Exploring Benelux Ventures
In this chapter the initial research findings are presented and a comparison is made to the results from the 2020 DVITUS research and other expert findings.
Business Sector
Technology emerges as the largest group of companies, comprising 23% of the total population. Other popular sectors include Marketing & Media and Life Retail & Consumer Goods.
Tech
Marketing & Media
Retail & Consumer Goods
Life Sciences & Health
Engineering & Construction
Industrial Manufacturing
Food & Beverage
AgriFood
Company Size
Most Benelux ventures in this study are Small and Medium-sized Enterprises (SMEs). In Belgium, they are known as KMOs, in Luxembourg as PMEs, and in the Netherlands as MKBs. These SMEs are defined by factors such as staff headcount or turnover, which determine their scale and operations (Commission, 2021). The Benelux ventures in this study active in the U.S. either operate with a U.S. legal entity or directly through their parent company. As shown in the figure below, most Benelux ventures in this study, about 67%, have between 10 and 250 employees in their Benelux parent company, classifying them as SMEs.
Figure 19: Number of Employees in the Parent Company
U.S Sales Model and Revenue Impact
Most Benelux ventures in this study (70%) operate in the Business-to-Business (B2B) sector in the U.S. Approximately 22% engage in Business-to-Consumer (B2C) sales, while around 8% cater to the Business-to-Government (B2G) market. This distribution underscores the dominance of B2B sales among Benelux ventures in the U.S. in this study, aligning with findings from the 2020 DVITUS research (TABS, 2020).
Unlike the findings of the 2020 DVITUS research, where the largest number of respondents indicated that they received less than 20% of their global revenue from the U.S. market, most Benelux ventures (62%) in this study report that their U.S. entities contribute between 20% and 60% of their total global revenue. Approximately 21% of participants indicate that their subsidiaries contribute less than 20% to their global revenue, while the smallest group of participants (10%) attribute 60% or more of their global revenue to the U.S. market.
Figure 20: Revenue from U.S. Market
Registering in different States
1.Registering for Sales Tax
When Benelux ventures establish a physical presence in a U.S. state, such as setting up an office or warehouse or having an employee in a state, their U.S. entity must legally register for what is known as "foreign authority" within that state. Foreign authority refers to the permission required for a business entity that was formed in one state (or country) to legally operate in another state. This registration ensures compliance with local regulations and allows the entity to conduct business according to state laws. In addition to physical presence, a Benelux venture's U.S. entity can also establish an economic presence. This occurs when the entity surpasses specific thresholds, for most states the threshold is either a $100,000 in sales or 200 transactions.
According to a Sales Tax specialist consulted in this research, many ventures may not realize that even without a physical presence in a state a company can still create an economic nexus in a state, which triggers sales tax obligations.
Figure 21: State Registrations for Sales Tax
The data presented in the figure below provides insights into the geographic distribution of state registrations, besides their home state, among Benelux ventures in the U.S. that are operating with a U.S. entity (Group 1). This group consists of 50 ventures from the total respondent pool of this study, giving a clearer picture of the scale of these state registrations. The data reveals a pattern of concentration in certain states, suggesting strategic preferences or advantageous conditions for business operations. Interestingly, the relatively low number of registrations in states other than the home state may be surprising, as one might expect more registrations due to physical operations such as warehouses.
Most companies are registered in New York (12) and California (10) for doing business.These states are key business centers due to their large economies, diverse markets, and robust infrastructure. Furthermore, respondents often establish a presence in states such as Texas (6), Georgia (5), and Florida (4). This indicates a diversified footprint across various regions of the United States. Texas is known for its business-friendly environment and strong economy, while Georgia and Florida offer strategic access to different market segments and logistical advantages. This distribution reflects a strategic approach to expansion, leveraging opportunities across different states and regions to enhance market access and business growth.
Warehousing Across States
As previously mentioned, establishing a physical presence in a state could involve operating a warehouse within that state or working with a Third Party Logistics provider (3PL) in a state. Out of the companies operating with a US entity, 50% reported not having any stock in the US market. Primarily due to not shipping from the US or utilizing dropshipping to fulfill orders. d or utilizing drop shipping from Europe to fulfill orders. The other 50% of Group 1 respondents do have warehousing, with 40% using third-party warehouses and 10% operating their own warehouses.
No, we don't have products
No, we dropship from Europe
Yes, in a third party warehouse
Yes, in our own warehouse
As suggested by an industry expert in this study, Benelux ventures should carefully consider their warehouse locations in the U.S. due to the significant impact on logistical efficiencies, shipping times, costs, and overall supply chain operations. Strategic warehousing decisions also enhance market access, contributing to successful expansion and operations. This study's findings reflect these considerations. Among the 50% of Group 1 respondents with U.S. warehouses, there is an equal distribution between the East and West regions. Specifically, Kentucky and Washington each host three ventures with warehouse facilities, while California, Texas, and Georgia each host two. Kentucky is often chosen for its central location, which offers efficient distribution routes to both the East and West Coasts.
Figure 22: Warehouse Locations
Additionally, the presence of the UPS global logistics hub in Louisville, Kentucky, provides a significant advantage, offering unparalleled logistical support and distribution capabilities. Washington and California provide key access points to Pacific trade routes, making them ideal for ventures engaged in international trade. Texas and Georgia serve as critical hubs for reaching the southern and southeastern U.S. markets, catering to different regional demands.
This distribution also reflects the diverse industry needs and market demands faced by Benelux ventures. Sectors such as technology, consumer goods, and manufacturing each have unique logistical requirements influencing their warehouse location choices. Additionally, the presence of third-party logistics providers in these states further supports ventures by offering comprehensive warehousing and distribution solutions, enabling them to optimize their supply chains and better serve their U.S. customer base.
