U.S. Export Volume Expected to Climb in 2015

Written by Michael White, GlobalTrade.com

Baltimore, MD –   U.S. exports are expected to grow by $88 billion or 5 percent, in 2015, despite tepid global GDP growth, according to a research report just released by trade credit insurance provider, Euler Hermes.

According to the company’s latest Economic Insight report, the U.S.’s biggest export gains in 2015 will come from Canada, China and Mexico.

The report also projects strong export increases to smaller countries in Asia, Latin America and the Middle East, “reflecting recent rapid growth in these emerging markets, while also providing the U.S. with more diversification in its export composition.”

Export gains will primarily come from the agrifood, chemicals, energy and mechanical sectors. Textiles and ferrous metals show the smallest increases as the U.S. has become a much smaller player globally within these industries.

As U.S. energy companies are expected to start exporting natural gas globally by the end of 2015, revenues from this sector could be significant, growing from $16 billion in 2012 to $42 billion in 2040 or nearly 1 percent of GDP.

The planned 2016 expansion of the Panama Canal, which may double its capacity, “will also boost U.S. trade by allowing larger ships to carry exports from the U.S. through the canal, significantly reducing costs and making those exports more competitive.”

The U.S.’s largest trade deficit is with China, but several factors could shrink it, especially as China pivots toward a more domestically driven economy, and as the U.S. natural gas boon and favorable labor conditions have reduced China’s competitive wage advantage to the point that a growing number of companies are opting to ‘in-source’ their manufacturing.

In the coming year, the value of the U.S. dollar is expected to rise in 2015 making U.S. exports more expensive and less competitive with export financing faces several challenges, including tight lending conditions and risk-averse bankers.

Rising rates in 2015, the report says, “may make financing more costly and/or harder to obtain, especially given fragile global growth and geopolitical uncertainty.”

In addition, global business insolvencies “are expected to fall 3 percent, a much slower rate than 2014’s decrease of 12 percent.”

At the same time, insolvencies still remain 12 percent above 2007’s pre-crisis levels, meaning that exporters will need to continue stringently evaluating their partners for insolvency risk.

To further promote U.S. exports, two major trade agreements – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership – are currently being negotiated.

Both agreements  are being structured to reduce the burden of Customs, regulations, tariffs and taxes, lower barriers to trade, and allow increased access to new markets.

“Demand for U.S. exports is, of course, dependent on the strength of the global economy,” said Dan North, senior economist for Euler Hermes Americas.

“While the global economy is set to enter its fourth straight year of lackluster growth, the U.S. economy continues to grow and many of our industrial sectors are showing strength both at home and abroad.”


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Washington, DC – The US has set another annual record for the fourth consecutive year by exporting $2.3 trillion in goods and services in 2013, according to data just released by the Bureau of Economic Analysis (BEA) of the US Commerce Department.

In December, the US exported $191.3 billion of goods and services with the data also showing that US-generated export sales directly and indirectly supported nearly 10 million American jobs last year. in 2013.

Exports of goods and services over the last twelve months totaled $2.3 trillion, which is 44.0 percent above the level of exports five years ago. During the same timeframe, exports have been growing at an annualized rate of 9.5 percent when compared to 2009.

Among the major export markets – markets with at least $6 billion in annual imports of US-made goods – the countries with the largest annualized increase in US goods purchases, when compared to 2009, were Panama (25.9 percent), Russia (20.3 percent), Peru (19.6 percent), Hong Kong (19.2 percent), and the United Arab Emirates (19.1 percent).

Also on the list were Colombia (18.5 percent), Chile (17.1 percent), Ecuador (16.8 percent), Argentina (16.3 percent), and Indonesia (15.5 percent).

Source GlobalTradeMagazine

Broad Street’s Developing & Financing International Opportunities – A Smashing Success!


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 by Steve Lowery, GlobalTradeMag.com


EXPORTING TAKES THE CAKE When its main clientele, the airline industry, suffered after 9/11, Andy Axelrod looked abroad to sell Love and Quiches’ cheesecakes and desserts.

From the Publisher: Love and Quiches® is a great representation of how a small business can expand internationally. It is the kind of business that benefits greatly from the international expansion program developed by Fluent In Foreign Business to assure that every international expansion undertaken by its clients is successful.  If your business is seeking to expand internationally, or would like to bolster its current global expansion efforts, please contact us and tell your “Road Abroad” story

Andy Axelrod spends a lot of time on airplanes. His company, started “by accident” 40 years ago, has seen its overseas sales increase for the better part of a decade. As Axelrod’s business has grown so have his frequent flyer miles, making it fortunate that he is not a nervous flyer … well, except for that one thing.

Takeoff? No problem. Landing? Easy. In-flight movie? As long as it doesn’t feature anything in the Teen-Vampire-Without-a-Date-For-the-Prom genre, he’s just fine. No, there’s only one thing that raises Andy Axelrod’s airborne anxiety: dessert.

Chances are that if he’s flying the kind of airline that serves dessert—dessert, not a sad excuse of a cookie packed in a pouch equal parts kryptonite and frustration—they’ll be serving one of Andy’s. Love and Quiches, the Long Island, N.Y.-based company of which he is president, is a leading producer of fine desserts, and quiche, served in eateries and on airlines around the world. Chances are just as good that if you’ve had a great salted caramel brownie, slice of cheesecake or bacon-tomato quiche in a restaurant—fine dining or chain—at a food court or on a flight, you’ve tasted one of Andy’s products. If Andy happened to be in that restaurant or on that particular flight with you, be assured he watched intently as you took that first forkful, waiting for your initial reaction in what, for him, is a moment of delicious torment.

“I’m always watching what happens right after that first bite,” he says. “That moment always feels like forever. Fortunately, it’s always worked out.”

The same can be said for Love and Quiches’ overseas operation. Business is good; very good; an increase in sales of 20 to 30 percent each of the last five years, good. Still, global success is a relatively new thing for the company; it was only 2003 that Love and Quiches, founded by Andy’s mother Susan Axelrod, finally ventured overseas and then only when forced by lean times. Success itself has been transitory; stretches of triumph tempered by tragedy, days when any of a number of issues, including world events, threatened its very survival.

Love and Quiches desserts hitch a ride with a large food distributor that works with a specialized freight consolidator for the long ride overseas.

There’s a name for all of that: Business. More specifically, Small Business, where margins can be as narrow as the window of time one has to learn what they’ve done wrong and make it right. Exporting was like that for the Axelrods. Like so many small business owners—their company employs about 250 people—they had the typical reservations about taking their business overseas: they were too small, too specialized, their product was too fragile; they didn’t speak the language, know the customs or local regulations and had absolutely no idea how to go about getting a New York cheesecake from their bakery in Freeport, New York—44 miles east of Manhattan—to a chicken restaurant in Saudi Arabia. You know, the usual.

“The most common themes I hear from small business owners is not knowing where to start,” says Dario Gomez, associate administrator for International Trade at the Small Business Administration (SBA). “[They’re concerned] about not knowing what to do if something goes wrong and not knowing how to find clients.”

Clients have not been a problem as, today, about 25 percent of Love and Quiches revenue comes from exports. Those numbers would have seemed unfathomable to the Axelrods 10 years ago. They figured large-scale exporting was not in the cards for them because their product was so dependent on not only tasting fresh but being true to its name.

“A New York cheesecake has to be made in New York,” Andy says. “We had people saying, ‘Why don’t you just ship the ingredients overseas and have someone make them over there?’ But we would never skimp. People want to eat a real New York cheesecake. That’s what they’re paying for.”

That problem found a solution when Andy discovered that flash-freezing his products immediately after they were created ensured that they would remain fresh on the shelf for up to a year. Still, the flash-frozen solution raised another issue: How could Andy be sure that his product would remain frozen through the shipping process? Any fluctuation in temperature could ruin an entire shipment. He was introduced to recording devices that not only monitored each shipment’s temperature but alerted officials any time there was a break in the container seal or atmosphere fluctuation of the food-delivery system.

“I’ve eaten cheesecake that’s been on the shelf for more than a year and it tasted very fresh,” he says. “I’ll tell you it tasted much fresher than an item that was sitting in a bakery’s glass case all morning.

“These devices are amazing. That’s what comes when you deal with reputable people, reputable carriers. You get a high level of professionalism that leads to solutions. You have to do your homework to find them, like anything else. You interview, get background through things like trade publications and directories. But, I must say, the system has worked out really well for us.”

It’s possible for a small business owner like Andy to be overwhelmed by logistical issues and unaware that a revolution of sorts has been going on the past couple of decades as third-party logistic providers have made it a point to help small businesses with limited resources tap into vast assets, new technology and new thinking that allows them to reach far-flung markets previously thought unflungable.

These logistical providers—call them 3PLs, logistical experts, freight forwarders, consolidators, supply-chain managers, whatever—offer a full and wide-ranging suite of services specifically geared to get small companies products to their overseas destinations in an efficient, cost-effective manner. It’s in part due to this that, in the past three years, the amount of U.S. small businesses exporting goods or services has increased from 52 to 64 percent, with those exports valued at nearly $2.3 trillion.

In Love and Quiches’ case, it’s made it possible for the company not only to find customers far from where they ever thought possible, but to assure Andy he’ll see the proper, first forkful response, whether sitting in an airliner or in a South American café, something that would have been unthinkable little more than a decade before.


“To be honest,” said Susan Axelrod, who’s incapable of being anything but, “we really didn’t know that much about exporting. Then again, we really didn’t know much about anything.”

Founder Susan Axelrod. Using flash-freezing techniques, Andy Axelrod says even after a full year, his Love and Quiches cheesecakes taste fresher than mid-day bread from the local bakery.

When she’s not traveling to one of her bucket-list destinations with her husband—they recently returned from Egypt; Morocco is next—Susan is picking up awards, giving talks and readying for the publication of her book, tentatively titled An Accidental Business, chronicling her success as a business leader and entrepreneur. As undeniable as her success is, she is the first to say it was unplanned and unlikely; nothing in her background or upbringing seemed to foreshadow it. Yes, she attended college, but it was during the ‘50s, a time when most women were thought to be on campus for reasons other than commerce.

“Someone like me was expected to get married,” Mrs. Axelrod explained.

She did and began raising a family, a vocation that included cooking, something for which Susan began to demonstrate real talent. She was particularly good at baking and creating a dish new to America called quiche. She likes to say that she was fortunate to learn how to cook before anyone knew there was something called cholesterol, her creations including crepes stuffed with Brie, dipped in beer batter and deep fried in a cauldron of clarified butter. Friends swooned and Susan saw possibilities.

She created her home-based business in 1973, initially offering the then-exotic sounding quiche. Desserts would soon follow. If it sounds as if there was a plan, there wasn’t, business or otherwise. To Susan that was another world with a language all its own. She called receivables, “oweables” because “that’s what people owed us.” There were no “payables,” since the business had no credit and paid for everything upfront. She made nearly $25,000 that first year with a labor cost of $222, which is very efficient and a complete mystery to Susan.

“We must have paid somebody for something,” she says, “but for what, I can’t recall.”

Soon enough, production outstripped her kitchen and distribution outgrew the family car. The company moved into a local storefront, bought a second-hand truck and added eight employees. Everyone pitched in—Andy and his sister, Joan, would come home from school, drop their books and start breaking eggs. It was a grind but, perhaps a bit to her surprise, Susan found that she liked the grind. A lot. Rather than drain her, it seemed to feed a drive she’d been unaware she had.

“You have to have a tremendous capacity for work and I found I did,” she says. “Ambition is important, of course. But you have to have a very good idea, one that you are not going to be dissuaded from, because you will be challenged. Business is made up of challenges and if you can’t take the pain, you can’t be an entrepreneur.”

After going away to become a lawyer, then coming back to work in the company in the early ’90s, Joan—now Joan Axelrod-Siegelwax—returned to become vice president of Sales and Marketing. Business continued to grow as did the lessons; they learned that bankers were lovely folks, when times were good. They learned about being diligent about price points and the value of considered risk. After an unannounced change in packaging was met by customers with something bordering on outrage, the Axelrods became even more mindful that the people you sell to are not your clients but your partners—and that partnership doesn’t end when the product is delivered. The company fosters long-term relationships by keeping customers up with flavor trends—they’re very excited about a new Greek yogurt cheesecake—portion sizes, plating designs and serving suggestions.

There was another lesson to be learned, one that almost destroyed the business.

No segment of the economy was more affected by the terrorist attacks of September 11, 2001, than the airline industry. At the time, Love and Quiches had concentrated a large amount of its business with it and, virtually overnight, it disappeared.

“Things just came to a grinding halt for us,” Susan says. “Hundreds of thousands of dollars of cancelled orders.”

The lesson was simple but devastating, bringing Love and Quiches to the brink of ruin. They had focused too much of their business in one area.

“One of our philosophies since then is to not have concentration in any one customer or channel,” Andy says. “It can be a strength, but it can also make you very vulnerable. We certainly were vulnerable [after 9/11].”

Like all Americans, the Axelrods found themselves in utter shock and needing to grieve, and yet, they also knew they needed to act quickly or they would lose their business as well. They made changes immediately, converting to a lean manufacturing model, applying for a disaster loan from the SBA and searching out grants wherever they could find them. They hunkered down and, for the next couple of years, focused on growing sales, domestic sales, making the common mistake that many small businesses do: that it needs to be profitable domestically before it can even think about going outside the country.

“We tell [small businesses] that 95 percent of your potential customers live outside of the United States,” says the SBA’s Gomez. “Most foreign markets are growing from four to 10 percent each year. Companies that export are by and large more successful than those that don’t.”

Their foray into exporting had started small, with a single chicken restaurant chain in Saudi Arabia. It was easy to manage and they knew the owner. When, a few years later, the Axelrods believed it time to go larger, they were concerned that they didn’t have enough business to ship efficiently, that they would be paying for a lot of empty container space. It was then that they were approached by a consolidator who told them that he specialized in containers for clients that required multiple items. They had been approached by a large food company that specialized in food-court dining, they required a number of items to be shipped from the States, and Axelrod’s desserts would join the crew.

From that time on, things clicked. Love and Quiches expanded quickly in the Middle East and then in South America. The company has entered some European markets but finds it a bit glutted. Where they’re really interested is the whole of Latin America. And everywhere else.

“It’s a big world,” Andy says. “We have a lot of targets we’d like to pursue.”

Ironically for this accidental business, their biggest growth came through the lessons they learned from their own missteps and hard times. Things they didn’t foresee but things that, in the long run, made them, and their business, better. Here and overseas.

“You know, it’s funny, whenever I’m invited to go talk or be a panelist, they want to hear about all the great things you’ve done,” Susan says. “But I find I always end up talking about what we did wrong and the lessons we learned from that. It’s okay to make mistakes, it’s not the end of the world, as long as you learn from them. It’s not enough to believe in luck, you have to go out and make it. I mean, look at me, it took me a long time to become smart.”

A SEAT AT THE TABLE. (as BRICS crumble, is it CIVETS’ turn to shine?)

Indonesia tops many “fastest-growing” lists, but is it ready to compete with the world’s leading emerging markets? U.S. furniture maker Marie Albert thinks so. 


[By Warren Strugatch GlobalTradeMagazine]


WHAT’S IN INDONESIA FOR MARIE ALBERT FURNITURE? Tom Romano could make his furniture anywhere.  So why Indonesia?  A huge supply of timber and its low-cost workforce. The country’s booming consumer market is an  added bonus. (Gordon M. Grant photo)

Nearly a quarter century ago, Long Island businessman Tom Romano flew to Indonesia to acquire a factory in Semarang. The plant, in the middle of one of the world’s great timber expanses, would supply his Marie Albert furniture company with a low-cost workforce and easy access to mahogany, oak, pine and teak for its signature line of French country antique reproductions.

In the years since, Romano has shipped tons of American furniture—made by Indonesians in Indonesia—back to the U.S. Two years ago, lured by the booming Indonesian consumer market, Romano visited Jakarta for an international furniture show. Despite spending upwards of half of every year in Indonesia, Romano had never attended the expo.

He was glad he did. “I made sales,” Romano declares. “Last year I went back and made more sales.” In addition to reaching the growing Indonesian middle class, the show opened up vast markets in Asia and beyond. From the international seaport just down the road in Semarang, Romano now ships to new customers in India, Thailand, Brazil and other Pacific Rim markets. “There is more money now and people want good products for their homes,” he says. “Our furniture is made here by Indonesians. But it’s American furniture. It just happens to be made here.”

American companies, many of them fleeing rising Chinese labor costs on one hand and courting booming Asian consumer markets on the other, are following suit. Last fall, Furniture Brands International opened a case-goods plant in Tambak Aji, several miles from Romano. The factory, the furniture giant’s second operation in Indonesia, now manufactures and ships major volumes of Thomasville, Drexel, Maitland-Smith and La Barge around the world.

As more multinationals arrive and set up shop, Romano anticipates Indonesia’s long-neglected infrastructure will get a much-needed upgrade. Driving around various islands on business, Romano describes hair-raising rides on winding two-lane roads sandwiched between speeding semis. Dealing with the government can be just as harrowing, given the prevalence of corruption. “But things are modernizing,” he says. “It’s happening quickly.”

Yes it is. Ranked fifth on the Global Intelligence Alliance list of Top 30 Emerging Markets for 2012-2017—behind Brazil, Russia, China and India—Indonesia tops many fast-growth lists. With a population over 251 million, it is the world’s fourth-largest country. Even before the 2008 death of longtime strongman President Suharto, Indonesia was shedding its protectionist shell. In recent years it has joined the World Trade Organization, entered regional alliances like the Association of Southeast Asian Nations (ASEAN) pact, and inked free trade agreements with the U.S. and other states.

IT TAKES A VILLAGE Marie Albert’s Indonesian factory draws on the country’s young, low-cost workforce. Located in Semarang, the company also has immediate access to an international port, making it easy to ship its Indonesian-made U.S. furniture to its “home” country.

Indonesia has become a key U.S. trade partner, supply-chain ally and portal into Asia. Fanned by growing consumer demand, surging industrial purchasing and expanding government infrastructure spending, Indonesia last year absorbed over $10 billion in goods and services from the U.S., up more than 40 percent over the past five years. Oil and gas shipments pace the rise; agriculture and livestock, apparel, second-hand merchandise and specialized manufacturers are also surging. As for furniture, sales of U.S. brands are up 75 percent since 2008. Romano has plenty of company.

Globally, Indonesia is increasingly making its presence felt. Jakarta officials and their surrogates dominate the Asia-Pacific Economic Cooperation (APEC) forum as well as ASEAN. This spring, Indonesia spurred the formation of the ASEAN Regional Comprehensive Economic Partnership (ARCEP). The world’s newest trade bloc embraces all 10 member states along with key trading partners South Korea, Australia, China, Japan, India and New Zealand. Before an international press corps this spring, Indonesian trade minister Gita Wirjawan taunted the West with a telling comparison: ARCEP with its three billion-plus consumers and a GDP of $15 trillion, versus the European Union’s 390 million population and $13 trillion economy.

Indonesia’s true economic impact, however, may lie with the CIVETS. This loose affiliation comprises Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa, states whose growth dynamic by most measurements outpaces all other markets save Brazil, Russia, India or China.

In the future, “Markets will be defined not by geographic boundaries but by mega-corridors and mega-regions,” declares Aroop Zutshi, global president of Frost & Sullivan and the consulting firm’s managing partner. Zutshi and other analysts visualize commerce networks stretching across continents and spanning oceans. Markets historically defined by trade barriers, language and local taste preferences are being transformed by supply-chain opportunities, logistics-driven deals and a surging, acquisitive, brand-crazy, shopping-bag-toting middle class.

Taking its name from the small wild feline whose dietary and digestive habits help generate a certain high-priced gourmet coffee bean, CIVETS countries grow on average nearly 5 percent per year, a rate twice to three times as fast as developed countries. These cats attract big foreign direct investment dollars, import at accelerating rates, and invest increasingly in their own infrastructures. With an average age of 27, their populations attract companies looking to hire, to move into new growth markets—or both.

It’s not all Indonesia. Colombia—closer to the U.S. geographically and more familiar culturally—plays a vital role in hemispheric trade routes. The Colombia-U.S. Free Trade Agreement, signed in 2006, made more than 80 percent of U.S. exports duty free; most of what remained has since been phased out. According to the U.S. International Trade Commission, passage of the agreement has spurred bilateral trade by nearly $1.6 billion per year, most of it north-south. U.S. brands like Nautica and Northface have expanded; Perry Ellis came back post-treaty after effectively pulling out.

Colombia has marshaled its resources in recent years to specialize in custom-made orders and products, a growing manufacturing niche. According to Juan Carlos Gonzalez, vice president at Proexport, Colombia’s foreign direct investment arm: “These characteristics have positioned our country as a supplier not only for Latin American countries, but internationally,” reaching “the 17 countries with whom Colombia has signed free trade agreements.”

Vietnam may well be the fastest-growing feline; annual growth approaches 10 percent. By 2050, Vietnam’s economy should equal 70 percent of the United Kingdom’s.

Vietnam, Egypt, Turkey and Indonesia are among the 19 emerging-market nations cited by Prabhat Vira, regional head of trade and finance receivables for HSBC, as ranking among the world’s Top 30 markets. In a report released earlier this year, HSBC forecast that these nations would experience a middle-class boom reaching three billion consumers by 2050. Vira estimated that today’s emerging markets will drive up to two-thirds of world consumption by this century’s midpoint. Through 2020, Egypt, Turkey and fellow CIVETS Vietnam and Indonesia will dominate emerging-market growth, along with China, India and Malaysia.

Surging populations in all six markets are a defining factor of these emerging markets, Vira observes. “Population growth reflects longer life expectancies (coupled with) increasing consumerism,” he notes. “That in turn fuels growth in infrastructure and is linked to changes in spending habits.” The HSBC report anticipates rising consumer expenditures in financial services, health care, housing and household appliances as the next wave of middle-class nouveaux behaves pretty much as their parents’ generation did in Brazil, Russia, India and China. Industrially, HSBC economists foresee continuing rises in imports of machinery, transportation equipment, scientific apparatus, chemicals and plastics through mid-century at least.

Financing deals in frontier markets is characteristically complex. Commercial banks generally steer clear, leaving the territory to niche lenders and specialized funds. Reluctant to burden customers with costly Letter of Credit obligations, manufacturers often finance and insure their own receivables through customer-friendly terms and through deals arranged with distributors. “In countries like Colombia, where we have a discretionary credit limit, we can offer our customers open account terms,” says Michael J. Byrne, credit and collections manager with Hollingsworth & Vose, an industrial-paper and filtration manufacturer in East Walpole, Massachusetts. “They prefer that.”

Insurers would like more of that business, but such issues as transparency rankle. “If you’re purchasing goods from a factory in Bangladesh or Cambodia, what assurance do you have that the goods are actually being made there, not somewhere else?” asks Conrad Foa, chairman of Foa & Son, an international insurance broker. “The risks to business continuity are significant.”

Larger emerging-market deals typically involve government officials, adding another layer of complexity, cost and opportunity for mishap, observes Alexander Gordin, president of Fluent In Foreign, a New York trade consultancy. Those putting together frontier market deals may want to look into the government’s Overseas Private Investment Corp., a source of insurance and last-resort funding whose target markets reflect Washington’s foreign policy stance. OPIC, quips Gordin, “is the thousand-pound gorilla in the room.”

Anticipating a gold rush, companies are swooping into unfamiliar markets with Western products, services and processes, often with scant market knowledge or cultural savvy. Market entry strategies run the gamut from savvy to clueless.

TAMING CIVETS  The CIVETS affiliation—Colombia, Indonesia, Vietnam, Egypt, Turkey, South America—shares a name with a tropical forest-dwelling mammal that encompasses more than a dozen species.

TAMING CIVETS The CIVETS affiliation—Colombia, Indonesia, Vietnam, Egypt, Turkey, South America—shares a name with a tropical forest-dwelling mammal that encompasses more than a dozen species.

“CIVETS are no different than the BRIC countries in that you need a very specific strategy for each one,” says Babak Hafezi, chief of Hafezi Capital, a Beltway consulting firm. Surface similarities between markets are misleading, he says. While Indonesia, Egypt and Turkey share Islamic faith, their experiences in statehood, economics, trade and clerical influence on government are vastly different. Indonesia is characterized by vast size and Asian alliances; Egypt lists toward theocratic extremism; and Turkey thrives in part by reconciling modernization with Islamic values.

“Each of these countries,” says Hafezi, “consumes very differently and has different values based on cultural, political and economic experiences. Companies should approach them as heterogeneous economies.”

Sullivan & Frost’s Zutshi cites the example of a medical-device manufacturer that sought his firm’s advice after getting bogged down in Indonesian real estate. After opening a series of walk-in clinics scattered around the country, the company discovered—painfully—that geography and travel costs deterred potential customers. Zutshi’s team drew up a new plan, replacing brick and mortar clinics with a mobile staff and battery-powered devices. Employees fanned out across the country’s 17,000-plus islands, spanning 3,200 miles to see the customers who could not visit them.

The new approach is working, asserts Zutshi, who declined to name the manufacturer.

The medical-device firm’s experience offers a sound geo-cultural marketing lesson to Westerners willing to pay attention. “American businesses are late coming to the party,” observes Zutshi, himself born in India. “You have to be culturally sensitive. You can’t come in, flex your muscles and say, ‘Here we are,’ and expect it will work.”

Put another way: Taming CIVETS can be like herding cats. But given the size of payback, rest assured many will try.


President Obama’s promise to double exports in five years was a big idea. Maybe too big. Here’s where we’re really headed—and why. 

[By Will Swaim] Global Trade Magazine

global trade obama world international business logistics transportation cargo ocean carrier

Even now, reliving the moment online through the magic of YouTube, you’restruck by the Bigness of his Big Idea: President Barack Obama’s January 2010 promise to double exports by 2015 and, so, produce two million new jobs.

Observers called it “bold,” “surprising” and “ambitious.” It had the quality of Babe Ruth’s famous (perhaps apocryphal) promise to homer in game three of the 1932 World Series. Or U.S. Gen. Douglas MacArthur’s 1942 promise that he’d retake the Philippines. Or President John F. Kennedy’s 1961 promise to send a man to the moon.

And early this year, two years after his Declaration of Export Independence, it seemed the president had delivered. A New York Times reporter noted that the president’s original “surprise” announcement was a “bold promise” that had “sent the eyebrows of economists and policy experts upward, even as they applauded its intent.” However twisted that sentence (we know “they” is supposed to refer to “economists and policy experts,” but can’t help thinking it refers to “eyebrows”), her point was otherwise clear and nearly universal among reporters: “The administration is on track — for now — to meet its ambitious goal. Growing exports have been one of the central drivers of the recovery, accounting for about half the nation’s economic growth since the recession ended.”

“Exports are running at about $180 billion a month,” the Times reported, citing Commerce Department data, “up from $140 billion a month two years ago. They are currently growing at an annual pace of about 16 percent—a percentage-point higher than necessary to double exports to $3.1 trillion by 2015.”

But since January, European economies have collapsed, recovered and collapsed again. The U.S. jobs market has stalled. China—inexorable China—is wobbly. And while U.S. monthly exports hit $184 billion in March, they backed down to about $182 billion in April, the last month for which information is available.

Projections suggest slower export growth ahead. But worry not: The president hasn’t done the wrong things. It’s just that when it comes to growing exports, presidents simply can’t control the things that really matter. It turns out that generating exports—and export jobs—is less a function of government action than a result of things largely outside any president’s control.

THIS ISN’T A MATTER OF PARTISAN SPEECH but of understanding the limits of government where exports are concerned—something with which Republicans and Democrats both struggle.

Also Read: U.S. Must Focus on Exports

You can find the root of the problem in the president’s Jan. 27, 2010, State of the Union. The passage on exports is so brief that we can quote the whole thing here, courtesy of the White House website; we’ve retained the White House’s very helpful notes on crowd response:

Third, we need to export more of our goods. (Applause.) Because the more products we make and sell to other countries, the more jobs we support right here in America. (Applause.) So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. (Applause.) To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security. (Applause.)

We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. (Applause.) But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. (Applause.) And that’s why we’ll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia. (Applause.)

Also Read: Exports 2.0

There are fewer applause lines in your average television sit-com, and probably fewer errors.

The president made at least two crucial mistakes. First, in creating the National Export Initiative, he suggested that what he was proposing was somehow path-breaking/remarkable/unprecedented. It wasn’t. Second, he assumed a link between job growth and exports. There isn’t.

Go to the NEI’s own website for evidence that the president’s new, bold initiative is actually neither new nor bold. You’ll notice that the government scribes who drafted content for the site work first to lower our expectations. On national television, in the State of the Union, we got standing ovations for the president’s sweeping visions of a mighty nation roused to macroeconomic action; here we get microeconomics, humility and honesty: “The decision to export is one fundamentally made by U.S. business owners, entrepreneurs and farmers.”

Translation: You’re more or less on your own.

On the other hand, they (the scribes) assure us that the government can indeed help. But the help will come in fairly conventional areas. “U.S. companies, particularly small and medium-sized enterprises, often face hurdles when trying to close an export sale including lack of readily available information about exporting and market research, challenges obtaining export financing, strong competition from foreign companies and obstacles thrown up by foreign governments,” the website reads. “This suggests an important role for the federal government.”

Important? Maybe. But not new.

ON MARCH 11, 2010, SIX WEEKS AFTER HIS SPEECH, the president signed Executive Order 13534, creating the National Export Initiative. The order itself is more symphonic flourishes and booming bass drums than real action. It created the Export Promotion Cabinet (whose members are heads of various government departments and agencies or their designees) who “shall meet periodically and report to the President on the progress of the NEI.” Oh, and they “shall coordinate with the Trade Promotion Coordinating Committee (TPCC), established by Executive Order 12870 of September 30, 1993.”

Bottom line: One new committee shall meet with an old one.

There follow some general ideas about trade missions, commercial advocacy, expanding export credit … you can practically hear the sounds of a major recycling effort.

The reason for the recycling: American presidents have no power over the real variables affecting U.S. export growth. At least one critic, Foreign Policy’s Daniel W. Drezner, understood this. Blogging around the time of the State of Union, Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, declared, “Obama’s National Export Initiative will have no appreciable effect on export flows.”

In just a few paragraphs in a mere blog post, Drezner discounted the president’s proposals from breathtaking to merely windy. “The fundamental drivers for U.S. exports are the rate of economic growth of the rest of the world and the exchange rate value of the dollar,” Drezner noted. “If the dollar depreciates in value and the rest of the world experiences high rates of economic growth, then exports will take off. Everything else would generously be described as window dressing.”

AS ANYONE WHO HAS PURCHASED plantation shutters, curtain rods or drapes can tell you, never underestimate the value—or the cost—of window dressing. It blocks out harsh light, creates a sense of privacy, hides our shame.

But what this particular window dressing also blocked or hid was the reality that an export economy—even one that doubles its output—doesn’t necessarily produce jobs. And creating American jobs was the point of the president’s National Export Initiative.

Even the most optimistic observers grudgingly concede that what’s good for exporters is not necessarily good for a blue-collar worker in Ohio. In “What Export-Oriented America Means,” his brilliant essay in The American Interest, Tyler Cowen says there are three reasons to believe American businesses will, in fact, double exports in the five-year period ending 2015—and then destroys our innocence vis-à-vis job growth.

FIRST, HE SAYS, AUTOMATION IS MAKING production cheaper in the U.S. “The less manufacturing has to do with labor costs and relative wage levels, the greater the comparative advantage of the United States,” he says.

Second, Cowen says, “the recent discoveries of very large shale oil and natural gas deposits in the United States” mean cheaper fuel for American industry, and exports of that fuel and associated technologies around the world.” Let’s all agree that when it comes to fracking, opportunity rocks.

Finally, because the U.S. specializes in the accouterments of middle-class life, the rise of a global middle class will boost U.S. exports. Cowen sums it up this way: “The closer other nations come to our economic level, the more they will want to buy our stuff.”

So, there you have it: “Export success will resurrect the United States as a dominant global economic power,” Cowen believes. “America will be wealthier, its products will have greater global reach, and it will largely cure its trade imbalance with China. The fear of American foreign policy being determined by Beijing, or constrained by the financial resources of the Chinese central bank, will be forgotten. No one will view the United States as the borrowing supplicant in the U.S.-China economic relationship, and, all else equal, our exports to China will increase friendly feelings toward that country.”

This model—of a resource-exporting country that manufactures high-end goods in worker-free workplaces—might not sound like a wealthy country, not in the sense of one that produces jobs in great numbers. But Cowen suspects there will be real advantages. “As a major exporter (among other strengths), the United States can be expected to maintain and even extend its investments in its Navy and Air Force,” he writes. “The current defense budget austerity won’t last very long, meaning, among other things, that it won’t be a fun time to be a pirate. Parts of the Pacific may, politically speaking, become a ‘Chinese lake,’ but the two economically dominant countries will favor both open seas for trading and some approximation of global free trade, albeit with remaining protections in China itself. The United States will solidify its relationships with Latin America, and the old dream of an economically integrated New World will largely come true. Our neighbors to the south, too, will be buying a lot more U.S.-made goods.”

And because they will have been wiped out by outsourced production or insourced-robot production, labor unions will no longer be in a position to shape this new America—either through opposition to free trade or via project-labor agreements on the massive infrastructure projects that will likely follow this boom.

And Cowen suspects Americans will still get their jobs—though at far lower rates of pay—“in health care, education, services and government, areas that are largely insulated from foreign competition and that will themselves seek out export markets.”

Cowen doesn’t point out that many of these jobs, of course, represent their own grave threat to the nation’s future: The financial burden of the defined-benefit pensions and health-care benefits associated with jobs in the public sector are already scuttling city, county and state budgets across the country.

If all of this has you feeling glum, consider the example of recent German export history—“inspiring,” Cowen says, but “sobering, too.”

“At the beginning of the last decade, Gerhard Schröder’s Social Democrat government decided to reform labor markets and revamp Germany’s export prowess,” he writes. “These policies succeeded beyond most expectations, but less well advertised is the fact that real wages in Germany’s export sectors have been stagnant or declining, depending on which measures are used.”

The alternative—no jobs at all—is too grim to contemplate.

“We will continue to cut a proverbial ‘deal with the devil,’ in which ever more jobs will be created in the relatively protected service sectors, while much of the economic dynamism and income gains will accrue to the capitalists, CEOs and managers who dare to export.”

SO, AN EXPORTING BOOM IS ALMOST INEVITABLE—whatever presidents do—but won’t necessarily/invariably/inevitably create jobs. Should you worry?

That depends on your political philosophy. Democrats like the president (and going back to Andrew Jackson and the urban political machines of the nineteenth century) believe the government has a responsibility to create work. That may be. But if you want an example of governments that focus on job creation, take a look at North Korea where human technology is expensive and people are cheap—and so men and women spend hours each day sweeping Pyongyang’s empty highway system with brooms like something out of your kid’s Halloween pageant or the Renaissance Pleasure Faire. Where one guy driving a machine in the U.S. can clean 40 miles of roadway in a day, thousands of North Koreans are required. Now that’s job creation.

global trade kim jung un international business obama logistics shipping cargo ocean carrier

The idea that creating jobs is the full measure of the president’s activity is so pervasive that Republican activists have unconsciously accepted its corollary—that the job of business is to create jobs. Hence the Republican Party’s manipulative use of the descriptor “job creators” when they really mean to say “businesses” or “investors” or even just “rich people.” You don’t have to be a Democrat to guess that “job creators” was focus-grouped by conservative pollster Frank Luntz in order to appeal to President Obama’s constituency. But if you’re a business owner, you already understand its damaging implications: Republicans want Americans to believe that the primary job of business is job-creation.

It’s not. The primary goal of business is to create profit. There’s no question that it must do that in ways that are consistent with law and, more than that, morality. But jobs? That’s what a business produces as a byproduct when it has no other way to produce a profit.

The president’s larger ambition in 2010 was arguably to rally Americans to a point of view—to see the world as a marketplace for American products. That was a reasonable, legitimate and even honorable goal. But his blueprint for doubling exports—promising that government could manage the biggest things (foreign currency and economy) as well as the little things (that he would, as he said in his 2012 address, “go anywhere in the world to open new markets for American products”) was unsound in principle. Exports do not necessarily produce jobs. The world is not, as the president’s plan assumes, a place of competing nation states involved in zero-sum/binary/export-import calculations and easy-to-manage domestic job-growth. It’s more like chaos theory or multi-level chess.

Nor can the president bash American companies for moving jobs overseas; those companies are often also—in the real world, the one that’s more like multi-level chess—America’s leading exporters. And those exporters are making investments overseas and growing their wealth without much regard for boundaries—and no honest desire to grow jobs for the sake of job growth. They are not “job creators” except by accident. Sometimes, they’ll move jobs overseas. Sometimes they’ll bring them back to the U.S.—“insourcing,” has become a buzzword as popular among Beltway economists as the English boy-band One Direction is among tween girls.

If they are smart, and if they can, manufacturers will simply reduce the labor required to produce a product or service.

“The fact of the matter is these are the firms that account for two-thirds of American exports,” Gary C. Hufbauer said of companies that sometimes move jobs offshore. A senior fellow at the Peterson Institute for International Economics, Hufbauer noted that those offshore flows of capital and jobs “are intimately related to their exports. The notion that you can punish U.S. firms for investing abroad and still see exports rise is bunk.”

Bunk. Even the president’s friends and trusted associates understand this. In February, the Daily Caller, an online news site, reported that Matthew Rubel, one of the president’s private-sector trade advisers, also sits on the board of a Minnesota-based company called Supervalu. Months before Rubel’s September 2010 appointment to the president’s Advisory Committee for Trade Policy and Negotiations, Supervalu announced that it would move “149 white-collar jobs—including numerous high-tech jobs—to an India-based info-tech firm.”


Global Trade Magazine

Thre pieces of new legislation has been introduced in Congress aimed at better coordinating the federal government's export promiton programs. Credit. leatherdown.com

Three pieces of new legislation has been introduced in Congress aimed at better coordinating the federal government’s export promition programs. Credit. leatherdown.com

Three bills have been introduced in Congress that would enhance several federal programs aimed at promoting US-based small- and medium -sized businesses (SMEs) abroad.

The legislation – introduced last week by Rep. Sam Graves (R-MO), chair of the House Small Business Committee – seeks to improve “the coordination of federal trade promotion agencies.”

That would include “doing a better job of publishing up-to-date listings of foreign trade missions, tariff laws, and modifications in foreign regulations” and “integrating the states’ efforts at foreign trade promotion” into existing federal programs.

“Although 95 percent of the world’s market for products exists outside the US, many small firms do not have the resources and personnel to take advantage of these opportunities,” Graves said in a statement.

However, despite an improved environment for lending to SMEs, improved access to working capital remains a key factor in the success of small businesses wanting to expand into the global marketplace.

A survey released last month by the US Small Business Administration’s Office of Advocacy found that small business exporters “were especially dependent on working-capital loans because of the longer transportation times required when shipping goods abroad and the risk in foreign sales. “

The US Export-Import Bank (EXIM) manages an initiative to assist SME’s with expedited export financing and loan guarantees, but the agency has come under threat recently as it could be forced to stop operations in two months unless the Senate approves the nomination of Fred Hochberg as president of the government-operated bank for another two years.

“If we do not again confirm Mr. Hochberg before July 20, we run the risk of leaving the bank without a quorum to act on many of the transactions before it, which will hurt American workers and exporters,” said Senate Banking Committee Chairman Tim Johnson (D-SD).




 BY WILL SWAIM, GlobalTradeMag

Japanese kids have always been early adopters of global cultural trends—consider baseball (the country’s national sport) and Santa Claus, whom the Japanese have transformed into a kind of Jewish matchmaker presiding over a Christmas that looks more like Valentine’s Day.

Now Japanese youth are storming fast-food joints to order belly-busting volumes of fried potatoes, disgusting some observers by eating them all, and outraging others by leaving some behind. Blogger Brian Ashcraft reports that one scold took to Twitter to admonish the revelers: “Look, buying 23 large French fries is fine, but you gotta eat them all, you gotta eat every last one.”

Fried potatoes are truly international—whether they make a cameo in Canadian poutine (put to bed beneath blankets of gravy and a kind of cheese), as chips in England, as Belgian fries or a freak Japanese trend. But no matter where you eat them, the global trade cycle of what Americans call “French fries” begins in the Andes.


1In the 1550s, Spanish infantry encountered the potato in the arid Peruvian highlands. Shipped back to Europe, the tuber slowly grew in popularity, imbedding itself in Ireland, for example, as the chief staple. “No London merchant ever formed a new company to trade potatoes,” writes Steven Topik, my Global Trade colleague and co-author (with Kenneth Pomeranz) of The World That Trade Created. “But crises created needs to which the potato was beautifully suited; today, potatoes are the second-largest food crop in the world.”    READ MORE



The US exported $184 billion worth of goods and services, according to the latest figures released by the US Department of Commerce. Credit: redbubble.com

The US exported $184.3 billion in goods and services in March 2013, down from the $186 billion shipped overseas in February, according to the latest trade data released by the Bureau of Economic Analysis (BEA) of the US Commerce Department.

For the three months ending in March, exports of goods and services averaged $184.9 billion, while imports of goods and services averaged $227.2 billion, resulting in an average trade deficit of $42.3 billion.

The March figures show surpluses with Hong Kong of $3.2 billion; Brazil, $1.7 billion; Australia, $1.5 billion; and Singapore, $1.4 billion.

Deficits were recorded with China, $17.9 billion; the European Union, $9.9 billion; Japan, $6.6 billion; Mexico, $5.3 billion; Germany, $5.1 billion; OPEC, $4.5 billion; Canada, $2.3 billion; Ireland, $2.1 billion; Saudi Arabia, $2.1 billion; India, $1.8 billion; South Korea, $1.3 billion; and Venezuela, $1.3 billion.

Exports of goods and services over the last twelve months totaled $2.2 trillion, which is 39.7 percent above the level of exports in 2009. Over the last twelve months, exports have been growing at an annualized rate of 10.8 percent when compared to 2009.

According to the BEA, over the last twelve months, among the major export markets the countries with the largest annualized increase in US goods purchases, when compared to 2009, occurred in Panama, 31.2 percent; Russia, 24.7 percent; United Arab Emirates, 24.4 percent; Chile, 23.4 percent; Peru, 23.4 percent; Venezuela, 21.1 percent; Argentina, 21.1 percent; South Africa, 20.6 percent; Hong Kong, 20.6 percent; and Columbia, 20.3 percent.

lndustrial supplies accounted for 34 percent of total exports with capital goods claiming a 33 percent share; consumer goods,12 percent; foods, feeds, and beverages account, 9 percent; and automotive vehicles, parts, and engines, 9 percent.


How the Maker of Popular Brainteasers Learned to Conquer the Challenges of a Global Business

BY PATRICK DOOLEY , Global Trade Magazine

Master Minds Bill Ritchie and Andrea Barthello, married couple and co-creators of ThinkFun, headquartered in Alexandria, Virginia.

Bill Ritchie is tough to figure out. To his puzzle-enthusiast friends, the co-founder and CEO of ThinkFun is a businessman who enjoys the occasional brainteaser. His colleagues in the business world see Ritchie—an avid puzzler homegrown in a family of “Bell Labs people”—as an incidental international businessman trading on his first love, puzzles.

Ritchie sees the two as one in the same: business is a puzzle.

“The way I approach a puzzle is trying to figure out the underlying structure of it and to unlock its natural rhythms,” says Ritchie from the Alexandria, Virginia, headquarters of ThinkFun, maker of challenge games dreamed up by science types, engineers and mathematicians. “You figure out how its flow wants to be and you try to move it in that direction and see if you can figure it out. I really enjoy that process of trying to work through what is it I don’t understand, how do I massage this area and how do I identify something that’s just not working right and kind of open it up.

“Business,” he says, “is very much the same kind of thing for me.”

The world of international business has afforded Ritchie no shortage of challenges, from orchestrating the company’s first big international break, to dealing with copycats and the ongoing calculations of competing in a highly contested global toy and game industry.

ThinkFun’s initial global breakthrough shared the same “natural rhythms” as the company’s first blockbuster game, Rush Hour. In this puzzle, the player is given a small grid jammed with cars and trucks facing up and down, left to right; the object is to slide these pieces around the board in their given direction, eventually clearing the way for a designated red car to drive out of the gameboard’s single opening. Unless the player moves every piece to the correct position in the correct order, the red car will never get free.


Ask Ritchie and his wife Andrea Barthello, co-founder of ThinkFun, about their international breakthrough and they’ll give you a memorable name: Izzi Daddaboy. A buyer for Harrods of London, Daddaboy had wandered into ThinkFun’s booth at an annual toy fair—aptly named “Toy Fair”— in the early ’90s and said to Ritchie, “We need to do business together.” But to make this possible, according to Ritchie, the three needed first to slide a number of other pieces into place, clearing the way for the deal.

First, there was the problem of appearance. Before Daddaboy arrived on the scene at Toy Fair, ThinkFun’s packaging was, Ritchie says, “godawful,” too much even for someone like Daddaboy, whom Ritchie says “was in the business of [finding] diamonds in the rough.” But the packaging changed with ThinkFun’s very first export relationship—with a German company that discovered ThinkFun’s first “commercially viable” game, SpinOut, at New York’s Museum of Modern Art.

“This German group that was looking to create the German equivalent of the Sharper Image catalogue came to New York,” says Ritchie. “[They] shopped at the Museum of Modern Art, found SpinOut, contacted us, came down to visit us at Alexandria, set an agreement to send it into Germany, purchased product in bulk and made their own packaging.”

A friendship developed that allowed ThinkFun to use the German distributor’s packaging style and graphics, a totally new look for the young company. “We were being courted by Toys-R-Us to do versions of packaging that had the little kid with the smiling parents behind,” says Ritchie, “sort of the classic beauty-shop thing.” Thanks to the German partner, “we went to a highly graphic, adult-oriented black background with high color accents—a completely different look based on these Germans. That basically put us in a position to have Izzi Daddaboy come and go, ‘Hey, I like these.’”

Daddaboy liked the games so much he inked a deal on the spot for ThinkFun puzzles to be sold at Harrods of London. “I remember going out and celebrating at dinner that night,” Ritchie says. “It wasn’t a slow process. It was sort of amazing how fast the guy moved. Rare, too.”

If the partnership with Daddaboy and Harrods of London was a move made possible by ThinkFun’s first export effort, it follows that this discovery would never have taken place if not for another momentous change Bill and Andrea implemented beforehand.

Having launched the company hand making puzzles from wood and wire out of the couple’s basement in 1985 under the original name Binary Arts, the evolution to injection-molded plastic games necessitated a move to a third-party, Virginia-based manufacturing facility. That arrangement was short-lived. After just three initial products, Ritchie soured on the deal when he brought a new design to the manufacturer.

“I showed it to him and said, ‘Can you quote this for me?’” he recalls. “And he just looked at me, handed it back and sort of laughed and said, ‘No.’ To his mind it was so out of the realm of possibility that he couldn’t even imagine how to manufacture it. He wouldn’t even give me a high price quote on it. He was just like, ‘No, you can’t do that. That’s crazy.’

“It was that moment I realized that I needed to do something if I wanted to keep growing my business.”

That something was to follow a recommendation to a Chinese manufacturer, where Ritchie was given a quote that was “exactly right in line” with his target price for the end user. Not only would the new arrangement allow for more complex designs, it would give ThinkFun a scalability unavailable in its previous U.S. manufacturing arrangement. Suddenly it could produce more games like SpinOut, which would be picked up by the Museum of Modern Art and set in motion the series of events that led to its products being sold in Harrods of London. ThinkFun was now a truly global company.


As anyone who has ever played a game knows, moving to the next level doesn’t eliminate all challenges—it only creates more complex challenges. Between the times ThinkFun was arranging lasting partnerships in Germany and Europe, it had also found distributors in Canada and Australia. Along the way the company learned a valuable lesson: Work only with like-minded distributors.

“In the early days we would have people come into our booth and sort of say, ‘Hi, I sell into this market and I need a big discount from you because I’m dealing with exports,’” Ritchie recalls. “We’d say, ‘Oh, you want to buy that many? Well, okay, we can do that.’”

These distributors would buy a lot of product without a pricing agreement worked out, creating problems that wouldn’t become apparent until years after the companies had dramatically overcharged back in their home markets. “They would sell through and make a profit, but then the market was kind of dead because the products had gone in at the wrong price,” Ritchie says.

Speaking Your Language For international packaging, ThinkFun relies on its network of distributors to have translations made for local markets. Using local translators, the company keeps the rule explanations lighthearted for a family audience, rather than reading like instruction manuals.

Speaking Your Language For international packaging, ThinkFun relies on its network of distributors to have translations made for local markets. Using local translators, the company keeps the rule explanations lighthearted for a family audience, rather than reading like instruction manuals.

ThinkFun discovered that a department store in Italy had its SpinOut game—a perennial top seller—sitting on its shelf for more than 10 years after buying it from one such distributor. “The way it was described to me is that it was a constant reminder to the buyer of what a bad product it was. The reason is that [the distributor] had overpriced it. It didn’t sell at the price they were charging. A few units made a big stink because they got stuck and were placed by someone who was looking to make a one-season killing.”

So how can an inexperienced exporter avoid the same challenge? First, price fixing is illegal, so you can’t tell someone what to charge. “What you can do,” Ritchie advises, “is have sort of a larger relationship conversation about what the company’s values and philosophies are—what you believe together and what you think is appropriate for the market.

“I think it’s probably the case that as a general thing, when you’re a new company and hitting the blocks and kind of up and coming, there is just a class of [distributors] who basically, they’re bridge burners,” Ritchie says. “They do their thing and they just move on. If you don’t have any experience in that, you’re the bridge that they burn.”


As ThinkFun’s roster of export markets expanded, so did copycats. “You know how they say copying is the sincerest form of flattery?” asks Chris Gough, ThinkFun’s director of international sales. “It doesn’t make you feel good.”

Call that an understatement.

Barthello recalls: “The worst thing that happened was a distributor in Belgium who basically started making products that looked just like ours, but they weren’t quite specifically knocking us off—but it’s our distributor!”

“They did a good job of distributing our products,” says Gough. “They were aggressive and got us out there, and we had some good years. The problem was they started copying our platform of games and creating their own.”

At the outset of the relationship, the distributor had only been involved in young-age puzzles—think baby toys, like the frames with multi-colored twisty wires that tots slide beads across. Not exactly brainteasers. After taking on the partnership with ThinkFun, suddenly the distributor came out with its own line of multi-challenge puzzles with varying degrees of difficulty. The Rush Hour game, for instance, has 40 challenges with “Beginner” through “Expert” levels. The Belgians began producing games with 50 challenges, and instead of “Beginner” their version was called “Starter.”

It’s an obvious case of a partnership that needed to be severed immediately, but the process wasn’t so simple. “We ended the relationship and we did it to the letter of the contract—to the letter,” says Barthello. “We’re an incredibly honest company. We dealt with the excess inventory and switched distributors—and they sued us! And then it went to arbitration and we had to pay them $350,000 dollars!”

Barthello blames certain Belgian laws she says treat American companies unfavorably, the ineffectiveness of arbitration and the youthful ignorance of not having established a stronger partnership with a more trustworthy company. “There was no reason why a medium-sized company like us should have to pay them,” she says. “And that’s on top of the $100,000 in legal fees we’d already incurred. I was bouncing off the walls!”

ThinkFun holds a number of trademarks, patents and utility patents, the latter of which come into play with their most popular games, Rush Hour and Zinga. Still, it doesn’t stop everyone. “We have a whole big display of knockoffs in our office,” she says.

Barthello says her takeaway is that you have to be vigilant, have good relationships with distributors and realize it’s too expensive to chase down every would-be copycat in the world. “You have to have good legal advice and do the best you can without getting put out of business.”


Despite manufacturing in China, ThinkFun does not count the country among its list of nearly 60 export markets. Gough says it could be done with the right distributor, but the challenges of the market have thus far stood in the way. For one, the company would have to export its products to Hong Kong and then import them to China—a strange regulation that no one at the company quite knows the reason for. China is also notorious for bootlegging products, so it can be a challenge to find a distributor willing to compete with preexisting, often cheaper knockoffs.

Games-2Gough and company still hunt constantly for new markets that have the right formula for ThinkFun’s success, but perhaps fewer hurdles than China. “I look at the population, the per capita income and some unemployment rates,” Gough says. Though the wrong mix won’t necessarily preclude an effort to crack a given market, it is good to gauge what expectations should be. “You get in some places where really it’s just a small niche of the socioeconomic level in the countries [who] can afford it, and there’s not a lot of places to buy it,” he says.

Because ThinkFun is a small company, it relies heavily on its distributors, making those relationships all the more important. Once a new game is brought to market, it’s the distributor’s job to make sure translations are made for the packaging and instructions in the language of its home country. “Because we’re dealing with games and toys, a lot of the text is designed to be fun and geared toward kids and moms and dads,” Gough says. “You have to maintain the spirit of the text; you don’t want it to read like a manual.”

Once ThinkFun’s Chinese factories ship its games to Hong Kong, the distributors must work with a third-party logistics provider to transport the products to their various markets. Only goods bound for Mexico, Canada and some Latin American countries take a different route. For these markets, which make up about 10 percent of ThinkFun’s total exports, the games are first shipped to the company’s warehouse in Hanover, Pennsylvania, before traveling to their destination with a logistics provider of the distributor’s choosing. 


While Ritchie keeps an eye on the expansion of ThinkFun’s global presence, he sees a future without borders and with unlimited potential. He has spent most of the past several years analyzing a new platform—a whole new game—and trying to get a sense of its “natural rhythms.”

“The traditional games market today is really challenged because of the new world of electronics,” he says. “There’s just many things where social trends and distribution channels and everything is changing.

“I don’t have a hardcore plan on how to make that an international business. I do think that the revolution that’s waiting to happen is fusing traditional and online and moving into a whole new world of gaming using these new media techniques that are just emerging now.” He envisions a model where his online game sales fuel additional advertising, which in turn triggers higher sales of his physical games. An online component to the physical game can then drive players back to a web-based component to perpetuate the cycle.

“What I’m thinking is, even as the industry really starts to get troubled, our best days are ahead of us. And ahead of us not like some day in the future, but in the next couple years. For me, there’s never been a more exciting time than now.”

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