Export market is worth the effort

If looking to expand customer base overseas, consider this advice

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Export case study: Ryonet

Ryonet is a young, rapidly growing company that has taken a "tired" industry and made it sexy again. Focusing on the DIY printer, Ryonet has brought thousands of new customers into the screen-printing industry and spearheaded a movement of entrepreneurship in the industry.

• What it does: Manufacturer and distribute equipment and supplies for the screen-printing industry.

• Headquarters: Vancouver.

• Web: www.silkscreeningsupplies.com

Steps Ryonet took to export

• Brought in the expertise needed — both external and internal — in areas of strategy, logistics, sales and support, product development, and marketing.

• Won buy-off from management team for "exporting for growth."

• Communicated to entire company about of the importance of exporting, the challenges and opportunities, and specific tasks needed.

• Listened to what their consultants and overseas customers were saying about product development and localizing their products.

• Launched marketing by embracing overseas search engines, investing in exhibits at overseas trade shows, localizing sales materials and helping overseas partners spread the word.

• Built a sales channel that now includes distributors operating in 19 countries.

• Built strong and personal relationships with distributors.

• Helped overseas partners deliver product training via tailored training courses. (This summer, company CEO Ryan Moor and a small team traveled to the United Kingdom, France and Germany to deliver customer training).

• Created a constant flow of new products.

• Installing processes for locating and qualifying new partners and measuring success overseas.

• Placing an intense focus on two new countries per year — for 2013 the focus is on Japan (sales up 55 percent over last year) and Germany (up 16 times over last year).

How have the results been?

Atlantric started helping Ryonet expand internationally at the start of 2012. We have been impressed by their total commitment to growing exports. From CEO Ryan Moor to the person packing boxes in the warehouse -- the entire company is behind exporting.

The company's international revenue was up 48 percent in 2012, and 2013 growth will be similar. Export revenue is now almost 10 percent of total company revenue. Ryonet sold to 76 countries in 2012 and has shipped to 113 countries in its history.

At the start of 2012, 65 percent of Ryonet's export revenue came from Canada. Eighteen months later, Canada is still growing in revenue but now represents only 27 percent of export sales. Now, international revenue comes from Africa (2 percent), Asia (11 percent), Canada (28 percent), Europe (37 percent), Oceania (17 percent) and South America (5 percent).

Exporting is one of the most challenging business activities any company can undertake. Exporting is complex and time-consuming, and it requires strong management commitment.

But for many Clark County companies, this short-term stress of overcoming the risks and barriers that seem to be around every turn will provide many longer-term rewards.

I discuss the risks of exporting not to scare you away from the opportunity, but to ensure you have a realistic framework for making the right decision: should I export or not? You must be aware of these challenges and be willing to endure the cost, time and effort involved in overcoming them.

To be successful overseas, you need a product or service that is in demand in overseas markets, as well as the necessary commitment, resources, skills and information to support sustained exporting activities over the longer term. You must deal with radically different environments, communicate with diverse cultures in new languages, overcome a multitude of new laws and political regimes, face the prospects of competing with the very best exporters and producers around the world, and absorb a variety of costs that are measured in euros, pounds and many unfamiliar currencies.

Those who move into export markets face many challenges. There is a mountain of documentation to complete and you may even face legal action from authorities if you fail to get your customs, Value Added Tax, and other matters in order. You will be pressured from home and abroad, and at the end of the dark tunnel there is always still the risk of nonpayment.

Yet as current growth trends in U.S. exports show, many companies are able to manage the various risks and challenges and have found success in international markets. Rising exports suggest

that the U.S. is winning the battle to become more relevant in the rapidly changing global economy.

In an earlier essay in The Columbian, I referenced a Brookings Institution preliminary analysis that nearly 20 percent of the greater Portland economy is generated by exports — translating into about 5,400 jobs. Clearly, exports benefit the entire community.

In Clark County, many companies have successfully developed products and services for the domestic market that have strong potential to generate even greater revenue elsewhere in the world. As they begin to consider exports, they will quickly realize they have much to learn.

Here are some of the foundations that are essential for a company that wants to move into exports:

• They must be financially secure enough to support international expansion, which may take months or years to develop.

• There is export marketing, logistics and sales expertise available.

• They need a product that is desirable and adaptable outside North America.

• They require the support of their senior leadership to drive sales into new markets.

Exporting is not for everyone; it should only be attempted by companies that have the resources to tackle foreign opportunities. Deciding whether you are ready to export or not can be quite difficult. To help determine your company's potential to expand into export markets, ask yourself the questions listed below.

MANAGEMENT:

• Is your management team committed to developing export markets and able to dedicate staff, time and resources to the process?

• Has your team attended export training or solicited export advice from appropriate experts in this field?

• How long would your management be willing to wait to achieve acceptable export results?

COMPANY READINESS:

• Is your company established and profitable in its domestic market?

• Do you currently compete at a national level and need to expand sales?

• Do you enjoy numerous sales channels in your domestic market?

• Will you be able to commit your export-related resources for at least a two-year period?

• Are foreign markets necessary for your company's growth?

PRODUCT READINESS:

• Does your product compare favorably with domestic and import competitors in features and benefits?

• Does your product require special technical support or after-sale service?

• Can your product be modified to meet mandatory technical standards in foreign markets?

SALES READINESS:

• Have domestic sales of your product grown over the past three years?

• What international sales channels could your company support?

• Do you have reference customers who are meaningful on the international stage?

PEOPLE RESOURCES:

• Is the company prepared to train or hire people to work in new markets?

• Do you have contacts in your industry abroad that may be prepared to help you?

• Do you have the necessary export skills within your firm (or access to outside help)?

MARKETING EXPERTISE AND RESOURCES:

• Will your marketing tools, methods and programs be suitable overseas?

• Have you conducted some export-marketing research on which to base your forward thinking?

FINANCIAL READINESS:

• Is there excess growth capital available for foreign market development?

• Are you financially equipped to increase production significantly?

• What payment terms are you willing to offer reputable foreign buyers?

OPERATIONAL READINESS:

• Can you increase production to meet a surge in demand, even if there are unexpected changes in the domestic or international marketplace?

• Will your facilities/product need to be certified by a foreign agency before your product is allowed into the market?

• How do you expect to support your market (training, problem solving, repairs, etc.)?

• Is your company committed to providing the same level of service given to your domestic customers?

If you can respond positively to most of these challenges, then you are probably ready to start planning to export. If you are weak in any of these areas, you must address the areas of weakness before you tackle the export market.

Many companies turn to exports as a means of salvation from small and highly competitive local markets. These are the worst reasons for exporting. On the other hand, if you do endure and succeed, you will be a better company for it. You will become a global competitor and your local business will flourish as a result.


Richard Biggs, CEO of Atlantric LLC, is a Portland-based international growth consultant