Opinion 2: Mass. companies shouldn't shun foreign markets
By Bruce Greenwood and Julia Dvorko
It is the greatest blessing and, at the same time, the greatest curse.
The size of the U.S. economy and its impact upon small- and medium-size firms looking at international markets can be described with these words. American companies work within the world's largest national market, and generally, do not perceive the need to export. However, foreign markets present significant opportunities for the U.S. firms.
Consider the expanded European Union alone, where there are 450 million inhabitants, one and one-half times the U.S. total. The combined economy is the largest in the world with a nominal gross domestic product of $14.5 trillion, according to the International Monetary Fund, more than $1 trillion greater than that of the U.S. And as the EU removes internal trade barriers and creates uniformity - from patent rights to certification requirements - it resembles a single economy more and more. This is good for the American firms seeking markets in Europe.
And with the declining dollar, U.S. firms have become very competitive on price.
This is one very important reason why an increasing number of international firms are locating in the U.S. In Massachusetts, almost 185,000 people work for the subsidiaries of foreign firms.
Over the past 10 years, Massachusetts companies have become much more sophisticated in their approach to foreign markets and have significantly increased their sales overseas. Between 1996 and 2006, Massachusetts exports increased 66 percent to over $24 billion.
Despite this, many of our state's firms are not realizing their full potential globally. Both smaller and larger companies are sometimes surprisingly inert and reactive when selling overseas. Often, a foreign sale is made only in response to an inquiry from an overseas customer. After the initial sale, there is no serious effort to follow through or to try growing the business in that market. Companies need to realize that to grow sales internationally, they need to take a strategic look at foreign markets and commit resources with an eye toward long-term market development. Companies who expect to be successful overnight will be disappointed, while those who have a longer horizon will reap the benefits of expansion.
Too often, a long-term outlook is absent due to the lack of commitment from the top management. Managers without international experience can be reluctant to dedicate resources to growing export markets, thus perpetuating the reactive attitude in the company. Commitment is also critical for the development of export expertise that a company needs to operate globally. While a full-fledged export department is out of reach for many small- and medium-size companies, one or two employees trained in export logistics and finance, as well as international business development, can provide an invaluable contribution to the company.
Companies targeting foreign markets should take advantage of the numerous resources available to them. For example, the Massachusetts Export Center has a regional office in Worcester dedicated to helping exporters in the region, and the Massachusetts Office of International Trade and Investment has a network of overseas offices engaged in trade promotional activities.
Bruce Greenwood is the European director of the Massachusetts Office of International Trade. Julia Dvorko is Massachusetts program director for the Massachusetts Export Center.
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