Stephan Helgesen
In the anthology of the world history of exporting there are numerous stories of companies that ventured bravely into new foreign markets with high hopes for success only to stub their corporate toes on the most mundane of mistakes. This is not one of those stories (though I can tell you some if you give me a call).
Instead, this is rallying cry to all New Mexican companies that have achieved success in selling their products or services domestically to get on the exporting bandwagon! For some companies, this may have a hollow ring because they tried it once and didn’t like it or thought it was too much trouble. Those are frequently-offered excuses, but not good ones, and they often belie another hidden reason – either lack of awareness of the advantages of exporting or outright fear of doing so.
When I worked with the U.S. Department of Commerce’s Foreign Commercial Service unit overseas, the most frequent complaint I heard from foreign companies about American firms was, “We sent them (U.S. company) an inquiry about their products but never heard back from them.” I sincerely hope that this is not the case today, because if it is we’ve actually become our own worst enemy, and no company can afford to play that role for long in today’s economy.
The U.S. export picture is a classic example of the Pareto Principle (80/20 rule), as nearly $1.3 trillion in U.S.-made goods are exported yearly, and nearly 80 percent of those exports come from only 10 percent of all U.S. exporters. Astounding.
A substantial percentage of those exports are parts that will be assembled abroad and re-exported back to us as finished goods by foreign subsidiaries of U.S. companies. There’s something very wrong with that picture, especially if you’re an American worker, but that’s a whole other story.
New Mexico is losing out
Let’s look at Europe, a collection of countries that take approximately 20 percent of all our exports (approximately $26 billion yearly), many of which are not parts to be assembled in other products, but finished goods, ready for the distributor or retailers’ shelves. (By comparison, those exports equal our monthly trade deficit with China!)
That’s the good news. The not-so-good news is that many of these products are industrial products – not consumer products – and they go through elaborate and sometimes obscure distribution chains (like Japan’s, for example): from importer to master stocking distributor, from distributor to wholesaler, and from the retailer to the consumer. By the time they end up there, the original import prices have been trebled, making them only marginally cheaper than European-made goods (if we’re lucky) or, worst case, more expensive than comparable Far Eastern-made goods!
That would seem to a good argument for establishing a direct manufacturer/agent relationship, but each country or region must be carefully assessed on its own potential for sales to determine whether this is the right business model. Either way, New Mexico is losing out by not seizing the opportunities to export while our competitor states aggressively promote their own companies.
Critics will say that it’s too expensive for our state to do so, but I would argue that the price of not doing so is infinitely more costly to our long-term growth and is actually retarding the investments we need to make in key industrial sectors of our economy.
If we are to turn our local economy around
There are numerous overseas niche markets in which New Mexican products have distinct competitive advantages, among them countries whose populations have a predilection for our processed prepared foods (chile to name but one). Our higher-tech products for the medical, bio-tech and photo-optics industries have the greatest chance of success in highly developed overseas markets. I know because I’ve been involved in promoting American-made technology since 1984. Countries that place a premium on technology are our prime targets of opportunity, and we should focus on them like a laser beam.
Our federal government has 16 different government agencies that have a piece of the exporting pie, and there are many state and local organizations and private companies that offer exporting assistance to New Mexican businesses, so our export lethargy is not grounded in a lack of information. The answers must lie elsewhere.
If we are to succeed in quickly turning our local economy around, we must realize that it can only be done through corporate relocations or exporting. For my money, the path of exporting is the most cost-effective one and the one that will require the least time and investment. Export now.
Stephan Helgesen is a former foreign commercial service officer with the U.S. Department of Commerce and is now an export consultant. He is also the honorary consul for Germany in New Mexico. He can be reached at helgesen@2ndopinionmarketing.com.