Learning the Ropes

Suggestions on taking a cost-effective approach to export opportunities.

Tweet

What you should be thinking about as you enter the booming export market

Many growing companies are taking a hard new look at overseas markets, and for several good reasons. The slack dollar makes U.S. products more attractive than ever to offshore buyers. Many of the world's newly industrialized countries have streamlined joint-venture and import-export rules as a means of boosting employment and satisfying growing consumer demand. Some mushrooming markets didn't even exist just five years ago, from bathroom fixtures for the 3 million new housing units planned in the Soviet Union this year to Zimbabwe's heavy demand for farming equipment.

For those of you who are considering doing business internationally, one simple rule usually applies: for the best results, start by exporting. You'll want to be sure you have a solid overseas market -- some experts suggest at least 15% of total sales -- before you even think about setting up international operations. The truth is, the best product or service can fall flat, not because of poor demand or inherent defects, but because it takes time to understand fully a customer's real needs as well as the prevailing business conditions and practices in an unfamiliar setting. One company that has had a good deal of experience -- and ultimate success -- in these matters is Autosplice Inc., based in Woodside, N.Y.

Autosplice's initial overseas venture was a logical and natural extension of its U.S. business. Having sold its products -- machines that provide solderless connections in appliances, computer peripherals, and other electronic devices -- to U.S. appliance-makers and other customers for several years, the company set up agent networks in Europe and the Far East to service its key buyers who had moved offshore. Once there, says company founder and president Irwin Zahn, "we saw that appliances were also made by Japanese and European companies, and in much the same way. We reasoned that if our machines worked for American companies, they'd also work for these other manufacturers.'

Last year, with facilities in Woodside, San Diego, Brazil, West Germany, and Great Britain, privately held Autosplice scored sales of $15 million (an increase of 25% over 1986), a third of it from overseas; another $5 million was brought in by its wholly owned subsidiary, Autosplice Japan, based near Tokyo. Although the company's international business is now growing faster than its domestic sales, it has taken its lumps along the way.

One thing Autosplice didn't reckon on at first was the need to modify its equipment for overseas use. "Americans look at basic function, but will generally overlook what we consider minor blemishes," says vice-president Otto Nedelkovich. "It took us about two years to realize that those blemishes are very important to European and Japanese executives." For example, some customers tend to overtighten a certain fitting on Autosplice machines during routine adjustments, which can dislodge or damage the main shaft.

"It could happen once or twice a year in some plants," says Zahn, "and it's a fairly minor problem here. But the Japanese won't put up with that. They demand, and pay for, a special shaft design that withstands overtightening. It's a case of overkill for an American customer, but it's absolutely essential there.'

Constraints imposed by strict worker-safety rules in other countries can also test the creativity of your design engineers, he warns. In some cases, all that may be needed is to install special guards on potentially hazardous equipment; in others, however, government-backed union rules may call for relatively exotic features, such as an electromagnetic field that stops the machine when interrupted by a worker's hand, or a remotely activated device for handling workpieces near moving equipment. "The problem is that most U.S. companies simply aren't aware of this," says Zahn. "Unless you want to spend years learning all these regulations, you need to know some experts over there -- not just advisers, but also engineers, designers, and machinists."

An important corollary is to take the time to tailor your product literature, documentation, performance specifications, and marketing programs to your specific target. Although foreign buyers care little about your company's ownership or where your product is made, "they do insist on a detailed analysis of what you're offering and how it's going to meet their needs," says Nedelkovich. And while customer service is important in every market, it carries special weight with Japanese and European customers. A surefire way to lose a client, in fact, is to force him to find an English-speaking employee to translate your instructions.

How will you sell your product in your new market? For the cautious newcomer, the most sensible choice -- especially during the start-up phase -- is to find a reputable agent or representative. "If you're unsure of the market potential, working through an agent is a safe, cost-effective approach," says Nedelkovich. "It costs you nothing until you're actually selling." But be warned: finding the right agent can be only slightly easier than finding the right marriage partner.

 1 | 2  NEXT 

Read more:

Sign-up for our Small Business Success Newsletter

Email Address: