INDONESIA TRADE DIRECTORY  ON DISK 

1993

TRADEWARE BOX 406 WHITE MARSH VA 23183

     

TITLE       : The ABCs of Exporting


The ABCs of Exporting

If that firm can export, why can't we do it too?"
     Knowing the power of example, Business America regularly interviews
successful exporters and informs our readers about the international
marketing techniques of companies that win the President's "E" Award
for excellence in exporting, as well as companies that win other export
awards or otherwise distinguish themselves in international marketing.
We publish the interviews in a feature, "Exporting Pays Off," and the
stories about export award winners in the "Honor Roll of Exporters."
Our purpose is to encourage and instruct beginning exporters, as well as
firms that have not developed their full export potential.
     We select our export success stories, not because we endorse any
particular firm or its business plan and activities, but because we
believe their experiences will instruct other companies to improve their
export performance.
     Nor do we endorse the business plan and activities of the export
trading companies and export training organizations we describe. We cite
specific firms only to illustrate the wide variety of assistance that is
available to exporters.
     Following five basic steps will help a company get its first
exporting venture off on a smooth, orderly course. These five steps are
illustrated by the actual stories and experiences of successful stories
as told in the past year in Business America. We believe that real
examples and the actual words of business people bring the instructions
to life.

Step 1: Assess Your Export Potential

     Since exporting requires an extension of a firm's resources, it is
important you first assess your export potential. This assessment should
include a look at industry trends, the firm's domestic position in the
industry, the effects exporting may have on present operations, the
status of resources, and the anticipated export potential of the
product.
     * Unarco Commercial Products of Oklahoma City, Okla., figured out
that its shopping carts should sell in countries that are beginning to
move into U.S.-style mass merchandising. Marvin Weiss, president, said,
"As recently as five years ago, merchandising in the Pacific Rim
countries was done by lots of little service stores, where sales clerks
would take products off the shelves and bring them to the customer. Now
those countries are coming out with major self-service stores similar to
those in the United States. However, they aren't as large, and we have
to adjust our products. For example, we make smaller shopping carts for
them." Unarco is examining the market in Mexico, which is switching
toward mass merchandising.
     * Sun Metal Products, Inc., of Warsaw, Ind., believes that overseas
trade shows are a good way to test the export potential of products. By
participating in IFMA, the major bicycle trade show in Germany, in 1988
and again in 1990, the manufacturer of wire spoke wheels and alloy and
steel rims for bicycles made sales to 11 different European markets.
Since then, Sun Metal's participation in the 1991 Taipei Cycle Show has
led to an active Far East marketing program.
     * When Mike Carlton, founder of the Carlton companies of Chagrin
Falls, Ohio, faced a soft market in the United States for his business
services to advertising agencies, he got an inspiration: Why not offer
them where they are most needed -- in developing countries? "We believe
that, in the developing parts of the world, advertising will grow faster
than in the United States, where it is a mature industry," Carlton
said. "It's just more effective for us to grow in developing markets
than in mature ones." The Carlton companies focused on Indonesia, where
they are carving out a niche for themselves. Now Mike Carlton is looking
at the developing countries of Latin America and Southeast Asia as
promising markets.
     * LIFE Corporation of Milwaukee, Wis., tried out the export appeal
of its emergency oxygen packs by placing an ad in the U.S. Department of
Commerce's catalog-magazine, Commercial News USA. LIFE received
inquiries from every continent about its "oxy-pacs." John Kirchgeorg,
president, realized he had a highly exportable product. Forty percent of
the firm's products now go to foreign countries.

Step 2: Get Expert Counseling

     Once a company has assessed its export potential and made a firm
decision to commit time and resources, the next step is to get expert
counseling and assistance immediately.
     Firms that are entirely new to exporting should call the U.S.
government's Trade Information Center, toll-free, on 1-800-USA-TRADE
(872-8723); see page 13 for an article on the Center.
     Firms further along in the exporting process should contact the
nearest district office of the Department of Commerce's International
Trade Administration; see the end of this magazine for a list of the
district offices. Also see pages 25-27 for a list of ITA's industry
specialists, who are available for expert counseling.
     State governments are another prime source of export assistance.
See pages 28 and 29.
     Many other groups, both in government and the private sector, stand
ready to lend experienced, expert guidance to companies that are
starting an export business. Industry trade associations are also
useful, as are private consulting firms and the business departments
within major universities. See the directory of U.S. government export
services on pages 8-12 and the accompanying box on other organizations
that can provide export assistance.
     * What is the first step a small company should take to break into
exporting? Marty McCann, president of Buckles of America, a 23-employee
firm from Rocklin, Calif., replies, "Work with the Commerce
Department's International Trade Administration. When I was very green,
I received some good guidance from Mitch Larsen (trade specialist) at
the San Francisco District Office of ITA."
     * The U.S. Department of Commerce showed its willingness and ability
"to go right down into the trenches with us," says Bob Ellis,
executive vice president of National Orthotic Laboratories  of Winter
Haven, Fla., which makes orthopedic appliances. The firm never would
have ventured into the "uncharted waters" of overseas markets, Ellis
said, without the help received from the EUROpportunity program (under
which the Commerce Department's Europe country desk officers provide
specific market opportunities); the International Trade Administration's
district office in Miami; industry trade specialists; and U.S. and
Foreign Commercial Service personnel in Europe.
     * A training and assistance program to prepare U.S. companies for
the global market over an 18-month period is offered by Export Resource
Associates Inc., a small St. Paul, Minn., company in its third year of
operation (it also has an office in Chicago). "International
departments can often be `lone rangers' within a company," according to
Sandra Renner, president. "Our aim is to internationalize the entire
company -- that is, to get everyone involved, from the boardroom to the
production floor." Export Resource Associates shows all employees in
client firms the practical things they must do to change their products
and work habits so as to make the most of foreign market opportunities.
Export Resource Associates has developed a step-by-step program for its
client firms which it calls "Fast Track Exporting."
     * Hal Herron, president of Brunton USA, gives the Wyoming state
government major credit for his firm's rising exports of compasses.
"The state's trade staff has provided us with trade leads and
encouraged us to participate in overseas trade shows," Herron said.
"The trade staff is unlike any government I've ever worked with -- they
operate almost like the private sector. They're constantly on the phone
with us, telling us about things that are coming up and might benefit
us."
     * Susan Olesen of Boca Rotan, Fla., gives high marks to the Florida
Department of Commerce for helping her get started with her company,
Global Computer Products, Inc., two years ago. The Department's trade
specialists encouraged her to participate in successful trade missions
to Mexico, Antigua, and Jamaica. She has also received assistance from
the Miami District Office of the U.S. Department of Commerce's
International Trade Administration, and Florida Atlantic University's
International Trade Program. Global Computer Products buys computer
systems, network products, cable products, UPS systems, and other
peripherals from various U.S. companies and resells them overseas.
     * The INTERMARK Group of Rolling Hills, Calif., is an example of a
private sector consulting firm that helps companies get their bearings
in international marketing. It does not export -- it shows other firms how
to do it. James C. McKay, founder of INTERMARK, explained, "A client
comes to us and says, `Hey, what countries should we go out and sell
to?' We do market research and help him identify his best overseas
markets. We deal with every type of product, service, and technology. We
give individual treatment -- customized service. We arrange to get the job
done, whatever the job a client wants accomplished. We tell them we can
substantially reduce their costs, problems, and uncertainties."
     * The New York City Department of Ports and Trade helps exporters
get started. An agency official explained, "We believe that what new-
to-export companies really need is someone to stand beside them with
advice and encouragement during all phases of the export transaction.
Our ultimate goal is the self-sufficiency of our client companies in the
conduct of international trade."
     * Four volunteer business executives helped The Crowning Touch,
Inc., of Medford, Ore., set up its domestic and international sales
program under the auspices of the Service Corps of Retired Executives
(SCORE), a private organization sponsored by the U.S. Small Business
Administration. The five-employee firm, which makes sewing tools, sells
in Japan, Australia, the Netherlands, Canada, and the United Kingdom,
among other countries. Crowning Touch also has received export
counseling from the U.S. Department of Commerce through the Portland
District Office of the International Trade Administration.
     * The Tampa Bay International Trade Council counsels exporters,
sponsors trade seminars, workshops, and conferences, and organizes trade
missions. It maintains a trade reference library and exchanges inquiries
with more than 1,000 trade organizations and chambers of commerce in 80
countries.

Step 3: Select Markets

     After a firm has received expert counseling, it must select one or
two "ideal" markets from the hundreds available. Language and cultural
differences, special trade regulations, local competition and economic
conditions, and other vital factors must be evaluated to maximize
success abroad.
     The district offices of the U.S. Department of Commerce's
International Trade Administration are an excellent place to begin. The
Department offers a wide range of market research programs. In addition,
it maintains a global network of U.S. and Foreign Commercial Service
Officers and other international trade specialists who conduct overseas
market research and gather commercial data of broad interest to U.S.
exporters. The Department's industry specialists in Washington can
provide U.S. firms with a unique industry-oriented perspective on the
best prospective markets for their products. The Commerce Department
also offers a variety of trade promotion programs that help new
exporters test foreign markets and evaluate their export potential
within a specific geographical area. Other sources that are helpful to
firms involved in the selection of potential markets include export
councils of industry trade associations, the business departments of
universities, consulting firms, and market research groups.
     * Octocom Systems, Inc., of Wilmington, Del., aimed at small-and
medium-sized individual markets throughout the world that large U.S.-
based communications companies had not considered worth the effort and
resources to cultivate. The strategy paid off. Octocom has become the
dominant data communications vendor in many lucrative markets of all
sizes.
     * Fleming Manufacturing Co. of Cuba, Mo., spotted major business
opportunities in the political developments in Eastern Europe, the
former U.S.S.R., and the Middle East and is going after them. Ariel
Campos, international trade director, said, "Take the countries of
Eastern Europe; they are 40 years behind in construction and are very
eager to do a lot of building at a low cost and are very eager for U.S.
technology. Turkey is another example of a market that is opening up. As
a result of being a key ally in the Gulf War, Turkey is looking more to
the United States. We are going about our international marketing in a
more scientific way. We are looking carefully at the political
situations in certain regions. We are searching for stability and
searching out developing areas." The firm makes specialty concrete
product machinery and equipment.
     * Three years ago, Rust Evader Corporation of Altoona, Pa., made a
calculation that its rust-prevention devices for motor vehicles might
have better potential abroad than here. Dan Emanuelson, president of the
37-employee firm, explained, "Overseas, automobiles are more expensive.
People keep them longer. There are many backyard mechanics who like to
tinker with their cars. They are more apt to keep their cars for 10
years. Overseas, there is less of the planned obsolescence that we have
in this country." Rust Evader now sells most of its products overseas.
     * Laboratory Tops, Inc., of Taylor, Tex., began using the services
of the U.S. Department of Commerce to select overseas markets two years
ago. The firm, which manufactures chemical-resistant epoxy-resin
countertops and sinks used in laboratories, bought the Department's
Comparison Shopping Service, a customized service assessing a product's
export potential, in both the United Kingdom and Germany. It learned
about market potential and other basics of exporting at Commerce
Department seminars, and it took part in British Lab Week, a trade fair
in which the Department organized participation by U.S. exhibitors. In
addition to the United Kingdom and Germany, the firm now exports to the
Netherlands, Korea, Taiwan, and Australia.

Step 4: Formulate an Export Strategy

     The formulation of an export strategy is the next step. In general,
a successful export marketing strategy identifies and correlates at
least four factors that jointly determine the most suitable kind of
export operation: (1) the firm's export objectives, both immediate and
long range; (2) specific tactics the firm will use; (3) scheduling of
activities, deadlines, etc., that reflect chosen objectives and tactics;
and (4) allocation of resources among scheduled activities.
     The marketing plan and schedule of activities should cover a two-
to-five-year period, depending on the kind of product exported, the
strength of the competitors, conditions in the target markets, and other
factors.
     * New management at Global Manufacturing, Inc., of Little Rock,
Ark., has developed an international marketing plan targeted at the
major industries worldwide that use the type of equipment it makes to
reduce friction and facilitate the flow of bulk solids. It is searching
for new markets in many countries through trade/catalog shows, and it
watches for opportunities in foreign government projects. In five years,
the firm hopes to be selling one-half of its equipment overseas. Maura
Lozano-Yancy, international sales director, said, "We have in place
managerial commitment, excellence in product, and worldwide marketing,
and we have the persistence to succeed."
     * Six years ago, the management of Ohsman & Sons Company, Inc., of
Cedar Rapids, Iowa, decided to make a commitment to find and develop
more overseas markets for its products (hides, fur, and wool). In a
deliberate and orderly way, the 12-employee firm tackled such problems
as export financing; tough competition; arranging timely shipping; and
finding new employees who have at least a basic knowledge of the
languages of foreign trading partners, including Japanese, Korean,
Spanish, and Russian. In a three-year period, Ohsman's exports grew from
30 percent of total shipments to more than 50 percent.
     * Faced with an eroding customer base in the United States,
Greenville Machinery Corporation of Greer, S.C., which makes textile
machinery, developed a plan to transform the firm into an international
company. The plan, which set a goal of exporting half of the firm's
production in five years, involved upgrading quality, using the metric
standard for foreign markets, and extensive market research to establish
priorities. The commitment has resulted in the export of well more than
half of the company's production.
     * Leave your firm's export strategy to us, argues Paul Brauner,
president of Brauner Export Company, Inc., of St. Louis, Mo., a 19-
employee export management company that now is concentrating on sporting
goods and home fitness products. "We work with U.S. manufacturers in
blending their domestic resources with international opportunities in a
global strategy," Brauner said. "We counsel with our client, like a
partner. We set up a budget for trade shows and mutual travel. We set
sales goals for the year."

Step 5: Select a Selling Technique

     After investigating and selecting foreign markets for your
products, the fifth step in an export venture is to select a selling
technique. There are two basic selling techniques in exporting: indirect
and direct selling. The decision to market products directly, or
alternatively, to utilize the services of an intermediary, should be
made on the basis of several important factors: the size of the firm,
the nature of its products, previous export experience and expertise,
and business conditions in the selected overseas markets.
     In direct selling, the U.S. firm deals with a foreign importer and
is usually responsible for shipping the products overseas. However,
direct selling may include utilizing the services of foreign sales
representatives or agents. In selecting the method, the product involved
and the way it is marketed in the United States will provide a clue as
to how it might be marketed internationally. The customary business
methods and established channels of distribution in targeted countries
may also have a bearing on the marketing channel selected.
     Some of the available methods of direct selling are: sales
representatives or agents, the equivalent of a U.S. manufacturer's
representative; distributors, who purchase merchandise from a U.S.
manufacturer at the greatest possible discount and resell it at a
profit; dealing with foreign retailers, relying mainly on traveling
sales representatives who directly contact the foreign retailer; direct
sales to end-users; and state-controlled trading companies in countries
that have state trading monopolies, and where business is conducted by a
few government-sanctioned and controlled trading entities.
     In the indirect selling method, the U.S. firm with a product to
export relies on another firm that acts as a sales intermediary and
normally will assume responsibility for marketing and shipping the
product overseas. The principal advantage to indirect marketing is that
it gives a smaller firm with little export expertise a way to penetrate
foreign markets without having to get directly involved in the
complexities of exporting.
     There are several distinct types of intermediary firms, each with
its own advantage for the manufacturer: commission agents, who are
"finders" for foreign firms that want to purchase U.S. products;
country-controlled buying agents, which are foreign government agencies
or quasi-governmental firms empowered to locate and purchase desired
goods; export management companies, which act as the export department
for several manufacturers of non-competitive products; and export
trading companies, which purchase U.S. goods for resale in foreign
markets.
     * Sending letters, with brochures, to a select list of prospective
overseas customers, is the selling technique of Sabo International, a
two-person Connecticut firm that buys U.S. gas turbine maintenance
equipment and resells it abroad. James Taylor, founder of the firm,
bought a list of 181 names and addresses of potential overseas customers
from the U.S. Department of Commerce's Foreign Traders Index for only
$45. Every few months, he sends letters to the names on the list. He has
made sizeable sales to many of the firms and government agencies on the
list.
     * Systems Center, Inc., of Reston, Va., which makes computer
software for mainframe computers, attributes much of its export success
to its international network of sales agents. Says Gillian Parillo, vice
president, international agent operations: "We treat our overseas
agents as if they were business partners in the United States. We
provide them with information and materials exactly as we do with our
U.S. sales people. We always keep in mind that our agents sell for other
firms and that we are competing for their time. So, we try to make them
feel special. We try to provide them with better service than any other
company they represent. We keep in touch with them all the time -- we send
a newspaper each week." The firm has 39 agents, all natives of the
country or region, who receive a percentage of their sales.
     * Manufacturers reluctant to go into exporting are given an easy
option by Medical International Inc. of Spring Lake, N.J., which will
buy their products outright and market them overseas. Carol Myers,
export manager of the export management and trading company, said,
"Small- and medium-size U.S. companies think it's great to have our
expertise selling their products. Many of them wouldn't export at all on
their own. Some get an unsolicited foreign order, and it sits on their
desks for a long time and ends up in the trash can. The smaller
companies don't know about such matters as letters of credit. They just
don't feel comfortable with international marketing."
     * IKR Corporation of Houston, Tex., gives its client firms
(producers of firefighting equipment and industrial equipment) a choice:
(1) it will buy their products and resell them outright to overseas
customers; or (2) it will help them set up export departments or expand
their overseas marketing. "We get totally involved with our client
firms," Richard Koehler, IKR president, said. "We participate in their
operations to the extent they want us to."
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