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STRATEGY

Trading Places: Inc.'s 2008 Export Guide
 

Who has petrodollars to spend? Where can you sell construction equipment? Jewelry? Management consulting? And where is the market that grew an astounding 55,414 percent last year? Read on.
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BRAZIL

More than $24.6 billion in American goods were sold to Brazil last year, up 28 percent from 2006. This is a reflection of the country's decade of prosperity. "After several boom-and-bust periods, we're seeing the most sustained economic growth since the 1970s," says Camille Richardson, the U.S. trade officer there. Oil and gas companies and other customers acquired dozens of helicopters, while Brazil's 190 million consumers bought iPods and other branded lifestyle products. But novice exporters should proceed with caution. Under Brazil's complex tax and tariff structure, the cost of a landed product can jump 40 percent to 60 percent.

CENTRAL AMERICA AND THE CARIBBEAN

These markets are growing fast, and many of them have signed free trade agreements with the U.S. Plus, they're only a few hours away by plane. "In some ways, Central American countries have been overlooked by U.S. exporters," says John Murphy of the U.S. Chamber of Commerce. "There's a big opportunity there for smaller companies." Some places to watch:

DOMINICAN REPUBLIC

It's a market roughly the size of New York City in terms of population. Exports to the island hit $6.1 billion last year -- roughly on a par with those to Turkey and South Africa -- led by computers, alcoholic beverages, and food products.

PANAMA

Panama boasts the fastest-growing GDP in Latin America, estimated by the IMF at 8.5 percent in 2007. Its service sector is strong, and the U.S. dollar is in wide circulation. Exports to Panama have more than doubled since 2002, to $3.7 billion last year. And more growth is forecast as the country embarks on a $5.25 billion plan to expand the Panama Canal and the U.S. and Panama move closer to ratifying a free trade agreement.

GUATEMALA AND HONDURAS

These neighbors have come a long way since the political turbulence of the 1980s. Both have growing economies, and both consumed more than $4 billion in American exports last year, led by large gains in sales of metals, food products, and textiles.

CHINA

China likes to support its homegrown companies, which makes for an uneven playing field for U.S. exporters. Expect ever-changing customs policies, a thicket of business licensing rules, and, in the high-tech sector, unfamiliar standards and requirements. Hassles aside, the Chinese are developing a taste for all things American -- professional and business services in particular. U.S. exports to China set a record in 2007: $65 billion.

COLOMBIA

Continuing unrest in the country, the recent conflict with Ecuador and Venezuela, and the fact that a free trade pact is stalled in Congress are certainly reasons to think that Colombia is not an attractive trading partner. And yet exports to the country reached $8.6 billion in 2007. "The government that is in charge right now has been implementing market-opening policies that have really made a difference in the importation of machinery," says Ana Arias, a Latin America specialist at Hytrol, a Jonesboro, Arkansas, company that makes conveyor equipment for factories.

EGYPT

Though petty corruption is still endemic in Egypt, the World Bank's official reformer of the year has reduced tariffs, cut red tape at its ports, and privatized banks. Imports from the U.S. stood at $5.3 billion last year. Opportunities exist in Egypt's booming IT sector and in transportation. Following a series of accidents, Egypt has committed more than $1.5 billion to upgrade its rail system.

GERMANY

As the dollar has fallen against the euro, Germany has led the countries of the European Union in snapping up U.S. products -- $49.7 billion worth last year, an increase of $8 billion over 2006. Software, pharmaceuticals, management consulting services, and medical devices are frequently imported. U.S. sporting goods are also in high demand.

INDIA

India's GDP has been growing at a heady clip, and the country is shedding its protectionist legacy. In 195 special economic zones near industrial centers like Pune, duties are sometimes waived altogether. Machine tools for the country's nascent automotive industry and business software are in high demand. Exports from the U.S. to India were $17.6 billion in 2007, up 74 percent.

INDONESIA

A decade after the Asian monetary crisis, imports from the U.S. finally returned to pre-1998 levels, hitting $4.2 billion last year. A few dozen Boeing jets accounted for a big chunk of the total. But Indonesia has little homegrown manufacturing, so it relies heavily on imports of all items. Herbalists, take note: Vitamins and supplements are big.

ISRAEL

"In the last 20 years, we've seen a revolution in Israel's economy," says Yair Shiran, the country's economic minister to North America. "Today, the high-tech sector is Israel's engine of growth." As companies like Intel, IBM, and Cisco have set up R&D facilities in Israel, exports have grown, to $13 billion in 2007. Sales of lab testing equipment and cars posted big gains last year. American fashion is also popular.

MEXICO

Exports to Mexico topped $136 billion in 2007. As a hedge against the slowing U.S. economy, the Mexican government, working with the private sector, is set to bid out $141 billion in contracts to expand airports, build highways, and upgrade water treatment facilities. Under Nafta, U.S. companies are free to go after this work. In fact, the U.S. Commercial Service recently held a matchmaking event for American and Mexican businesses that are looking to partner.

MOZAMBIQUE

Since the U.S. and Mozambique signed a trade deal in 2005, exports have risen 85 percent, to $115 million in 2007. Tourism is beginning to take hold, especially along the country's virgin coastline, which is creating new demand for American-made products like business equipment and apparel. In an especially hopeful sign, the volume of writing and art supplies imported from the U.S. jumped 112 percent in the past year as school attendance rose.

NIGERIA

Oil-rich Nigeria is on a spending spree. The country, the U.S.'s second-biggest trading partner in Africa after South Africa, bought $2.8 billion of U.S. goods in 2007, a 25 percent increase from 2006. Nigeria's energy wealth, coupled with President Umaru Yar'Adua's antigraft stance, has convinced many foreign companies that the upside is worth the risk of doing business in this long-troubled country. At the same time, a decline in nonoil industries has rendered Nigeria more dependent on imports of staples such as medicine and construction equipment.

NORTH KOREA

Which country posted the sharpest increase in imports from the U.S. in 2007? North Korea, up 55,414 percent. Of course, 2006 was the year the U.S. cracked down on the sale of luxury items such as plasma TVs and Jet Skis to North Korea -- gifts that dictator Kim Jong-Il reportedly liked to bestow on his cronies. With the tighter trade ban in place, North Korea's purchase of U.S. products fell to a measly $3,000, but last year it rebounded to $1.7 million, all of that going for grain.

OMAN

Exports from the U.S. to this sultanate at the southeastern tip of the Arabian Peninsula topped $1 billion in 2007. Look for that sum to grow as a free trade agreement signed in 2006 by President Bush and Oman's leader, Qaboos bin Said, goes into effect. The country imports a lot of drilling and oil field equipment, industrial machinery, and vehicles. And given the conflict across the region, the flow of military equipment, parts, and ammunition from the U.S. to Oman grew 284 percent in 2007.

PERU

U.S. exports to Peru were up 41 percent last year, to $4.1 billion. Peru's large mining, fishing, and agricultural industries bought a lot of equipment, but look for Peru's economy to diversify as a brand-new free trade agreement with the U.S. is implemented. "Even though the Peruvian market is small by American standards, for a small American company, this could be a very interesting market," says Aldo Defillipi of the American Chamber of Commerce of Peru.

PAPUA NEW GUINEA

Long one of the world's basket-case economies, this South Pacific nation is enjoying a rare period of stability thanks to higher prices for its gold and copper. Sales of aircraft parts, drilling equipment, and cosmetics drove exports from the U.S. to PNG to $65.9 million in 2007.

POLAND

Since joining the European Union, in 2004, Poland has become a gateway to the fast-growing economies of the Eastern bloc and the Baltic states. American exports to Poland totaled $3.1 billion in 2007, a 59.3 percent increase from 2006. CellAntenna, a Coral Springs, Florida, company that makes equipment that amplifies cell phone signals, began exporting to Poland only two years ago and already does $750,000 in annual sales. CEO Howard Melamed says it makes sense to set up shop there because of its central location and its educated work force.

RUSSIA

Russia imported $7.4 billion worth of goods from the U.S. last year, an increase of 56.1 percent from 2006. The country's economy, fueled in large part by its oil and gas industry, is booming, as is demand for U.S.-made generators, building products, and telecommunications equipment. And Moscow, which now boasts more billionaires than any other city on the planet, has become one of the world's top markets for luxury goods. Exports of jewelry, antiques, and artwork from the U.S. to Russia increased fivefold last year, to $98 million.

Our Top Trading Partners

COUNTRY 2007 U.S. EXPORTS
1. Canada $248.4 billion
2. Mexico $136.5 billion
3. China $65.2 billion
4. Japan $62.7 billion
5. United Kingdom $50.3 billion
6. Germany $49.7 billion
7. South Korea $34.7 billion
8. Netherlands $33 billion
9. France $27.4 billion
10. Taiwan $26.4 billion

Source: Office of Trade and Industry Information, U.S. Department of Commerce

Top 10 Export Markets by Increase in Dollars in 2007

COUNTRY INCREASE IN $
1. Canada + $18.2 billion
2. China + $10 billion
3. Germany + $8.3 billion
4. India + $7.5 billion
5. Brazil + $5.4 billion
6. United Kingdom + $4.9 billion
7. Belgium + $3.9 billion
8. Taiwan + $3.3 billion
9. France + $3.2 billion
10. Japan + $3 billion

Source: Office of Trade and Industry Information, U.S. Department of Commerce

Last updated: May 1, 2008

DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.




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