From the November 1996 issue of Startups

Want to increase sales through new markets for your product? Find a way to weather slowdowns in the nation's economy? Learn how business is done elsewhere in the world? Then think globally, and start promoting your products to foreign markets.

"Exporting is one of the best ways for a small business to expand its markets and increase sales," says Eileen Cassidy, director of the Office of International Trade (OIT) of the Small Business Administration (SBA). Selling overseas, she explains, can extend the life cycle of your products by finding new buyers in foreign markets, as well as accelerate your firm's revenue growth, since foreign orders for merchandise are generally larger than they are at home. "In 1994, small business exporters were responsible for one-third of the total merchandise exported," Cassidy says. "So there's still tremendous potential for growth by small-business exporters."

Exploring Foreign Markets

"Foreign buyers are very interested in U.S. products. They carry a certain panache," says Peggy Baird, co-founder of American Image Group, a firm in Cambridge, Ohio, which helps U.S. manufacturers sell to Japanese retailers. "But your product must have proven demand in the foreign market you're pursuing."

One way to find out if that demand exists is by showing your product at a trade show. "Foreign buyers attend domestic trade shows," says Baird. "They'll tell you if they have an interest in your product. They're savvy about their exchange rates and can tell you immediately if your product is priced competitively for their market."

You also need to make sure your American-made product fits your foreign buyer's body size, housing needs or lifestyle. For example, hair dryers, television sets and other types of American-made equipment that operate on 110-volt and 60-cycle current will work in Canada but not in Japan and Europe, where electrical equipment operates on different voltages and cycles. Product quality is another key consideration. An item that chips, fades, shrinks or doesn't operate properly won't be accepted in foreign markets. Some foreign buyers won't accept a product with even the slightest imperfection.

Once you've tested your product for marketability, consider how you will ship it overseas. Also, assess your production capacity to ensure you can adequately respond to a large foreign order.

Understanding Cultural Differences

When marketing abroad, you must adapt to another country's culture and way of doing business. While many foreign businesspeople speak English and are knowledgeable about U.S. business practices, they operate according to their own unique cultural assumptions.

U.S. businesspersons frequently use slang, tell jokes, address one another by nicknames, and express their emotions through facial expressions or hand gestures during a meeting. Their counterparts in western Europe, Canada and Asia, however, are far more reserved. They observe a sense of decorum in addressing each other by using last names and titles, with no casual gossip or joking comments that could make someone feel uncomfortable.

Probably the biggest cultural adjustment for U.S. exporters is accepting how business decisions are made overseas. American entrepreneurs are independent thinkers, quick to make their own decisions. In Asia and western Europe, business decisions require a group consensus and can take months, even years, to finalize. "The process is much slower because these countries view business commitments as long-term relationships, based on mutual trust and respect for the trading partners," notes Judith Starkey, president of The Starkey Group Inc., a Chicago-based management consulting firm specializing in interpersonal relations in a multicultural environment. "Building this trust takes time. So to make the relationship work, you've got to commit to the long term."

Of course, the rules of protocol vary with every country. The best way to guarantee you'll be using the right business etiquette is to read up on a country's social and cultural history. Have your business cards printed bilingually. Use textbook-perfect grammar and avoid slang like "OK" or "for sure." When in doubt, follow your host's lead, adapting your pace and manner to his.

Choosing a Distributor

Once you've identified a target market, you'll need to determine how best to sell and deliver your product.

If you handle your own distribution, you'll be responsible for marketing and shipping your product, contacting foreign buyers directly, processing your own paperwork, and making sure you get paid. It's an approach recommended only for more experienced exporters.

Your other option is to deal with your foreign customers through an intermediary, such as a foreign sales representative or distributor, who works on commission and is under contract for a specified amount of time. You can find one by attending trade shows, talking with other exporters, or contacting your state Department of Commerce for leads. Such arrangements offer you the benefit of the intermediary's established relationships with foreign buyers, but you need to enter such arrangements carefully. Be cautious about signing an exclusive agreement. If you're going to be locked into a long-term contract, you want it to be with a good distributor; ask for a list of other exporters he represents, then review his track record with them, as well as his experience in selling products similar to yours.

Another type of intermediary resource is an export management firm, like Baird's, which also helps manufacturers ship their products to Japan, distribute purchase orders, and make payments in American dollars for products sold. Baird's counterpart in Tokyo is responsible for building relationships with Japanese customers, taking orders, and making payments in yen. Together, they handle customs procedures and other paperwork. "We try to make it as easy as possible for buyers and sellers," Baird explains. "Japanese buyers can call and speak with someone in their time zone who knows their language. U.S. manufacturers here can do the same."

Promoting Your Product

Be prepared to promote your products to overseas buyers. You can advertise in international magazines or domestic magazines with a proven international following. You can also develop a direct-mail campaign using mailing lists available from your state's Department of Commerce or office of international trade.

Once you've mastered domestic trade shows, promote your product at international trade shows; the language barrier may not be as insurmountable as you might think. Many serious foreign customers also speak English or bring English-speaking representatives.

However, making certain your marketing materials can be easily understood by foreign buyers is critical to the exporting process. If you're marketing directly, you can hire a professional translation firm to translate your sales letters, promotional materials and product literature. If you're working through a foreign distributor or export management group, they'll usually translate for you. In some instances, translations are handled by foreign companies purchasing your products.

Getting Help

There's plenty of information available on promoting your product overseas. The Department of Commerce's Trade Information Center (TIC) can help you locate federal government export assistance programs, provide export counsel, and direct you to state and local trade agencies for additional help. The TIC also offers a 24-hour, automated fax-retrieval system, where you can access free information on export promotion programs, regional market information, and international trade agreements. Call (800) USA-TRADE.

At the SBA's OIT in Washington, DC, staffers offer export development assistance and provide "how-to" materials and publications on specific markets. Call (202) 205-6720.

Two other fax-retrieval systems are available. The Export Hotline provides no-cost trade information on over 50 industries in 80 countries; call (800) 872-9767. At the Export Opportunity Hotline, trade specialists have access to online data banks and reports from government and private agencies; call (202) 628-8389.

Contact Sources

American Image Group, 64346 Arrowhead Rd., Cambridge, OH 43725, (614) 439-4610.

Office of International Trade, Small Business Administration, 409 Third St. SW, 8th Floor, Washington, DC 20416, (202) 205-6720.

The Starkey Group Inc., 333 W. Wacker Dr., #700, Chicago, IL 60606-1225, (312) 444-2025