Israel Consumer Goods Exports to the United States

Israel Consumer Goods Exports to the United States Panel Discussion Leonard N. Budow, Esq. April 10, 2016 © 2016 Fox Rothschild

Trends in Consumer Goods – Does your Product Meet, Follow or Leapfrog Those Trends? Knowledge Risk Panel Questions: – Do you consider the United States a trend setter or follower? – What are the primary demand supply drivers in the United States consumer goods industry today and what do you see over the next decade? – Is there Global convergence or divergence for middle class consumer markets?

Factors to Consider 1. The Green Revolution 2. Technology - Digital, Gigs and Apps affecting consumer goods distribution channels 3. Health 4. Demography, Age, Taste and Needs - one country or 119? 5. Fair Trade 6. Working Wages 7. NAFTA and TPP 8. Changing OECD Tax Regimes

Key Trends in Consumer Goods 1. The beast awakens - the digital consumer 2. Value beats luxury 3. Demography or the inverted pyramid

Demography Trends US Population by Nativity: Native Foreign % Foreign Born Total Population 2014 277, 000 42000000 13. 3 319, 000 2020 286000000 48000000 14. 3 334, 000 2030 302000000 57000000 15. 8 359, 000 Under 18 18 to 64 65 and older 2014 23 62 15 2020 22 61 17 2030 21 58 21 US Population by Age:

Regulations and Your Business Launch? Be Aware Panel Questions: – Is the regulatory environment in the United States prohibitively costly for new entrants? – How does it compare to your other ex-U. S. territorial operations? – Do you need a lobbyist to conduct business in the United States?

Factors to Consider 1. 2. 3. 4. 5. 6. 7. 8. 9. Federal Trade Commission Labeling and California Consumers Legal Remedies Act Consumer Product Safety Commission Environmental Protection Agency Department of Transportation Federal Trade Commission Sarbanes Oxley 2010 Health Care Act State and Local - where do I conduct business

Let the Numbers Speak or Now I know Why There are so Many Lawyers • 1, 000 regulations (not laws) in 2010 • 174, 545 pages in the Code of Federal Regulations • The index of the Code of Federal Regulations is 1, 242 pages

The Sentier Dream Beyond a One Off Sale or for 100, 000 Francs I am Yours Panel Questions: – Is proof of concept in Israel adequate to secure funding, coventure, franchisee, distributor or agent in the U. S. ? – What do you look for when you co-venture with an off shore entity? – Do you feel more secure if there is a subsidiary and/or infrastructure in the United States? – How does an Israeli venture sell itself to an American? – How does an Israeli company protect itself from Target Canada, Circuit City, Linens & Things, A&P, Radio Shack, Blockbuster, Sbarro, Christian Bernard or Brookstone?

Factors to Consider 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Personal history of the principal behind the venture Serial entrepreneurs Investor backing-private equity, crowdfunding Length of time in business Business outside of Israel Balance sheet and fiscal integrity - accountants? Pre-existing business in the United States Exclusivity? Nature of product - subject to extensive regulation? Legal structures - board members and fidelity to normative process; layers? 11. The Big Sale or my Sentier Dream Come True 1. 2. 3. Credit Insurance - Receivable Insurance Limits Insurers Letters of Credit or in the EU a Bank Guaranty

The Israel Label – Plus, Negative or Neutral Panel Questions: – Hypothetically does BDS affect your business decisions in buying Israeli products? – How do you advise your Israeli Partners in how to and whether to address the issue? – Is BDS a long term threat to Israeli exporters? – Does it depend upon which industry?

Factors to Consider 1. Campus movement creating a youth generation antithetical to support of Israel 2. Is the BDS campaign affecting internal green line companies? 3. Alienation of certain Christian groups although evangelicals appear firmly committed to Israel 4. Do we export to America and the EU as Israeli companies or companies based in Israel 5. Does support from Jewish and Christian Fundamentalist sectors outweigh any negative effects of BDS?

Timing – Is it Now or Never? Economic Risk Panel Question: When Electing to Launch in the United States, do you advise taking in to account macro economic, local political and monetary conditions?

Factors to Consider 1. 2. 3. 4. 5. 6. 7. 8. Shekel Cost Average or all in Stanley Fisher versus Lael Brainard - does the panel see pressure on wages and the ability to increase prices in the consumer goods area? Are you a Fisherite (divergence and diversification) or Brainardite (convergence and unification)? Will US consumers continue to spend in a tightening monetary cycle? Currency - to hedge or not to hedge; to care or not to care Proof of Concept - maturation of the launch vehicle Industry specific issues or hemlines up, hemlines down Macro Economic Cycles - is diversification a virtue to off set risk The Donald or Hillary - does it matter to your launch?

United States and Israel Today – In Sync? Year over Year End Israel United States Budow Diversification Value® GDP 2. 8 1. 9 -7 Industrial Production -0. 7 -1 -0. 3 Consumer Price Index 1. 7 1. 2 -0. 5 Unemployment rate 5. 1 4. 9 0. 6 Budget Balance -2. 5 -2. 6 0 Interest Rate-10 Year Bond 1. 91 0 -7. 2 Range -20 to +20

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Leonard Budow, Esq. 212. 878. 7902 LBudow@foxrothschild. com