In his State of the Union address last week, President Barack Obama once again called for the U.S. to double exports in five years in order to create U.S. jobs.
The President first set this goal in early 2010 when he created the National Export Initiative (NEI) to help U.S. companies sell their products and services internationally.
The NEI is led by sixteen separate government agencies and departments. These agencies and departments promote exports by providing U.S. companies, particularly small and medium sized enterprise (SMEs), with export financing, counseling on foreign markets, support in lobbying foreign governments regarding trade barriers, and assistance in marketing their goods and services overseas.
Based on our experience assisting SMEs in China, we think the NEI can be effective in providing businesses export financing, counseling, and lobbying support. However, we also believe the NEI can be even more effective by working with the private sector to help U.S. companies sell in foreign countries.
Having worked with a variety of American SMEs in the Chinese market we have seen a need among them for the NEI’s funding, counseling, and regulatory support. We have communicated with multiple SMEs that considered exporting to China but decided not to because the costs were too high. The NEI’s export financing program can provide such companies with the loans they need to begin exporting. Similarly, many companies can benefit from the NEI’s counseling about doing business abroad because they are new to exporting. U.S. companies can also benefit from having the NEI’s regulatory support in working with foreign governments to tackle trade barriers since such barriers often impede exports to China and other countries.
While our experience has shown us how the NEI can be beneficial to U.S. companies, we have also learned that there are ways its sales and marketing support can be strengthened. The primary means through which the NEI promotes exports is by arranging matchmaking sessions with potential foreign distributors, organising trade missions, and supporting participation at international trade shows for U.S. companies. We know several U.S. companies that have used these services and have found them valuable in providing initial support when entering the Chinese market. However, they have also found that after using these services in China and returning to the U.S. they had difficulties finalising business deals. Based on our experience, these companies faced difficulties because they lacked strong relationships and on-the-ground business experience in China. In China and other emerging markets, companies must often spend a considerable amount of time developing relationships in business and government before they can close deals. In addition, due to differences in business culture it is very important to have first hand business experience in China in order to successfully operate in the unique Chinese business environment. The NEI’s promotional efforts do not provide the long-term support these companies to build the relationships and gain the expertise they need to successfully export to China and other countries.
To help U.S. companies export, we recommend that the NEI partner with private sector businesses that can help U.S. companies market and sell abroad. In China, there are a variety of U.S. and Chinese companies that provide marketing and sales services to U.S. companies seeking to export. These businesses often have significant on-the-ground experience conducting business in China. Due to this experience they also have the relationships and market knowledge needed to sell in China, which they can leverage on behalf of U.S. companies. The NEI can utilise these companies by contracting with them to provide marketing and sales services to U.S. companies that want to export to China and other countries. This approach will allow the government to help U.S. companies interested in exporting by connecting them with reliable service providers that can provide the expertise and relationships needed to successfully sell products and services internationally and make the President’s export goal more attainable.
By Anthony Goh and Matthew Sullivan. Mr. Goh is President and Mr. Sullivan is Director of Business Development and Communications at US-Pacific Rim International, Inc. (www.us-pacific-rim.net)
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