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There is a definite learning curve for doing business on a global scale and, while the process is long, the payoff can be worth it.
Rena Liu-Belshe, the manager of international trade at the Southwestern Pennsylvania Commission, said there are resources available for those companies interested in selling abroad.
Usually, she said, American businesses start selling in Canada, Australia and the United Kingdom.
"A lot of companies like to go to countries with similar values. It's what we call low-hanging fruit," Ms. Liu-Belshe said. "They get their feet wet and they go from there."
The Southwestern Pennsylvania Commission, a Downtown-based planning agency that works in the 10 counties of the region, helps companies get their products into foreign markets, often by organizing trade missions during which Pennsylvania companies can more easily find overseas buyers.
"A lot of small companies don't have the personnel to do the international marketing," she said.
And if they do decide to take that step of marketing beyond the U.S. borders, even with help available from the state and federal governments, it is not a quick fix for a business that needs cash.
"From the moment they are interested to the moment they get paid is a very long time," she said.
Pennsylvania ranks 11th in the country for exports, accounting for $34.8 billion worth of products in 2010, according to the U.S. Commerce Department. Nearly a third of that revenue, $10.21 billion was from Canadian buyers. China was second, buying $2.67 billion worth of Pennsylvania goods, and Mexico was third at $2.4 billion.
"Generally, we recommend that a company should not look into exporting until they have a successful domestic business," said Lyn Doverspike, the director of the U.S. Commercial Services Office in Pittsburgh.
The benefit of selling in foreign markets is that it somewhat insulates a company from domestic market swings, she said. But she cautioned that a company should not build a market outside of the U.S. if it can't meet the demand. Failing to deliver ordered product overseas will hurt future sales.
The U.S. Commercial Services Office, which is part of the Commerce Department, offers courses on exporting and explains some of the rules and regulations that are part of the system.
For instance, the U.S. government has export controls on certain products. While anyone would expect restrictions on exporting nuclear materials, there are also restrictions on computers and electronics, telecommunications equipment, marine devices, sensors and lasers.
Rules govern not just what can go out of the country, but also who can receive U.S. products. That has to do with trade boycotts with nations such as Iran, North Korea and Cuba.
The U.S. Department of Commerce offers a publication, "Basic Guide to Exporting," and Internet seminars on pursuing international trade.
"There are some basic fallacies," Ms. Doverspike said.
For instance, while many companies think exporting is the realm of the Fortune 500, the reality is that 97 percent of U.S. businesses doing business outside of the United States are small to medium sized.
However, the lion's share of the revenues from exporting is going to that other 3 percent -- such as General Motors and Westinghouse -- that brings in 70 percent of the foreign trade revenues.
Ms. Doverspike said 58 percent of the small- and medium-sized companies that do business overseas sell to only one foreign market. That may represent missed opportunities, she said. If a company is going to the trouble of selling in one market, it ought to look for others where the product would have appeal.
When it comes to helping businesses, the U.S. government sponsors booths at trade shows from which small companies can market their wares, in addition to offering the courses.
There are also cautionary tales contained in the government printing of "Don't Let This Happen to You," a handbook from the Commerce Department that lists investigations of export control and antiboycott violations.
Among the companies named in the booklet are Spares Global, Inc. of Green Tree and Ameri-Source Inc. of Bethel Park, which the Commerce Department said conspired to falsify documents and made false statements about a 2003 export of graphite products to a company in the United Arab Emirates. The products, which can be used in nuclear reactors and the nose cones of ballistic missiles, wound up in Pakistan.
On Oct., 4, 2007, Spares Global was assessed a $40,000 criminal fine.
At the end of February, President Barack Obama, a Democrat, signed an executive order to create the Interagency Trade Enforcement Center. The center is meant to coordinate work by the federal departments of State, Treasury, Justice, Agriculture, Commerce and Homeland Security and the Office of National Intelligence to enforce U.S. trade rights and trade agreements to make sure companies are getting the opportunities that have been negotiated for them in foreign markets.
One local company that benefited from government help was Xodus Medical in Upper Burrell Township, which has been exporting its medical products for the last dozen years.
Craig Kaforey, the president of Xodus Medical, said that since his company makes medical equipment, it already has to go through the federal Food and Drug Administration. That made it easier to qualify for a CE mark, the designation on packaging that says a product conforms to European requirements.
With the CE mark in place, Mr. Kaforey said he went to the Medica trade show in Dusseldorf, Germany, 12 years ago, where his products were on display with others manufactured in the U.S.
Now, Xodus is selling products in 50 countries, accounting for 10 percent of total revenues. Mr. Kaforey, who declined to give specific revenue figures for the private company, said the team from the Southwestern Pennsylvania Commission has helped him break into new markets.
Some markets are easier than others. On the regulatory front, Mr. Kaforey said, one of the more challenging in his business is the United States.
"The U.S. has a lot of regulations that help improve quality for the patients and look out for the safety of the medical workers," he said. "Those are all good things and they improve quality overall."
By meeting U.S. standards and those set by the International Organization for Standardization, he said, the company positioned itself for foreign markets.
The CE mark allows Mr. Kaforey's company to trade throughout Europe, but moving into Japan and Saudi Arabia requires extra paperwork.
While it can take awhile to prove that products conform to the regulations of various countries, he has found that choosing the right partners for distribution is even more time consuming.
It may take six months to realize that a company is working with the wrong distribution partner and that the partner just isn't making any sales, at which point the company has to go back and find someone else.
Ms. Liu-Belshe agreed that lining up partnerships and working with the right people is both the key to success overseas -- and the hardest part of the transaction.
First Published March 20, 2012 12:00 am