War. Civil unrest. Unstable governments. Draconian foreign regulations. These are just some of the problems exporters face in today’s world, but with the right attitude, the right skills and the right advice, they are little more than minor nuisances on the road to opportunity.
David Yen wants to make sure Northeastern Ohio businesses don’t miss out on these global opportunities, regardless of what’s going on in certain parts of the world. No matter what happens across the globe, the world keeps spinning and trade keeps moving.
Yen, executive director of the World Trade Center Cleveland, has extensive experience in both the public and private sectors of the exporting business and is armed with cultural knowledge and language skills gained at Brown University in Rhode Island, Istituto di Lingua e Cultura Michelangelo in Italy and the Den Hartog & Zevenbergen Language School in Amsterdam.
“In some ways, it’s easier than ever to export,” says Yen. “It’s not necessarily easy to do it, but there is a lot of support out there.”
The World Trade Center Cleveland is the perfect example. The WTC license is owned by a public-private partnership among the city, county, port authority and the Greater Cleveland Growth Association, and was established in 1995.
Its goals are simple: Increase trade and foreign investment and help make Cleveland an international city. One of the best ways to do that is to assist local companies in finding new markets for their products overseas and help them expedite the export of those goods.
But with war in the Middle East, trouble on the Korean peninsula and volatility in financial markets worldwide, is now the best time to be exporting?
Smart Business talked to Yen to find out how current events have affected the exporting business.
How have recent world events changed the exporting business?
The effects are primarily on the general economy and on the strength of the dollar. The strength of the dollar means our prices are more expensive than our competitors’, and it has a dampening effect on exports.
The weakening in the economy has a domino effect in that other economies selling product are also weaker. What I think is significant is in spite of some grim international events, exporting and importing continue. A year ago or two years ago, we had the spy plane incident with China. Sept. 11 has caused us to focus on our interconnectedness with other countries.
Trade goes on regardless of world events. The economy is tied to sources of supply, engineering and resources in overseas markets to the point where it is critical to the stability of companies and their profitably.
Is it more difficult now to start exporting than it was a few years ago?
I would say no. There are certainly more resources out there and a greater awareness of the opportunities that exist. Businesses are far more astute about the chances to do business and the means by which they can do it. It’s growing, but there is a lot of work to be done still.
Have you seen a decrease in exports or in interest in exporting to the volatile regions of the world, such as the Middle East?
It’s normal for companies to be wary of doing business in risky locations and dealing with the uncertainty of war or the Middle East. Companies usually don’t respond well to that.
But there are companies that do benefit from uncertainty and from change. There are companies that will see increases in exports. For example, the rebuilding of Iraq may present huge opportunities for engineering, construction and redevelopment companies.
Have world events changed the exporting business to countries close to the United States, such as Canada and Mexico?
We are all subject to global forces, now more than ever, and when I say we, I mean not just Northeast Ohio, not just the U.S., but also Canada, Mexico and Latin America.
The Chinese rise as an economic power has created some problems for Mexico. Manufacturers have moved from the United States to Mexico and have now moved once more to China, where manufacturing costs are even lower.
It’s global events and globalization, more so than political uncertainty, that have caused changes for our direct neighbors.
Has the additional security in the United States and abroad increased the time it takes to get goods to a foreign destination?
There are certainly more hoops to jump through. You have to be better prepared for how much time they include when they quote delivery, and be prepared for additional documentation and inspections that occur at port.
There are programs for both importers and exporters that help to expedite shipments. Basically, the U.S. government is looking for companies to provide — and consistently provide — a certain amount of information to the government and have the shipper require specific information from their partners on the other side.
To learn more about these programs, shippers and importers should be in touch with customs officials.
What types of products will require increased scrutiny to comply with the various security concerns of the federal government?
The standards haven’t changed.
The government has always been interested in destinations of products that have military applications. There is a heightened awareness of that and some additional scrutiny. The products or equipment that are under scrutiny most often have nonmilitary applications that make them appear quite benign.
A shipper has to identify honestly for the U.S. government whether these goods have potential military applications. Machines that are used to make auto parts, for example, might also be used to make bullets and ammunition. It is up to the government to decide whether it is permissible to export.
There have been cases where American companies have been penalized for knowingly sending equipment or machinery to people to resell or transmit on to a location that is sensitive.
Other products that will attract attention are electronics, computer equipment, advanced controls for manufacturing, machining equipment or chemicals. Basically what has to happen is you have to apply for an export license. It’s not difficult to get, but it puts you on the radar screen of the U.S. government that you are shipping something that requires something that requires careful study.
Do you see export opportunities in post-war Iraq?
Beyond the rebuilding phase, there are certainly a lot of opportunities in a post-war Iraq that will no longer have an embargo. The population in the past has been very affluent and has had the flow of goods and food and all kinds of things severely curtailed in the last decade, so there is a lot of opportunity there.
There is a lot of pent-up demand, and it has fueled a lot of black market purchasing.
Is it possible to export products without the help of a freight forwarder or other third-party assistance?
Yes, you can do it alone, but I don’t know why you would want to.
If there are people that can help you accelerate through the learning curve, you should use them. Some of them provide free advice. The advice you get can save you money.
Let’s say you have a 30 percent mark-up on a product, and you sell $100,000 worth overseas, so you have $30,000 tied up in the transaction. If it goes down the toilet, how much are you going to have to sell to repay or neutralize the $100,000 loss?
I think utilizing knowledgeable people helps transactions move through faster and avoid the mistakes that inevitably occur in international transactions.
In today’s world, what skills are required to be a successful exporter?
The first is an attitude of openness and a receptivity to change. The effects of globalization can be perceived as threats that cause us to go into a defensive mode or cause us to not see it as an opportunity.
If we don’t embrace it, we will never be able to capitalize on it. We will never be able to be at the front of curve rather than being a victim of it. An attitude of receptiveness to international business in any form whatsoever is an absolutely critical component of a businessperson in a global market.
In terms of skill sets, this may seem trite, but language proficiency is helpful, not so much in communicating with the Spanish in Spanish but more because I think learning another language predisposes the businessperson to a better understanding of other cultures.
Another skill I think you need is a good understanding of current events. You have to have an understanding of geography, cultural differences, political and religious considerations that make a difference. Fundamentally, business is about relationships.
Another trait that is important is a combination of impatience and patience. You have to have the drive to go into uncharted territory, but you have to go in with the correct expectations about the delays that may occur or make decision-making slower on the part of your partner because of cultural differences. How to reach: World Trade Center Cleveland, (216) 592-2446
