International Interest

Baby strollers in England and Israel, water-quality devices in Canada, gas-leak detectors in China and Australia-all produced by Southwest Florida companies. Tourism and construction might dominate the region's economy, but international business is growing; and Charlotte, Collier and Lee counties are home to manufacturers that export products all over the world.

"Exporting or doing international business is vital to Florida companies today," says Manny Mencia, senior vice president of development for Enterprise Florida. "We live in an ever-shrinking universe, where companies can no longer give themselves the luxury of not competing in international markets," he says. "Companies that do [expand into foreign markets] grow faster, are more profitable, pay higher wages and are less susceptible to domestic downturns. Most of all, they are less susceptible to foreign competition."

For those with a narrow market, expanding outside the United States is mostly a matter of responding to demand. That's the case with several Southwest Florida-based companies.

Double Decker Stroller Inc. sells most of its stroller forms that hold baby seats for twins and triplets (Triple Decker Stroller) in the United States, but Israel and the United Kingdom have the next-largest markets, says Marshajene Schaaf, owner and president of the North Fort Myers company. Her target market-new parents of multiples-find her. "Eighty-five percent of my business is word-of-mouth," she says.

Laser Imaging Systems knew from the beginning it would expand internationally with its niche industrial product. The Punta Gorda-based company, started in 1989, makes systems that detect gas leaks at electric substations, so its customer base is limited to electric utilities, says president and CEO Tom McRae. It didn't take long to expand into foreign markets, because many of the U.S. clients have international interests. "We sold the first few in England and Germany; that kind of got things started," he says. "International-type companies approached us and asked for quotes and demos."

Naples-based Environmental Enhancement and Technologies USA Inc. produces Hydro-Guard, an automatic flushing system that helps keep potable water lines clean, which it sells in several countries besides the United States.

"Identify the perceived need for your product in the market, identify the barriers, including legal as well as cultural barriers, and also barriers as to cost of delivery, and try to establish reasonable expectations in terms of timetable and return on investment," recommends national sales manager Davis Wolf.

"By and large, if you can compete successfully in the United States, you can compete successfully in the world market," says Mencia. But it takes research and a strong commitment; business can take longer in foreign markets to start paying off.

"The top management has to have a firm commitment to developing business overseas," agrees George Martinez, director of the U.S. Commercial Service's Tampa Bay Export Assistance Center. An agency of the U.S. Department of Commerce, the Commercial Service helps U.S. companies do business in international markets.

Getting started

To succeed, businesses must commit resources, develop a plan and "do their homework: determine where products fit best in what markets," says Martinez. Do a market analysis, and make sure the market isn't as broad as, say, "Latin America," which encompasses numerous countries, cultures and consumers, says Mencia.

He recommends joining trade missions and using government resources, such as economic development offices, the Department of Commerce and Enterprise Florida, to help cultivate customers. "The worst way is to buy a list from the government and write 6,000 letters," he says.

Wolf's company first took Hydro-Guard into Canada, he says, because of "ease of market entry and the fact that the Canadian marketplace is a particularly good match for the apparatus, and there are no boundaries on language and statutes."

Patent protection was one of the company's primary considerations, he adds. "The idea was as long as the technology could be patent-protected within foreign markets, it would be desirable to expand internationally." Through the Patent Cooperation Treaty, a single patent protects the product in other member nations. The company's Hydro-Guard technology is patented in the United States and Canada and patent-pending in Western Europe and Australia.

Patent protection was also a major concern for Schaaf in choosing an overseas manufacturer for her Double Decker and Triple Decker strollers. "If you're going to manufacture in a particular country, make sure you're protected there as far as patent goes," she recommends, and make sure confidentiality agreements are in place.

Adapting to the market

In some cases, a business must adapt its product to different quality standards or regulations, or revamp packaging and manuals for foreign markets. "If you want to sell in France, you have to have the packaging in French and metric," says Martinez.

And materials must be correctly translated. Mencia has plenty of examples of poorly translated marketing materials: the airline with leather seats that invited customers to fly naked, the baby food whose unfortunate translation implied babies were not the recipients but the ingredients.

"In international business, the most important language is the language of your client. It would be good to speak the language. If you don't, it's not insurmountable, but you should have the capability to provide information about the product in the language of your client," he says.

Wolf saw that pay off at a trade show in Quebec. A prospective client was happy to see the proper translation for a mechanical "spring." Most companies used printemps-the season, he told Wolf, who is fluent in French. "An outside translator won't necessarily understand the nuance of your product," says Wolf. An in-house translator can ensure that the written materials "correctly represent your product capability."

Sales and distribution

There are a number of options for getting a product in front of prospective customers, including direct marketing, contracting with a local representative, using an agent distributor or distribution network, or licensing the product.

McRae decided to find a distributor in each country to handle his Laser Imaging Systems. "Most are bilingual and can talk to you and to the customer in their native tongue," he says. The challenge was choosing the right people from the flood of applicants.

"I asked them to send me a list of U.S. customers with similar tech products and contacts at those companies that I could call and talk to. That got rid of 90 percent of them," says McRae. He also quickly learned that each demanded exclusive distribution rights.

Money matters

An added benefit of having local distributors is that the personal contact helps ensure payment, he says.

Governmental tools are available to help ensure foreign receivables, and the Export Import Bank of the United States has a program for exporters "to extend credit to cover potential losses," says Martinez. But getting paid can be challenging-as can obtaining financing.

Companies that are considering taking their business overseas must be prepared for additional upfront costs and should talk to an international banker for recommendations.

"It may be that at the beginning when you meet a client, you may need cash in advance or letter of credit secured with a U.S. bank. Eventually you will have to offer terms to clients to be able to expand your business; if you're not flexible, he's going to go somewhere else," says Mencia.

Laser Imaging Systems, whose products cost upwards of $100,000, sells about a third of them overseas and hasn't had shipping or collections problems, says McRae. FedEx handles the paperwork and provides a waiver for insurance, which can be expensive.

"We went through those letters of credit through a bank. It turned out to be more of a hassle than it was worth," he says. "Most of the companies we deal with have the money; they're good for it, so we've been going net-30 overseas and haven't had a problem."

Especially in developing countries, a company might have to extend credit to customers. "You have to be prepared to finance or at least find tools to finance customers' purchases," says Martinez. "Europe is not so much an issue, but Africa, Eastern Europe, parts of Asia [are] poorer areas where they want your product but might not be able to meet terms."

Financing options can be a deciding factor for a prospective buyer, he adds. "Price is king in the developing world; they look for price more than for quality. In more mature markets, they look more for quality and performance."

Ask the experts

Venturing into foreign markets can be profitable, but without expertise, it can also spell doom.

"Don't try to do everything yourself; hire experts," says Mencia. They know how to handle everything from banking to the logistics of making sure your products are delivered on time and in good condition.

"Build a good team with service providers-attorneys, translators, accountants," Martinez advises. "There are tax issues involved, international bankers to deal with payment of product or services," as well as both domestic and foreign laws.

U.S. Commercial Service can help with domestic export regulations, systems and processes, but the company must also deal with the host nation's laws and systems. "When you're operating in a foreign environment and the laws of these countries apply to contracts, it's important to always have an attorney to guide you, especially when you're setting up contracts with distributors or joint ventures or licensing of new technology," says Martinez.