Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 22, 1995 TAG: 9501240001
SECTION: ECONOMY PAGE: NRV-11 EDITION: NEW RIVER VALLEY
SOURCE: STEPHEN FOSTER STAFF WRITER
DATELINE: LENGTH: Long
The money and power surrounding truly international businesses is beyond the scope of many people's imaginations.
But what about the little guy? What about the dozen- or hundred-employee company that perhaps has patented a better idea, or makes its product more efficiently than its competitors - what does the possibility of selling overseas mean to it?
For small businesses in the New River Valley and across the nation, it means a huge market of potential profits beyond what's here at home.
It also means difficulties - time differences, language barriers, fluctuating currencies, and a host of other operations that must be mastered before the deal can be sealed. And small businesses often don't have the money that is needed to go about initially setting up the connections.
"You expand your market and you make profit by being able to sell your product," said Clarence Rose, a professor at Radford University. But, "the smaller the business, the smaller the total resources available."
Rose heads the International Marketing Program at the school, which has hosted seminars for the state Department of Economic Development and has graduate students work with companies interested in opening export opportunities. The program can cut down businesses' costs significantly, and Rose said more companies are interested than the school can supply students for.
Radford has also hosted classes for companies interested in becoming ISO-9000 certified. Whether exporting directly or doing business with companies that ship overseas, the European-designed certification is fast becoming a necessity to doing business with foreign companies that want a standard of certification to go by.
Like other aspects of doing business out of the country, certification isn't cheap. But if a company can surmount the many obstacles toward opening overseas markets, Rose said, it benefits from the simple fact that, "all people around the world are consumers."
"There's a lot of work involved," said Luther Dickens, president of Radford's RADVA Inc. "You've got to really be prepared to do it over a long haul. You can't expect instantaneous returns."
In 1976, Dickens' company patented a new type of building panels made of Styrofoam-like material that substituted for traditional wood frame construction. RADVA's subsidiary, Thermastructure Ltd., has exported and granted licenses to make the panels to companies in Mexico, Australia and the former Soviet Union.
Thermastructure Ltd., while still not a majority of RADVA's business, is growing, so much so that last month RADVA entered into an agreement with a West Coast company to market the product. RADVA also is adding to its plant size and 185-employee work force.
"Part of it is because we have a good product," Dickens said. "The market for housing ... it's a worldwide need. People find out about us and come to us."
It hasn't been easy, though.
RADVA Director of Finance William Cadden remembers the negotiations between his company, partners in the 1986 Soviet Union and banks there and in Chicago. The project weathered the collapse of the communist regime, bankruptcy of the Russian bank involved and the 1991 Russian coup before manufacturing finally began in 1993.
Dickens credits Cadden and other financial staff with possessing the wherewithal and business savvy to hold the deal together.
Opening up business avenues behind the Iron Curtain may have been the toughest of deals to make, but it reflects the nature of obstacles that all companies looking to do business across the ocean must surmount.
Joseph Lesnefsky, president of Theysohn Corp., which makes extruders for use in plastics manufacturing, food processing and other industries, knows all about those problems, but said the matter of prime importance is a simple one.
"The difficulty is ... getting the right collaborators," Lesnefsky said. "It's no good having someone sell your equipment if you can't service it. That's not easy, by the way. There's a lot of people who say they can do this, but when it comes down to it, it's another story."
Lesnefsky works out of a three-person office in the Radford Industrial Park, overseeing operations that move machinery from Germany, where Theysohn's parent company is located, through Kansas, where a plant refits and manufactures the machinery, into Latin America and Canada.
"We have responsibility for the Western Hemisphere," he said.
He said competition in U.S. markets is so stiff that it pays to look outside the country, where it's not easier to find customers, but can be easier to work with local suppliers the companies he deals with.
"It's expensive to start up," he warns. "You have to be able to spend a lot of money up front in developing the contacts. A lot of American companies don't want to stand that kind of expense."
Even after establishing contacts, there are ongoing difficulties to international business.
"The time zone is a big issue, and language is a big issue," said Larry Maccherone, part owner of Christiansburg Comprehensive Computer Solutions, an 18-employee firm which sells computer hardware and software and provides programming and systems integration services. About half of its business is potentially international, with its prime customer, Salem's GE Drive Systems, shipping computers to industrial plants around the world.
While much of the company's business is local, and CCS does no direct international marketing, Maccherone said it's not uncommon to have a company that deals with GE to call him up. They say, "hey we're going to call the company that makes computers for GE," he said. "You get contacts anyway you can."
Maccherone recalled staying up until 1 a.m. waiting for a company to call (during its working hours), or troubleshooting over a phone connected to a radio connected to a Malaysian plant without phone service - battling static, less-than-perfect English, and disconnections for hours to solve the problem.
Finding customers and partners, negotiating deals through translators, making your product a good deal in the face of cost-raising tariffs and import duties, transferring dollars for Deutsche marks - "the little guy has to run those gauntlets," said Franklyn Moreno, director of the New River Valley Economic Development Alliance.
"GATT is supposed to start cutting down the number of problems," he said, referring to the General Agreement on Tariffs and Trade that is to level the playing field for the world's trading partners. Already the North American Free Trade Agreement has begun doing that on this continent, he said.
Regardless, Moreno said it takes a courageous and in-it-for-the-long-run kind of business person to take a company's business out of the country. "It's long term. You've got to be real entrepreneurial. You've got to find willing partners. And you've got to be willing to take a hit."
by CNB