What the world told me about Tuesday’s election.

Who am I?
As a regular global business columnist for the DBJ, many have read my thoughts and tips on global business. My field is international market entry, and my firm specializes in taking firms into foreign markets through sales, distribution, acquisitions, and strategic alliances. I only mention this to demonstrate that I am in touch with people from overseas regularly, often daily. The magnitude of work my firm performs forces long term, intimate relationships with my clients and business associates. We are able to speak directly, and no issue is considered taboo. I’ve been at this for over 25 years, and worked on 6 continents in 72 countries.

Disclaimer
As a disclaimer, I cannot begin to speak to or surmise what 6 billion people think of the US Presidential election. My knowledge is limited to my own span of attention, and much of the reading comes from my own Outlook in-box.

Oddly enough, this weekend I was raking leaves at my home, when a woman from England came to my door to campaign for Obama. She and several other Europeans had flown in for election week. How many times have we heard of that? We all knew that the world has been watching this campaign, but this is the first I have heard of Europeans campaigning on US soil, for an American election!

This morning I woke to hundreds of emails congratulating me on our new President, and expressing cheer in my being American. The emails received from my colleagues expressed gratitude, relief, enthusiasm, optimism, and of course, curiosity. When companies allow you to build markets for them in unfamiliar territory, trust becomes the most important issue. Hence, I trust what I have read and heard this morning.

Some noteworthy examples (with names omitted for obvious reasons):

“Bill, it’s about time the world’s most powerful nation did something for itself….”
- CEO, French petroleum company

“You took your country back”
- CEO, Irish Media company

“I can’t begin to tell you how happy we are in London about America’s great success. We look forward to a different kind of soldier and a different kind of way to relate to each other”
- Chief of International Development, British Real Estate Development firm , one of the world’s largest property managers

“Maybe this guy will speak TO us and not AT us”
- Executive, Dutch Trading (import/export) company

“Dear Bill, The rumors that Obama is Muslim are outrageous. As a devout Muslim, it is difficult when Americans think that all Islam is bad, and therefore the best way to slander an American is to call him a Muslim. I do think that Obama will be the first American President not to hate all Muslims. Allow me to buy you dinner next time you are in Dubai.”

- CEO, Dubai and UAE investment firm

“I guess all Americans aren’t ugly”
- Secretary, Polish TV station

“Now we don’t have to hate you, or pretend to hate you”
- CEO of several Canadian companies.

“Does this mean we are safer now?”
- Japanese “salaryman” (middle manager at an electronics firm).

“With a man like Obama in charge, this is probably good for women.”
- Swedish commercial airline pilot (female)

In the past, my firm’s experience has been that many deals originating from the US carry a stigma. We are often shunned in business due to military, economic, or foreign policy issues. (All over the world, these issues are related to business. Most countries don’t “segment” them the way we do in the US. The Ford Motor company knows this, and conducts all international export and licensing activities through Ford Canada, a Canadian company.

Several years ago my firm had scheduled a 13 country sales trip through central Europe. Due to US foreign policy, most of the CEO’s had cancelled my meetings. Only the Poles met with me and enlightened me about the marriage between US foreign policy and US products selling in Poland.

“The door is now open”
- Polish entrepreneur and industrialist

Now it seems many of our cooling relationships with our allies can warm up, creating larger and better markets for US products and services abroad. We may even thaw the ice with some of the countries who have hated us the past, creating brand new opportunities for US firms. We have learned that the more we are entrenched with other country’s economies, the less likely we are to have war with them.

As the Polish entrepreneur said so succinctly,
“The door is now open”

Technorati Tags: international market entry, international business, global business, international marketer, Obama

Can manufacturers use a foreign trade zone to be competitive?

In 2000, Congress passed the Trade and Development Act, to create Foreign Trade Zones. Foreign Trade Zones (FTZ’s) exist throughout the USA to help domestic manufacturers save money and defer expenses. Think of an FTZ as a small island somewhere in the USA that is exempt from US Customs duties. An FTZ can be a port, part of a port, acreage in an industrial park, a warehouse, or even an office building! Anywhere goods can be imported, stored and then re-exported can be an FTZ.

According to the National Association of Foreign Trade Zones (www.naftz.org) activities that can occur in an FTZ include: assembling, packaging, destroying, storing, cleaning, exhibiting, re-packing, distributing, sorting, grading, testing, labeling, repairing, combining with foreign or domestic content, or processing. Hence. Almost any manufacturers dealing with imported material can benefit from an FTZ.

An example might be a bicycle manufacturer in Colorado. If the manufacturer is working with any imported components they can keep those components in an FTZ until they are ready to use them. They can also work on those components while they reside in an FTZ.

This means that the bicycle company will not pay any US duties on these components until they are ready to exit the FTZ (thus “entering” the US market).

This is a great boost to the company’s cash flow. By saving money on duties, the firm can order more pieces of components and take advantage of bulk pricing. And when properly managed, the finished product wouldn’t leave the FTZ until a customer was ready to buy bicycles. If the bicycles were being exported, there would be no US Customs duty whatsoever.

In our example, if the bicycle firm bought components from Japan, steel from China, and tires from Malaysia, and built bicycles for export to the UK, the firm could import all of these pieces duty free, build the bicycles, and then export them, duty free.

This alone could make any US manufacturer more competitive.

The benefits continue though. If that bicycle company uses imported machinery to assemble bicycles, then a portion of that imported machinery would also not incur US duties. The labor and overhead affiliated with the production process (for export) would also be exempt for US customs duties.

If the UK client returned bicycles to the FTZ, there would be no duty collected on those returns either.

Many firms don’t export, so let’s take an example with a domestic customer. What if the bicycle company was in Colorado, but its clients were say, in Pennsylvania?

The Colorado firm could store parts and produce goods in a nearby FTZ. After completed, the finished products could be shipped to an FTZ near the Pennsylvania client. Duty would only be collected when the bicycles leave the Pennsylvania FTZ for delivery to the client.

In many cases, such as with Swedish giant Ikea furniture, the duties incurred upon leaving the FTZ are borne by the customer. Ikea is able to offer its clients better pricing provided the clients take that burden, as many are willing to do.

Most manufacturers reading this article will be able to calculate their cost of duties, and their cost of capital to estimate their savings. However, few will be able to calculate the costs of the paper work associated with paying duties and registering goods. By consolidating into an FTZ, much of the paperwork associated with individual imports can be minimized.

FTZ users can engage a practice known as the Weekly Entry Procedure. This procedure allows the FTZ user to file one Customs Entry per week (as opposed to filing one Customs Entry per shipment). Picture our bicycle maker getting several hundred boxes per month, from various suppliers.

Only an employer can tell you their costs per employee, per minute. But if we assume a two dollar per employee minute cost rate, and save hundreds of hours in filing time per month, savings add up quickly.

The FTZ has several other benefits. Savings can occur on personal property tax, harbor fees, spare parts inventory, destruction of obsolete parts and insurance rates on inventory.

Landlords can greatly benefit by activating an FTZ within their real estate. If our bicycle manufacturer has several locations to choose from, it may pick the location that is already established as an FTZ.

According to the NAFTZ there are over 250 U.S. communities with zones, and all 50 states have zone projects. The FTZ’s handle some $400 billion worth of merchandise, and FTZ’s employ over 300,000 people. $19 billion worth of goods are exported from FTZ’s

So in short, some paperwork and compliance can save a manufacturer money and hassle, very quickly.

How much money can be saved?

To stay with a bicycle example, Huffy Bicycles of Centerville, Ohio claims to save over $1 million a year in duties and paperwork.

If your business spends more than $100,000 in duties and paperwork, an FTZ should be part of your plan.

Technorati Tags: international business, international advice, international strategy, foreign trade, market entry, funny business

1) Make no investment in the country. Don’t learn any of the
language, don’t read about the culture, and don’t visit frequently.
Why waste your valuable time?

2) Don’t spend any money. Use a “straight commission, no cure
no pay” business model. After all, no one else is interested in the
Chinese market, so remember that people are actually waiting around
for your product.

3) Keep those business trips short. The culture is over 4000
years old, but you can do a deal in a weekend. And if you can, keep
all meetings to 20 minutes or less.

4) Show the Chinese “who is boss.” Dictate all terms. Be as
inflexible as possible. This will force them to respect your
authority.

5) Don’t bother with costly translations and interpreters. If
these people don’t speak, read and write English, then it is your
duty to modernize them.

6) Ignore local laws. Law is law, but business is business.
Nothing hinders a deal more than difficult, ancient laws. To
overcome Chinese resistance, force your laws down their throats.

7) Arrive late to meetings. “A busy man is an important man.”
Command respect immediately by making the Chinese wait.

Remember the American sense of humor. The best way to get a
point across is using a little joke. Sex, religion and politics are
always suitable topics to pass a few laughs with.

9) Critique that government. Everyone admires the American
sense of free speech. If you disagree with government policies or
officials, don’t’ be shy about broadcasting your opinions.

10) Change that culture. If you are unhappy with “the Chinese way
of doing business” then do things your way. Live by the motto:
“It’s my way or the highway.”

Technorati Tags: international business, international advice, international strategy, selling in China, market entry, funny business

The whole world is watching the Olympics. And as we cheer on our athletes, can we cheer on our companies? What specific business opportunities is the Beijing 2008 Olympics creating for American companies?

Below are the top 10 that are the most apparent:

• The first three: English English English — English language, English media and English educational products.
English language instruction is paramount. We’ve seen it happen all over the world: When the Olympics come, the street signs become romanized (using letters instead of characters), and countries strive to learn English.

Any visitor to China will instantly see that the country is rapidly leaning English — businesses, students, even taxi drivers (who must speak three sentences in English to patrons). This creates opportunities for English schools, English learning websites and English workbooks.

English media is also desired, such as movies, DVDs, songs, bands and magazines. Even old, antiquated TV shows, “B” movies and unheard-of story books have a market waiting in China.

English educational products refer to products that teach in English. For example, accounting journals that teach accounting methods. There’s a strong desire for master’s-level curriculum on anything for agriculture to industry to medicine. Chinese production engineers want to learn the latest techniques, and to do so in English.

• Western service techniques — With more exposure to the West, the demands for service have changed. Hotels, airlines, restaurants and resorts need to learn to cater to Western tourism students and businesspeople. This new level of service may differ greatly from the old-style communist service industries.

There’s an enormous opportunity to teach customer service basics, sales, change management and problem solving in these industries.

• Chinese business education — China’s new leaders want business education from the best of the West. The large, famous Western universities are already in China.

However, there are many vertical markets that remain up for grabs. Associations such as the American Society for Quality (ASQ) already are teaching executives their ways. Western manufacturing standards are being taught in China. Environmental remediation firms are making inroads into China.

• Western business education (about Chinese) — China’s new markets bring opportunities for those of us who can educate Western firms about how to do business in China.

Cross-cultural training, interpretation and translation firms all receive enormous benefits, and there’s an eager audience in the West. The West needs to learn culture, standards, business practices, law, finance standards and, of course, Chinese languages.

• Promotion of Chinese brands (show off the technology) — The billions of dollars China is spending aren’t just to give athletes a better swimming pool or a nicer volleyball court. China is showing the world that it can be a world-class manufacturer, and that its technology and design will be second to none.

These new Chinese brands will need Western marketing muscle, technology and business savvy to efficiently penetrate Western markets. Western firms in advertising, logistics, marketing, distribution, media, law and finance all can seek new clients from China.

• Promoting foreign brands in China — We can’t all be Coca-Cola, which will spend billions to conquer the Chinese soft-drink market. We all can’t be Starbucks and open hundreds of outlets.

However, with the Olympics comes interest about Western goods and services. New Chinese consumers will thirst for Western soft drinks, hunger for our foods, crave our consumer products (hundreds of thousands of Iphones in China, which have been illegally unlocked) and be fascinated with our recreational activities.

Not only will the companies that produce the brands benefit, but so will firms that facilitate brand promotion. These firms include shipping companies, advertising agencies, banks that finance deals of this nature, brokers and consultants.

• Importing from China — As Chinese curiosity grows about us, so does our curiosity about things Chinese. Consumer food firms may wish to add a Chinese line. Chinese music has yet to be commonplace in the United States. Chinese games, sports and recreational activities (board games, dance and art) will find a new home outside Chinese borders.

Firms that can import these products or concepts will realize additional revenues, from their existing clients and from many new customers.

• Business centers (to help foreigners in China) — Planes full of Yankees are heading into China. Most of them have no Chinese market savvy.

When these executives don’t pay to hire the right people, or learn about the Chinese market, they’ll be in for a shock when they hit Shanghai.

Business centers are a common quick fix to this problem. A good Chinese business center should be able to supply translation, interpretation, training, logistical support, tourism, hotels, concierge services, health care and banking relationships to unprepared clients.

These centers aren’t restricted to China, and whoever takes this market space will enjoy a loyal clientele.

As we cheer on the Olympic Games, we should be aware of the business prospects that are created. We can do a lot more than put an athlete on a box of cereal.

Technorati Tags: international business, international advice, international strategy, Olympics, China, Olympic Games, Chinese market, Chinese business

Many years ago I went to a mentor of mine with a great idea. He put down 1c on the table, and told me I owed him one more idea.

“Ideas are two to a penny.” He said.

“Implementation is priceless.”

Technorati Tags: business, consulting advice, strategy, start ups

“The Money you Make is in the Deals you DON”T do”

- Ancient Investment Banking saying

Technorati Tags: business, consulting advice, international strategy, trade shows

How to push your company at an international trade show
Denver Business Journal

The world-is-getting-smaller concept means Americans are attending more foreign trade shows to perform market research, sell their wares, engage in competitive analysis, or seek partners and alliance companies.

There are nuances to doing this overseas, and here are the top 10 tips for working a foreign trade show:

Set a strategy —
Are you going to this show to look for cooperation opportunities? Are you trying to find customers? Are you looking for vendors? Are you just showing the industry that your firm is still in the game? Prepare the staff with the proper expectations, and set an action plan for what you’ll be doing at this show.

Translate your material, or at least an introductory sheet —
Remember your audience. If you’re heading overseas, people may speak and read English, but it may be their second, third or fourth language. While it’s an expense to translate a firm’s materials into many languages, you can usually use an “at a glance” sheet to deal with your firm’s major benefits.

And when coming from the United States, don’t forget to put the country and country code on all business card and letterhead addresses.

Have multilingual people available —
It’s a courtesy to the locals (and visitors from other countries) to speak their languages. In Europe, you can provide trade-show support in four or five languages, and cover a great portion of the population. In Asia, having someone on hand who can speak Chinese and Japanese will be seen as a differentiator, and a courtesy (your hotel can usually help you locate that expertise).

Have several people in attendance —
First, there’s nothing more pathetic than seeing some lonely guy sitting at a booth at a trade show. Usually, when there’s no booth traffic, that person can be found reading or looking at their computer, hence, visitors are interrupting.

But also, international trade shows are exhausting. Time differences, jet lag and logistics necessitate breaks for booth staff.

Arrive early, stay late —
Get to know the town. Make sure your booth arrives (things like that can get held up in customs or suffer from shipping delays, breakage, etc.). Get over your jet lag.

Learn a few words of the local language (such as “please,” “thank you” and “where is the toilet?”).

Staying late provides an opportunity to meet with people after the show. And Americans are notorious for having their business trips be too short. When you tell people at the show that you’ll be in town for the next several days, you have differentiated yourself.

If you use giveaways, make sure they’re culturally sensitive —
I once attended a trade show in Mexico with a company that insisted on giving away pocket knives with their logo on it. To a Mexican, the presentation of a knife means severing a relationship.

At another show in Belgium, an American firm was giving out chocolate at its booth. Belgians view their chocolate with national pride (it just may be the world’s best) and therefore had no interest in Snickers bars. This type of mishap is easily avoidable by asking a native of the country what is and isn’t acceptable.

Prepare your website to deal with inquiries —
The beautiful thing about websites is that they’re so easily modified. Have a “Berlin Trade Show” button on your site, and house everything there you wish the participants to find. You can even put your multilingual benefit sheets up there.

The second word in trade show is “show” —
The people in the booth handing out brochures and cup holders don’t represent the American marketing machine. The United States is known worldwide for marketing prowess, and this is the place to do it. Rent an animal, hire a magician or give out snow cones. Remember that trade-show participants are jet-lagged, tired and hungry. Cater to them.

Follow up —
Once you’ve met the people you want to see, don’t forget to keep up with them. Send a friendly email, put them on a newsletter list, or — if they warrant this — arrange a visit for your next trip. Remember that most other nations are relationship-oriented, and you’ll need far more touches to make a deal.

Don’t forget to have fun —
Why go through the hassle of international travel if you’re only going to work? Take some time to see the sights, shop for ridiculous souvenirs and take in the local cuisine. And if you’re really trying to do business with people from other cultures, then it’s necessary that you spend some personal time with them to build relationships.

Using these tips will help you accomplish your goals at trade shows. Many of them even can be used here in the United States.

Technorati Tags: international business, international advice, international strategy, trade shows, foreign trade show, international trade show, trade show tips

It’s true there are markets waiting for American products and services around the globe. But the main success factors for market entry have not always been money, market power or advertising. Successful market entry is often a function of flexibility and creativity.

We’ve all seen examples:

Market failures
We’ve all heard stories of Chevrolet Nova being sold in South America where the name Nova translates to “it doesn’t go.” We’ve also heard that Pepsi’s “come alive with Pepsi” was translated into Mandarin as “your ancestors will come out of the grave with Pepsi.”

But translation is only part of the story

In Taiwan, Whirlpool came into the market with large, American style refrigerators. The Chinese in Taiwan prefer a smaller fridge (their kitchens and homes are much smaller, and they prefer to purchase groceries more regularly that busy Americans). So Whirlpool failed. A “Lowe Taiwan” or “Taiwan hand” could have helped Whirlpool prevent the losses and embarrassment. Whirlpool also might have been advised to pick a name that Chinese could actually pronounce!

During the Viet Nam war, US troops distributed toothbrushes to the South Vietnamese army (who thought there were rifle cleaners). The toothbrush company that donated these for eventual market share therefore got no benefit.

Many European food processing companies opted to break into China’s market in the 80’s, with China becoming on of the world’s largest consumers of Chicken. However, the neatly wrapped cellophane chicken sections did not sell; Chinese prefer to pick out live chickens at a market, and have them slaughtered and prepared at purchase.

And who could ever forget the doomed Presidential trade mission of 1992, where American Auto icons demanded that Japanese purchase more US autos. The Japanese simply replied: “the steering wheel is on the wrong side.”

Market surprises

The Sony Walkman was an enormous hit in Japan in the 1970’s. It was launched with the main benefit that using it “would not disturb others.” Walkman entered Los Angeles in the late 1970’s as its entry point to greater America. It was immediately adopted by the cool, California beach scene. However, when consumers were polled, they said they bought the Walkman “so they wouldn’t be disturbed BY others.”
A great American export success is Tabasco sauce. It could be found throughout Japan. It has nothing to do with Louisiana food, Cajun food, or even hot food! Tabasco appears for a macho approach to spice up the rather delicate Japanese cuisine. But nothing else on the table may be spicy at all!

Market adaptations

McDonalds prides itself on inexpensive, quick food. The dining experience should be convenient. The food comes out within seconds of ordering it, and the restaurant itself is brightly lit with hard plastic furniture, so that customers don’t really want to linger very long. The drive-through made perfect sense to rushed Americans who want to power down a burger while driving on a highway.

Asian McDonalds are “sit and chat” places. Because many of the items are imported, they are more expensive. It’s possible for Chinese families to spend an hour or two in a McDonalds. In Europe, many McDonald’s serve beer, redefining the “family restaurant” theme. Additionally, McDonalds is a quick service or casual dining restaurant outside the USA (where it is classified as fast food).

Budweiser
Budweiser is a high volume, low margin, inexpensive beer. In Japan, Budweiser is a premium beer, selling at some restaurants for 8-10$ per can. Japanese have been known to instruct the waiter at a restaurant to leave the empty BUD can on the table, and have glasses refilled with less expensive local beers, as BUD is a status symbol.

Heineken
The same holds true for Heineken, which could be called the “Budweiser of The Netherlands.” In the USA, however, it is a premium product.

Levis
The Americans get their revenge with Levis though. Levis are a workingman’s blue jean. But in Holland prices can be 3-5 times what Americans spend at home, and the Dutch wear Levis to cafes and clubs.

Market Flips

Bottled water

In a bottled water deal I was once with, we surveyed the landscape of bottled waters in Europe and realized we would never compete as a water drink. We would therefore compete as a club drink. We found a sexy fashion magazine to put their name on our water, and we sold “Scena” (the scene) water through fashion magazines and nightclubs. Our quantities were less than if we were in supermarkets, but our margins were enormous.

Media
In bringing media companies to Asia we found that the content (the movies, the radio show, even home shopping) was less important than the English that was being spoken. We were able to sell American TV as a means for Asians to practice their English.

So the lessons?

Get a Lowe Taiwan. Walk into a few kitchens. (Or just go where the customers are) Be flexible. And be on the lookout for market surprises and market adaptations. And when you can’t find those surprises, “flip.”

Technorati Tags: international business, international advice, international strategy, international markets