Fred Hansen never intended to become an expert in Japanese culture.
But Hansen, vice president of marketing for Mardel Laboratories Inc., based in Glendale Heights, not only has mastered bowing, instead of shaking hands upon greeting a Japanese business colleague, he’s become a walking encyclopedia of do’s and don’t’s when doing business across the Pacific Ocean and the world.
Like many small businesses throughout Illinois, Mardel Laboratories, a 50-employee manufacturer and supplier of pet products, saw market opportunities in the ever-growing global economy. And, recognizing this shift in the commercial horizon, the privately held company jumped at the opportunity to distribute its tropical fish aquariums and cleaning systems throughout Japan.
Today, only two years after Mardel expanded to the Japanese market, sales there make up one-third of all company revenues. The Japanese market is the firm’s second-largest customer after Kmart, which distributes Mardel’s pet products throughout the U.S. What’s more, the 20-year-old firm is considering adding its dog and cat product lines to the Japanese export chain, says Hansen.
“Exporting to Japan has become an extremely profitable venture for us,” he says.
Indeed, many small and mid-sized firms have joined the big-business bandwagon in seeking their fortunes abroad.
The Illinois Department of Commerce and Community Affairs (DCCA) International Business Division says the number of small companies in Illinois tapping into the global market is growing fast.
Illinois exports rose faster than those throughout the United States last year. The state’s exports in 1992 were up 6.8 percent from 1991, increasing to $17.6 billion, compared with a national rise of 6.3 percent, according to Marcia Tjader, manager for DCCA’s International Business Division.
What’s more, Illinois exports to foreign markets have doubled between 1987 and 1992. Exports, together with foreign investment in Illinois, account for 854,000 Illinois jobs-one out of every eight positions, says Tjader.
“Going global is the way for small companies to go now, especially since our domestic market is already saturated,” she says.
Through extensive research, Tjader and other international trade experts agree that in the current market, companies slated to receive the most favorable reception on foreign business turf fall into the following key sectors: industrial machinery, construction equipment, chemicals and plastics, metals, medical and health-care supplies, and scientific equipment.
Trade industry studies indicate the most receptive markets for Illinois companies are Canada, Mexico, Germany, France, the United Kingdom, Poland, Hungary, Japan, Taiwan and Hong Kong, says Tjader.
Certainly, the Mexican market, with its 88 million consumers and population expected to grow to more than 100 million by the end of the decade, is one of the hottest and fastest-growing markets being targeted by Illinois firms, says Tjader.
“We just sponsored about six Illinois firms in the medical-products industry in a trade show in Mexico and they were beginning their trade immediately off trade-show floor sales,” says Tjader, adding that DCCA plans to run 24 trade shows and two trade missions during the coming year in Mexico, Canada, Asia and Central Europe.
These state-sponsored trade shows provide Illinois’ businesses with a contact point for entering a foreign market, giving them the opportunity to learn about logistics, from shipping to marketing.
But even the largest, most sophisticated companies and leaders in international trade will tell you that navigating across-the-border deals isn’t always smooth sailing. The international course can, in fact, be quite choppy.
Translation problems and other cultural clashes can cause a company to stumble.
Just as Mardel Laboratories’ Hansen found. If he learned one lesson about breaking into the global market it was: “patience, patience, patience,” he says.
“It took us two years of going back and forth to Japan, to test and retest our product to prove its merit, before we signed a deal,” says Hansen, who along with the other executives in his firm didn’t leave anything to chance, hiring an outside foreign-culture expert to provide instruction in Japanese customs and business practices before Mardel made even an initial proposal.
Indeed, knowing what sells, and at what price, in the U.S. is no guarantee of success abroad, says Stephen Konkle, district international trade officer for the U.S. Small Business Administration in Chicago.
“There is no such thing as a global market,” says Konkle. “There is a globe of markets and each one is very, very different. The biggest stumbling block in international trade is not studying the individual market and knowing what makes it unique and what you have that is special to offer them.”
To that end, the SBA offers invidualized counseling to potential small-business exporters at its Chicago office, says Konkle. Trade experts work with small-business owners to assess their readiness for exporting.
Holland Phillips, who has been exporting to Mexico and Latin America for 12 years through his firm, Drilex Corp., a Romeoville-based manufacturer and distributor of drilling equipment and replacement parts, says that companies should never attempt to establish a foreign presence by staying at home.
“Trade is a cast-eyes business, meaning you have to establish communications and build trust, the two keys in doing business with foreigners, in person, and not over the phone,” says Phillips, who also founded World Data, a computerized international trade data and resource base.
Moreover, technical details carry potential risk in the global market, adds Phillips. He had to readapt his entire product line to meet electrical operating standards in Latin America. “You’ve really got to know your product and the costs to adapting it to foreign standards,” stresses Phillips.
Small-business owners seeking assistance before entering a foreign market also can turn to their local World Trade Center.
“We consider ourselves a prime resource for business people interested in getting into international trade,” says Monica DeBartolo, director for the 400-member Chicago chapter of the World Trade Centers Association, headquartered in New York.
Member businesses gain access to experts in the 70 countries around the world with association chapters, points out DeBartolo. Membership provides access to an international computerized referral network, market research data and help in assessing foreign markets, she adds.
Likewise, DCCA, the SBA and the U.S. Department of Commerce, all with offices in Chicago, offer individualized, and free, advice to potential exporters.
And DCCA and the SBA jointly operate three International Trade Centers throughout the state designed to provide assistance to potential Illinois exporters.
Experts at the centers, which are located at the College of Du Page in Glen Ellyn, Bradley University in Peoria and Southern Illinois University in Edwardsville, utilize international market research data to help small-business owners evaluate key overseas opportunities, says Shannon Rielly, program coordinator for the International Trade Center at the College of Du Page.
Financing help is available through two state agencies-DCCA and the Illinois Development Finance Authority-that have joined forces to guide small and mid-sized businesses through the often tedious and rigorous financing process, with a program called “The Export Finance Partnership.” The program offers 100 percent guarantees for private bank loans.
The SBA offers a similar program, which provides loan guarantees for small businesses of up to $750,000, says Konkle, adding that this is available on a first-come, first-served basis.
Another resource available to small-business owners is the U.S. Department of Commerce’s U.S. and Foreign Commercial Department, whose Chicago office offers private consultations, market matchmaking and seminars on a variety of related trade topics.
