Meet Four Firms That Have Discovered The Potential Of Worldwide Markets
How a company goes about doing business in foreign countries depends on its products and target markets.
Some companies establish international manufacturing or sales operations, choosing to hire staff to oversee them. Others offer products unavailable in customers' countries, making it that much more appealing for the foreign customers to seek them out. Still others find it most beneficial to establish strategic partnerships with resellers and distributors to market and deliver their products or services. Those companies often set up key point people in different countries to train and advise partners and keep an eye on things.
One might imagine language barriers and other cultural challenges that are inherent in international business. Those can and do exist, but the four Central Massachusetts companies profiled here have found ways around them. For some, it demonstrates the longtime experience of their executives, while others are just selling into the right markets, and some sell to domestic buyers who take products internationally themselves.
From technology to shipping to manufacturing, these companies have learned what it takes to get their products into the hands of those who find them most useful, no matter what part of the globe they're in.
Crossbeam
Crossbeam Systems Inc. of Boxborough recently entered into a partnership in Russia that exemplifies one of the company's core growth strategies: grooming the right distributors to be joint partners.
That method has helped the privately-held company grow 20 percent annually for the past five years, said Jim Freeze, Crossbeam's chief marketing officer and vice president of business development.
After a year and a half of distributing Crossbeam's systems – platforms that help operate and streamline IT security – Russian distributor RTec approached the company about a joint venture. Freeze said Crossbeam conducted an analysis of business in Russia and determined there was substantial room for growth there, paving the way for the new joint venture, Crossbeam RT, which was launched last spring.
The deal gave Crossbeam a minority stake in the new Moscow-based company, representing a growth opportunity that hadn't existed before. Freeze said the agreement meant Crossbeam's systems could pass a rigorous certification process, allowing them to be sold to large enterprises and government entities in Russia. The certification is expected to be completed in June.
The Russian venture is just one example of Crossbeam's efforts to expand into new growth areas. It has salespeople and engineers in Canada, Asia, Europe, Australia and New Zealand. Last year, it added three business partners in South America and hired a regional sales manager for Latin America. Freeze said the company also completed its first deals in India last year.
"There are certain international markets where we think there's very good growth opportunity and we're starting to invest in those," he said. For example, the economies in Brazil, Russia, India and China, "in general, that are growing very rapidly, and there tends to be significant investment in building infrastructure. We think the international markets present good opportunities."
Freeze said Crossbeam faces similar competition from larger companies like Juniper Networks and Cisco Systems, no matter what part of the world it ventures into, so his company has to offer a "compelling value proposition."
Part of that, Freeze said, is that "we're very good at demonstrating a lower total cost of ownership. Companies want the benefits of consolidating infrastructure."
Freeze said Crossbeam also doesn't make customers use specific software with the platforms.
"Our competitors not only sell their own platforms, but they also sell their own security software. The value to our customers is they're not stuck with the security software that our competitors are just shoveling at them."
EcoChlor
Some companies branch out into international markets when they feel they're ready. But a company that serves the shipping industry has no such choice.
"Shipping, by definition, is international," said Charlie Miller, CEO of EcoChlor, based in Maynard. "This business had to be international from day one."
EcoChlor makes water treatment systems to cleanse the ocean water in large ships' ballast tanks (which are used for balance), before the water is ejected back into the sea, usually hundreds or thousands of miles away.
So when the 11-year-old company was starting out, its executives knew they would need to establish a foothold in major shipping markets. In a word, that meant Asia.
EcoChlor, which works closely with Connecticut-based ProFlow Inc. to make chlorine dioxide-based systems, partnered with a Tokyo-based company called Ace Clean Co., which was also using chlorine dioxide for cleaning purposes. Ace Clean, in turn, led EcoChlor into partnerships with Fuji Trading Co., and perhaps most significantly, Sojitz Marine and Engineering Co., which recently invested $1.8 million in EcoChlor (and had a treatment system installed on one of its ships).
Miller affectionately calls his Japanese partners "Team Japan." He said the partnership has taught him much about Japanese business customs and he speaks fondly of time he has spent with Ace Clean President Eiji Nakai, who mostly speaks to his American partners through a translator.
EcoChlor has international approvals for its system and extensive data on the amount of marine organisms killed by the chlorine dioxide, which is highly unstable and breaks down within 24 hours so no toxins make it back out into the ocean. It holds patents for using the chemical to clean ballast water. Competitors use ultra-violet or chlorine-based systems.
Environmental concerns over spreading non-native or invasive species have led to International Maritime Organization regulations that require ships to clean their ballast water before they dump it back into the ocean.
Just how soon ship owners will have to install ballast water systems on their ships is not certain, but regulations passed in 2004 call for the process to largely begin this year for existing ships.
"If I'm lucky, this'll be the last year I have to raise money," Miller said. "If we sell what we want to sell this year, we'll be profitable next year. "
The market is easy to measure from there. There are between 50,000 and 70,000 ships that EcoChlor can target. At approximately $1 million per system, Miller said his company will be happy to secure just a piece of the market.
THG Corp.
Whether it's through direct or indirect sales, THG Corp. of Northborough has the world covered when it comes to fluid power products.
Founded in 1933 as a rubber products provider, THG has grown into $45 billion company with three limited liability companies – The Hope Group, Hope Air Systems and Sorensen Systems – servicing markets that include marine and mobile, defense, machinery manufacturing, and power generation.
THG's entry into international markets came not long after it became a distributor for Parker Hannifin in 1960, which put it in the fluid power products business. By the 1970s, THG was making PET (polyethylene terephthalate) bottle-blowing machinery that was being sold internationally and domestically. Today, the company reports that $1.5 million of its sales comes directly from foreign companies, while $4.5 million goes to domestic companies that sell to a foreign entity.
Marketing Manager Richard Wright illustrates THG's indirect international sales by talking about the business it does with Worcester-based Morgan Construction Co.
Morgan "designs and builds steel mills in foreign countries," Wright said. "We design and build the power units that go to Morgan (and that go) to the steel mill. The steel mill machinery (that THG builds is) shipped into China on behalf of Morgan. My customer's in Worcester. But what I built is in China. The trend in people's minds is that everything goes overseas and none of it comes back to us. We're pretty good at getting foreign money to come back to us."
Wright said power generation is THG's biggest market now, and Canada is a "significant customer" because of power generation and the need for electrical control panels.
"Canada is filled with dams, and we build systems that lift the gates," Wright said.
While sales may often be done with Canadian companies, that revenue is outpaced by business in southern Africa, Wright said. "There's a nickel-cobalt mine in Madagascar that would amaze you," he said. "We built 128 power units that are operating acid-slurry titanium ball valves," which bore into the earth to extract cobalt. "Mining in foreign countries is huge."
ExaGrid
ExaGrid of Westborough sells disk-based data backup systems around the globe. The market is immeasurably big, CEO Bill Andrews explained.
"Any reasonably-sized business backs up data five nights a week," Andrews said. "Ninety-five percent of businesses are still using tape to do backup."
Andrews knows the math.
"We think there are 1.2 million targets," he said. "Our market is less than 5 percent penetrated."
In addition, data backup is very standardized, he explained, so the same product used in California works just fine in the United Arab Emirates. Most businesses are still backing up to tape, a habit ExaGrid hopes to break.
ExaGrid targets mid-sized companies that need to back up between one and 200 terabytes of data. The larger companies are measured in petabytes; the small ones in gigabytes.
Three-and-a-half years ago, the company was selling only in the United States. That all changed when it hired salespeople in the United Kingdom, which Andrews said was a purposeful first move into international markets.
"Only because it's English-speaking and there's a lot of synergies between the U.S. and the U.K.," he explained.
But ExaGrid didn't stop there. It wasn't long before it began doing business throughout northern Europe — in Ireland, Denmark, Norway, Sweden and Switzerland.
The company sells its products through distributors — companies based in foreign countries across the world — that in turn attract resellers.
Resellers are a much more integral part of the tech business in other countries because many of the most popular IT products are made by U.S.-based companies, he said.
ExaGrid's reach is expanding daily. It just established a distributor partnership in Singapore and recently received its first orders from the Middle East.
The company has grown from 30 employees in 2005 in Westborough to 154 today. International sales have been an important part of that expansion, Andrews said.
One thing that's made the expansion easier, he added, is that the company sells to data centers, not end users, and nearly all data center purchasers speak English.
"The IT departments worldwide all speak English because they have to deal with the English-speaking companies back here because that's where the products come from," he said.
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