Success in exporting, like in any business endeavor, depends on paying careful attention to details and adjusting your strategy when things don't go as planned. From export insurance and import duties to intellectual property protection and customer support, here are four examples from American exporters who have learned from experience. If you're looking to grow your business by exporting, these lessons learned may help you, too.
A Little Insurance Can Go a Long Way
Insurance is one of those business costs that may seem like overkill, until something goes wrong.
Hard Manufacturing, a Buffalo, New York-based manufacturer of hospital cribs, recently dodged a bullet by renewing its export credit insurance with the Export-Import Bank of the United States (EXIM)—just a few months before the company was faced with the possibility of writing off a $175,000 receivable. (Exporters often use credit insurance to protect against nonpayment by international buyers.)
Hard Manufacturing began using EXIM Bank credit insurance in 2009, but cancelled the policy a few years later to save money. Fast forward to 2015: Gina Trubits, the company's controller, started getting nervous about some of the company's larger receivables.
“We have an extensive customer base in the Middle East, which has experienced quite a bit of instability lately," she says. “As a company, the goal is to maintain the sales relationship, but in a way that keeps us profitable. I presented the argument that renewing our EXIM policy would give us that security."
So, Hard Manufacturing started using EXIM credit insurance again. At about the same time, the average number of collection days for several big customers began increasing dramatically. “In fact, we had a customer in Saudi Arabia with a large balance that we insured," says Trubits. “Months went by without payment, and it was beginning to look like a reality that we would have to file a claim for payment. We ended up collecting the money the day before I was due to file the claim."
Understand All Your Costs Before Shipping
TJ Scimone, founder of Slice Inc., a manufacturer of scissors and box cutters based in San Jose, California, is a veteran exporter who has been navigating global waters for decades. But back in the mid-1990s, when he was still learning the nuances of world trade, Scimone owned another company that exported private label cigars.
The company, called Private Label, sent a shipment of cigars to Europe. But no one had checked on the import duties, and the next thing Scimone knew the cigars were stuck in customs, pending payment of a $10,000 import tax.
While it's good to get the wins, you have look at exporting long-term, and you have to demonstrate that you're willing to support your products and do everything possible to demonstrate your commitment to supporting the customer.
—John Clark, president and CEO, Masterclock Inc.
“It was our responsibility to do the homework," says Scimone. “Of course I couldn't pass on that fee to my distributor because it wasn't their fault, it was my fault. So, I ate the entire thing."
More recently, a Slice customer tried to return some of the company's cutting tools from Europe to Slice's contract manufacturing facility in China. “But the customer declared the full retail value of the goods, not the wholesale price, and our factory got a $5,000 invoice from Chinese customs, which the factory refused to pay. So we just abandoned the goods at China customs because the value was less than the price of the import duties."
Intellectual Property Is Equity
Excel Dryer Inc., a Massachusetts manufacturer of electric hand dryers, learned the hard way to implement a global approach to intellectual property protection. When Excel launched its XLERATOR line in 2001, it did not apply for trademark registration or patent the design in most international markets. As a result, foreign knockoffs have cost the American company hundreds of thousands of dollars.
“We became a victim of our success," says Denis Gagnon Jr., the company's vice president, international. “We hit the radar of foreign manufacturers, which began pushing out cheap knockoffs that we are now fighting, after the fact, in every major market."
Excel learned its lesson. When the company introduced its ThinAir product line in 2015, it was careful to make sure it had trademark registrations and patents in place worldwide. “Patents may not be worth the investment in every market you enter," says Gagnon. “But the cost / benefit equation should be well considered in advance."
Customer Support Translates Into Sales
John Clark, president and CEO of Masterclock Inc., knows a thing or two about international sales and marketing. The St. Charles, Missouri-based manufacturer of precision timing devices supports its products across a wide range of vertical markets in more than 100 countries, and that can create significant communication challenges around the world.
“One recent issue that opened my eyes was with a longtime customer of ours in South Korea," says Clark. “We manufacture PC timing cards for their automation systems, and after we switched to a new format our customer could not get the system to work."
Clark says the two companies went back and forth for about six months trying to troubleshoot the integration problem. Masterclock engineers were unable to reproduce the issue in-house and did their best to provide guidance, but time differences and language barriers hindered the process.
In an effort to support the customer, Masterclock asked the Missouri Department of Economic Development (DED) if the state's local representative in Korea could help. So, late one night, central time in the U.S., Clark and his senior support team got on a Skype call with the customer's team and the Missouri DED rep—who was at the company's facility to help translate.
“Once we could communicate with them in real-time, we offered to send a working system to the customer," says Clark. “After they received it on-site, we demonstrated that our system was functional, and helped them further identify where to focus to fix the problem."
Even while the bugs were still being worked out of the interface program, the customer had already placed a new order with Masterclock.
“While it's good to get the wins," says Clark, “you have look at exporting long-term, and you have to demonstrate that you're willing to support your products and do everything possible to demonstrate your commitment to supporting the customer."
Moreover, Clark adds: “Performance and ethics can translate across cultures much easier than words can."
