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Expanding business internationally

February 1st, 2011 / By: / Feature, Marketing

There’s never been a better time to expand into an international market—if you are patient, committed and open to new ways of doing business.

When Walt Disney songwriters Richard and Robert Sherman penned “It’s a Small World (After All)” for a ride at the 1964 New York World’s Fair, they couldn’t have imagined how much smaller the world would become within a few decades. Showcasing mid-20th century U.S. culture and technology, the fair was dedicated to “Man’s Achievement on a Shrinking Globe in an Expanding Universe”—a theme that seems as prophetic as it was reflective of the era.

So many of the tools that make doing business in the global marketplace possible today could hardly be imagined in 1964. With an Internet connection, potential customers can find you in a few keystrokes. But if selling to international buyers were that simple, every U.S. business with export potential would be making big money overseas. Success still requires some old-fashioned business practices: do your research, have the patience to build relationships and make a long-term commitment to your global customers.

“I think it’s important to recognize that you are not going to just go in and present a product because it’s so obviously the best thing since sliced bread and expect to be able to sell it,” says Bud Weisbart, vice president of AR Industries, Fontana, Calif., which recently began selling its SKP™ repair tape in Indonesia, Singapore and Malaysia through a distributor. “Establishing a relationship is the first step, ultimately resulting in marketing and sales opportunities as those relationships grow.”

Made in the USA

Mary Lynn Landgraf, senior international trade specialist with the Office of Textiles and Apparel (OTEXA) of the U.S. Department of Commerce, says that there’s never been a better time for U.S. businesses involved in the specialty and technical fabrics industries to expand into international markets. Exporting allows U.S. companies to be less dependent on the domestic economy, reach the two-thirds of the world’s purchasing power that is outside of the United States, buffer seasonal downturns and business cycles and keep an eye on competition, Landgraf says.

“There is a great interest in U.S. products, and the task of determining international market needs and solutions has become much easier,” she says. “The plethora of information that’s available to U.S. exporters and would-be exporters is pretty phenomenal.” (See “Exporting resources.”)

U.S. companies have a market advantage in the “Made in the USA” label because it signals quality, innovation and sound business practices, she says.

“[Foreign buyers] know that what they ordered is what they will receive,” she says. “We didn’t change the formula for the product, we didn’t overstuff shipping containers, and we didn’t package an inferior good.”

Even with these advantages, the current world economic outlook might be enough to scare some companies from taking the plunge. But that’s not the attitude of successful U.S. exporters.

“If one operates under the premise that you want to wait for the perfect environment everywhere in the world, you will be waiting forever,” says Jeff Sponseller, executive vice president of Navarre, Ohio-based Miller Weldmaster Corp., which manufactures heat sealing equipment for industrial fabrics. “We take the attitude that we are a global company. Certainly we make smart business decisions on where we want to go, but we don’t let the economy hold us back.”

Where in the world…

So you’re ready to book a flight, but where? OTEXA’s Going Global guide, released in October 2010, details the 15 top markets and the five fastest growing markets for U.S. textile and apparel exports, but the right market for your company is the market where your product will be the most effective.

“I look at markets where I know there is oil, natural gas, water, water filtration, huge infrastructure development, tourism and agriculture,” Landgraf says. “I’m looking at everything from major projects—especially roads, airports, public buildings—to private sector home construction and the hotel industry.” The Middle East looms large for technical and specialty fabrics markets because of the oil and gas industry, huge infrastructure development and soil stabilization needs, she adds.

If you are interested in a particular country, the U.S. Commercial Service office in that country can produce customized market research for your product. These reports are fee based but economical for the information they provide, Landgraf says.

When you believe you have found the right market, further research will help to avoid two common mistakes beginning exporters tend to commit: being inflexible in business practices and not adapting the product to a specific international market.

“You have culture, legal and religious requirements in certain markets that are totally different than the U.S.,” Landgraf says. “Special labeling, packaging, tweaks to the product that need to be made to make it more acceptable to that country make you more competitive and successful.”

Miller Weldmaster found this to be true when adapting the company’s products to the European market. In the United States, 90 percent of awnings are manufactured for commercial uses and the remaining 10 percent for residential purposes. In Europe, that ratio is reversed. That makes a big difference in awning demand, quantities and speed of production, Sponseller says. He also has found that in many countries, pricing structures need to be more flexible than in the U.S., and that international customers tend to favor Skype over e-mail communications. And though it sounds simple, exporters need to ensure that all literature and operating materials are in the local language, he says.

“It’s like anything—there is the fear to start, there is the fear to go there,” Sponseller says. “Educate yourself as much as you can, and once you are there it will become second nature.”

It’s a match

When AR Industries placed an ad for SKP repair tape in InTents magazine, responses came in from around the globe. But one particular inquiry from an Indonesia-based company that distributes tents and accessories stuck with Weisbart and led to a successful partnership with a distributor.

“The steps we took were to establish a relationship of confidence, making sure they knew who we were and what we’re all about, and getting an understanding of who they are and what they are all about,” Weisbart says.

Experienced exporters credit the time they took to find and establish relationships with distributors and business partners as the key to their success. When Marco Alvarez, CEO of Fabric Images Inc., based in Elgin, Ill., wrote the company’s vision statement in the mid-1990s, he included a desire to grow globally. While he researched various big markets in the ensuing years, finding the right person in Mexico in 2005 resulted in the company’s first international expansion.

“He was the first person I connected with and thought ‘This is a good person to run the business for us,’” Alvarez says. “He’s from Mexico, he understands the industry we serve and he understands our product.” As designers and fabricators of printed fabric structures, Fabric Images now serves the Latin American and European markets with manufacturing facilities in Mexico and Italy.

Moving slowly to establish a relationship with a potential distributor allows time to investigate the individual or company. It’s important to know if they have a good reputation in the local market and ensure that they are not taking your product and actually closing you out of the market through an exclusive agreement while carrying competing products, Landgraf says. Jamie Nute, international sales manager for Sinclair Equipment Co., Diamond Springs, Calif., advises looking carefully at the range of products, services and history a prospective representative has to make sure this fits with your goals. Potential buyers are good sources of information on a would-be distributor’s reputation.

“Does this potential business partner have an excellent track record of success?” he says. “Have they treated customers fairly? Are they honest and honorable? Just as your name stands for the success of your product in the domestic market, in a foreign country your name will be judged by the integrity of the associate you’re working with.”

The long journey

Landgraf says one of the biggest mistakes companies exploring international markets make is having a short-term mind-set—for example, “If I can’t sell at this show, I’m not returning.”

“It’s not a one-shot deal with a show,” she says. “You’ve got to be in it for the long run so that you don’t waste your time and money and embarrass other serious U.S. companies out there.”

Ted Anderson, president of BondCote Corp., Pulaski, Va., says that foreign buyers want to know that U.S. suppliers are as committed to them as they are to their U.S. customers.

“There is a historical concern of folks in other countries: Is the supplier in for the long term or are they looking at foreign markets because their domestic market is down?” Anderson says. “Nobody wants to go through the process of qualifying a new supplier and that supplier pulls their reins back when their existing customers rebound.”

Manufacturers of coated, laminated and composite fabrics, BondCote has been working on developing international business for about five years, investing both capital and time—traveling overseas, participating in international trade shows, advertising and building relationships.

“We are receiving orders, but it’s a journey, not a destination,” says Anderson. “We’re gaining new customers every month. Is it 30 percent of our business? Not today, but we’d love it to be.”

The Department of Commerce provides a range of free and fee-based services for potential U.S. exporters, including a Gold Key Matching Service, which provides pre-screened appointments with potential partners and buyers, and sample booths at international trade shows that get your products into potential buyers’ hands.

Landgraf advises would-be exporters that when you go overseas for trade shows or meetings, arrive a day ahead of time and see the sites—even if it’s just a bus tour of the city. That will give you some talking points with potential partners or customers as they get to know you.

“They are not going to delve into business issues first,” she says. “Many Americans are very impatient; they will say, ‘Will you believe we sat there for four hours and talked about this and that, and drank tea and never mentioned business?’ Yes, I believe it, and you know what? They will invite you back another time. Take time, understand their culture and have the patience to operate within it.”

The “patience” advice is echoed by industry experts who are successful in international markets. Alvarez says that a strong, long-term commitment to global expansion will help you pull through in moments when you become impatient with the process.

“The key things I’ve learned are you have to be culturally sensitive to the market you are going into, you have to have a clear vision, be committed to sticking with it and last but not least be patient,” he says.

Jill C. Lafferty is editor of InTents magazine.

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