The mission of Going Global, which appears on MidwestBusiness.com on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.
CHICAGO – Tom Bartkoski is director of international business development for World Business Chicago, which is a public/private economic development partnership in Chicago. He is responsible for foreign direct investment (FDI) and international data gathering. Bartkoski also assists foreign-based firms with all phases of location evaluation and site selection.
In part two of a three-part Q&A, Bartkoski sat down with international expert Michael Muth to discuss how well Chicago fares against other major cities.
Michael Muth: How do you think landing the 2016 summer Olympics would impact your work?
Tom Bartkoski: If we get them, it certainly would create foreign exposure with global attention. It would be a huge opportunity to get the Chicago message out to the world.
Not everyone knows what a great business location it is and how great of a place it is to live and work. The Olympics – as with Sydney in 2000 or Tokyo in 1964 – has the potential to be a real image maker. It’s a long road and there are a lot of hurdles (no pun intended). We’ve got our fingers crossed.
MM commentary: I’m skeptical of government’s focus on tangible results. It appears as if some results have come out of these specific activities. As only a quasi-governmental organization, I guess they come out better than most.
MM: What problems or surprises do foreigners typically encounter when coming to Chicago?
TB: In this era of security worries, the U.S. government has a system that unfortunately makes it difficult for people wanting to do business here to get visas in a timely fashion. The problem is probably most acute for Chinese – including Chinese VIPs – wanting to come here. The country would certainly benefit from more rationality in that process. We’re inadvertently shunting off not only business but the best and brightest foreign students to other countries.
It’s frustrating to have to explain to foreign VIPs that we welcome them to visit Chicago but they will have to go through a Byzantine process that is under the control of the federal authorities. There was a brief period locally when it was very difficult for spouses or children of many expatriates (all of whom were here legally) to get an Illinois driver’s license from the Illinois Secretary of State even though they were good drivers.
There was concern about the effect it would have on business attraction and the status of our consular community since other states didn’t have this roadblock. Fortunately, state legislation was passed that helped ameliorate the problem. About five years ago, you would have heard a great deal more about the difficulty for expatriates to set up banking services here, to get a credit card and so forth.
We have had some local financial institutions really step into that need in a positive way as the banks have become aggressive in going for retail and international business.
In general, it’s a challenge adjusting to a foreign culture and business environment for nearly everyone. Though this sounds self-serving, it happens time and time again that the biggest surprise foreigners tend to share is the beauty and cleanliness of the city as well as the friendliness of the people. Many had no idea Lake Michigan is so large (“like an ocean”).
MM commentary: The Brazilians have made it reciprocally difficult for us to visit there and I don’t blame them. The international business school Thunderbird has suffered from a drop in foreign students.
MM: Chicago is less expensive than other big cities but more expensive than many other locations. How do you deal with cost-sensitive prospects?
TB: We are indeed less expensive than New York and Los Angeles and other “global” cities in general. That is of course a selling point for companies that need or want to be in a first-tier city to compete. It can be a more frustrating process with the smaller, foreign-based companies because occasionally the home office is not immediately aware of the size and scope of the U.S. market.
An extreme case: someone once mentioned a planned itinerary driving to regional cities (St. Louis, Detroit and so on) all in an afternoon. Some small companies are interested in coming to the U.S. without a true picture of what it costs to do business here regardless of the particular location. That requires an educational process.
If a company is willing to really perform due diligence on their search and is mindful of things like transportation cost, access to workforce talent and business services, benefits of a diverse and more international city and access to their markets, we can do well. O’Hare and Midway can trump anywhere else in the U.S. for air service nearly every time.
One of our biggest challenges, though, is getting on the mental map for small companies that may have a hazy picture of the U.S. If we can become top of mind as a non-coastal location, that’s a big advantage.
MM commentary: Though foreigners typically do know more about us than we do about them, their knowledge of our geography sometimes is lacking. I’ve know people who’ve had the same perceptions.
MM: How important are incentives to foreigner location decisions?
TB: Incentives are of some importance. Most are fairly modest because many companies are not putting in a huge plant or development. In the U.S., incentive availability is the same across the board for domestic and international companies.
Local government incentives by and large are tax-reduction abatements to reduce or abate things such as payroll taxes, property taxes and private financing at tax-exempt rates. Some people are under the misconception that companies get bags of money. It’s tied to job creation and investment.
While we’re a not-for-profit organization that provides information on incentives, we do not provide the incentives themselves. The decision is up to the state and local government. The rules are straightforward. If they meet the rules and are in the right location, they can plug in.
If a company is entitled, we’ll let the government entities know. This is publicly available information. We want to get the information out. It’s on our Web site. Chicago’s Department of Planning & Development puts city incentives on their site as well. The Illinois Department of Commerce & Economic Opportunity has incentive information on their Web site, too.
MM: What non-financial incentives do you offer?
TB: First, all of our assistance, information and contacts are provided free of charge. Second, there are additional government programs (such as training). The state of Illinois has a program that can provide up to half of workforce training costs to qualified companies and the Mayor’s Office of Workforce Development in Chicago also provides training and recruitment assistance.
There are also incentives in the form of taxes that others impose and we do not. For example, Illinois does not impose taxes on personal property other than real estate or an intangibles tax. There is no inventory tax. Illinois corporate tax is sales only on in-state sales, which benefits large and multi-state companies. Unlike New York City and several others, Chicago does not impose a city income tax.
MM: With which other cities does Chicago compete? When and how does Chicago win?
TB: There are so many permutations here. For foreign companies, we obviously are competing against larger and sometimes mid-size U.S. cities. One pattern might be Chicago versus New York City for finance and other high-end operations where we feel we can demonstrate great advantages for our case.
Sometimes it’s Chicago versus the coasts in which case we have both an access and cost advantage as well as other industry-specific advantages. The other pattern would be Chicago versus Denver, Dallas and Atlanta in which someone is looking for a city with a major hub airport as a base.
Denver’s relatively small size, smaller business community and low international profile tends to generally work against them. Dallas (where I once worked) and Atlanta are more serious competitors. Still, we do have the edge over them too in various ways I’ve already outlined. We can make a strong case for preferring Chicago if we get our turn at bat.
MM: What’s your relationship with other city, county, state and federal organizations?
TB: It’s very collaborative. With the city, we work often with the Department of Planning & Development. I work periodically with the city’s Office of Protocol and with the Illinois Department of Commerce & Economic Opportunity, which works with investment for Illinois. The state also has foreign offices. We’ve worked in particular with the Toronto, Brussels and Tokyo offices.
MM: How do you work together with foreign consulates and chambers of commerce?
TB: They’re good about funneling leads to us. They often come to us for general information on the local economy.
They’re interested to hear what we have to say. They forward what we’re telling to folks back in their capitals. They want them to know how important the Chicago post is to them. It’s not competitive. It’s collaborative. We’re an open book in terms of information on Chicago. We have an excellent story to tell. It’s to our benefit to get that word out.
MM commentary: There are instances where the city competes with the state and foreign organizations utilize our information for their benefit. In many of those situations, competition is a good thing.
MM: How much international business have you studied?
TB: People may not know that Fantus – founded by Felix Fantus of Chicago early in the 20th century – essentially invented business location consulting. I got to work for some foreign clients there doing economic development consulting. In the late 1990s, I went international with a non-profit that was folded into World Business Chicago.
MM: What foreign languages do you speak?
TB: I picked up a smattering of many things. I’ve been studying Chinese. My Chinese-American wife has been a help there.
MM: How would you compare Chicago’s international business development with that of Dallas?
TB: Dallas certainly seems to have international aspirations. Reading their local media, it appears that Boeing’s decision in favor of Chicago was a sobering event for them in terms of a higher standard of competing internationally as opposed to domestically.
Texas and the Southeast have always been very aggressive. Their public and private sectors (including public utilities and business associations) have never been shy at throwing staggering resources at business acquisition efforts. Dallas/Fort Worth international airport, which competes with O’Hare as a hub, suffered a blow with the pullout of Delta’s operations there.
Nonetheless, Dallas and Texas will no doubt push very hard to attract foreign investment. In fact, while fDi Magazine (a Financial Times publication) named Chicago the U.S. winner for “City of the Future” for foreign direct investment in 2005, Texas took the honors in the state category.
Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at firstname.lastname@example.org.
Click here for Muth’s full biography.
Previous Columns in 2006:E-Mail This Article to a Friend or Colleague
Q&A: World Business Chicago’s Tom Bartkoski on Economic Development (9/5/2006)
Q&A: Robert Noe, CEO of 1SYNC in Chicago, on Enforcing Data Standards (8/15/2006)
Q&A: Robert Noe, CEO of Chicago-Based 1SYNC, on Data Standards (8/8/2006)
Q&A: Robert Noe, CEO of Chicago-Based 1SYNC, on Data Synchronization (8/1/2006)
Q&A: Mike Jakob of Sportvision in Chicago on Creating Sports Innovation (7/11/2006)
Q&A: Mike Jakob of Chicago-Based Sportvision on What’s Coming Next (6/27/2006)
Q&A: Mike Jakob of Sportvision in Chicago on Enhancement Technologies (6/20/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Culture (6/6/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Expansion (5/30/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Compliance, Partners (5/16/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Trade Shows (4/4/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on International Partners (3/28/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Overseas Expansion (3/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese Readiness (2/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese, U.S. Differences (1/24/2006)
Q&A: Steven Ganster of Technomic Asia on Approaching Chinese Expansion (1/17/2006)
Click for 2005 column archive.
Click for 2004 column archive.
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