4 Threats facing US companies in a post-American world
The threats to U.S. businesses today are bigger and far more complex than they were in the 1980s, when the U.S. was in fierce competition with Japan. Now it is no longer Japan, but many emerging countries that are developing strengths and capabilities in areas such as technology, manufacturing and financials, which have been at the heart of the U.S.’s dominance in the past.
Previous blog posts have addressed the strengths, weaknesses, and opportunities of starting and growing technology-driven businesses in the U.S. In the fourth and final part of this series, we examine the threats. What are the threats that U.S. businesses face in the post-American world?
- Corporate Taxes. The U.S. has one of the highest corporate tax rates in the world at 35%, not counting discounts and write-offs. By comparison, the corporate tax rate in Brazil and China is only 25% without exclusions. The ease with which businesses can move at least some of their activities from country to country has made investment decisions more sensitive to differences in tax rates. As profit margins continue to shrink in the U.S., differential tax rates will drive more companies toward moving some operations overseas as a cost-saving measure.
- Healthcare Costs. The World Economic Forum’s Global Competitiveness Report for 2011–2012 states that except for the U.S., every one of the top 10 competitive nations in the world have implemented universal health care programs. Yet the U.S. spends more than 17% of its GDP on health care, higher than any other developed nation. Furthermore, employer-funded coverage is the backbone of the U.S. health insurance system. Health care is the most expensive benefit that many U.S. employers pay, which puts them at a substantial competitive disadvantage in the global marketplace.
- Reverse Brain Dain. For the better part of the last century, thousands of highly-skilled immigrants came to the U.S. to study, and then stayed on to work for or establish companies that contributed to the nation’s bottom line. Now, rising economic opportunities, lower operations costs, and access to local markets are compelling today’s foreign-born graduates to return to their home countries. And even for those who choose to stay, the U.S.’s immigration policy is an obstacle. For example, according to the National Foundation for American Policy, the wait time for permanent resident status in the US for educated workers is 5 years or more.
- Flat World. Advances in networking and information technologies have ensured that a U.S. business’s competitors could be anywhere in the world, with access to the same pool of resources and expertise. As a result, clients now have a wider range of options to choose from, many of which come at a lower cost that what U.S. businesses can offer. In 2004, a report published by the Urban Land Institute and the Columbia Business School’s Paul Milstein Center for Real Estate predicted a cumulative loss of another 3.3 million knowledge-based jobs in the U.S. by 2015.
The good news is that while there are threats in every market, they also present potential opportunities. In the case of the global marketplace, U.S. businesses can pursue collaborations with foreign-born, U.S.-educated professionals who are now sowing American knowledge and skills abroad (for a personal success story, read an earlier blog post on global tribes). Indeed, the business and educational contacts that these professionals have made during their stay in the U.S. can spark more cross-continental collaborations and parallel growth.
If businesses like BRI are to be successful, it is critical that we not only work through these threats, but recognize and take advantage of the associated opportunities. At BRI, we do this by being diligent in our market and scientific research, establishing mutually-beneficial relationships with partners in emerging markets, and actively monitoring needs within the global food production chain that we could help address.