All roads lead to the mall. M.H. Alshaya: The mystery company importing Americana to the Mideast

How M.H. Alshaya is transforming mall culture in the Gulf region with lattes, milk shakes, and cheesecakes.

By Beth Kowitt, writer  FORTUNE

A Pinkberry yogurt shop at the Mall of the Emirates in Dubai

FORTUNE — David Overton makes a point of trying to get to every one of his restaurant openings. In the 35 years since he founded the Cheesecake Factory in Beverly Hills, only a handful have kicked off without his discerning eye. So it surprised no one when Overton decided to travel halfway around the world for the Kuwait City launch of the 160th Cheesecake Factory.

Overton’s presence made this event just like every Cheesecake Factory opening. Indeed, it was Overton’s directive to his team that this launch and, more important, this restaurant be treated like any other. The tables were set exactly as they are in the U.S., the forks slightly staggered. The usual artist had designed the decorative murals featuring themes of mythology, history, and astronomy. The portions and the waiting times were just as abundant. “It feels like a Cheesecake, and it tastes like a Cheesecake,” says Heather Berry, director of beverage and bakery operations, who had traveled over for the launch.

Beneath the surface, though, restaurant No. 160 was dramatically different. Publicly held Cheesecake Factory (CAKE), known in the industry for its consistency and Overton’s attention to detail, owns all its restaurants in the U.S. But the Kuwait City outpost is licensed to M.H. Alshaya Co., a Kuwait-based group operating in 19 countries with more than 70 brands in its portfolio. In January 2011 the two companies signed a deal that allowed Alshaya to open 22 Cheesecake Factories over five years in the United Arab Emirates, Kuwait, Saudi Arabia, Bahrain, and Qatar. (Two Dubai locations opened in 2012.)

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You may have never heard of M.H. Alshaya, which is exactly how the intensely private company likes it. Formed some 30 years ago by members of Kuwait’s Alshaya family, including current executive chairman Mohammed Alshaya, the retail-franchising operation manages dozens of international brands and thousands of stores. The closely held business declines to disclose any financial information, and executives rarely speak with the media, saying they prefer to let their brands and properties speak for themselves. And oh, what brands: Starbucks (SBUX), Pinkberry, IHOP (DIN), American Eagle Outfitters (AEO), Victoria’s Secret (LTD), Pottery Barn, and Williams-Sonoma (WSM) — all are mainstays in the Middle East thanks to Alshaya.

These retailers and many more are increasingly drawn to the region because of its well-heeled population of expats and globetrotting locals. (Qatar, Kuwait, and the UAE rank among the world’s top 20 countries in GDP per capita.) There also are few homegrown competitors to fend off; in fact, consumers in the Middle East seek out Western brands because they crave authentic American experiences.

But Kuwait City isn’t Kansas, and to bring a taste of the U.S. to places such as the UAE, multinationals need a local guide to help them navigate the cultural, religious, and regulatory protocols of the region. That’s where Alshaya comes in. Like many franchisees, Alshaya handles basics such as scouting locations and negotiating leases; it hires and manages employees who come from 110 different countries; and crucially, it helps eateries modify their menus to comply with Islamic dietary laws. As I discovered when I traveled to Kuwait City for a behind-the-scenes look at the Cheesecake Factory’s opening in November, bringing a Western restaurant chain to the Middle East is an exercise in patience, creativity, and strong execution. It also involves tasting a lot of food.

Cheesecake Factory CEO David Overton (in suit, center) and Mohammed Alshaya (with scissors, second from left) at a restaurant opening at the Dubai Mall

Cheesecake Factory CEO David Overton (in suit, center) and Mohammed Alshaya (with scissors, second from left) at a restaurant opening at the Dubai Mall

All roads lead to the mall in this part of the world. Over the past two decades, shopping culture in the Gulf region has migrated from the outdoor marketplace, the souk, to the destination megamall that sits at the center of social life. You can escape from the oppressive heat, browse brands from Armani to Zara, ski and ice-skate indoors, and visit one of the world’s largest aquariums. “When Alshaya told us, ‘You’re going to go in malls in the Middle East,’ we looked at them and said, ‘You don’t understand. We’re a cool New York urban brand. We don’t do malls,’ ” explains Randy Garutti, CEO of Shake Shack, based in New York City. “Then you witness it. The mall there is the piazza. It is the Union Square.” Garutti didn’t have to worry about whether the concept would translate. When Shake Shack, part of Danny Meyer’s Union Square Hospitality Group, announced plans to open in Kuwait, its Miami Beach location became a hotspot for Kuwaitis scoping it out on spring break. The Cheesecake Factory was also coveted by Middle Eastern consumers. For five years the restaurant ranked No. 1 in a quarterly survey asking patrons which American restaurant concept they’d like to see in the Dubai Mall, Overton says. When the restaurant opened there in August, it touted the line “The wait is over.”

Retailers who take the plunge into the Gulf are often rewarded with some of the best-performing stores in their systems. Take Scottsdale-based P.F. Chang’s: Three of its top-10 restaurants by sales are in the Middle East. With relatively small populations — Kuwait has just 2.8 million residents — the region’s blowout figures come with not only higher transactions but also a greater frequency of store visits.

Alshaya is the driving force behind much of the brand migration. “We are a willing investor, an aggressive investor,” Mohammed Alshaya tells me during my visit to Kuwait City. He had just finished touring the newly opened section of the Avenues mall with the U.S. ambassador to Kuwait; earlier that day he had cut the ribbon at the Cheesecake Factory opening with CEO Overton.

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The Alshaya group of companies’ history dates back to 1890 and includes interests in real estate, construction, and hotels in the Middle East. In recent years the 30-year-old retail-franchising operation has started expanding beyond its Gulf region roots. In January 2012, Alshaya acquired 60 stores of lingerie shop La Senza in the U.K., and in 2007, Starbucks opened in Russia with Alshaya as its partner. “We had already established a great partnership with them” in the Middle East, explains Michelle Gass, president of Europe, the Middle East, and Africa for Starbucks. “The core skills they bring to the table — they believed they could translate that into Russia.”

International restaurant companies tried to woo the Cheesecake Factory for years, but Overton felt that the restaurant’s complexities made it hard to license. He wasn’t sure that he would ever feel comfortable taking his company global. It wasn’t until meeting Alshaya that Overton thought that an international partnership might work. Alshaya paid a visit to Overton in California and offered to show him around personally if he came to the region. In May 2010 Alshaya went with him to Bahrain, Kuwait, Qatar, and the UAE, showing him malls, where Overton was most struck by how closely stores mimicked their counterparts in the States. “I walked into Pottery Barn, and there’s no way you could tell that it wasn’t [the U.S.],” Overton tells me.

Alshaya’s core competency is cloning, replicating, duplicating — a sampling of the terms I heard used during my trip. The day the company launches a brand in the Middle East, it starts with the assumption that the retail experience will be identical to what a customer encounters in the U.S. Alshaya has no desire to reinvent; rather, it tries to understand a retailer’s core and reproduce it. Still, Alshaya makes appropriate tweaks when necessary. The most common changes stem from compliance with Islamic dietary laws. Serving a cake made with gelatin? It must be extracted according to halal guidelines. Other alterations are made to match regional tastes. At Shake Shack, you won’t find its pumpkin-pie frozen custard on the menu — customers may not be familiar with the flavor. More shower items than bath products line the shelves at Bath & Body Works because there’s a preference for bathing in running water. At Pottery Barn Kids, the chairs on display are personalized with Jaber rather than Max.

Alshaya has helped bring Cheesecake Factory restaurants to Kuwait (left and right) and Dubai (center).

Alshaya has helped bring Cheesecake Factory restaurants to Kuwait (left and right) and Dubai (center).

The process of creating uniformity across a brand is never easy in the restaurant business. Chains can copy aesthetics with little difficulty; it is much harder to get food to taste exactly the same every day in every location. One of the most fanatical guys in the industry when it comes to standardization is Overton. If you order his Over the Top Meatloaf Sandwich, covered in Guinness-marinated Swiss cheese and tomato-bacon jam, it should taste exactly the same in Boca Raton as in Phoenix or in Honolulu. When Overton decided to bring his brand to the Middle East, he insisted that his meat-loaf sandwich and the rest of the menu taste the same in Kuwait City and Dubai as well. The Cheesecake Factory did the initial work to make the recipes comply with Muslim dietary practices, and then reviewed the changes with Alshaya. So now that meat loaf had to taste exactly the same using halal beef, sans Guinness marinade and pork bacon in the topping.

Cheesecake Factory chief culinary officer Donald Moore’s initial reaction was alarm — especially when it came to limitations on pork. “I love bacon,” he says. “We put bacon in our salads and on our burgers and sandwiches.” He took a reconnaissance trip to the region, eating bacon everywhere. “I ate veal bacon, turkey bacon, beef bacon, you name it,” he says. The issue wasn’t just about taste. A lot of the bacons were jerky-like and lacked the texture of pork. Once his team found the right consistency, it matched the sweetness and smokiness, ending up with a beef bacon that Moore loves.

When it came to alcohol, some menu items needed only a simple fix. The cheese for the meat loaf, for example, now gets marinated in nonalcoholic beer. Some of the other substitutes were harder to come by. The Cheesecake Factory’s No. 1-selling item in the U.S. is Chicken Madeira, which calls for the eponymous wine. Moore’s team created gastriques — caramelized sugar with vinegar — to duplicate the flavor profile.

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Every item had to pass Overton’s muster to make it onto the menu. (“I don’t believe in focus groups,” he explains. “I’m kind of our one-man focus group.”) It took Moore’s team a year to find a replacement for miso, which contains alcohol, before Overton gave the miso salmon his okay. Some items, like the tiramisu and Kahlua cheesecake, couldn’t be copied to the Cheesecake Factory’s standards. “We worked for months replicating the cheesecakes that we have, and doing it without alcohol,” says Berry, who runs bakery and beverages.

The afternoon before the Kuwait opening, I went out to the Avenues mall to talk to Scott Thomas, the Cheesecake Factory’s area director of operations. “My goal tomorrow is to make sure every guest that comes in here thinks that they’re in our brand in the United States, that there’s no difference,” he says. The biggest challenge for Thomas was the global nature of the staff. Many don’t speak English as a first language and were unfamiliar with the restaurant’s concept at first. Overton told me that he had talked to an employee from Russia who admitted that she was worried she was going over to Kuwait only to be exploited. She had thought she was literally coming to work at a cheesecake factory.

To help bridge the cultural and language gap, training went back to basics. Instruction ranged from the literal — making sure the wait staff knew that the Caramel Pecan Turtle Cheesecake didn’t actually contain turtle — to the figurative. One of the restaurant’s most popular salads is the Luau Salad, but many of the new hires didn’t know what a luau was. “It’s not the end of the world, but we wanted them to have a full understanding [of] why this salad looks the way it does,” Thomas says. “It’s a Hawaiian celebration in a bowl.”

Alshaya also runs this Starbucks in Kuwait (left), Shake Shack (center), and Victoria's locations in the Mall of the Emirates in Dubai.

Alshaya also runs this Starbucks in Kuwait (left), Shake Shack (center), and Victoria’s locations in the Mall of the Emirates in Dubai.

For three days before the Kuwait City opening, the Cheesecake Factory held its “mocks” — a dress rehearsal for opening day, which the restaurant chain does before every launch. About 80 designated trainers had been brought over from the U.S. to work alongside the newly hired Alshaya staff. These test runs offer the chance to work out the kinks. “We’ve been cooking and eating and eating and eating, and that’s all I’ve done for the last two days,” Moore tells me. As a result of the sampling, Moore realized that a wine-free mustard in the herb-crusted salmon had failed to give him the perfect note. He needed to find a replacement mustard, so he bought every Dijon on the shelf at Dean & Deluca, another food retailer Alshaya brought to the region.

It wasn’t the only improvising he would do that week. Some ingredients that the Cheesecake Factory imports hadn’t made it over in time. Fresh corn had missed a flight. A special dough flour got stuck in another part of Kuwait, so tamale cakes were taken off the menu. “If we can get something local that would be the same or better, we would serve it,” Moore says. Berry was waiting for a couple of juices that hadn’t made the boat. She had come up with a backup recipe using a local fresh juice in case the shipment didn’t arrive, but she was reluctant to hand it out. With all that the staff already had to learn, she didn’t want to further complicate their training.

Sourcing will only become more complicated as the restaurant chain’s expansion continues. Lebanon, for example, requires that imported products come directly from their country of origin; if the Cheesecake Factory uses shrimp from Mexico, the shellfish must come to Lebanon directly from Mexico.

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The team had a sense of what to expect in Kuwait thanks to its Dubai Mall launch in August. The restaurant opened during Ramadan in order to be ready for Eid, the celebration marking the end of the month of fasting. Like its location in Kuwait, the first Dubai Cheesecake Factory sits on prime real estate, in this case across from an aquarium. At opening, the wait for a table stretched to more than 150 names (large parties had to wait as long as three hours), and mall security eventually made the restaurant set up stanchions for crowd control.

Every customer was ordering cheesecake, with dessert making up 25% of sales. Berry had to write a whole new policy and procedure for handling the cheesecake mania. “It looked like I was writing a line of scrimmage,” she says. “I had X’s and O’s and seven bodies.” “Mocktails” and bottled water were so popular that beverages as a percentage of sales matched those in the U.S. — amazing considering the absence of liquor sales in Dubai. The Cheesecake Factory says every Alshaya-licensed restaurant open for a year represents a penny in earnings per share, which translates into about half a million dollars in profit. Analysts expect the company to report about $1.8 billion in revenue and $105 million in profits in 2012. A third Middle East location, the largest Cheesecake Factory in the world, opened in Dubai on New Year’s Eve.

A view of the Avenues mall in Kuwait

A view of the Avenues mall in Kuwait

I ate most of my meals on the trip at the Cheesecake Factory with Donald Evans, the company’s genial chief marketing officer. He worked his way through ordering a long list of items that he and his colleagues thought I should sample — primarily dishes that had been tweaked for the market, like Chicken Madeira, Chicken Piccata, and Herb Crusted Filet of Salmon. (Evans judiciously had only a bite or two of each dish, and I eventually caught on.)

There is something a bit odd about spreading this part of American culture around the world — the desserts, the burgers, the hefty portions. But when I got back to the U.S. and went to my local Cheesecake Factory, I couldn’t help being impressed by how flawlessly Alshaya and its partners do it. Everything was nearly identical: the friendly service, the lighting — even the restaurant’s neighbors (Victoria’s Secret, Express, Bath & Body Works). But I was most focused on the food. I wanted to compare a sampling of menu items to what we had eaten in Dubai and Kuwait. And so, in the name of research, I tucked into White Chocolate Raspberry Truffle Cheesecake, Shrimp Scampi, and Hawaiian Pizza.

While I can’t claim to have a particularly discerning palate, the food tasted exactly the same. The real moment of truth came when my server brought out the Chicken Madeira. One forkful, and I felt like I was transported to Kuwait.

This story is from the February 25, 2013 issue of Fortune.

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ZIPPO’s Global Dilemma

Zippo-Lead-photo

Zippo CEO Greg Booth is solving a problem most executives would eagerly share. The company’s flagship product, the iconic windproof lighter, is too well known. Don’t laugh. How can Booth successfully launch new products when Americans aren’t used to accepting Zippo the lighter as Zippo the brand?

Yet the company identified a need for diversifying its product line. Lighters are generally used in connection with tobacco products, and Zippo executives haven’t missed what Booth calls the “significant decrease in smoking” that began in the 1980s and ’90s.

“Of course, we immediately realized it was a trend that we needed to face, and face immediately to ensure the company would remain strong,” he says. Zippo reacted by committing significant resources to “determining how we could evolve beyond just being known for our windproof pocket lighters, and laying out a strategy for product line expansion that would be accepted by our consumers as ‘Zippo.’”

That strategy of recreating Zippo’s domestic image starts overseas, test marketing new products before bringing successful trials back home.

A full 60 percent of Zippo sales are overseas in more than 160 countries. These markets often resemble the end goal for the American Zippo experience: Up to 90 percent brand recognition bolstered by an openness to products that, believe it or not, don’t generate a flame.

Zippo CEO Greg Booth

Zippo CEO Greg Booth

“We’ve found that consumers in markets such as China, which is actually our number one market outside the U.S. representing 10 percent of our business, are very receptive when it comes to other products we’ve introduced,” Booth says. “Here in the U.S., the domestic consumer is very much focused on Zippo the lighter company—so we have a lot of work to do.”

Zippo has flirted with other product lines for a while. “The company has always taken strides to expand beyond [being solely known as a lighter company], introducing such products as tape measures, a pocket flashlight called the ZipLite, pill boxes and even golf balls, but these tangents never took off,” says Booth. “They weren’t true to the core values of our brand or what Zippo stood for.”

Those core values—quality, durability, ruggedness—are what Zippo has zeroed in on with its latest product expansions. And while the renewed and concerted effort to diversify may have been sparked by fears over trends showing decreased smoking, that trend never really amounted to falling sales. In fact, sales never faltered much at all, excepting the time surrounding 2007, when sales of everything were down, outside of perhaps alcohol and rope.

“The motivation is not to offset a decline in the lighter business,” says David Warfel, Zippo’s global marketing director. “The diversification strategy began 10 or 12 years ago with just some concepting about, hey, in addition to great brand recognition, we have a sales channel that’s in place. We certainly have manufacturing capabilities.”

Zippo's Global marketing director, David Warfel

Zippo’s Global marketing director, David Warfel

Warfel points to a strong collectors market, foreign sales, custom design and positioning the product as an accessory—rather than just a cigarette lighter—as top contributors to not only sustained, but rising bottom lines. “Our lighter sales for the past three years have grown approximately 20 percent each year,” he says. “Our lighter business has never been bigger, better or stronger—and I know that sounds crazy but it’s the truth.”

That’s saying a lot for a company that famously manufactured its 500 millionth lighter in July of this year, after more than 80 years in business. That bears repeating: 500 million lighters. Is it any wonder that the little metal rectangles are the first thing called to mind whenever the word “Zippo” is uttered? Or is it a surprise that such an iconic company would want to trade on its flagship product’s key traits—quality, durability, ruggedness—to start entering new verticals? Certainly not.

The surprising part is the products—and places—Zippo decided to venture.

Buon Giorno, Italia!

The lessons of how to leverage the international marketplace as a launching pad for new products begins with an important understanding: “Middle-aged white men in Bradford, Pennsylvania, cannot be making consumer opinions for Delhi or Beijing,” says Warfel, a middle-aged white man in Bradford, Pennsylvania. “It’s very easy to have opinions. You have to put those aside.”

Warfel’s approach is much smarter and solves two problems at once. To collect market data, advice, trends and the like from countries around the world on the local level, he relies on a PR firm, namely, SLAM. His reasoning is important: Yes, you need localized information worldwide, but you also can’t spend all your time communicating with dozens of PR firms—you need a single firm with tremendous reach, one that can consolidate information and transmit it in a fraction of the time, freeing Warfel up to strategize on that question we keep coming back to: How can Zippo diversify its product line?

In Italy, he was told, Zippo’s answer is fragrance. Zippo fragrance? Yes. Zippo fragrance—and no, it doesn’t smell like butane.

“The fragrance is an excellent example. The brand perception of Zippo in Italy is somewhat— ” Warfel stops short, tussles with some descriptions and final settles on this: “There’s a cool factor to it.

Zippo's newest smash hit, fragrance, launched in Italy, with the help of a leading local perfumery.

Zippo’s newest smash hit, fragrance, launched in Italy, with the help of a leading local perfumery.

“[Italy] was the ideal place to begin extending out into this ambiguous ‘lifestyle’ category,” he continues. “And there’s nothing that speaks of lifestyle more dramatically or as quickly as fragrance. That’s what lifestyle is.” Warfel says fragrance sales began in Italy because, when an Italian fragrance company came knocking with enticing news about a new opportunity, Zippo knew there would be a predisposition to accept its brand beyond just windproof lighters—thanks, of course, to its friends at SLAM.

“We partnered with a leading Italian perfumery to design the scents and packaging and it’s absolutely resonating with our consumers in Europe,” Booth says. “With success such as this, the fragrance line is without question ready for prime time here in the U.S.”

Zippo can now turn to its domestic distributors with the idea of adding a fragrance line not sounding so far-fetched. “We will be using data and consumer acceptance overseas to demonstrate viability to key U.S. accounts,” Booth says. The company has already gone this route with Zippo-branded watches, also launched in Italy and currently on sale at select men’s stores that carry the company’s wares.

Watches were a logical extension of the Zippo brand in its existing distribution channel. For one, they didn’t take up very much room in the transportation process, and resellers already carrying windproof lighters wouldn’t mind picking up a dozen Zippo-branded watches. “If someone was predisposed to buy a Zippo lighter, they’re in the store, they look over and they can also get a Zippo watch,” Warfel says. “Maybe that’s a nice add-on purchase.”

Ni Hao, China!

China has been kind to Zippo, accounting for 10 percent of total company sales. The company couldn’t be blamed for rushing to offer more of its products to such a successful market, though it suffered a tough lesson in the perils of hastiness.

“We are just like lots of people venturing into new markets for the first time,” Warfel says. “We’re beginners, too, in certain categories.” One such category was sunglasses, which had become quite a successful accessory back in Italy, where Zippo seems to launch many of its introductory products. When a Chinese distributor asked for rights to sell the eyewear in its market, Zippo saw a great opportunity and had “a bunch of glasses” shipped right over from Italy. The only problem? They didn’t fit. It turns out that the head size of the average Chinese consumer is roughly 20 percent smaller than an Italian’s. “Talk about missing the obvious,” Warfel laughs. “But something as simple as that, making sure the sizing is correct….” The company abandoned the idea of marketing sunglasses in China, deeming the small scope of projected sales less enticing when accounting for doubled manufacturing costs.

Items from Zippo’s luxury clothing line, launched in China.

Items from Zippo’s luxury clothing line, launched in China.

It was an error Zippo would not repeat while using China as the testing ground for the launch of its luxury clothing line. The addition, which the company has been working on for more than two years, culminated with the recent launch of a Zippo-branded store in Qingdao. The idea had surfaced nearly four years ago when Warfel conducted a survey and found that Zippo already carried 50 percent aided and unaided brand recognition—what he calls “a good head start.”

“Before we began we already had resellers lined up to carry the brand line,” he says. The company was meticulous in its research. “We said, ‘Where’s the space that Zippo should play outside of the lighter market?’ Clothing came up. And as we examined the market, we found that it was the white space. We’re not competing with everyone else, we like to think that we found the white space where Zippo can fit where nobody else is playing.”

He likens Zippo’s clothing brand quality to that of a Nautica or Timberland—“maybe not a Ralph Lauren,” but rugged and aimed at outdoor types. As part of that aiming, Warfel has helped to develop a marketing strategy that strikes at the heart of his desired current and future audience, with the main goal of edging Zippo back to relevancy. Partnering with entertainment company Live Nation to sponsor a series of concerts, Zippo drew on local talent to create a run of battle of the bands-type shows, as many as six per year until it grew into a larger event. “It was sort of the monkey move-up. Based on online endorsement, [bands] would advance to the next round,” says Warfel.

“We had product, signage, lots of promotion surrounding it,” he explains. “It’s been very successful.” Part of his surprise stems from an observation that, in China, big crowds are typically not well-received, so a stadium full of rock music enthusiasts could have been a tough sell. “We would have anywhere from 700 to 2,000. But because it was unique for the market, it gained an awful lot of attention. In fact, we did that type of promotion for two years and we became a feature on MTV [in China].”

The success of the Zippo Encore Program, as the company calls it, depends on “ground activation” and co-promotion with local media, such as, “Call in the next hour and get two tickets plus a Zippo something for the upcoming concert.”

“Any event has a beginning, the event, and a follow up,” Warfel explains. “We look at an event not as a singular activity, but as a campaign, and that’s sort of the crown jewel.” Zippo’s participation in these events gives it more to talk about than just product. The company becomes an interesting story, engaging and—here’s that word again—relevant. “But we’re not talking about product,” he reiterates. “We’re not saying ‘go out and buy a lighter. Go out and buy a pair of jeans.’ People talk about it because it’s cool, it’s fun.”

Fun. It’s a word that hasn’t been bandied about much here in the States when Zippo is the topic of conversation. Or is it even the topic of conversation? Perhaps, and perhaps not. But there’s little question of whether their cornerstone product is cool. As Warfel points out, have you ever seen a Bruce Willis flick in which he didn’t light up with a Zippo? And aren’t they used in every episode of Mad Men ever made?

Zippo’s manufacturing plant in Bradford, Pennsylvania.

Zippo’s manufacturing plant in Bradford, Pennsylvania.

“We have a very rich history and it’s romantic and it’s World War II and it’s Vietnam and it’s movies,” says Warfel. “I finally said, ‘No more.’ I don’t want to talk about the past. I only want to talk about the future.” Can you blame a guy for such sentiments when he’s tasked with breathing new life into an iconic brand via new—and often unlikely—products?

“We had the potential of becoming Pepsodent, Texaco. One of those famous names from out of the past. I’m not going to let that happen. And the first thing we had to do is, we had to become relevant.” Again: Relevant. And it’s as simple as reconnecting the youth of today with the classic cool Zippo came to signify yesteryear. Which is why the Mad Men placement is so brilliant—it’s retro, but retro is young now. “So often people talk a lot about Zippo in World War II. The fact of the matter is, when soldiers embraced Zippo in WWII, they weren’t 60-years-old. They weren’t your fathers and grandfathers. They were 18-, 19-year-old kids. Those are the people we have to engage now.”

They’re already being engaged in China and Italy—just two of Zippo’s 160-plus foreign residencies. The final phase of the company’s master plan is only just now beginning to play out. “Market conditions will always change and force you to adapt,” says Booth, “but remaining true to the principles that your company was founded on and the core values of your brand will always inform the best direction.”

With fragrance, watches, clothing and more inching into local chains as the culmination of a successful expansion strategy that began overseas, the Zippo brand is truly headed in the best direction: Up.

The post is reprinted from the Global Trade Magazine

 

 

CHINA PLAYS BY ITS OWN RULES WHILE GOING GLOBAL

By JACK CHANG, AP

MEXICO CITY (AP) — When Venezuela seized billions of dollars in assets from Exxon Mobil and other foreign companies, Chinese state banks and investors didn’t blink. Over the past five years they have loaned Venezuela more than $35 billion.

Elsewhere around the Caribbean, as hotels were struggling to stay afloat in the global economic slowdown, the Chinese response was to bankroll the biggest resort under construction in the Western Hemisphere — a massive hotel, condominium and casino complex in the Bahamas just a few miles from half-empty resorts.

All over the world, from Latin America to the South Pacific, a cash-flush China is funding projects that others won’t, seemingly less concerned by the conventional wisdom of credit ratings and institutions such as the World Bank.

Argentina China's Reach Risky Business

The Chinese money is breathing life into government infrastructure projects that otherwise might have died for lack of financing. For commercial projects such as the Caribbean resort, China is filling a gap left by Western investors retrenching after the 2008 financial crisis.

But some in the Bahamas worry what will happen if the sprawling Baha Mar project fails. They picture an economy saturated with hotels, dragged down by an expensive Chinese white elephant. Likewise, the infrastructure loans are loading financially shaky countries with more debt and letting them avoid economic reforms that other lenders would likely have demanded.

“The Chinese play by other rules,” said Kevin Gallagher, a Boston University international relations professor who has studied Chinese lending to Latin America. “We’ll give you financing with no conditions, and we’ll finance things the International Monetary Fund won’t fund, things others won’t fund anymore, like big infrastructure projects. It allows countries to shop around, which has good and bad sides.”

Venezuelan leader Hugo Chavez talked up his independence last year while highlighting another $4 billion in Chinese loans, part of a wave of money that has translated into new railways, utilities and other projects.

“In a few days, they’re going to deposit 4 billion little dollars more from Beijing,” Chavez told reporters, holding up four fingers for emphasis.

“Fortunately, we don’t depend on the dreadful bank. What’s that one called that you mentioned? The World Bank. Poor are those countries that depend on the World Bank, the International Monetary Fund.”

Venezuela’s Oil and Mining Minister Rafael Ramirez says China has loaned his country $36 billion since 2008, and others put the figure even higher. The Spanish-language version of a report co-authored by Gallagher, “The New Banks in Town: Chinese Finance in Latin America,” estimates it at $46.5 billion.

The loans have added to Venezuela’s $95.7 billion in public foreign debt as of mid-2012, which has risen even as the country rakes in record-high oil revenue. Some analysts say the spending helped Chavez win re-election in October, despite battling cancer.

China has emerged in recent years as the largest provider of development loans not only to Venezuela but also to Ecuador and Argentina, according to the Gallagher report. All three are junk bond countries, ratings agencies say. In contrast, the World Bank and Inter-American Development Bank remain larger lenders in Brazil and Mexico, both countries with higher bond ratings.

In cases such as the tiny South Pacific islands of Tonga, China is lending enormous sums to countries few expect will be able to repay.

What has surely given the Chinese banks courage is the trillions of dollars in reserves the country holds in U.S. Treasury bonds, investments that pay almost nothing in interest. Making that money work harder for a return overseas has become nothing less than a national priority, part of China’s trumpeted “going out” strategy.

___

China’s economy is the second largest after the U.S., and many of the deals stipulate repayment in oil and natural gas, locking in the commodities China will need to sustain its growth for decades to come.

In 2009 and 2010 alone, the China Development Bank extended $65 billion in such loans to energy companies and government entities from Ecuador to Russia and Turkmenistan, according to a report by Erica Downs, a China expert at the Brookings Institution, a U.S. think tank.

“If you’re lending tens of billions of dollars to a borrower …, you want to make sure that loan is secured against something,” she said. “In the case of Venezuela, it’s the most valuable thing they can offer. It’s just one way to ensure they get paid.”

In dozens of cases, the Chinese have also demanded that their own companies build the infrastructure that will help governments extract and ship the commodities used to pay back the loans. In Argentina, that means agreements to bring in Chinese companies to revamp the country’s decrepit rail system, which would speed up shipments of soy to Chinese consumers.

“The money goes from one account in the China Development Bank into the hands of small- and medium-sized businesses in China,” Gallagher said, while noting the majority involve big state companies.

The Chinese also hold a valuable trump card: They’re betting that Chavez and other financial pariahs won’t dare alienate their last source of affordable money by defaulting on Chinese loans or seizing Chinese assets.

“The Chinese have the upper hand,” Downs said. “The China Development Bank sees this country that’s thumbed their nose at the IMF. And if they borrowed from the IMF and had to be subjected to IMF conditionality, the regime would fall.”

Perhaps with that in mind, more than 30 Chinese consultants toured Venezuela in 2011 and handed Chavez a thick binder with recommendations on everything from exchange rate reform to agriculture.

While news cameras clicked, Chavez held up the book, thanked his Chinese benefactors and pledged to study the prescriptions. Unlike IMF loans, however, the Chinese recommendations weren’t a requirement, and Chavez has shown no sign of curbing public spending.

The investments and loans have contributed to a substantial shift in commerce toward China. Venezuela, for example, saw its trade with the U.S. drop from 26 percent of its GDP in 2006 to 18 percent in 2011, according to an Associated Press analysis of IMF databases. Meanwhile, Chinese trade grew from virtually nothing in 2001 to nearly 6 percent a decade later, much of it in the form of oil to repay loans.

But the money doesn’t necessarily save countries from their own bad financial bets.

Zimbabwe, which has received generous Chinese financing, saw inflation peak at 79.6 billion percent a month in November 2008. At one point, a loaf of bread reportedly cost 500 million Zimbabwe dollars. Gideon Gono, governor of the Reserve Bank of Zimbabwe, suggested one possible remedy: Adopt the Chinese yuan as the official currency. (Zimbabwe eventually overcame the crisis by switching to a mix of Western and African currencies.)

Argentina is fighting off an economic reckoning despite receiving more than $12 billion in Chinese loans, according to the Gallagher report. In 2001, the country defaulted on some $100 billion in loans. It struck a deal with most of its lenders, but over the past year, a group of creditors is insisting on payment in full.

“It’s extremely concerning,” said Margaret Meyers, a China expert at the U.S. think tank the Inter-American Dialogue. “Chinese financing won’t be able to sustain these economies unless they go through substantial macroeconomic reforms. For Argentina, that means open markets, reforming institutions, reforming the banking system, fiscal accountability, ending lots of misspending.”

Some in the borrowing countries have watched with worry as the Chinese bets play out.

Opposition politicians in Venezuela have slammed the deals for locking in contracts for everything from Chinese-made refrigerators to Chinese construction workers while giving Chavez free rein to spend billions of dollars.

“There’s no doubt we’re going to need China, they are an economic powerhouse,” opposition leader Henrique Capriles said last year. “But many of the agreements the government has signed involve political loyalties that don’t interest us.”

___

On the beaches of New Providence in the Bahamas, hundreds of Chinese construction workers are toiling around the clock to ready the Baha Mar project for a scheduled grand opening in late 2014.

The project will add thousands of hotel rooms not far from the islands’ biggest resort, the Atlantis.

“Going forward, we have to achieve a sustainable tourism product,” said James Smith, the former state minister of finance for the Bahamas. “If we don’t, Baha Mar could be cannibalizing Atlantis.”

Baha Mar has opened sales offices all over Asia to promote and presell hundreds of pricey condos, hoping to imprint new travel habits on a continent that’s traditionally spent beach vacations in Southeast Asia. It is also working with the Bahamian government to open more consular offices in China to issue visas.

“In general, you would assume that a project of that size is generating its own demand and the idea would probably also be with Chinese money comes an influx of Chinese travelers,” said Jan Freitag, senior vice president of hospitality industry research firm STR. “The Chinese would argue that we can maybe attract a clientele that has not been with you before.”

When completed, the complex is set to boast brands such as the Grand Hyatt, Rosewood and Mondrian, and 313 $1-million condos being marketed to the international elite.

Business leaders have openly questioned the investment as Baha Mar rises just blocks from storefronts left empty during the latest downturn. The Wyndham hotel was closed for all of September and most of October because of low occupancy levels, and on Feb. 8 announced the need for “substantial cutbacks,” including layoffs.

“In a vibrant economy, we wouldn’t be having any concerns. The reason it comes into question is whether it’s right at this time,” said Winston Rolle, CEO of the Bahamas’ Chamber of Commerce.

The project had, in fact, been conceived in a different moment, more than six years ago, when the U.S. housing boom and global tourism seemed unstoppable.

One of the original developers, Caesar’s Entertainment Corp., formerly Harrah’s Entertainment, backed out of the project in 2008, and Chinese financiers stepped in after reaching a deal with project CEO Sarkis Izmirlian. The agreement brought in a state-owned Chinese construction company to build the resort.

“This project is essential to developing business in the Caribbean and into the U.S.,” said Tiger Wu, vice president of the construction company, to Bahamian media. “It’s only the beginning.”

All evidence indicates the Chinese are charging forward. They’ve made their $3.5 billion gamble in the Bahamas. Elsewhere, they’ve promised tens of billions of dollars for everything from dams to railroads. Guyana has hired the state-owned Shanghai Construction Group to build a 197-room Marriott Hotel on the southern edge of the Caribbean.

Meanwhile, traditional investors in the U.S. and Europe have been left on the sidelines. It’s China’s game now. And the rest of the world is waiting to see how the big gambles pay off.

___

Associated Press writers Jeff Todd in Nassau, Bahamas; Ian James in Caracas, Venezuela; Ben Fox in San Juan, Puerto Rico; Michael Warren in Buenos Aires, Argentina; and Nick Perry in Wellington, New Zealand, contributed to this report.

EDITOR’S NOTE _ This story is part of “China’s Reach,” a project tracking China’s influence on its trading partners over three decades and exploring how that is changing business, politics and daily life. Keep up with AP’s reporting on China’s Reach, and join the conversation about it, using the hashtag (hash)APChinaReach on Twitter.

Born Global: Five Reasons to Travel & Experience More

 | February 14, 2013 |

Global GenerationWe are the “Born Global” Generation. We are suspicious when on evening news that is only about America, we dream of vacations in Mykonos rather than Martha’s Vineyard, and are excited to meet people from countries we have never heard of. But, what does “Born Global” really mean?

Ted D. Zoller, Executive Director at the Center for Entrepreneurial Studies at Kenan-Flagler Business School introduces it as such:

  • They are better traveled at twenty-one than most who are now forty, and many are already on their second passports.
  • Prague, Buenos Aires, and Dubai are not exotic to them; London, Paris, and New York are passé, and, at best, hub airports on their way to somewhere else.
  • They do not operate only in the West, and do not see you as legitimate if you haven’t engaged in all hemispheres—on all continents (save maybe Antarctica).

While some of you may protest, saying that you can’t name 75% of the world’s countries on Sporcle and aren’t on your second passport, I would like to suggest a new way of defining “Born Global”.

But being born global means a certain mindset, that we see our world as just that–an entire world–an interconnected series of diverse peoples, rather than just our homogenous city, state or country.

The most distinguishing trait of our “Born Global” generation is the ability to see a vast community woven together, operating seamlessly between developing and the developed world.  Also part of digital generation, we don’t see that the cultural or spatial barriers between countries and people, but rather the ability to communicate to nearly anyone else through technology and the internet.

Being flexible culturally, where different cultures are not viewed as uncomfortable situations to blend into but rather learning experiences, we are not inhibited by the thought of moving to a new country, doing our research, talking to locals, finding emerging market opportunities, and starting companies.

Globalization is no longer reserved for huge multinationals, as “Born Global” entrepreneurs think about scaling vertically, horizontally and across oceans.  Or better yet, we just start across seas.

Top Five Reasons to be Proactive as one of the Born Global

1) Jumpstart your career, whether corporate or entrepreneurial

As multinationals become more ubiquitous, each one of them is looking for an edge– and and that edge has taken the form of localization.  Working in another country for a local companies fully submerges you into that culture and language.  When companies are looking for candidates with diverse international experience, having hands-on experience in a country they’re interested in could land in you in a leadership role.

While the world of VC’s and startups are getting more and more oversaturated in the US, they are often just beginning in many other countries.  Not only can you take a more active role in foreign entrepreneurial communities, especially BRIC countries, but you may also have a prominent opportunity to shape these ecosystems.

2) Gain a new perspective on your own country

Working in another country and taking a vacation in another country are two very different experiences.  Working in another country and truly trying to interact with the local culture will enable you learn more about other nationalities’ perception of your own country.  Some of those perceptions may be pleasant, and others less so but it allows you to understand why people may act a certain way towards your country.  Consequently, you can react in a more civil and appropriate way in inflammatory situations, representing your own nationality better.  Sometimes you have to step outside to see more clearly what is inside.

3) Learn Faster and More

Being in another country is uncomfortable.  When you’re uncomfortable you’re forced to push yourself out of your boundaries and adapt faster.  You learn time management skills when you have schedule any hour learning a new language into your schedule, or have figure out how to achieve your own initiatives through a completely new kind of business politicking.  Often times you can no longer push the responsibility on someone else and become more accountable for all your tasks and endeavors at hand.

4) Use your skills in a surprising way

There are certain innate skills you have from receiving a Western education that are much more valuable than you would think.  Resourcesfulness in research and creativity can go much further in countries where your co-workers have received more sheltered or conservative educations.  This outside of the box thinking will position for a more accelerated professional trajectory.

5) How will you know what to do in the world if you haven’t seen all the options?

It’s easy to say that travel will “broaden your horizons”, but being in other countries exposes you people or situations with more fluid experiences.  Seeing other CEO’s or craftsman alike who have made a wider array of professional and personal decisions will enable you to make more educated opinions and decision about your own life.  Sometimes all it takes to have the courage to make a big decision is to see someone else who has done something similar.

The Born Global Generation is here to globalize the local and localize the global, aren’t you ready to take part?

Stephany Zoo creates fire, not flash. Incubated at powerhouses like Ralph Lauren, Princeton, and Likeable Media, Stephany is a vigorous steward of brand, relentlessly excited about enduring imprints of image and word. A New York City transplant, Stephany seeks to bridge her bicultural heritage and achieve a greater understanding of international consumer behavior in Shanghai, China. She enthusiastically advances the customer development of BUNDSHOP.COM, leveraging digital and viral assets to disseminate BUNDSHOP. COM’s vision and voice.

Image Credit: Shutterstock.com

 

U.S. Exports Rise to Record Annual Total of Nearly $2.2 Trillion in 2012

Export-Import Bank of the United States : U.S. Exports Reach $186.4 Billion in December, Rise to Record Annual Total of Nearly $2.2 Trillion in 2012

02/08/2013|

WASHINGTON, D.C. – The United States exported $186.4 billion in goods and services in December 2012, according to data released today by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department.

U.S. exports of goods and services in 2012 reached a record annual total of nearly $2.2 trillion ($2.195 trillion), which is 39.1 percent above the level of exports in 2009. Over the past 12 months, exports have been growing at an annualized rate of 11.6 percent when compared to 2009.

“Today’s record-breaking numbers show that U.S. exports in 2012 continued on a historic path of growth,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “Thanks to the hard work and ingenuity of our exporters, America is making steady progress towards meeting President Obama’s National Export Initiative goal of doubling exports. Over the past year, U.S. companies big and small have exported almost $2.2 trillion worth of goods and services, fueled by the power of American innovation.”

“But we cannot stop here. More can and must be done to increase international sales and create jobs in the United States. Through our nationwide Global Access for Small Business initiative, Ex-Im Bank is reaching out locally to more small and medium-sized businesses to provide them with the export financing and training they need to succeed globally,” Hochberg said.

Over the last 12 months, among the major export markets (i.e., markets with at least $6 billion in annual imports of U.S. goods), the countries with the largest annualized increase in U.S. goods purchases, when compared to 2009, occurred in Panama (52.0 percent), Chile (42.2 percent), Russia (41.4 percent), Peru (37.9 percent), Venezuela (37.6 percent), Argentina (36.2 percent), United Arab Emirates (36.0 percent), Hong Kong (33.4 percent), Turkey (32.9 percent) and Columbia (31.7 percent).

About Ex-Im Bank

Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years (from Fiscal Year 2008), Ex-Im Bank has earned for U.S. taxpayers nearly $1.6 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.

Ex-Im Bank approved nearly $35.8 billion in total authorizations in FY 2012 – an all-time Ex-Im record. This total includes more than $6.1 billion directly supporting small-business export sales – also an Ex-Im record. Ex-Im Bank’s total authorizations are supporting an estimated $50 billion in U.S. export sales and approximately 255,000 American jobs in communities across the country. For more information, visit http://www.exim.gov.

 

You are invited to a “Fluent In OPIC™ – Financing & Protecting your International Franchise Expansion” webinar

Felisquestions

Fluent In OPIC™ – Financing & Protecting your International Franchise Expansion webinar workshop

Join us for a webinar on Feb 27, 2013 at 1:00 PM EST.

 

A comprehensive “beyond the website” look on how to effectively utilize little known programs offered by the Overseas Private Investment Corporation (OPIC) – a US Government Agency – to finance international franchise expansion transactions and insure royalties. GlobalFelix

The workshop will address the application process, Franchise deal structures, sponsor requirements and commitments, approval procedure, realistic time frame estimates, costs, fees, legal and developmental issues. The workshop will also examine various options for protecting royalties and investment through effective use of political risk insurance.
PRESENTER:
ALEXANDER GORDIN, FOUNDER of FLUENT IN FOREIGN BUSINESS
An international merchant banking professional with over 25 years experience providing cross-border strategic advisory services in the areas of export finance, international project finance, risk mitigation and business development. Clients include foreign governments and state enterprises. Transactional and negotiations experience in over thirty-five countries. Author of the critically acclaimed “Fluent in Foreign Business” book. Published and featured in numerous publications including: The Wall Street Journal, … for more ….http://wp.me/P1iIhX-I

After registering, you will receive a confirmation email containing information about joining the webinar. This webinar is COMPLIMENTARY for the IFA Members and Readers of the Fluent In Foreign Business Blog and Weekly Newsletter. Register now!

https://attendee.gotowebinar.com/register/8464918269348346624

 ______________________________________________________________________________________________

We also offer

Emerging Markets Business Opportunities Disconnect and What to Do about It.” occurs several times. Please register for the date and time that works best for you: 

https://attendee.gotowebinar.com/rt/4647937265038308352


PROBLEM 
As their economies grow, emerging market countries are aggressively building infrastructure, and developing commerce. These countries need a host of resources including suppliers, professionals, investors, franchisors et cetera from outside their borders to help them capitalize on their potential.

At the same time, many companies from developed nations, particularly from the U.S., are eager to provide products or services.

However, the market of connecting these buyers and sellers is extremely inefficient. Tremendous amounts of valuable time, resources and money have been wasted, until now.

At Fluent In Foreign Business we have developed a program that effectively and efficiently connects emerging countries with companies and investors that are ready, willing and able to provide needed products and services. This initiative addresses several fundamental problems currently hindering international business such as cross-culture gaps, lack of financing, risk mitigation and legal compliance with anti-corruption and anti-money laundering legislature.

Fluent In Foreign also provides a cost-effective platform for pre-selected Emerging market companies, as well as North American exporters, investors, project developers and franchisors to access and take advantage of over $5 billion of qualified business opportunities in more than 40 of the most promising emerging markets.

PRESENTER:
ALEXANDER GORDIN, FOUNDER of FLUENT IN FOREIGN BUSINESS 
An international merchant banking professional with over 25 years experience providing cross-border strategic advisory services in the areas of export finance, international project finance, risk mitigation and business development. Clients include foreign governments and state enterprises. Transactional and negotiations experience in over thirty-five countries. Author of the critically acclaimed “Fluent in Foreign Business” book. Published and featured in numerous publications including: The Wall Street Journal, … for more ….http://wp.me/P1iIhX-I

GlobalFelix

Emerging Markets Business Opportunities Disconnect and What to Do about It. occurs several times. Please register for the date and time that works best for you: 

https://attendee.gotowebinar.com/rt/4647937265038308352
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Keys to ABCs – “Your Company’s Keys to American Business & Capital”

Emerging Markets Business: Keys To America™

presents

Keys to ABC

“Your Company’s Keys to American Business & Capital

Master Class Tour Across 42 Emerging Markets Kicks Off The Emerging Markets US$5Billion Business  Challenge!

As part of  the EMERGING MARKETS BUSINESS: Keys To America™ initiative to help emerging market countries create $5 billion of tangible economic value over the next two years, Fluent In Foreign Business, along with the Princeton Council on World Affairs and RSL Media are pleased to announce “Keys to ABCs”  – a 42-country educational tour beginning November of 2012 and continuing through May of 2014.

This unique tour is the first step of the Business Challenge program and will feature a series of 2-day comprehensive master class workshops titled:

  • “Your Company’s Keys to American Business & Capital Markets”
  • “Entering North American Business Markets”
  • “Preparing Your Company for International Business”

 The sessions will be taught by me personally and a cadre of Fluent In Foreign Academy’s experienced instructors.   The unique workshops and comprehensive will provide qualified corporate participants in those countries with a unique opportunity to participate in the Emerging Markets:Unlocking America Challenge™, to diagnose their companies’ present “international business IQ” and to develop practical useable strategies to position their organizations for access to the International Financial and Strategic investments, Low-interest Loans, Technology Partners, World-renowned Franchisors and Lucrative Customers.

 (READ  MORE http://wp.me/P1iIhX-aa )

Three ways to find clients abroad (two are wrong)

How to build a solid international business, brick by brick.

By Alexander Gordin, reposted from Citibank.com Business Solutions

January 31, 2013

If you remember the story of the Three Little Pigs, you already know all there is to know about doing business internationally. Just like in the tale, there are three ways to for a company to approach international expansion through exporting.

Passive Lucky (straw house): In this scenario, exporters-to-be go about their daily business and hope that someone from overseas will contact them with an order. Sometimes that does happen, and the order can be a minnow or it can be a whopper. In either case, the approach is no more solid than a straw house, and is unsustainable over time.

Ad Hoc (stick house): This strategy is a little better than the first since it involves some proactive moves by the exporting company. Maybe the CEO met someone at the trade show or called on a potential customer during a business trip. Some exports can be built up in this manner, but no serious, long-term strategy develops. Therefore, any adverse turn of events threatens to quickly undo this fragile structure.

Top-Down (brick house): This is the only correct approach to building business abroad. By committing to a strategic business development approach, would-be exporters are able to gradually implement a systematic, sustainable expansion plan that will serve their companies for years to come.

So how does one develop and implement the Top-Down approach?

Hire experienced advisors. Assign or hire experienced, dedicated folks to staff your international department. Starting with senior management, implement an ongoing training program for everyone involved in exports, finance, shipping and administration. Work with the U.S. Commercial Service, U.S. Chamber of Commerce (AMCHAM) and an American business council in each target market. Set up an account with a bank that has global reach and experience in foreign currency, can provide a letter of credit and has a wire transfer department.

Select the most promising markets for your product. There are about 180 potential countries in the world that merit consideration for exporters. Using tools available from the U.S. Commercial Service, World Bank, Transparency International, CIA World Atlas and private companies, thoroughly explore the markets and select 10 that appear to have the highest sales potential for your company’s products.

Drill down into your target market. Once the locations have been decided, the company should research its target market segments and define its products’ advantage in each. Use currency conversion calculators to set the local pricing for the product and check how it compares to the locally available products. Create a schedule of phases in which each of the new countries will be entered.

Find a strong local partner who will be able to completely service your company’s in-country needs. This is the most important step of all. The local partner should

  • Have a strong ability to recruit and manage local staff
  • Properly represent your company at all levels
  • Understand your strategic goals
  • Respect the value of your brand and understand the damage to it that a single wrong act may cause
  • Look out for your interests when it comes to financial matters and anticorruption policies

There are several types of partners for exporters. They include in-country agent or representative; local distributor or importer; and providers of technical services of equipment where warranted. To find a local partner, there are several good places to start. The U.S. Commercial Service offers Gold Key Service, which will identify and screen potential partners. Query local AMCHAM and industry associations in the target countries. Look on business networking sites such as LinkedIn. Ask headhunters, expats, family and friends, local lawyers, accounting firms and economic officers at the countries’ embassies in Washington DC.

Once the partner is selected, enter into a comprehensive agreement and structure the relationship in a way that affords you leverage and provides for a “trust but verify” framework for monitoring the relationship. Remember, building the partner relationship is an ongoing process and the personal touch is essential to success. Travel to the country often and get to know your partner. Put a contingency plan in place in case the partnership does not work out.

Together with the partner create product pricing; customize your company’s offering to the market; set up Foreign Corrupt Practices Act (FCPA) compliance policy and obtain local certifications and licenses that may be required. Find a great customs broker and an experienced freight forwarder. Line up export credit insurance and export financing from the Export-Import Bank of the United States, or private insurance carriers and banks, which finance exports.

Commit to the process. In order for a company to succeed in building successful export business, commitment of the entire organization starting with the top management is essential.

Once your export countries are identified, your partner selected, your product customized and positioned and your organization committed, execute the strategy patiently and consistently in each target country. Then watch your export business flourish.

Alexander Gordin is the founder and CEO of Fluent in Foreign, a business development and risk management platform designed to help exporters, manufacturers, franchisors and investors successfully enter foreign markets or expand their existing international operations. Fluent In Foreign publishes Fi180 Global Business AtlasTM with unique country profiles and proprietary Fi3
indicesTM to help companies seeking to expand their international business.

©2013 Citigroup Inc. Citibank, N.A. Member FDIC. Citibank with Arc Design is a registered service mark of Citigroup Inc.

 

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