"Small Businesses to Get More Help Selling Overseas"
By Andrew C. Schneider
Jan. 25, 2005
Source: KiplingerForecasts.com

One of the major tasks for Carlos Gutierrez, Don Evans' replacement as
secretary of commerce, will be figuring out new ways to boost exports of
U.S. firms. Look for a major effort from the Commerce Department to help
small businesses break into overseas markets, making it easier to take
advantage of a weakening dollar.

When the dollar was strong against the British pound and the euro, the
exchange rate gave a natural competitive advantage to firms based in
Europe because it made American goods pricier. Even as the dollar fell,
European firms managed to hold on to their market share by cutting
prices, something small businesses operating on narrow margins couldn't
afford to do.

But with the dollar down 24% against the pound and 34% against the euro
since February 2002, the Europeans are reaching the limits of that
strategy. As a result, exports priced in dollars will start to gain
ground over the European competition, making overseas markets easier for
smalls to crack. The competitive edge will be most pronounced in
third-country markets where U.S. exports vie with exports from Britain
and the euro zone.
Those markets will include countries that have kept the exchange rate of
their own currencies fixed against the dollar-most notably China.

For many small firms, though, the benefits from the weak dollar aren't
enough to make the leap into foreign markets worth the effort and risk.
That's where the Commerce Department comes in. Over the past year, its
Commercial Service has developed new approaches to help smalls overcome
the most critical hurdle to entering the export game: finding the right
contacts overseas.

For the past six years, the Commercial Service has run a regional
promotion called Showcase Europe for companies looking to break into
European export markets from Iceland to Russia. The promotion helps put
U.S. companies in touch with Commercial Service offices in each country
and provides contact and event information for specific sectors, such as
aerospace and information technology.

Now the service has launched three similar promotions to help smalls
reach out to emerging markets. One covers the Asia-Pacific region; the
second, the Western Hemisphere; and the third, parts of the Near East
(Egypt, Israel, Jordan, Lebanon, Morocco, Turkey and the West Bank and
Gaza Strip).
The Commercial Service plans to open yet another regional promotion
later this year to sub-Saharan Africa.

"We encourage companies who feel they have a product to sell to get in
touch with us and set up a meeting," says Doug Barry, the Commercial
Service's communications director, pointing to the 108 export assistance
centers the service operates around the U.S. "If it seems [as if]
they're ready to go ahead at that point, we will assist them to identify
markets and potential buyers."

This assistance often takes the form of matching potential buyers and
sellers at regional trade shows, a process that doesn't necessarily
require the small company to send a representative to the show. The
Commercial Service officer on the spot will talk to potential foreign
buyers about the products of U.S. firms and put any prospective buyers
in touch with the U.S. firm. For firms that are willing to send someone
out to the field to search for partners, the agency offers a program
called the Gold Key Matching Service, through which it sets up
appointments for the U.S. firm's representative to meet with different
prospective buyers.

The Commercial Service has also begun working with the National
Association of Manufacturers, providing speakers on how to get started
in exporting and helping to organize trade missions to the Far East for
smaller members. The first trip, which took place in September, brought
representatives of 12 small and midsize firms to Singapore, Beijing and
Shanghai. As a result of the visit, one of the participants-Behlen
Manufacturing Co., a firm based in Columbus, Neb.-ended up winning the
contract to build the swimming hall for the 2008 Beijing Olympics.

"It was a terrific experience," says Terry Engle, vice president for
sales and marketing at the Philadelphia-based Sandmeyer Steel Company,
which also took part in the trip. "We've developed [not only] some nice
contacts but also a better understanding of the whole [East Asian]
market and where we sit in that market."

Barry notes that the number of small and midsize businesses that are
successfully exporting has quadrupled over the past decade, from fewer
than 59,000 in 1994 to 235,000 in 2004. That's still a relatively paltry
showing. According to Bruce Phillips, senior economist with the National
Federation of Independent Business' Research Foundation, firms with
fewer than 20 employees account for roughly 90% of America's 5.7 million
businesses.

Researcher-Reporter: Kathy Rowings
All contents (c) 2004 The Kiplinger Washington Editors