Exporting is for players only – the multi-tentacled big boys who own their own containers, set up offices everywhere, and can deploy an army of staff.
Or so we are told. Of course, we were once fed the same myth about manufacturing. But hundreds of companies like PowerBar have shown that with some clever offsite partnering, a home office business can make and distribute products that reap great profits from the kitchen table. Now, we are seeing the same players-only myth busted in the export field.
Representative Rush Holt (D-12NJ) is insisting that the greatest obstacle to a Garden State business doing trade with Russia, as opposed to Akron, is fear itself. To help owners of firms of all sizes leap over this hesitancy, Holt, in conjunction with the U.S. Department of Commerce’s Trenton Export Assistance Center, is hosting a free seminar, "Export 101," on Monday, March 31, at 8:15 a.m. at the Sarnoff Center. Call 609-750-3965.
Don Newsome, CEO of the Sarnoff Center, and Musya Tumanyan, senior vice president of Hoffman International, will explain the benefits of exporting. Thomas Mottley, international trade specialist with the USDOC advises how to find foreign customers. Thomas Cummings, director of the US Export-Import Bank details the bank’s role. Attorney Margaret Gatti, of Gatti Associates, covers the legal aspects; and Daniel Petrosini offers tips how to ship over seas.
Tumanyan has traveled the globe for 30 years, solidifying scores of partnerships worldwide. Growing up in the then-Soviet nation of Moldavia, his mother worked as a bookkeeper, while his father trucked the vegetables and wine for which the garden state of Moldavia is so famous. He graduated from the Moldavian Technology Institute and immigrated to America, gaining another degree in international marketing from Manhattan’s Latin America Institute.
After eight years working for a New York trading company, Tumanyan joined Hoffman International, where he has worked to promote ventures spanning cultural boundaries for the last 20 years.
"Export is more than profitable," says Tumanyan, "it is absolutely necessary – to our commercial lifeblood and to developing an understanding that leads to peace."
Export – Why now? Two things are shrinking at the same time, Tumanyan points out: the American buyers’ market, and communication/transport times globally. Despite White House denials, domestic job loss is up and spending continues down. "This is an ideal time to reach out to additional markets abroad as one’s own traditional base begins to decline," says Tumanyan. "Note I say additional, not replacement, markets."
America is not losing jobs overseas, rather it is shifting its production base. We are developing technology at the rate we used to develop autos, Tumanyan says. It doesn’t matter who actually grinds out the ball bearing or software, participating United States companies and workers will still profit. This also does not mean that we will forever be the only ones to develop technology. Creating fear-based, illusionary yardsticks to see who is leading in high tech is much less vital than promoting ventures that feed and give employment to our citizens. And nothing so brings the capital in as partnering without.
What’s needed where? No matter how necessary and elemental the product, not everyone will buy it. Tumanyan advises would-be overseas traders to look beyond the product, and with surgical precision sculpt a list of what can profitably be supplied. Recently Hoffman International was asked to help assemble a 150-cubic meter, three-stage crushing plant. It became quickly evident that crating up the entire package and shipping it overseas to Russia would be prohibitively expensive – and entail a 30-day wait in customs.
"The answer lies in components," says Tumanyan. "Find out just what your partner can provide least expensively; and also find out what some regional contractor who is not yet your partner can supply. Then realize what you can cost-effectively contribute." Factoring in the law’s delay and tariff hurdles, plus the relative speeds of overseas vs. reliable overland transport helps clarify the picture.
Additionally, remember that marketing numbers provide only a head count. Tumanyan warns foreign investors and developers to truly study the culture. In the late 1980s American companies eyed the one billion-plus Chinese population sitting on a first-time rising economy and took the plunge. Unfortunately most of these U.S. companies found people unable to buy their wares.
"But now look at the difference of China vs. Russia," Tumanyan says. China, which has for the past decade been rising vastly in per-capita income, still remains a comparatively reluctant buyer of many foreign goods. Meanwhile, Russia, which has had a stable, solid economy for barely five years, cannot snap up American products fast enough.
These purchase patterns are culturally rooted, insists Tumanyan. Chinese citizens, emerging from centuries of eking out a living, remain a nation of survivors, not primarily consumers even yet. Whereas Russians are ready to become consumers. "Add a little cultural history to your marketing figures," Tumanyan suggests.
Hints and caveats. Probably the greatest lack Tumanyan sees in foreign commercial venturers is commitment. Even small company owners must be willing to not only travel frequently, but also stay abroad for substantial periods. They must acquaint themselves with the land and its people, as well as their specific partners. If you don’t have at least one capable, linguistically flexible top manager in your firm to take the trips, don’t even think about expanding abroad.
Further, all this outreach must be made while maintaining a domestic balance. Longtime customers at home will not be as excited about your expandsion into Peru as you are. They seek only the continued high levels of service they’ve grown used to.
Finally, with international trade comes oceans of paperwork. Government agencies, such as the World Trade Center of Greater Philadelphia (www.wtcphila.org; 215586-4240) and the USDOC Trenton Export Assistance Center (609-989-2100), can be of great help. Yet beyond these, the small firm in particular will require the aid an expert, nationally specific, professional trade company if it is to survive.
The long term financial benefits of international trade continue to be increasingly evident. Companies are reaching into Argentina, Chile, the entire former Soviet Union, and Tanzania and are meeting annual profit expectations within the first six months. And with this, is being reaped a greater reward.