How to Sell Overseas

FOLLOW YOUR PARTNERS
It may sound obvious, but you need to make sure there is demand for your product. If you have a strong domestic market, you're likely to find an international one as well, but there are so many regional and cultural particularities that there are no guarantees. "You had better start with: Is there a market there and unmet need where I can sell? That is the heart of any business plan," says Van Wood, chair in international business at Virginia Commonwealth University in Richmond. The particular attributes of a region matter almost as much. Lawrence Tuller, author of An American's Guide to Doing Business in Latin America, has identified major risks entrepreneurs should assess before heading overseas. These include political instability, corruption, inflation, and government interference. In some instances, international trade agreements such as NAFTA and CAFTA might be reasons to expand, as they are specifically designed to foster business relationships with new regions, primarily through tariff reductions.

Joe Guiliano, president of Christopher Norman Chocolates in New York, has a niche product in the hotly competitive market for high-end specialty chocolates. Guiliano knew his 15-employee, $1 million company needed to diversify its customer base. First he tried Europe but found he was locked out of selling there because of a blockade of American sweets. Then the Japanese caught wind of his hand-painted, hand-sculpted creations. "The Japanese love visually how our stuff is different from the European chocolates," says Guiliano. "We also have the cachet of 'Made in N.Y.'" Guiliano found a distributor with experience selling specialty chocolates and its own manufacturing facility near Tokyo. That distributor now makes the company's candies under a licensing agreement.

One of the best ways to get to new customers is through existing ones. The days when CEOs or their minions parachuted into a new place, built a factory, and considered themselves officially "global" are gone. Nowadays, most companies, even those not currently selling overseas, already have an international network. The smart thing is to start using it. One of the best routes is to follow your partners or your supply chain. You may already be a supplier to a large foreign-based company that has customers in its home country. Or you may be outsourcing part of your operations to a company overseas. Use these contacts to find new customers. "Small businesses can take that relationship with vendors or suppliers and have them introduce them to customers in that country," says Tim Hanley, vice-chairman and U.S. process and industrial products leader for Deloitte.

That worked for Michael Worhach, president and CEO of Sepaton, a 140-person software manufacturer based in Marlborough, Mass. His is one of the companies that has benefited from the Chinese government's urge to upgrade. Sepaton's technology allows companies to back up data using digital files rather than tapes. But it took more than government initiatives to get Michael Worhach, Sepaton's president and CEO, in the door. Worhach knew a systems integration expert who was also a Chinese national with extensive contacts in China's banking and financial world. In 2003 his contact introduced Sepaton's products to Agriculture Bank of China and China Construction Bank, two of China's largest, as well as to People's Insurance Company of China. They signed on as customers, and things picked up from there. Sepaton now has about 35 business clients in China, offices in Shanghai and London, and 40% of its $28 million in revenues originating overseas.