In Japan a corporation can't write off a bad debt for tax purposes unless it can prove the debt really is bad. The accepted evidence is if the debtor goes bankrupt -- which SofTouch did not. Not only did Acme have to pay Japanese taxes on the $900,000 receivable; it never even got that $900,000. The double whammy cost Acme $1 million, plus some $200,000 in legal fees to clean up the mess.
But all's mostly well that ends mostly well. In July 1992 Modern Technologies joined ACKK as a 10% partner, along with Kabuki and Magna. Acme's share was boosted to 70%. Modern Technologies bought $4 million worth of product from Acme, enough to last well into fiscal 1994, even though it didn't need that much. Why? For one thing, the infusion helped Acme meet its plan for fiscal 1993. And maybe Modern Technologies felt a little guilty: it was that company's rigorous audit that had exposed SofTouch's rickety underpinnings to anxious creditors.
dÉjà vu all over again. Acme corp. was barely six years old in 1989, when Greene received the call that was to propel him into European markets. It was from a small company in France, offering to represent Acme on the Continent. Go ahead, Greene replied (again), cutting a familiar deal for exclusive distribution. But this time Greene knew better. He created a wholly owned subsidiary, Acme Corp. E.C. (ACEC), organized as a corporation operating under a general manager -- a common structure in France.
A general manager, or gÉrant, Greene was to learn, "can do pretty much what he wants." As a company's agent, the g -- rant has certain functions that are delimited on hiring, but if he or she exceeds the bounds of the agreement -- entering, say, into a contract his or her employer doesn't like -- the employer's only recourse is to sue the individual. The contract itself is unassailable.
ACEC's gÉrant ramped up the new company, hiring 30 employees. Rather than reducing the staff, as Greene demanded from California, the gÉrant contracted with the government to build ACEC a free, tax-advantaged research-and-development facility in remote Brittany. As a quid pro quo, ACEC would employ 125 people. That chafed Greene. "What are we going to do with 125 people and a building in the middle of nowhere?" When he tried to negotiate his way out, the issue became a cause cÉlÈbre: a local mayoral candidate ran on a "Keep Acme in Town" platform -- and won. So the ACEC R&D building remains open, though Greene has cut the work force down to only three employees.
In March 1993 Greene finally dispatched his first American to Europe, with an assignment to redesign ACEC's clearly faulty transatlantic-communication chains. Now the financial person in Paris reports to Acme's chief financial officer in California; similarly, the French sales manager, technical-support chief, and so on also report to California counterparts. "It was a great move," Greene exults. "At last we built relationships. The people there know the people here."
ON THE ROAD
By Phaedra Hise
I've seen Americans at overseas trade shows who can't find their products, who've lost their equipment, and whose people were held up at customs," says Keith Kiel, vice-president of MacAcademy, a videotape distributor in Ormond Beach, Fla. Preparing for overseas trade shows is a whole different ball game from getting ready for a Stateside show, says Kiel. He's an old hand at foreign trade shows from Australia to Mexico, which he considers promotional investments. "Don't expect to make a big profit the first time you go. Your first few shows are an introduction, like a live ad." In other words, they are an exercise in making friends. Leave the "hurry up, let's close the deal" mentality back in the States.
And pack your kit carefully, says Kiel, or risk being one of those dazed and confused first-timers with nothing to show for the trip. Here's what Kiel takes to every foreign show, no matter where it is:
A. Copies of all documents. Long before he leaves home, Kiel contacts the trade-show organizer and keeps in touch, exchanging faxes on a daily basis. He stuffs all the information he gets from the organizer into a manila envelope and carries it onto the plane. "If you have to, you can prove you were promised specific pieces of audiovisual or other types of presentation equipment," he says.
B. A carnet. This detailed customs document listing all the valuables you take out of the States isn't required, but it can save you endless paperwork coming and going. If you skip it, you risk having goods turned back, or being taxed on your own computer, Rolex, or tennis racket when leaving other countries. "Carry it like a passport," suggests Kiel. Carnet forms are available from the U.S. Council for International Business, at 212-354-4480, which charges processing fees ranging from $120 to $250.
C. Half as much product and twice as many brochures as he thinks he needs. "Bite your lip and just do it," says Kiel. Most overseas customers respond better to a soft sell. They want a nice brochure to take home and study, which means fewer products sold at the show but more phone calls afterward.
D. A 220 transformer kit. Buy a 1,600-watt transformer at Radio Shack for $19.99, advises Kiel. "We blew up a $700 overhead projector in Australia by plugging it into what looked like a regular socket."
E. A suit and tie. Leave the logoed polo shirts at home. At some shows exhibitors are required to wear a suit. But even if suits aren't mandated, says Kiel, wear one anyway. Most everyone else will.
F. No equipment. Kiel rents everything, including computers and overhead projectors. Usually, it's cheaper to rent equipment overseas, and he avoids possible customs taxes. He contacts manufacturers for the names of their foreign distributors who can rent the equipment he knows he'll need. If there's no rental option, he always ships via the trade show's recommended carrier, even if there is a less expensive alternative. It's worth it, he's found, because trade-show carriers typically use seasoned brokers to usher equipment through customs, saving time and preventing hassles at the airport.
