Even when we get through, though, there's another inhibiting factor. At first glance the obstacles look enormous -- much greater for American companies trying to go overseas than for foreign companies coming here. To sell here, a foreign company needs to learn only one language, one set of customs, one way to sell.But an American company looks at Europe and sees 30 languages to learn. Just to sell in a few Western European countries, an American company thinks about putting out five catalogs in five languages, and teaching salespeople to speak all of them. It seems impossible.
We've found a way to deal with this. We say, "Okay, you don't have to sell to everyone at once. Start small." We suggest starting in Latin America where there are only two languages -- and you can get along with one -- and just one social background. We know that the first sale is the hardest, that once these people get out and get their feet wet they'll keep going because it will be fun as well as profitable. A small company executive will find himself the center of attention at a dinner party when he says, "On my last trip to Caracas..." Then he'll start thinking, "Well, I always wanted to see Italy," and he'll be off to another market.
INC: Even if they're primed to ease into foreign trade one country at a time, do our companies still run into special problems just because they're American?
Reagan: The only special problems we have to worry about are matters of credibility. In trying to help foreign companies follow up on trade inquiries, Sell Overseas America has found that the products they want are not always available for export, or that they've been taken off the product line entirely, or that they're imported from another country and have to be ordered from somewhere else. This has happened often enough to make some potential foreign buyers very doubtful of the American commitment to international trade.
There's another aspect to our credibility problem as well. Not only our commitment, but also our quality is called into question in some places where they accuse us of using them as dumping grounds for second-rate goods. There's some justice in that complaint, but American business is only partly to blame. Our government bears even more of the responsibility. In the past, we've taken some of these countries for granted and haven't treated them as sovereign nations. Somehow, what government does to government, or people do to people, carries over into trade.
This is a problem in Mexico and in Canada, too. The long-range solution was suggested by President Reagan the night he announced his candidacy -- that we should form a Western Common Market consisting of the United States, Mexico, and Canada.
The "dumping grounds" charge is a problem right now in West Africa, too. Of course, it only has to happen once, and all American business is painted with the same brush and all West Africa knows about it. Then we have some difficult times until we overcome the image. We have to learn how West Africans do things. They're particularly sensitive to any hint of being taken for granted, and they like to know the people they're doing business with. Not long ago, two West Africans flew all the way to the Midwest for one day, just to meet the people and see the plant they're buying from. West Africa offers excellent markets for American companies -- there are a lot of petrodollars in Nigeria -- but if you want to sell there, you have to make the trip and introduce yourself to the buyers.
These are real problems for American companies, but they're not insurmountable ones.
INC: In addition to these problems that affect all American business, are there others that pose special difficulties for small companies?
Reagan: Yes: Financing problems. While financing may create difficulties for any company, small companies have fewer places to go for help. Many banks won't even discuss contracts under $1 million, but many small company contracts don't approach half that figure. One of the big things we've done in Sell Overseas America is to set up some criteria for banks that want to join. They must agree to consider small contracts, so we can refer companies to them. We've also collected a lot of information on financing for small companies that don't know a letter of credit from a sight draft, for instance.
Beyond that, however, American companies are at a disadvantage compared with foreign companies whose governments guarantee loans. Our companies, in effect, are competing with foreign governments, and small companies suffer most. Our government isn't geared to working with them.When the Commerce Department organizes a program, it has to be for all people, and it doesn't help the little guy. That's why we set up our bank referral program. But we think banks should be doing much more to help than they're doing now.
INC: The export trading company bill, introduced in Congress last year, allows for the formation of companies that would function as middlemen by buying products from manufacturers and then selling them overseas. Do you think this would be of assistance to small businesses?
Reagan: We're ready to support anything that can get small manufacturers involved with overseas trade, but I don't think a new law is needed. For one thing, American trading companies could form right now -- we already have export management firms that are trading companies in all but size.
I also have another reservation about that bill. In this country, we like simple solutions, and I'm afraid this legislation would be perceived as a panacea. People will say, "Okay, we've set up trading companies and now we can forget about export. The problem is solved." Well, it would be far from solved, and I don't want to risk that.
INC: How do you feel about the attention being focused right now on protectionism?
Reagan: I think protectionism is dangerous; I'm very much opposed to it. Trade restrictions breed more trade restrictions. Many of the restraints in force around the world today are a result of those we imposed in the '30s, and they're still there.
The answer is not to prevent other countries from selling to us; the answer is to make sure that we sell them as much as they sell us. The big pressures now are coming from the automobile industry, but we don't need regulations to limit Japanese imports. The Japanese aren't dumb -- they've set up their own voluntary limits. They'll also invest more money here in joint ventures, and they'll buy more from us. They've begun to do that already. Our representative in Japan says interest in our products has increased dramatically in the past couple of months, and we've been there for a year.
INC: Are there some ways in which you'd like to see the government help small companies move into foreign commerce?
Reagan: Not really. I think the government should stay out of business. I'm always surprised when business invites the government in, as it does repeatedly, and then wonders what's happened when the dinosaur takes over. Government's role in export should be confined to two functions. First, they should see to it that agreements made among nations are fair and equitable -- we shouldn't let others come here if we can't go there. Second, they have to make sure of our national security. There's nothing else we need the government to do.
