Going Global | Massachusetts businesses turn to overseas markets for opportunities
There’s one common piece of advice for businesses thinking about expanding their international footprint, whether they’re planning on increasing exports to China or opening a warehouse in Europe: Do your homework.
“The most common mistake I see businesses make is not doing their research,” said Kristen Rupert, executive director of the Massachusetts Alliance for International Business, which is under the umbrella of the Associated Industries of Massachusetts.
The good news is there are dozens of state, federal, public and private organizations that help businesses expand their international footprint.
In an increasingly flat world Rupert said more and more businesses are thinking about how they can expand to international markets.
Massachusetts ranks 14th in the country in terms of exports, with nearly $17 billion exports going overseas through September of this year. Texas is the top U.S. exporter among states, with $117 billion being exported this year, according to the U.S. Census Bureau.
Those totals are down 21 percent compared to the same time last year in Massachusetts, while nationwide, exports are down 23 percent so far this year compared to last.
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Still, Rupert, whose organization runs seminars about emerging markets, said in the economic downturn she’s seen more businesses leaders attending seminars focused on expanding markets and updates on new developments for reporting regulations and compliances with the government.
One of the resources for businesses is the Massachusetts Export Center, a quasi-public organization that gives businesses, usually free of charge, technical assistance on developing a plan to go abroad.
Julia Dvorko is the Central Massachusetts regional director for the export center and said a first step for companies is to think about their goals.
Companies take the same basic approach to expanding sales, for example, in an overseas market that they would domestically.
“Evaluate the markets and see if there is a need and if your product can fill that,” she said.
The export center has information about various international markets and can link companies up with other organizations that study specific parts of the world.
Steven Rocheleau, president of Rocheleau Tool & Die Co. Inc., in Fitchburg, said exports now make up about half of the sales at his fourth-generation family business.
He said there are a lot of technical details to think about when exporting, which his company has become accustomed to since they’ve been doing it for decades.
For a new business starting out, however, Rocheleau said to expect the unexpected.
“The reality exists that there is a different level of risk in international financial transactions,” he said.
Making sales in Central America, where Rocheleau sends many of his products, can carry inherent risks.
How will the product be delivered? How can you ensure you will get paid? What if the order is cancelled at the last minute?
Rocheleau said he works with well-known distributors the company has been working with for a long time, and he said he relies on other organizations to help him establish partnerships. As for expanding the client base, Rocheleau said he attends international trade shows.
One organization that helps with financing is the Small Business Administration’s Office of International Trade. John Joyce, the regional director for New England, said there are multiple loan-guarantee programs available to help companies guarantee their loans with banks, in some cases up to 90 percent of the loan.
Some businesses already have robust international operations that go beyond just exporting products.
Hopkinton-based EMC Corp. reported last month that 46 percent of their third quarter earnings were from outside the U.S.
John Herrera is the vice president of global delivery for the computer storage company and said managing an international operation takes time, energy, and a plan.
“A lot goes into planning where we’re going to have an overseas operation,” Herrera said.
He said one of the first things the company thought about was how to structure the international operations. The company has leaders for specific areas of the world, such as Asia Pacific. Then, there are country managers in each of the 60 nations outside the United States that the company does business in. So, each country has its own structure that may be slightly different based on local customs, the regional marketplace and business partners in the area.
“It’s important to have those people on the ground who have that local knowledge,” he said.
But, EMC also has corporate functions that stretch out across the entire company. This allows the company to have common human resources, information technology and procurement offices to not only create efficiencies, but create uniformity in operations.
EMC recently announced a $1.5 billion investment in India, where the company already had partnerships and sales.
Herrera said the U.S. government has many programs and services, many of which that are free of charge, that can help companies make decisions about where is the best place for them to expand. And he said, companies can look to other businesses that are already in an area they are looking to expand to and ask for some advice.
He said one of the most important things a business leader needs to keep in mind is the extra travel.
“Always have that bag packed and ready to go,” he said.
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