Looking to sell drapes in Japan or chocolate chip cookies in Finland? Hoping to import gears for engines or lemongrass for your restaurant? Where do you start at going global? Luckily, many enterprising business owners in Utah have experienced the growing pains incurred with global trade and are willing to share their knowledge.
Dave Martin, owner and one of the original founders of Martin Doors, traveled to Taiwan hoping to find a reliable manufacturer for sectional garage door components. He walked into an office and in faltering Chinese asked if anyone spoke English. That was more than 20 years ago and marked the start of an international relationship that has grown to include 87 countries.
“First you do some importing and learn from importing,” suggests Keith Martin, Martin Doors director of international sales. “You’ll learn how to clear customs, how to import. We knew nothing about international trade. We definitely learned the hard way.”
International trade in Utah is big business. Merchandise exports from Utah topped more than $10 billion in 2008 and should exceed that number in 2009. With Internet sales, more Utah companies have the opportunity to send products to other countries than ever before. But navigating complicated tax laws, import rules and customs documents can be daunting.
More than 2,200 Utah companies export internationally, primarily dealing with metals such as copper and gold. But during 2008, local high-tech companies doubled their export value from $1 billion to $2 billion. Transportation equipment along with mining equipment made up another 13 percent of the state’s export numbers.
The First Step
So do you think your business is ready to take a global leap? There are many resources available to help you find out.
The World Trade Center Utah (WTCU) is a support organization created to assist business leaders as they enter the worldwide market. WTCU conducts assessments to help companies determine their level of readiness to be internationally competitive.
The center also assists Utah companies in developing profitable international market relationships. Since 2006, more than 1,000 Utah companies have utilized WTCU whether by attending seminars, keeping up-to-date on international business developments or taking part in a variety of networking opportunities.
Elizabeth Goryunova, executive vice president and COO of WTCU, says the assessment process at WTCU helps weed out companies who might not be completely ready for the transition but also helps them find ways to get ready for future endeavors.
“The first sign a company is ready to trade globally is they have a strategy put together and resources already dedicated to international business,” Goryunova says. “International trade is a special category of business and it requires commitment.”
Companies must also be willing to visit trade shows overseas or go on trade missions with local dignitaries. Learning to speak a foreign language and the willingness to travel frequently are additional commitments necessary to succeed globally. With 240,000 Utah jobs dependant on international trade, WTCU experts say companies need to be prepared for a long-term commitment.
“It’s lots and lots of work,” says Lew Cramer, president and CEO of WTCU. “If you’re not willing to work, come back when you’re serious.”
The WTCU assessment involves selecting a regional focus, detailing products and services, and specifying objectives. Once the level of readiness is decided, WTCU provides many free courses to help businesses increase global competitiveness. Courses include a customs seminar, a roundtable offering advice about the global market, and how the drug trade affects international operations.
A free sample export plan is available on the WTCU Website along with a free online guide to basic exporting. Workshops and continuing education courses in international marketing, overseas financing and the logistics of global trade can help strengthen companies taking their first steps toward the export or import business.
“We are always asking companies what knowledge they are lacking,” Goryunova says. “We build seminars around those issues. We also provide individual counsel in a one-on-one situation.”
Utilizing networking opportunities at the WTCU can also help increase a company’s likelihood of success with going global, says Goryunova. Traveling to American embassies around the globe and taking every opportunity to meet with dignitaries from other countries, as well as attending trade conferences and connecting with international experts can enhance a business’ efforts.
“Right now, business people of Utah have the WTCU and this helps us find the contacts to help business become successful,” Martin says.
Martin details an experience with his first garage door ordered from Israel. “We didn’t have any idea about international shipping,” he says. “We didn’t know about containers, customs itemization or documentation. I arranged a trip to Israel to meet the container but they wouldn’t release it because we didn’t have the right documents. We learned how to calculate containers after that and how to create documentation.”
Study the Customs
Through the WTCU and the Utah Department of Commerce, business leaders can learn about customs, documentation and international shipping and tax laws.
Jack Sunderlage is the president and CEO of ContentWatch, Inc., a provider of Internet management solutions for families, schools, business and government. His Net Nanny software is currently installed in 157 countries including Canada, Japan, Australia and Turkey.
When introducing Net Nanny to Japan, the product was competing against an in-country software program. Sunderlage contacted AOS Technologies as a possible distributor and began the intricate process of establishing a connection with the company, which is the custom in Japan.
“We found it was a relationship we were going to have to build and develop a trust,” Sunderlage says. “Over time, we’ve built a really nice relationship.”
International business experts say that being aware of a country’s culture, religion and language is a courtesy business leaders should extend at all times. Understanding a foreign business culture could make or break an international deal.
Turkey is a country with a large Muslim population. When the Internet was first introduced in the country, people were concerned with the adult content available. Turkish leaders contacted ContentWatch, willing to negotiate a contract to manage Internet coverage in the country. Sunderlage was not familiar with the Turkish business culture or tax laws. By utilizing the Gold Key Services available through the U.S. Department of Commerce, he was able to learn about the tax laws and how to negotiate within a notoriously aggressive business environment.
As negotiations progressed, Sunderlage didn’t agree with the steep fees Turkish leaders wanted to include in the contract. “At one point, I had to speak up against the harsh penalties. I knew they were aggressive negotiators and I took a risk and told them we were prepared to walk away from the negotiations. There was a pause that felt like ten minutes, but was in reality about ten seconds. I wondered if I had pushed too far.”
But his knowledge of the business culture paid off. Turkish leaders agreed to remove the penalties and now more than 320,000 subscribers use Net Nanny in Turkey.
During a negotiation with China, things didn’t turn out the way Sunderlage would have liked. When ContentWatch was not willing to remove the copyright on Net Nanny, Chinese officials were reluctant to approve the product. Sunderlage finally had to walk away from the discussions.
“We should have laid out the ground rules early because we spent two years developing the product for the Chinese market,” he says.
Experts say having esteem for foreign cultures and the language will go far when establishing relationships with international dealers, bankers, distributors and customers. Never hesitate to call in a trusted translator if either party is uncomfortable with the language. A good translator can tell when something is not being conveyed or understood properly and can ensure more reliable discussions.
“Please respect the culture of the country,” Martin says. “You have to remember if you are going to do any international trade, that you are a guest in the country. You’re not an American—you’re a businessman.”
Martin says another important factor in succeeding internationally is being willing to adapt a product or service. When Martin Doors expanded their business into Northern Norway, they realized the grease in the roller bearings would thicken in cold temperatures, making the doors unusable. Alternately, the grease became too thin in the hot climate of Saudi Arabia. Extensive research was done to find grease that could work in a wide range of temperatures. Once that was completed, the export business of Martin Doors found new customers around the globe.
A distributor in England wanted Martin Doors to reduce the size of its 8- or 9-foot doors to a 7-foot sectional garage door. A complete redesign was made to accommodate the request, but the company willingly made the modifications on a raised-panel door that looked beautiful, met Martin Door standards and got the business into England. Understanding international product standards and modifying products as necessary, including voltage regulations, can push a business further in the global market, says Martin.
Sunderlage and Martin also say making connections with a reputable distributor is a must. Selecting a good dealer means more than just getting a product into the foreign market. Dealers handle the advertising and promotion of your product and can help expedite financing in unfamiliar banking situations.
“You want someone who has the finances who can accomplish what you want in a dealer,” Martin says. “You want a dealership with good customer service, an understanding of the product and a good reputation to uphold.”
Along with the WTCU, the U.S. Department of Commerce, the Utah Governor’s Office and the Salt Lake Chamber of Commerce are resources that can help business search for trustworthy and experienced distributors for international trade.
Martin also says that to be profitable, business leaders must be professional. Associating with highly regarded business contacts raises a company’s worth in the eyes of its partners. Martin suggests visiting a foreign U.S. embassy to get advice on appropriate business clothing for the region, information regarding cultural communications including eye contact or hand gestures, and learning the country’s social norms to make a difference with foreign leader’s first impressions.
Also, frequent travel can give business leaders an edge. Not only can they see what the competition is doing around the world but a different location can inspire new ideas. Experts say it’s not necessary to open an office in Bangkok in order to sell a product, but becoming familiar with the country the company wants to work with can simplify the start into international trade. Creating connections with foreign associates, even competitors, helps build global relations.
“Friends help friends,” Martin says. “We are not visiting foreign countries. We’re visiting friends.”
WTCU is focused on educating, facilitating and motivating Utah companies to become international trade experts. By providing access to pertinent resources and relevant educational events, business leaders have the opportunity of increasing knowledge while leveling the playing field for global trade. For more information about starting or building international trade relations, visit www.wtcut.com.
Whether it’s guidance in shipping, customs, foreign relations, tax laws or negotiations, information is key. Global trade in Utah grows exponentially each year with Utah ranking third in the western states for export growth during 2007-2008. Of Utah’s $90 billion economy, one-third is based on international trade with $15 billion worth of exports and $15 billion in imports.
Cramer likes to quote the late Peter Drucker who is considered to be the pioneer of management theory. “In the future, there will be two kinds of CEOs: those who think globally and those who are unemployed.”