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Mexico’s Release of its National Cluster Map: a Testament to the Strength of the U.S.-Mexico Partnership

July 28, 2016

Leslie Wilson is the Mexico Desk Officer for the U.S. Department of Commerce

A neighbor, an ally, and our third-largest trading partner: Mexico – and its relationship with the U.S. – has never been more important. As part of the ongoing work to reinforce that relationship, Mexico has published a new and innovative National Cluster Map, which identifies areas for investment and job creation and enhances regional economic development between the United States and Mexico.

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Mexico-US flag

On July 22, 2016, in conjunction with Mexican President Enrique Peña Nieto’s visit to Washington, D.C., the Mexican government released the map as a free, open website available to the public around the world. During his visit, President Peña Nieto met with U.S. President Barack Obama and Department of Commerce Secretary Penny Pritzker, among others, to discuss ways to continue strengthening the U.S.-Mexico relationship. For example, as Mexico is the United States’ third largest trading partner, $1.5 billion in trade crosses our border every day.

The site, a key milestone of both governments’ efforts to increase North American competitiveness, is a component of the U.S.-Mexico High Level Economic Dialogue (HLED). Through the HLED, the Innovation Cluster Subcommittee of the Mexico-U.S. Entrepreneurship and Innovation Council (MUSEIC) – in collaboration with Mexico’s National Entrepreneurship Institute (INADEM) and the U.S. Department of Commerce’s Economic Development Administration (EDA) and International Trade Administration (ITA) – has worked to develop binational, compatible cluster maps that identify geographic concentrations of interconnected companies, suppliers, service providers, and associated institutions that are present in the United States and Mexico.

The U.S. and Mexican maps can be used to enhance regional economic development by identifying an area’s assets and creating important connections between the public and private sectors. They can also be used by innovators working in similar sectors and spaces to share best practices, identify opportunities for public investment, and serve as a framework for understanding drivers of private investment and job creation.

Cluster Mapping as a Tool for Regional Integration                                     

According to U.S. Assistant Secretary of Commerce for Economic Development Jay Williams, “The Mexico National Cluster Map is essential for understanding the competitive landscape of North America and facilitating regional collaboration. The U.S. and Mexican maps will help regions work together to capitalize on assets and discuss best practices in economic development, policy, and innovation.”

To further the goal of regional integration, President Obama, President Peña Nieto, and Canadian Prime Minister Justin Trudeau committed to establishing a broader North American Cluster Map at the most recent North American Leaders’ Summit held in June to best display synergies among the major regional economies. The development of Canada’s cluster map will be the next step in achieving this goal.

EDA, in partnership with Harvard University, runs the U.S. Cluster Mapping website, which offers a member directory that profiles cluster initiatives throughout the country and provides statistical and visual data that assess business environment characteristics.

How Mexico Created Its Map

Mexico’s cluster map was developed by Mexico’s Statistics Agency (INEGI) based on 2014 census data, the latest cluster definitions  by Michael Porter, Scott Stern, and Mercedes Delgado (also used in the U.S. map) and the location quotients of the country’s 32 states. It combines the Porter, Stern, and Delgado methodology using employment and occupation data, and the Monterrey Institute of Technology and Innovation (Tec de Monterrey) methodology adopted by INADEM to identify strategic sectors in Mexico. Mexico has undertaken a data alignment and cluster definition matching exercise so the data can be used and analyzed in a binational fashion, ensuring the compatibility of the information provided in the U.S. and Mexican maps.

“Mexico has convened key stakeholders of government, academia, and private industry to develop its Cluster Map and a global strategy for Cluster Development,” said Enrique Jacob, President of INADEM. “The map helps to identify smart specializations, promote private industry investment, support new public policies in innovation, and foster global value chains.”

Dynamic initiatives such as the U.S.-Mexico binational cluster mapping project offer a powerful knowledge-based tool that can generate clear, positive outcomes for government, industry, academia, civil society, and entrepreneurs. Specifically, the U.S and Mexican cluster maps provide reliable data essential to foster regional and global value chains, support investment decisions, and enforce data-oriented public policy. In fact, a full 40 percent of the content of Mexican exports is comprised of U.S. inputs. This means that of all the products Americans purchase that are manufactured in Mexico, about 40 percent of those products’ value-added components are made here in the United States. This reflects the highly integrated nature of our bilateral value chains.

The compatibility of the U.S. and Mexican maps is also a critical step toward the development of cross-border  economic development strategies that can help drive the sustainable, long-term economic vitality of urban and rural communities along the U.S.-Mexico border.  And most importantly, these maps underscore the importance of using innovative tools to best leverage our connections to create jobs in both countries and across the region.

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Ensure International Clients Can Find You – Website Globalization

July 27, 2016

Michael Waters is an International Trade Specialist for the U.S. Commercial Service office in Atlanta

In this digital age, a website is a necessity for any business of any size across all industries. A company’s website speaks about the organization and should be viewed by management as a virtual introduction of products and services offered to prospective customers.

However, working with international customers presents its own unique set of circumstances, especially when it comes to websites. For example, is there a link for international sales inquiries on your company’s website? And if so, what details are you requesting? What does your site look like on a mobile device or when translated into a foreign language? These are a few questions that every organization needs to consider when designing a website that offers a product or service for international customers.

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Ensuring your company’s website is user-friendly can attract customers from abroad.

Globalizing your company’s website does not have to be overly technical. This article will provide a few easily implementable suggestions that anyone can apply, with the ultimate goal of increasing international sales.

One of the simplest steps a company can take to attract international clients is to ensure that foreign visitors know your company is interested and open for business. But you need to have more than just an “international sales” email address listed on the “Contact Us” page. While a direct email address is an important feature, having a specific page dedicated to International Inquiries is a best practice. Be sure that the information collected there is relevant, like removing ZIP codes and correct formatting of telephone numbers or addresses. An open field text box is generally a good way to go.

We also live in a world with a growing mobile workforce. Your company’s web presence should be mobile compatible. Not only is it an important aspect for international business, it also makes sense for your domestic customers as well.  Google reports that 61% of users are unlikely to return to a mobile site they if had trouble accessing it (McKinsey 2014). Work with your website service provider to ensure mobile compatibility is enabled, works properly, and that the content is limited to the most important information.

Turning now to search engines: Most of us domestically use Google or Bing, and there may even be a few still using Yahoo!. But does your company consider international search engines? Ever heard of Baidu, Yandex or Naver? If your sales team is trying to attract customers from China, Russia, or South Korea, then these need to be on your radar. According to ReturnOnNow.com, in 2015 Baidu had an impressive 55% share of all internet searches in China, with Yandex capturing 58% of the Russian market, and Naver with more than 77% of South Korean online searches . While Google maintains the majority share in Japan, Yahoo! Japan maintains 40% of internet searches. When targeting a specific market or region of the world, ensure that your company will be found when customers come looking by registering your company’s site map with the search engines in your target markets.

Speaking of site maps: Does your company’s webpage have one? A site map is an XML file that search engines use to “read” what is on your webpage and impacts where your company is listed on a search results page. If looking to grow your visibility internationally, it is important for your company to register the site map with popular search engines used in local markets. Site maps also exist as HTML files and can allow for quick navigation – important for customers in a developing market accessing the internet on a pay-as-you-go basis.

Finally, companies may be tempted to translate webpages to attract international customers. While this is logical, it is important to do so properly, generally by professional translation firms. Your website should be free of spelling mistakes and grammatical errors. However, translation services can also be an expensive investment, especially if you translate your entire website; therefore, including a Google Translate link can be a more affordable option. If mistakes are made, an international visitor will know that it is most likely due to the translation software, and not the company. If your company has a few target markets, we recommend translating an introduction page (often a combination of the home page and “about us” page) so that foreigners from those markets can find your website when searching in their native language.

While these might seem like small details, they can make a lasting impression on a potential international customer, and result in a sale. With 95% of the world’s population outside of the United States,  it is important that your website reflects your interest in international business. Your local U.S. Commercial Service Export Assistance Center and Trade Specialist can help ensure that your international web presence works to assist your international expansion. Visit www.export.gov to find your local office and for additional information.

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Doing Business in Brazil’s Retail Sector in the Digital Age

July 21, 2016

Mindi Hertzog is a Commercial Officer and Heros Iarossi is a Commercial Clerk with the U.S. Commercial Service in São Paulo, Brazil.

Even as political turmoil, the Zika virus, and the Summer Olympics make headlines, Brazil still stands as one of the world’s largest economies – and one of the most important trading partners for the United States.

In our capacity with the U.S. Commercial Service, we recently attended the sixth annual Brazilian Retail Week, held June 27-30 in São Paulo. We had the honor of listening to and interacting with more than 150 corporate and industry leaders and experts about challenges, opportunities, and trends in the Brazilian market.

Crowded and colourful shopping street.

Shopping in Brazil

The biggest buzz at the event focused on the need for retailers to be aligned with younger consumers, a group labeled as “millennials.” These consumers display different purchasing patterns than more traditional consumers. Most critically, retailers must utilize digital technology in order to adapt to this new kind of customer, presenting both enormous challenges but also enormous opportunities. Retailers must be located where their customers are – with significant presence on the internet and on social media platforms, like Facebook, Twitter, and Instagram.

According to one of the speakers, this “tap & pay” generation in Brazil does not like to stand in lines or carry bags, and many times, knows the product better than the seller. Others discussed trends including the startup economy, “omni-channels,” seamless shopping experiences, cross-border e-commerce, and the need for retailers to personalize the shopper experience.

It is clear that success in the Brazilian market requires companies to constantly innovate, especially in the digital space. A major theme throughout the two-day event was innovation in the U.S. as a model for Brazilian retailers. This provides a huge opportunity for U.S. companies in technological sectors – from marketing to cloud software to mobile apps– looking to do business in Brazil.

The International Trade Administration (ITA) helps U.S. companies find and capitalize on these opportunities. One important upcoming occasion is for businesses to join ITA at the U.S. Department of Commerce-certified LATAM Retail Show in São Paulo, Brazil, running August 23-25. This is one of the most high-profile events within the retail, franchising, mall, and e-commerce sectors in Latin America. There will be upwards of 280 exhibitors and 20,000 participants, including high-level executives and decision makers from major retailers. ITA will work to find partnerships and opportunities for American companies who take part in the delegation, including meetings with top industry professionals, social media exposure, and technical advice.  If you would like to join ITA at LATAM or learn how the U.S. Commercial Service assists businesses in Brazil, please contact the US Commercial Service in Brazil or your nearest Export Assistance Center.

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Vietnam: a Land of Opportunity for U.S. Exporters

July 20, 2016

Stuart Schaag is a career Foreign Service Officer with the U.S. Commercial Service.  He currently serves as Senior Commercial Officer at the U.S. Embassy in Hanoi. Barbara Banas is an International Trade Specialist with the Office of ASEAN and the Pacific Basin, where she covers Vietnam. She is based in Washington, D.C.

Before you keep reading, let’s conduct an experiment. Open another page on your internet browser and type the word “Viet” into the search bar. What was the first term that came up from the autofill function? It wasn’t “Vietnam”, was it? More than forty years have passed since the end of the U.S. conflict with Vietnam, yet our old ghosts still linger, revealed in our internet algorithms. As Pulitzer Prize winning author Viet Thanh Nguyen stated, “Vietnam is a country and not a war,” a fact that many U.S. companies are learning as they seek out new export markets. We like to think that Vietnam is not a war and not just a country, but an opportunity.

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Vietnam

Since the United States and Vietnam renewed diplomatic relations in 1995, our commercial relationship has grown exponentially. The United States is now Vietnam’s largest export market and a major source of foreign direct investment. Conversely, in 2015, Vietnam was the United States’ fastest growing export market (up over 23% from 2014) among new TPP partners, demonstrating the increasing demand for U.S. technologies and goods. Moreover, in Asia, Vietnam’s average annual economic growth rate of well over 5% over the past 25 years has been second only to China’s. After rebounding from the doldrums of the last decade’s global financial crisis, Vietnam has regained its luster as an investment destination and lucrative export market. Last year closed with the economy back in full swing, buoyed by GDP growth of over 6%. What does growth like this mean for Vietnam’s future? The recent joint World Bank and Ministry of Planning and Investment study, Vietnam 2035, states that “growth rates in this range would produce by 2035 an upper-middle income country on the cusp of high income – at the level of Malaysia or the Republic of Korea in the mid-2000s.”

Vietnam offers many opportunities to U.S. exporters. With a population of over 90 million, Vietnam is filled with young, tech-savvy consumers (median age is just 29). According to a 2013 study by the Boston Consulting Group, Vietnam represents the fastest growing middle class in the region.  In fact, Vietnam’s middle class is predicted to double by 2020, exceeding 30 million consumers. We are already experiencing the benefits of this rising middle class. In 2015 there were over 18,700 Vietnamese students studying in the United States. That same year, over 85,000 Vietnamese travelers visited the United States, representing the largest growth in Asia (up over 30% from 2014).  Vietnam is now ranked among Asia’s top 5 retail markets. Consumer confidence is among the highest in Asia, where more than 90% of residents in Ho Chi Minh City consider themselves to be part of the middle class, a response rate higher than in Singapore, Jakarta or Kuala Lumpur.

That is Vietnam today. As a member of the Trans-Pacific Partnership (TPP), the Vietnam of tomorrow will be further transformed. There is no doubt that Vietnam stands to gain the most out of the 12 TPP member countries. According to several economists’ estimates, the TPP Agreement could increase Vietnam’s exports by about 30% by 2025 and raise GDP by more than 10%. Why should U.S. exporters care? Because a more prosperous Vietnam means a better market for American products. The TPP will further open Vietnam’s market to U.S. companies, as the country has agreed to reform its state-owned enterprises, adopt stricter environmental standards, and permit workers freedom of association. Upon entry into force, 88% of U.S. non-agricultural exports to Vietnam will be duty free (our handy FTA Tariff Tool can help you identify how your products will benefit).

Let’s look at cars as an example. Under the TPP Agreement, 98.1% of U.S. auto parts exports will be eligible for immediate duty-free treatment in the new TPP markets, and all remaining tariffs will be eliminated over time. Considering that automotive sales in Vietnam were up 40% in 2014 and the ownership rate is still among the lowest in Asia, this is a great example of how opportunities created by Vietnam’s growth, linked with the implementation of the TPP, make Vietnam such an exciting market for American exporters.

Americans visiting Vietnam are often astounded by the chaos of this country’s traffic. They stand speechless as a never–ending sea of motorcycles seamlessly weaves in and out of traffic, seemingly oblivious to those behind them. They point incredulously at the scooters driving into an intersection without a second glance to see if the way is clear. How can this be? The unwritten rule of the road in Vietnam is: the driver in front always has the right of way. This driving culture is but a window on the Vietnamese ethos – always look forward. The young Vietnamese you will encounter in the cafes, clubs and streets of Hanoi or Ho Chi Minh City are excited for what the future holds. Born long after the war ended, they see America as their best ally and a country to emulate. They believe their future is linked to ours, and hope that we believe the same.

For more information on new U.S. export opportunities in Vietnam under the TPP please see our Vietnam TPP factsheet.  Additionally, to find out more about best prospect sectors in Vietnam, please see our Country Commercial Guide and Top Market Reports. We invite U.S. exporters interested in exploring the Vietnamese market to contact us.

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ITA Releases Smart Cities Guide

July 14, 2016

Vinay Vijay Singh, Senior Advisor, Global Markets, Urbanization & Infrastructure

A successful economy lays the foundation for a successful city, but the city must be able to keep up with an evolving economy to maintain overall success. Global trends show the world is spending far less on infrastructure than is required to contend with the rapid pace of economic development. A Smart Cities movement has risen to address the forces of urbanization around the world.  The International Trade Administration’s (ITA) newly released Smart Cities, Regions & Communities Export Opportunities Guide highlights potential business opportunities for U.S. companies along with insights from other Commerce bureaus.

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The Smart Cities initiative was created to target federal resources to meet the needs of local communities.

Cities have been the center for commerce since bartering and trade first began. Smart Cities is a development mission aiming to monitor and promote urban sustainability, environmental cleanliness, citizen engagement, governance and critical needs in education and healthcare. The growth of a city places demand on its municipal government to address urban challenges in sectors such as water, energy, transportation and connectivity. Each of these industries represents opportunities to foster business partnerships and bolster prosperity.

The recent $160 million investment in federal research by the White House is aimed to help local communities establish solutions to key problems faced, including traffic congestion, fueling economic growth, managing effects from climate change, fighting crime and improvement of city delivery systems. This initiative is part of the President’s commitment to target federal resources to meet local needs and by providing leadership at a national level, this initiative is just one example of a Smart Cities vision and a huge business opportunity. The ITA continues the Obama Administration’s level of engagement by offering The Smart Cities Guide as another tool for U.S. companies to help make these connections and further expand their global export solutions.

The Smart Cities Guide incorporates Department of Commerce intra-agency smart city initiatives by combining in-depth information for export opportunities into four main categories: Access to Capital, Trade Promotion, Industry Sectors and Internet of Things (IoT). Many bureaus in Commerce are lending their thought leadership to help U.S. cities and businesses find unique solutions to global urbanization issues. ITA’s primary focus in the Guide is to serve as a trade promotion resource for U.S. companies looking to interface with local partners and government officials in markets with export opportunities.

This is the first edition of The Smart Cities Guide and as the U.S. government synthesizes its efforts to continue to elevate U.S. industry leading capabilities in this space, the ITA will look to publish its second edition later this year.  Come join our global teams at Discover Global Markets: Building Smart Cities in Chicago, November 1-3, 2016, to further explore opportunities in the smart city space.  For more information on the U.S. government smart city initiatives or services offered by the ITA, please email the team at smartcities@trade.gov and follow me @SmartCitySingh.

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Jobs Supported by Exports 2014: Product and Industry

July 13, 2016

Chris Rasmussen, a Senior International Economist in the Office of Trade and Economic Analysis, is the Team Lead for Quantitative Analysis and the author of several publications on jobs supported by exports.

The International Trade Administration has released a report detailing the jobs supported by exports by specific product and also within individual industries. This report joins earlier work estimating total U.S. jobs supported by exports, jobs supported by state goods exports, and jobs supported by exports by destination.

When thinking about the relationship between exports and jobs the natural tendency is to focus on the workers employed in the industry that produces the final product that is exported.  For example, a statistic for U.S. exports of chemical products may conjure up images of workers employed in chemical plants wearing hardhats and other protective gear.

However, products are not produced in isolation from beginning to end in a single industry, with the production of any product generally requiring the use of inputs from other industries.   As a result of these interrelationships between industries in the production process, the export of a product will impact employment in multiple industries in addition to the industry that produced the export.

In the chemical products example, the production and export of those products will not only affect employment in the chemical industry but also employment in industries such as petroleum and coal products, transportation and other services whose products are used by the chemical industry.

By the same token, production and employment in the chemical industry will be impacted not only by the export of chemical products but also by the export of agricultural products and products made of plastic and rubber that use products from the chemical industry as inputs in their production.

This report uses data capturing these interrelationships to look at the impact of exports on employment throughout the supply chain.  This report finds that as a group, manufacturing industries have the highest share, 26 percent, of their employment supported by exports. The report further finds that although 59 percent of all export-supported jobs are supported by the export of goods, 68 percent of all export-supported jobs are jobs located within service industries.  In fact, the report indicates that for every job within manufacturing industries supported by the export of manufactured products there is there is also a job supported in service industries by the export of those manufactured products.

To read the entire report and other jobs-supported by exports materials, visit the OTEA website: http://www.trade.gov/mas/ian/employment.

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Business Investment that Counts: Congratulations to Sofidel and Circleville, Ohio on New Groundbreaking

July 12, 2016

By Vinai Thummalapally, Executive Director, SelectUSA

Yesterday, I was honored to participate in the groundbreaking ceremony for Italy-based Sofidel Group’s first greenfield investment in the United States – a 1.4 million square-foot integrated paper manufacturing facility in Circleville, Ohio expected to create more than 300 jobs. With a speaker lineup featuring Ohio Lieutenant Governor Mary Taylor, Sofidel CEO Luigi Lazzareschi, Columbus2020 CEO Kenny McDonald, P3 Executive Director Ryan Scribner, and JobsOhio Senior Advisor David Mustine – the event clearly demonstrated the depth of community support and engagement for this project.

Groundbreaking

L to R: Tony Curtis, CEO Sofidel America, Simone Capuano, Sofidel Ohio project manager, Luigi Lazzareschi, CEO, Sofidel Group, Vinai Thummalapally, Executive Director, SelectUSA

My role was twofold – first, to welcome Sofidel on behalf of the U.S. government, and second, to congratulate the local community and recognize the vital, collaborative efforts of the state, regional, and local economic developers that helped transform this manufacturing opportunity from a vision to a reality. My observations following the event are below.

Sofidel’s $259 million commitment to Circleville – the largest private sector investment in the community in decades – was recently highlighted by President Barack Obama at the 2016 SelectUSA Investment Summit. It was a particularly meaningful occasion to recognize Sofidel – a world leading manufacturer of paper for hygienic and domestic use – because the Summit is where it all began.

Each SelectUSA Investment Summit is a unique opportunity for investors and those seeking investment to connect and explore the diversity of opportunities across the United States under one roof. Following meetings at the 2015 Summit, Sofidel welcomed Columbus2020, JobsOhio, and the Pickaway Progress Partnership to their facility in Italy. Shortly thereafter, the company’s planned Circleville facility was officially announced in November 2015, which culminated in yesterday’s groundbreaking ceremony. This investment milestone would not have been possible without the support and close collaboration of these dedicated regional and local economic development teams and the state government – and it is truly remarkable how it all came together.

In his remarks, the president emphasized that this project represents exactly the type of investment that the United States welcomes to our shores. The United States is consistently ranked among the best internationally for its overall competitiveness and ease of doing business – and today, Italian companies directly employ nearly 125,000 people across the country.

For companies like Sofidel, which has been making tremendous headway since entering the market in 2012, the United States offers a competitive platform for manufacturing and exports; a transparent, fair, and stable business environment; and one of the world’s most productive workforces.

At the same time, foreign direct investment in the United States creates high-paying jobs, spurs innovation, and drives exports – connecting American communities with global networks. This has a significant real-world impact on Circleville, and communities like it all across the country.

Win-win outcomes like these are why SelectUSA was created in 2011 to help companies considering establishing or expanding operations in the United States. We are proud to have played a role in bringing Sofidel together with these high caliber partners, and look forwarding to continuing to work with all parties towards the next key milestone of this project.

Congratulations and best wishes on the dawn of an exciting new chapter for Circleville and for Sofidel.

To learn how SelectUSA can help your community to attract international investment or assist your company to establish or expand in the United States, visit http://www.SelectUSA.gov.

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