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BWSmallBiz -- Strategies April 16, 2008, 3:00PM EST

How to Sell Overseas

Put that talk of recession to rest. Foreign markets are eagerly buying American

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One key contact opened doors in China for Worhach Shawn G. Henry

By Jeremy Quittner

Harkness teamed with a manufacturer in India Timothy Archibald

Farrell got a helping hand from Uncle Sam Kevin Miyazaki/Redux

Guiliano (right) and partner John Down found receptive customers in Japan Roger Hagadone

Beth Marcus' first company, Exos, made a name for itself selling gear to American gamers. Microsoft bought Exos in 1996, and the 49-year-old Marcus has gone on to launch Zeemote. This time around, she has a whole new strategy. The 16-person Bedford (Mass.) company, which lets consumers use their cell phones as game consoles, is seeking its first customers to buy her product, but not in the U.S. Instead, Marcus is looking overseas, particularly in Asia and Europe, where cell phone networks are more open to companies like hers.

Marcus is one of about 246,000 entrepreneurs now selling abroad. Exports rose 12%, to $1.2 trillion, from 2006 to 2007, according to the International Trade Administration. That included increases of 18% to China, 28% to Brazil, and 74% to India. Small businesses account for about 30% of all U.S. exports.

If you aren't selling abroad, it's time. We don't have to tell you that the U.S. economy is struggling. Your suppliers may be raising their prices, and your business customers may be worried about their own sales. But just because demand may be shrinking at home doesn't mean you won't get a rousing welcome abroad. "We are still viewed by the rest of world as the highest-quality producer, and now our stuff seems to be on sale because of the falling dollar," says Larry Harding, president of High Street Partners, a Boston firm that helps international companies manage their finance and accounting. Says Harding: "Most U.S. companies should be getting one-third to one-half of their revenues outside of U.S. borders."

Thankfully, selling abroad has never been easier. Technological advances get much of the credit. Many international markets are throwing open their doors. Trade agreements such as CAFTA—the Central American version of NAFTA, passed in 2005—have lowered tariffs and removed other obstacles. And countries once regarded only as places to outsource, such as China and India, are now hungry for imported goods.

The news is even better on the business-to-business front. This year, China began giving tax breaks to local manufacturing companies attempting to upgrade their technical processes or environmental standards—good news for U.S. companies that can help them. India is similarly keen on minimizing environmental damage and upgrading its manufacturing base. "When you talk about business-to-business, particularly if it has anything to do with high tech, by and large the market is wide open," says Anil Gupta, a professor of strategy and organization at the University of Maryland's Robert H. Smith School of Business.

Of course, there will be some headaches along the way. Selling internationally takes a commitment, of both time and resources, as well as an understanding of the cultures in which you plan to operate. Swings in currency prices can hammer profits. Selling abroad often means reengineering products for new audiences, often of lesser means. And it is crucial to keep things in perspective: You don't want to get so consumed with international sales that you divert too much attention and resources from your business at home.

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.

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