SEMA News - October 2010
Utilizing an Array of Free or Low-cost Resources to Become a Strategic Exporter
The U.S. government estimates that less than 1% of U.S. small businesses currently export, even though there’s huge demand for high-quality, American-made products. SEMA members as a group appear to fare better as a percentage of those that engage in exporting, yet many SEMA-member products are finding their way into overseas markets, often through their U.S.-based warehouse distributors or in response to ad hoc requests from overseas customers and in the absence of a deliberate policy on how to maximize their bottom line through a deliberate effort. “My guess would be that about 75% of SEMA-member manufacturers’ products wind up overseas somehow,” said Wade Kawasaki, president of Exports International. “I think a very small portion—perhaps 20%—have an integrated strategic plan on how that is done and how to expand or structure upon what
Given that exporting is an important but underutilized tool to help U.S. companies better weather the current prolonged economic downturn, the U.S. government recently announced a new initiative to assist firms. On March 11, 2010, President Obama signed Executive Order 12870, the National Export Initiative. It includes an increase in the budget of the U.S. Department of Commerce’s International Trade Administration in order to expand the number of trade experts available to serve as advocates for U.S. companies. The initiative includes a number of goals, including increasing the number of small and medium enterprises (SMEs) exporting to more than one market by more than 50% and increasing the presence of U.S. SMEs in emerging markets, such as Brazil, China and India. U.S. Department of Commerce staff noted that these resources had yet to be added as of August and, in fact, key posts—including the U.S. Commercial Service in China—have seen an actual reduction in staff. (SEMA News will include an interview with the Department of Commerce in an upcoming issue. The interview will highlight the progress of this initiative.)
In addition to adding to a company’s bottom line, selling products to markets beyond one’s home country can have a number of other benefits. Numerous studies have shown that exporters outperform non-exporters in terms of wages, productivity and innovation. The Organization for Economic Co-operation and Development concurs, noting in a 2009 report that internationalization benefits small- and medium-size firms through “greater access to new markets, improved resource utilization and productivity, and increased exposure to international best practices, knowledge and technology via the pressures—competitive, yet also creative—of the international trading environment.”
SEMA members that are currently active exporters know that being successful takes a commitment of time, money and resources—all of which are in short supply. It’s a struggle for most firms to develop a strategic plan that involves everything from identifying which international markets provide the greatest potential in terms of product mix, vehicles on the road, industry-friendly laws regarding customization, a consumer base with the means and interest to personalize their vehicles and manageable tariff rates. They also have to develop the ability to connect with reliable and capable overseas distributors as well as determine the costs that factor in shipping, any necessary product alteration and researching the competition in the market.
SEMA offers members various resources to help with these tasks, including market research, distributor databases, networking events at the SEMA Show and abroad. The overseas events include venues in China, the Middle East, Mexico and Europe.
“SCT finds distributors and dealers in a variety of ways” said Rick Trudo, president of SCT, a SEMA Show exhibitor and longtime SEMA member. “The SEMA Show is one source. In 2009, 29% of the visitors to SCT’s booth were international.” Among them were a Russian distributor and a Russian dealer, each of whom bought $40,000 worth of tuning software from SCT.
SEMA creates networking opportunities for member companies with distributors in key markets around the world. Pictured here importers, retailers and wholesalers from around China discuss the developments of the market in that country.
Other resources are provided by the U.S. government—the federal government spends $235 million annually to assist U.S. businesses in selling abroad. All 50 U.S. states also offer services, often including financial assistance to firms within their borders. A recent survey of state export services said that grants to small- and medium-size businesses were among the resources state funds provided and that “some states provide grants or payments to SMEs to help defray the costs of the U.S. Commercial Service’s fee-based export promotion services, such as attending international trade shows and trade missions and export training.”
Derek Chen is the director of foreign operations and the director of motorsports development for the international trade division of North Carolina’s Department of Commerce. His primary responsibilities involve assisting with North Carolina’s export of automotive and defense products. In addition, Chen oversees the operation of the state’s six foreign offices, which report to him.
“It is important that we continue to grow the North Carolina economy by expanding our companies’ goods and services into foreign markets,” he said. “By increasing their output, our North Carolina companies create jobs, keep the jobs they have, pay higher wages and enjoy increased stability, and the state enjoys increased tax revenue. Together, these benefits provide one of the more attractive and enduring solutions to our state’s economic woes while securing our state’s future in the global marketplace.”
Roehrig Engineering Inc. originally started as a supplier of automotive testing equipment to the racing industries and has worked with the North Carolina trade staff.
“We have worked with the international trade division since 2001, at which time we were just entering into the exporting market,” said Kim Rash, CFO of Roehrig Engineering. “Since that time the trade division has been instrumental in growing our business. Sales have increased by 110%. International sales contributed to 40% of the 2008 income and 60% in 2009. This increase in international activity would not have been possible without the help of the international trade division. Our staff is very grateful for the opportunity to serve international markets as well as the support and guidance needed to retain our employees in North Carolina and our four international reps.”
Roehrig Engineering currently sells in 47 different countries. Rash noted a few of the services the company has received from the North Carolina staff, including promoting the company’s products to potential customers; providing information regarding legal and accounting services; assisting Roehrig in understanding the process for clearing customs on a country-by-country basis; suggesting and sponsoring seminars regarding finance, shipping, insurance needs and business practices in foreign countries; and assisting with language translations and travel arrangements.
“Needless to say, the North Carolina Department of Commerce has been a valuable resource for our company and has provided priceless information that helped us diversify into the international markets,” Rash said.
Exporting is worth exploring. Those companies whose products are proven export-viable with some initial overseas success should consider elevating and integrating the goal of increasing overseas sales with a commitment throughout the firm and using the upcoming SEMA Show to begin networking with the more than 20,000 international buyers expected in Las Vegas.
“I believe many, many more SEMA exporters would find great success in selling outside the United State,” said Kawasaki, a veteran exporter. “They just need to put more thought behind the process.”
For more information about how to jumpstart your export success, contact Linda Spencer via e-mail. She can help you capitalize on the SEMA Show programs aimed at bringing together exhibitors and international buyers as well as obtain distributor lists, information on overseas trade shows and relevant laws, regulations and tariffs.