up to 17 prime European business locations, using unbiased business facts and figures assembled by an independent business consultant.
Should the online calculator lead you to choose the Netherlands, please contact the Netherlands Foreign Investment Agency so we may assist you with site visits, detailed cost comparisons, introduction to local government officials, potential business partners, industry organizations, or any additional information, guidance or support you may require. Should the online calculator lead you to favor one or more other locations, please contact those countries' respective economic development agencies. Even if you do not select the Netherlands, we want to be sure you find the assistance you need to make your move to your location of choice.
Proximity to customers and prospects
Where are your markets, customers and clients located in Europe? Are they concentrated by region or industry cluster, or are they spread across the continent? If the majority is within one area, it makes sense to set up operations nearby. If you are an industry-related supplier or support firm, other like-minded companies are likely to be located there, too.
If your customers are found within a couple of countries or across Europe, you'll want to locate as near the center of them, to make travel as time- and cost-efficient as possible. Key to this decision will be the range of passenger transportation options available within or near the locations you may consider.
If you are distributing products, transit times are very important. There are more than 857 million people inhabiting 55 countries. If your products can reach them within 24 hours, you'll have a decided advantage. So be sure to compare the distribution and logistics infrastructures of the European locations you're interested in.
Also be sure to find your center of gravity. Here's why:
No matter where your markets are concentrated now, you must ask yourself: Will they sustain your business in the future? If you're not sure, you should look ahead to additional markets you may need to penetrate over the next five years in order to meet your growth objective. This is known as "finding your center of gravity." Take this longer-term approach to establishing your European base, and you may be able to avoid the cost and disruption of having to move again later.
Availability of qualified staff
For many North American companies going to Europe, recruiting and retaining employees with the right skills are their two most important concerns. If those employees will be in contact with customers, a well-educated population with a high degree of multilingualism and English proficiency will be advantageous. Countries with these employees in good supply include the Netherlands, Belgium, Germany, Ireland, the UK, France and Spain.
Labor costs are also a crucial consideration, and vary by title, vocation and country. European labor statistics may be searched easily on the Internet, or made available to you from the economic development agencies of the countries of interest. Most, such as the Netherlands Foreign Investment Agency, put workers' total hourly or annual compensation figures in terms of U.S. dollars for easier comparison. Look carefully, too, at each country's laws and regulations concerning worker contracts, hiring/warning/firing policies, union/ non-union stance, and policies regarding full-time and part-time and temporary laborers.
Try to avoid countries you deem to be overly protective of their workers, or where significant time is lost to labor disputes, strikes, sickness or slowdowns, even though their salary and benefits structures may be temptingly low. The best potential countries will have employee statistics that exhibit consistently higher rates of productivity, and attitudes that reflect flexibility and adaptability. This helps you hit the ground running and get your operations off to a smoother, more profitable start.
Cultural similarities to the United States
Just because the European employees you'll hire will speak English,
it doesn't necessarily ensure
Transportation and logistics
Think about how you and your employees will get to work each day. Do your locations of interest have dependable public transit systems? Are area roads and highways in good or poor condition, navigable or congested? How close are regional or international airports, and are enough carriers serving destinations that are important to you with sufficient frequency? Are there reliable passenger rail links to the cities and countries you need to reach? And be sure to factor in the travel time to and from air and rail connections.
Will you be importing, exporting or distributing products to customers in different markets? If so, you'll want to compare modes of freight transport within your potential business locations. If seaports are important, consider their size, reputations, capabilities and customs practices. Also consider their connections to inland waterways if needed, as well as the variety of shipping companies and third-party logistics service providers.
If you have goods or freight to ship by air, look for international airports with top rankings for annual cargo tonnage, on-time performance, customs efficiency and number of airfreight carriers. Annual ranking facts and figures can be sourced from such organizations as Airports Council International at www.airports.org and Air Cargo World's Air Cargo at www.aircargoworld.com/Air-Cargo-Excellence.
Rail freight service is constantly improving in Europe, with more countries accepting double stack container traffic and offering dedicated freight-only lines to reduce bottlenecks on main lines, reduce travel time and lower costs between destinations. Look for countries with strong rail/seaport interfaces. Also, since most cargos start out or reach their final destinations by truck, consider the roads, toll roads, highways, speed limits and intra-city connections of potential European locations for your business.
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