Prospects, Partners, and Profits: U.S. Commercial Service Tells Companies to Look Beyond our Borders
Source: Dynamic Business, July/August 2009 Issue 
Editor: Mary Heindl

Looking at boosting your bottom line by making new sales abroad? With 250 worldwide offices, including locations in 80 countries, the U.S. Commerce Department’s Commercial Service helps U.S. companies export and looks out for American business interests abroad. Dynamic Business recently discussed exporting with Lyn Doverspike, director of the U.S. Commercial Service in Pittsburgh.  

DB: Why should companies consider exporting, if they aren’t already?

LD: In today’s global economy, businesses can’t afford to miss out on international opportunities. Think about it: more than 70 percent of the world’s purchasing power is outside of the U.S. If you’re not exporting, it’s highly likely that your competitors are or will be selling internationally. For many of our clients, free trade agreements, ease of transportation, and the Internet have really helped to simplify the export process. Exporting is a great way to boost their bottom line and build competitiveness. One of the most important things about exporting is that it enables firms to diversify their portfolios and help weather changes in the domestic economy and world economies. So, by spreading the risk, it helps them boost their competitiveness and bottom line. Contrary to what many people think, it’s not just the big companies that export. By far, the vast majority of exporters are small and medium-sized businesses (with fewer than 500 employees) making up 97 percent of all U.S. companies that export. Even though small and medium-sized businesses make up the bulk of U.S. exporters, we also know that only a very small share of businesses export. For example, nearly 60 percent of all exporters only sell to one foreign market, so many of these firms could boost exports by expanding the number of countries they sell to.  

DB: What does it take for a company to be a successful exporter?

LD: That’s an important question, and one that we stress to our new-to-export clients. Companies must have a long-term perspective and top management commitment. Exporting can be rewarding, but challenging, and companies need to be in it for the “long haul.” Also, a track record of successful selling in our domestic market is very helpful. Companies also need to assess their internal resources for doing business abroad, and we can help them do that.  

DB: Which of the U.S. Commercial Service’s export services seem to be most in demand and useful to Greater Pittsburgh companies?

LD: Western Pennsylvanian companies have a gateway to world markets right here at 425 Sixth Avenue. Our “team” includes a seamless web of 250 Commercial Service offices around the world, including U.S. embassies and consulates in 80 countries. Different companies have different needs, and the value of our assistance is tailoring to the individual needs of that company. Basic export counseling is our bread and butter, but the scope can vary greatly. For example, our office has worked with companies who needed market-entry strategies for selling to South Africa, Germany, and Chile, and helped others that were dealing with regulatory, documentation and customs issues for Japan, Saudi Arabia, and China. Sometimes these may involve export licenses for high technology products. We do market research on economic and industry trends in key sectors for many markets, much of which is available through our “country commercial guides.” All of these services save businesses valuable time and resources when competing in world markets and the market research is freely available on our on-line database. Simply go to export.gov and select market research from the left hand side and you see in the center of the page the link to search our foreign market research library. Our goal is to help find qualified business partners, distributors, agents, representatives, or end users in foreign markets. For example, our Gold Key Service is a matchmaking service that provides customized meetings for U.S. businesses with pre-screened agents and distributors in those countries. We also support U.S. exhibitors at trade shows and events around the world, conduct due diligence on potential international partners, and a host of other services. We also coordinate closely with other U.S. Government agencies such as the U.S. Small Business Administration, and partners such as the Western Pennsylvania District Export Council, whose members provide guidance and mentoring to businesses learning to sell internationally.  

DB: What about companies that cannot afford long, expensive overseas trips to develop business relationships and potential partnerships?

LD: It’s always best to meet potential customers face-to-face, but many small companies don’t have time or the budget for extensive travel. We understand this and offer products and services for those companies. For instance, we offer a report called an International Partner Search, a list of qualified contacts who have received the U.S. client’s market literature. We then interview each foreign firm to gauge interest and compile a report for the U.S. company. Through our International Company Profile, we provide background reports on potential foreign buyers. We actually interview the foreign firm for this report and often are able to render an opinion. We also offer a Video Gold Key Service matchmaking service, where U.S. businesses looking to meet foreign agents and distributors can take advantage of customized meetings via video conferencing. We also have overseas catalog shows, where we can exhibit a U.S. company’s literature at trade shows attended by many buyers. These are some inexpensive ways smaller companies can pursue international sales opportunities.

DB: What are some of the most common errors made by local companies as they enter into or expand their international business, and how can you help them avoid those pitfalls?

LD: Do your homework first. I’ve seen it time and again — smaller companies will assign the international sales or shipping to one or two people, yet the sale impacts the rest of the company. For example, the accounting department may not understand how the company could be more competitive if they only gained an understanding of finance options for export sales. The sales people are severely limited on what they can offer a foreign buyer. That’s because they may not understand international terms of sale, or Incoterms, or what the seller and buyer responsibilities really are once they’ve agreed to a sale. Furthermore, upper management may not incorporate all aspects of the company into the overall international business strategy. Other areas that cause confusion or expose the company to risk may include not knowing the buyer, agreeing to an exclusive distributorship for an entire region, or not knowing enough about U.S. export laws. The Commercial Service works frequently with companies on these issues. Many times, it’s a simple matter of internal and external communication and a process of learning for the entire company. By contacting the U.S. Commercial Service, we help firms avoid these pitfalls.  

DB: What trends do you see regarding local business looking to develop or expand their international business?

LD: We see a lot of recent positive trends for the region. According to the U.S. Commerce Department, the Pittsburgh metropolitan area boosted export sales from $6.9 billion in 2005 to $8.3 billion in 2006 — a growth of nearly $1.4 billion. In 2007, U.S. exports reached a record $1.6 trillion, a 12 percent growth over the previous year. Many companies are beginning to take a more strategic approach to doing business internationally. When I first began with the Commercial Service years ago, companies were much more reactive. Now, they want to initiate a game plan for selling internationally, and that’s where we come in. Nationwide, we’ve seen a large growth and sophistication among smaller businesses, including minority-owned firms that are selling back to their native countries. Many of these are run by higher-educated, savvy business owners who understand the dynamics of the global marketplace. Also, companies are increasingly taking a regional rather than country-by-country approach. For example, firms are selling not just to Mexico, but expanding into Latin American countries such as those covered by free trade agreements, including CAFTA and Chile. Free trade is also opening doors for Pennsylvanian businesses in other countries. Congress recently passed the Peru FTA, and we are awaiting agreements with Colombia, Panama, and South Korea. Combined, these four countries would provide further access to 126 million consumers with a combined GDP of $1.1 trillion. Each holds important geopolitical significance in strategic regions of the globe — here in our own region, the Western Hemisphere, and in the rapidly rising Pacific Rim.  

DB: What can U.S. companies do to help protect their intellectual property and trademarks when selling internationally?

LD: This is a reality in global business and always a potential risk and we address this when counseling our companies. Our in-country colleagues are very good about sharing insight on potential IP risks in a market, what preventive steps U.S. companies might take and what to be aware of. The U.S. Commerce Department has also initiated a STOP! Program in partnership with the U.S. Government, the private sector, our trading partners, and law enforcement. We are providing aggressive outreach to educate U.S. companies on how to register and enforce their intellectual property rights in foreign markets such as China. Our U.S. Patent and Trademark Office points out that 85 percent of small and medium-sized businesses that export do not realize their U.S. patents and trademarks do not protect them overseas.  The U.S. government offers many programs to educate and train U.S. industry on how to best protect and enforce IP rights in China. We have four such programs you can find on the www.stopfakes.gov website. We also suggest that U.S. exporters seek legal counsel and find out what steps they need to take to prevent IP violations and what their legal recourse might be in a country if they discover intellectual property theft.  

DB: Any other thoughts?

LD: Whether you are a new-to-export company thinking about exporting or looking to boost your existing export sales, give us a call. You can reach our U.S. Commercial Service Pittsburgh U.S. Export Assistance Center at 412-644-2800 or e-mail us at office.pittsburgh@mail.doc.gov. We are also available on the web at www.buyusa.gov/pittsburgh.