Even small firms can profit in world of foreign trade State division offers tips for overseas trading

May 06, 1991|By Liz Atwood | Liz Atwood,Evening Sun Staff

You have to admit there's a certain excitement in the idea of running an international business. Think of the trips to Singapore or Milan or some other exotic place, of meeting fascinating people, of having your business card printed in a foreign language. And, of course, there's the practical reason: The international market can help a company weather bad economic times at home.

At least several hundred Maryland companies already are dealing overseas, according to the Department of Economic and Employment Development's arm that helps to develope overseas trade.

But is the international market really for you?

Maryland trade experts say even small businesses can be successsful overseas, but the foreign arena isn't for everyone.


Just because it sells in Baltimore doesn't mean it will sell in Bonn or Bogota, but success at home can be a good indicator of success abroad.

Andrew Gordon, director of program development in the Office of International Trade of the Maryland International Division, says the owner of a small business interested in trading overseas should start by looking at the company's domestic market.

"Before they export to Korea, maybe they should look into marketing in the Midwest," Gordon says.

If the business is succeeding in the United States, the next step may be to look at Canada and then Great Britain, where language and cultures are similar, he says.

Although the Maryland International Division doesn't define "small business," Gordon says the typical company that seeks assistance from his office employs between 15 to 25 people and has $5 million in sales.

A company with fewer than a half-dozen people will find it difficult to compete in the international arena, he says.

Selecting the country in which to market requires a certain amount of strategy. "In deciding on a country, ask what drives the demand for the product in the U.S.," Gordon says. "What you're really doing is looking for a similar market overseas."

In some cases, the product determines the marketing strategy. High technology and sophisticated medical equipment may have to be marketed internationally as well as domestically while the technology is still current. But a small business also must consider whether the country is receptive to the idea and whether it is capable of using the product.

Larry Loomis had a product that he knew was in demand. His New Horizons Diagnostics Inc. in Columbia produces medical diagnostic equipment that can detect infectious diseases such as gonorrhea and syphilis.

A couple of years ago, a German company wrote him and expressed an interest in marketing the products. Now he is selling the equipment in Japan and Europe, and overseas sales are about 25 percent of his business.

"It's an interesting dialogue, an interesting experience," he says.

Andrew Silberstein, executive vice president of Morton Management, a computer hardware company in Rockville, says he "sort of fell into" international marketing. The Maryland International Division persuaded him to take his products to a trade show in Germany and he was besieged with inquiries from foreigners wanting to do business with him. "We realized there were people outside of the U.S. that would be interested in our stuff."

Silberstein says his company fills a niche; The market isn't huge--outherwise his competitors would be the size of IBM--but it's strong enough to support his business.


A market study can be invaluable. You might start at the local library, but other sources of information include the Chamber of Commerce, U.S. Department of Commerce, the Maryland International Division, trade associations, and other businesses.

"It's not hard to get general information on the market, what's the challenge is getting information related to your specific product," Gordon says.

Look at the competition, both from other U.S. companies, from native companies and from companies from other countries. Consider their pricing strategy and whether you can compete with them.

In addition, a company should look at other considerations:

* Is exporting consistent with other company goals?

* What demands will exporting place on the company's existing resources?

* Are the expected benefits worth the costs.?

James L. Hughes, program manager with the World Trade Center Institute, a private, non-profit organization designed to encourage Maryland international business, says patience is the key. "A company that thinks you can go over and develop a market in six months will be disappointed," he says.


Once you've chosen the country to which you want to export, you need to find a distributor, agent or partner. Small companies especially might want to consider joint ventures with native companies, Hughes says. Although such arrangements cut into profits, they can smooth a small company's way into the marketplace.

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