Why don't more small businesses export? Suresh Kumar, who helps lead the U.S. National Export Initiative, intends to eliminate trade barriers of the psychological variety and double exporting in five years.
President Obama appointed Suresh Kumar last year to a key post in the United States's National Export Initiative with one clear—if lofty—goal in mind: to double exports within five years. For Kumar, it's the latest challenge in a career of international endeavors. Before coming to Washington to work in the U.S. and Foreign Commerical Service, he headed the worldwide businesses of Johnson & Johnson and served on the boards of multiple American business associations. Four years ago, he advised the Clinton Foundation on ways to stimulate agriculture and business development in sub-Saharan Africa. He's lived in six countries, and speaks Hindi, Tamil, Malay, Punjabi, and Bengali, in addition to English. Kumar spoke with Inc.'s Evan Klonsky on the progress of Obama's goal and the barriers, logistical and psychological, to exporting goods.
What progress have you made toward the president's goal of doubling exports to $3 trillion within five years?
Doubling exports in five years is compounded at an annual growth rate of 15 percent. In the first 10 months of this year, American exports have grown 18 percent. Eighteen percent against a goal of 15 percent—we are doing much better than anticipated. But we always like to cautiously say, "It's a good start." We feel good about how we've achieved those targets. It's a function of not only our network—we've always had that—but what we did and redirected people to work and engage with American businesses.
How have you reached that 18 percent?
When I came in, I decided to redirect attention on the first year to really focus on two seminal issues. The first, all our trade promotion I wanted to concentrate on activities that will enhance and provide greater opportunities for exporter-and-buyer interface. We wanted to provide many more occasions for face-to-face interaction for businesses that are exporting and buyers that are buying. In the end, what we do is provide a framework and facilitate trade. It's the buyers and the sellers and the businesses which transact the physical stuff and I wanted to give them as much opportunity.
The second is people who have already been exporting but to help them to go to more markets. Of the 30 million companies in the United States, only 1 percent export, which means 280,000. Of the 280,000, 58 percent export to only one market. Wouldn't it be great to get those guys who are already exporting, who know something about exporting, and take them to a second. If you're exporting to Mexico, why not to Canada? Or vice versa? The idea is that those who know how to export have already gone through that learning curve and we can engage them more rapidly. For a business to become export-ready it generally takes more than three years.
What businesses will you look towards to boost up that 280,000 numbers?
Ninety-seven percent of businesses in this country are small and medium enterprises. That's the vast majority of exporters. It's written into our statute that we seek out and help these people. When you look at the statistics, as much as 70 percent of jobs created in the U.S. over the last decade have come from small and medium enterprises.
And what sectors and areas for these businesses have been the most successful?
We've noticed an increasing trend now towards newer markets or newer sectors coming up. For example, the information, communication, and technology space has been incredibly hot. The second area has been green—renewable energy. Six of our 39 certified trade missions were in the green space. That demonstrates the interest and the demand in that sector and the business opportunity there.
Geographically, no surprise, there has been significant interest in India. Coincidentally, six of our trade missions went to India. Significant demand also exists for China and Brazil. The newer industries, particularly in the ICT side, certainly in renewable energy, the medical services and devices and pharmaceuticals, and public health programs have all been major areas of interest.
For many of these industries, the barrier to entry seems on the higher end. As part of the effort to move forward export gains, are you trying to push non-traditional industries, such as retail, that haven't done as well abroad?
Barriers to export vary from market to market. It's interesting that you mention retail. There are some parts of the world where retail is the most difficult. But the truth is if a company has a good track record of selling in the U.S., then they have the track record and credibility to get them there.
The barriers come mainly from internal, mental, psychological barriers a company has. People think there's a mystique there—they don't speak the language. "What the hell happens in China and India? I don't know if I'll get paid." There is no mystery to exporting. You're not in it alone. We will connect you to finance, to capital, to the right buyers. This is not soup to nuts. This is soup to nuts with the best steak and dessert and pie to go with it.
Let's say I'm a business owner right now. Why do I want to export?
You should realize the fact that 95 percent of consumers live outside this country. India and China add an Australia and New Zealand to their populations every year. How can you afford to ignore those? That's where the markets are gravitating.
There is a cultural bias. Eleven percent of America's GDP comes from exporting. Most of European countries are in the mid-to-high 30s from exports. The reason is not that we are good or bad. It's that we have always had a wonderful market in our backyard. It behooves you to engage in external markets. By diversifying your customer base, you're that much more resilient when the economy takes a downturn. You don't need to put all your eggs in one basket. We actually help you diversify your risks.
What have other countries done to make open up markets for exporting?
Sometimes you'll see press releases talk about macroeconomics re-balancing. This is policy dialogue at the G-20 level and other intergovernment level where America has always called for the 19 other partner of G-20 to play their part to stimulate their domestic economies, to uplift their middle class, and to create a consuming market in their own countries. It's not just looking to us at the market for consumption.
We do believe we have the products, tech, and services superior to any country in the world. Even today, the cachet of a "Made In U.S." is much more valuable than in any other country.