By: Christos Linardakis, Senior Counsel
It’s been my experience over the past 30 years that regardless of what the U.S. economy may be doing, whether it’s a recession, or a period of growth, one area has rarely changed, and that is exports of U.S. products and services. I was fortunate enough to have had a pioneer teacher (Dr. Roth) while in college, who saw this nearly 30 years ago, when “going global” was an unheard phrase. She had taught us to look past our horizons, to venture into unknown waters, and to set our goals on the entire world market. Whether it was learning the aspects of micro and macro-economics, and the impact on a country’s ability to purchase goods, or the fluctuation of foreign currencies, and how to leverage them to promote your exports. She opened our eyes to the world of exports.
These lessons allowed us to explore the global market and the potential for exporting at a time when the Internet was not yet in existence! We sat with representatives of the Small Business Administration SCORE office, who mentored us on what we’d need to start a small export business. Coupled with SCORE, we leveraged the U.S. Commercial Services (“USCS”) and their various Platinum, Gold, and Silver Key Programs, which matched exporters with importers and buyers. To this day, I am amazed whenever I mention the USCS, as many companies have never even heard of them, and are unaware of their services, many of which are free.
For those of us who are old enough to remember, the Journal of Commerce was printed in a format similar to the WSJ, with news, shipping line departure and arrival dates, and at the very end, trade leads, provided by the DOC, USCS and other U.S. government agencies. We used these leads to secure an importer and buyer in Japan and Germany, exporting Levi 501 Jeans, Swatch watches, and U.S. vintage 1930’s, 40’s and 50’s watches to Japan, along with music CDs to Germany, all while in college! In our best year, as sophomores, we did $367,000 in exports, all from the basement of our homes! All of this, because mentors, like the retired executives from SCORE, the USCS, and of course, Dr. Roth, not only believed in us, but provided guidance on how to enter the global market. We’ve come a long way in 30 years, with the help of the Internet, as it has opened the door to the world from the smallest sole-proprietors, to multi-billion dollar companies.
The U.S. government’s programs for supporting companies are effective, both from a regulatory standpoint and regarding incentives, such as tax credit programs for exporters (IC-DISC can help reduce corporate taxes from 16-20%) to resources and grants. One relatively new strategy that is helping companies expand globally is the National Export Strategy and Initiative (NEI). This program has selected several major cities in the U.S. with the task of identifying and expanding exports. Implementation of key strategic priorities, coupled with analysis of the effectiveness of Federal programs in this area, including the SBA and other agencies, is helping companies grow globally.
In cities like Chicago, which was one of the chosen geographic areas, the Metro Chicago Exports (“MCE”) is leading this initiative. As the 4th largest U.S. metropolitan area in total export volume, it’s been identified that there are still major opportunities that exist to break into international markets. The MCE has created:
a) Targeted export pipelines for export-ready businesses,
b) Strengthening the network to coordinate both services, firms, and strategic marketing, and
c) Provide export promotion grants to small and medium size enterprises, something all companies desperately could use.
Yet, many companies will still need to address one key area, and that is being “export ready”. Without the solid foundation of export controls and a compliance program, any new business transaction may lead to possible violations under various U.S. regulations, whether it be the Export Administration Regulations or the U.S. State Department “ITAR” regulations. Companies need to look hard (and fast) at what controls, training, and compliance programs they have in place, in order to play in the global marketplace. Whether this is classification for import/export purposes or analyzing Free Trade Agreements, which will make the company even more competitive in their exports, the underlying message is to be prepared in cementing a solid export compliance program.
As I mentioned in the beginning of this article, the mentors, whether they were teachers, like Dr. Roth or U.S. government agencies, like SCORE and the USCS, allowed us the opportunity to enter the global market when it was still relatively unknown to many companies. When I look back to what tools and programs we had then, to what the NEI, MCE, and other agencies offer today, I am amazed that more companies do not take advantage of these services. If you want to grow globally, regardless of the size of your company, leveraging everything available to help expand your exports is a necessity, but laying the foundation in export controls and compliance should always be your starting point.
