EXPORTS 2.0

Exporting American-made goods and services has become a hot topic as the U.S. slowly rebounds from one the worst economic recessions. Timing is everything. And with a favorable exchange rate for the U.S. dollar, our exports are even more competitive in overseas markets.

Other factors favoring U.S. business include the global economic recovery, surging demand from emerging markets, the U.S. government’s financing, advocacy and policy initiative, and the cachet of the mark “MADE IN THE USA.” American service and manufacturing businesses have much to gain from an expanding export market. It is a widely held view among U.S. economists that increased exports can lead the way to a long-term business recovery.

Growing demand in emerging markets creates new opportunities for American companies to capitalize on a competitive currency by serving the burgeoning consumer classes. In addition to a revival of exports of U.S. consumer goods, accelerating infrastructure development in emerging economies presents opportunities for U.S. manufacturers of capital equipment and industrial materials and services. Capital-intensive sectors such as airport and road construction, real estate development, telecommunications, aerospace, health care and transportation have traditionally been strong for American manufacturers.

Unique opportunities exist in regions with emerging economies such as those in Eastern Europe, Africa, the Middle East and South and Central America, as growth in these countries spurs trade with the U.S. The so-called BRIC countries—Brazil, Russia, India and China—have long been in a class by themselves as growth leaders.

Despite the emergence of low labor cost Asian and South American competition and a strong European presence, American companies are and will remain highly competitive in a number of international sectors and industries. Opportunities abound, but are often riddled with pitfalls and traps for the unwary. A U.S. company competing in the global arena must be informed, vigilant and prepared in order to successfully exploit these opportunities.

 The Global State of Mind

Skeptics say that U.S. companies will not be able to compete with low-cost goods and services from China, Brazil and Korea; yet Germany, which has some of the highest labor costs in the world, is an export powerhouse. Holland and Sweden also have highly paid workers, but are successful at exporting.

Why? Business people in these countries think, eat, sleep and literally live exports. They are also sophisticated and proactive when it comes to direct investment into foreign markets. It’s that simple. With domestic markets much smaller than ours, they have to look beyond their borders for business. Then they dig in and learn the foreign cultures and develop relationships. They design goods and services that can be adapted in various countries. They are committed to finding ways of selling their goods and services and state borders aren’t going to stop them. These companies are not all major European conglomerates either. They include small and medium size businesses across many industry sectors.

Though untapped export and investment opportunities exist for many small and medium-sized enterprises, international trade and investments are simply not part of the typical American business mindset, perhaps because we have historically been fortunate to have such a huge marketplace right here within our own borders. Yet, fear and simple lack of information on how to effectively do business abroad deter executives from venturing into the international business arena.

Exporting and overseas investment is a state of mind. But it seems to be an afterthought for many U.S. companies that betrays a palpable lack of commitment. I’ve seen it many times: a U.S. business hires a mid-level international sales manager—usually an American with extensive foreign sales experience. He is assigned a massive territory with a great sounding acronym, such as EMEA (Europe, Middle East, Africa), often with a paltry marketing budget or minimal technical support. Then he is sent across the globe to look for qualified distributors. I often wonder why, in contrast, even small American companies have domestic sales forces to cover multiple towns, counties, cities, or maybe even states, but when these same companies go overseas, they assign entire continents to a single person with limited administrative and financial resources.

How do we change this mindset? How can American companies enter new markets abroad?

Fundamentally transforming the way American businesses think of exports and international business is critical to the expansion of U.S. export and foreign direct investment. Here’s how:

1.  Comprehensive Education of Exporters and International Investors. We must establish an education system where exports, foreign culture and international business are taught not as a byproduct, but as a core economic discipline at all levels. As a nation, we don’t offer the intensive training or formal education required to prepare exporters and direct investors. Neither do we have a system of measuring and standardizing the quality of export organizations. This must change.

2.   Enhanced Export and Foreign Direct Investment (FDI) Infrastructure. We must refine and enhance our export and FDI infrastructure and better focus our resources on preparing and assisting promising companies to effectively sell and invest overseas. This has to start with expanded funding to appropriate agencies such as the U.S. Trade and Development Agency (USTDA), which delivers $47 in exports for every dollar it spends funding project feasibility studies and reverse trade missions. We also need our government resources to be leveraged with private-public partnerships (or PPPs). We need to involve more banks and private finance companies in funding exports and finance American investments overseas.

3.  Increased National Focus on Exports. Exports must become a part of our national agenda, on par with health care, housing, real estate, and education, consistently and on a sustainable basis—not just when times are bad. When asked to name the top initiatives that can improve our economy, the average American should come up with exports. The Small Business Administration reports that a mere 1 percent of all U.S. companies are currently engaged in exporting.

4.  Build a “Securities” Market Approach to Exports and Foreign Direct Investment. The U.S. export and direct investment industry should take a cue from the securities industry, which is based on analysis and real-time distribution of information. Imagine how our industry could be served if, in the wake of Japan’s nuclear crisis, one or more export and investment analysts covering the nuclear sector would highlight third-country export or investment opportunities for U.S. companies.

I hope that this article will make a small contribution in helping American companies expand their businesses abroad, whether through exports of goods and services or through direct foreign investment.

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