The Global [Access] State of Mind is Key to Successful Exporting

Two days ago, my clients and I attended a very interesting Global Access event in Nashua, New Hampshire. Part of a series of such events around the country, this event was co-organized at the local Community College by the Export-Import Bank of the United States (EXIM Bank), and the 2nd District’s Congressional Office. Its goal, to help American companies learn about the tools, which exist to help expand exports and mitigate risks in the process.  Although, over my 25 year involvement in international business I’ve become quite familiar with all the tools federal and state governments offer to exporters, the Global Access event in Nashua put U.S Government’s commitment to assist companies that wish to export into a new perspective for me.

It is no secret to anyone that Nashua, NH is not a global metropolis, most people in the U.S., and certainly abroad, do not even know of its existence. Yet, the Global Access session in Nashua was attended by a group of prominent dignitaries including U.S. Congresswoman Ann McLane Kuster, a current Board Member of the EXIM Bank – Hon. Patricia Loui, and a former Board Member of the EXIM Bank – Hon. Joseph Grandmaison.  The event also brought together representatives from the U.S. Commercial Service (USCS), State of New Hampshire Department of Economic Development, Small Business Administration(SBA) and the EXIM Bank.  All this firepower to help companies in New Hampshire learn about exporting, obtain financing and mitigate risks of non-payment. AMAZING!

What was even more amazing, that the $300 plus million dollar deal concluded by our clients with Flex Energy of NH and announced at the event by the Congresswoman Kuster, was just one of several significant export deals successfully signed and executed by companies in New Hampshire.

If companies from a tiny New Hampshire can do it, there is no excuse for companies from every other state not to follow suite. Yes, working with Federal agencies is not often easy. The agencies charged with assisting exporters are constrained by bureaucracy, budgets, political considerations, yet having such multibillion dollar resources placed at the disposal of each end every American company seeking to expand its business internationally is truly a gift and a phenomenal opportunity. Those companies not taking advantage of this opportunity are doing themselves a disservice.

Below, I offer you an excerpt from my book “Fluent In Foreign Business”, which dovetails very well with the event that took place in Nashua and puts exporting in perspective. This fragment outlines a framework on how to expand internationally and take advantage of all the government and private resources that have been developed to enable American companies to succeed abroad

The deals take us to strange places,

exotic towns, abandoned mines,

through the deals we learn people’s faces

and find the truth between the lines.

Exporting American-made goods and services has become a hot topic, as the U.S. slowly rebounds from one the worst economic recessions. Timing is everything. And with a favorable exchange rate for the U.S. dollar, our exports are even more competitive in overseas markets.

Other factors favoring U.S. business include the global economic recovery, surging demand from emerging markets, the U.S. government’s financing, advocacy and policy initiative, and the cachet of the mark “MADE IN THE USA”. American service and manufacturing businesses have much to gain from an expanding export market. It is a widely held view among U.S. economists that increased exports can lead the way to a long-term business recovery.

Growing demand in emerging markets creates new opportunities for American companies to capitalize on a competitive currency by serving the burgeoning consumer classes. In addition to a revival of exports of U.S. consumer goods, accelerating infrastructure development in emerging economies presents opportunities for U.S. manufacturers of capital equipment and industrial materials and services. Capital-intensive sectors such as airport and road construction, real estate development, telecommunications, aerospace, healthcare, and transportation have traditionally been strong for American manufacturers.

Unique opportunities exist in regions with emerging economies such as in Eastern Europe, Africa, the Middle East, South and Central America, as growth in these countries spurs trade with the U.S. The so-called BRIC countries — India, Brazil, Russia and China — have long been in a class by themselves as growth leaders.

Despite the emergence of low-labor cost Asian and South American competition and a strong European presence, American companies are and will remain highly competitive in a number of international sectors and industries. Opportunities abound, but are often riddled with pitfalls and traps for the unwary. A U.S. company competing in the global arena must be informed, vigilant and prepared in order to successfully exploit these opportunities.

The Global State of Mind

Skeptics say that U.S. companies will not be able to compete with low-cost goods and services from China, Brazil, and Korea; yet Germany, which has some of the highest labor costs in the world, is an export powerhouse. Holland and Sweden also have highly paid workers, but are successful at exporting.

Why? Business people in these countries think, eat, sleep, and literally live exports. They are also sophisticated and proactive when it comes to direct investment into foreign markets. It’s that simple. With domestic markets much smaller than ours, they have to look beyond their borders for business. Then they dig in and learn the foreign cultures and develop relationships. They design goods and services that can be adapted in various countries. They are committed to finding ways of selling their goods and services and state borders aren’t going to stop them. These companies are not all major European conglomerates either. They include small and medium size businesses across many industry sectors.

Though untapped export and investment opportunities exist for many small and medium-sized enterprises, international trade and investments are simply not part of the typical American business mindset, perhaps because we have historically been fortunate to have such a huge marketplace right here within our own borders. Yet, fear and simple lack of information on how to effectively do business abroad deter executives from venturing into the international business arena.

Exporting and overseas investment is a state of mind. But it seems to be an afterthought for many U.S. companies that betrays a palpable lack of commitment. I’ve seen it many times: a U.S. business hires a mid-level international sales manager — usually an American with extensive foreign sales experience. He is assigned a massive territory with a great sounding acronym, such as EMEA (Europe, Middle East, Africa), often with a paltry marketing budget or minimal technical support. Then he is sent across the globe to look for qualified distributors. I often wonder why, in contrast, even small American companies have domestic sales forces to cover multiple towns, counties, cities, or maybe even states, but when these same companies go overseas, they assign entire continents to a single person with limited administrative and financial resources.

How do you change this mindset? How can American companies enter new markets abroad?

Fundamentally transforming the way American businesses think of exports and international business is critical to the expansion of U.S. export and foreign direct investment. Here’s how.

1. Comprehensive Education of Exporters and International Investors.  We must establish an education system where exports, foreign culture and international business are taught not as a byproduct, but as a core economic discipline at all levels.  As a nation, we don’t offer the intensive training or formal education required to prepare exporters and direct investors. Neither do we have a system of measuring and standardizing the quality of export organizations.  This must change.
2. Enhanced Export and Foreign Direct Investment (FDI) Infrastructure.  We must refine and enhance our export and FDI infrastructure and better focus our resources on preparing and assisting promising companies to effectively sell and invest overseas.  This has to start with expanded funding to appropriate agencies such as the U.S. Trade and Development Agency (USTDA), which delivers $47 in exports for every dollar it spends funding project feasibility studies and reverse trade missions. We also need our government resources to be leveraged with private-public partnerships (or PPPs).  We need to involve more banks and private finance companies in funding exports and finance American investments overseas.
3. Increased National Focus on Exports.  Exports must become a part of our national agenda, on par with healthcare, housing, real estate, and education, consistently and on a sustainable basis — not just when times are bad. When asked to name the top initiatives that can improve our economy, the average American should come up with exports. The Small Business Administration reports that a mere 1 percent of all U.S. companies are currently engaged in exporting.
4. Build a “Securities” Market Approach to Exports and Foreign Direct Investment.  The U.S. export and direct investment industry should take a cue from the securities industry, which is based on analysis and real-time distribution of information. Imagine how our industry could be served if, in the wake of Japan’s nuclear crisis, one or more export and investment analysts covering the nuclear sector would highlight third-country export or investment opportunities for U.S. companies.

I hope that this book will make a small contribution in helping American companies expand their businesses abroad, whether through exports of goods and services or through direct foreign investment.

Fluent in Foreign Business™ is intended to serve business executives and entrepreneurs considering taking their businesses into the international arena. It is also targeted at their business advisors, i.e. accounting and legal professionals who know their U.S. operations intimately and are in the position to help make tough decisions with respect to international expansion. This book will benefit those of you who are developing or expanding existing import-export businesses.  It will also benefit those of you who are considering investing directly into the foreign markets and operating locally in multiple industry segments.

The book combines basic business concepts with practical business insight and revisits some of my own experiences — some defining moments, some cautionary tales. It is not a guide to customs, holidays, economic data, or market research.  It is not a textbook on import-export trading or a compilation of forms and guidelines. There are many government and private resources that provide that information. Instead, this book is intended to help business executives develop a framework for strategic decision making, access the necessary information to evaluate the relative benefits of foreign market expansion to their organizations, and carefully prepare — organizationally and personally — for the demands, intricacies, and obstacles that prevail in the world of international deal making.

This book examines the ABCs of researching, planning and entering foreign markets such as the decision making process, the importance of selecting the right partners, practical steps one can take to make the search for local partners more effective and efficient, construction of an in-country support network, and managing corruption, culture gaps, and competition.

Government agencies such as foreign ministries, the U.S. Department of State, diplomatic corps, and foreign services have so-called “charm schools” to train employees to handle themselves in foreign markets. A number of leading universities offer programs in international business, geopolitics, and global affairs. However, the majorities of businesspeople who end up doing business in foreign markets or with foreign companies have never attended, or will not attend, such programs. Fluent in Foreign Business is for them.

Fluent in Foreign Business™ is based on my twenty plus years of experience in building and managing companies across borders and thirty plus years of international exposure. I have visited 39 countries, lived in five, and have done business in 31, three of which I have never visited.

Before we embark on an educational and entertaining journey, meet Global Felix™. He will pose provocative questions, the answers to which will help shape your international business strategy.

Although many of these questions come up in connection with doing business domestically, they take on a different dimension in an international context. There is less room for error, the issues are more complex in the face of additional laws and regulations, and the repercussions of a bad answer can be more brutal.

A new Sample Chapter called “Walk Softly and…”or “How big is your bat?” has been published on the pages of this publication. TO READ