Hesitation to explore global marketplace like leaving money on the table
Despite all the talk of trade wars, foreign opportunities are expanding as a source of growth for our firms and our Region. Yet, why do many of our companies and our economic development groups too often leave this potential gain on the table?
There’s not a simple answer. Perhaps news of the challenges and risks of going global hide the real advantages. Perhaps our large and growing domestic market reduces interest in trade. Perhaps there are always seemingly more pressing priorities.
Yet, the big picture of Indiana’s global activity is quite positive. Last year Indiana exported $38.1 billion in manufactured products, supporting more than 160,000 jobs. Indiana is sixth in the nation for percentage of private sector jobs (7.2%) that come from foreign-direct investment (FDI); 950 foreign firms employ 193,000 Hoosiers.
But such an impressive international performance masks some real gaps at the company and community levels. Most of our exporters are the biggest firms. Indiana is among the 18 states with the lowest export value of small/medium enterprises (SMEs) as a portion of total exports. More of our small companies can compete globally.
The upsides of trade are many. About 95% of the world’s customers live outside U.S. borders. Exporting companies grow faster, pay their employees more, are more competitive at home, can better weather domestic downturns, and are less likely to go out of business. Foreign demand for our products is high.
The internet is also fast emerging as an enormous new highway to global markets. Especially for small manufacturers, internet-enabled trade is a low-cost export strategy without complex distribution arrangements or setting up a foreign retail presence.
So why don’t more of our companies seize international opportunities? Fear of the unknown is a big reason. Most small firms lack knowledge of foreign markets, and the logistical and financial hurdles to enter them. Stories of foreign buyers not paying, daunting foreign regulations and loss of intellectual property often get attention, while records of many successful exporters are less common. Many firms believe they lack products that would appeal to foreign customers. But if their products are selling well in the U.S. market, it’s shortsighted not to at least assess overseas sales potential.
Today it’s probably easier for an SME to export than ever before. With the right effort and help, most firms can learn the ropes, develop a plan and start exporting in a few months. Leverage the free services of the federal government to find out if there’s foreign demand for your product. Contact the Export Assistance Center in Indianapolis, which is run by the Department of Commerce, and explore the government export hub www.export.gov. It offers export services and excellent online tools, including one that can pinpoint the best markets for your specific product.
The Indiana Small Business Development Center in our Region provides free export advice. Other federal agencies (such as the Small Business Administration, the Export-Import Bank of the United States), trade consultants, banks, freight forwarders, global logistics providers, and the vast research resources of the web all can help level the road to success.
Talk with your peers in your sector about their experiences with trade. Attend a major trade show in your industry and seek out foreign manufacturers, distributors and buyers. Check out the excellent export training available both online and in Chicago. Network at a local event hosted by the NW Indiana World Trade Alliance.
Other communities here and abroad have proven the value of export and FDI promotion to economic development and job creation. Yet economic development strategies in our Region include no organized and proactive efforts to boost trade and FDI. And our logistical advantages, proximity to the global city of Chicago, innovative universities, skilled workforce and our diverse population gives us a clear edge over other regions. Harnessing globalization for our companies and our communities is a key component of future prosperity. It’s time to make it a higher priority.
Click here to read more from the Oct-Nov 2019 issue of Northwest Indiana Business Magazine.
