To successfully export products, small manufacturers face significant challenges. And much depends on how they structure agreements with exporters, as well as the nature of their business.
While the exporting business may be bound by political factors outside their control, small manufacturers can take steps to ensure success, or to at least get on the right path.
These steps include partnering with local organizations for training programs and trade missions, doing research and development work, becoming an original equipment manufacturer and using one exporting customer to distribute products to multiple companies overseas.
“In the Lehigh Valley, there’s such wonderful support for manufacturing,” said Catherine Campanaro, administrative manager for Bio Med Sciences Inc. in Upper Macungie Township. “There’s just so many ways we can expand our capacity.”
Her company has overcome the obstacles of getting its products into other countries through the help of the Manufacturers Resource Center and Lehigh University’s Small Business Development Center and International Trade Development Program.
“Through training programs and trade missions, both of these organizations have been instrumental in helping our company not only meet potential distributors, but also to overcome the hurdle of entering new countries,” Campanaro said.
Small manufacturers can have key personnel attend and participate in global trade shows to develop and maintain an international presence. This helps in creating partnerships, identifying market trends and discovering new product standards.
Taking on research and development work also can gain traction in international markets, potentially leading to more breakthroughs in technology and more demand for the product.
Another approach to exporting is to take on work as an original equipment manufacturer, which gets the product into those markets, under a different name.
Having one exporting customer that distributes the product to multiple end users around the world can be beneficial if one has the terms and conditions of the contract established beforehand to make a more efficient operation.
Furthermore, if the distributor can serve as the initial contact for technical support, that frees the manufacturer to focus more on the product.
PRODUCT STANDARDS OVERSEAS
Some manufacturers, particularly those in health care products, find their merchandise has different classifications in different countries.
“Because we are a medical device manufacturer, we need to be aware of the classification of our products in different countries,” Campanaro said.
For example, in the U.S., all of Bio Med Sciences’ products are considered Class I medical devices. In Canada, its scar management products are Class I and its wound care products are Class II. In the European Union, its scar management products are Class I and wound care products are Class IIa, she said.
Bio Med Sciences creates products for wound care, scar management and skin renewing technologies. It has 22 employees and 37 international distributors who ship to multiple countries. Bio Med also can sell and ship directly to international consumers.
“In order for a company to be able to import and distribute our products, we have to help them jump through the hoops of their equivalent regulatory body, their version of ‘FDA,’ ” Campanaro said of the U.S. Food and Drug Administration. “Finally, we need to comply with the importing regulations for each country. We also rely on the customer to provide the details of what is required for their country.”
Helping distributors navigate that process to get Bio Med Sciences products into the country is a challenge, she added.
AT GLOBAL EVENTS
To be successful at exporting, Campanaro said, it’s important for Bio Med to attend international meetings and trade shows.
“You have to have your presence out there,” she said. “People from our company will create burn masks for people in developing countries. A lot of it is good will and charity work; that goes a long way internationally.”
Also, once there is a new standard for a product, the medical community has great influence.
If some of the leading doctors in the market are using the product, it will bring more business, she added.
It all comes down to relationships, especially in the global market, Campanaro said. The “Made in the USA” label still is one of the greatest attractions for global customers.
“Just as it is for domestic sales, providing consistent quality is the key for exports, as well,” she said.
Bio Med Sciences also performs a lot of original equipment manufacturing work for companies in other countries. With this, Bio Med still makes the product, but the other company processes it further and packages it under its name.
Performing research and development work not just domestically but internationally also helps boost exporting, she said.
“That’s one of the beauties of being a small business,” Campanaro said. “We’re very agile.”
ONE CLIENT PER COUNTRY
For XiGo Nanotools Inc., doing business with only one company in a particular country has helped it successfully export.
The company is largely virtual and its employees are in several places, including Upper Macungie Township. The company makes analysis and measurement devices for a number of industries, including energy, pharmaceuticals and electronics.
“In our particular business, we export to distributors who sell to end users,” said Sean Race, president. “We always do business with the same company internationally in a given country. That turned out to be a good strategy. … That’s how we were able to survive in the beginning.”
His company, which formed during the Great Recession, develops proprietary technology for end users, with prices from $45,000 to $65,000 for its devices.
When it came time to bring those devices to market, however, the aftermath of the recession was in full swing around 2010.
“We were struggling with what was the best strategy,” Race said. “In the U.S., capital spending was on hold. So we started contacting distributors in various countries. That’s been our lifeline the past couple of years. It’s very difficult if you are a small company to get access to capital.”
Race said small manufacturers struggle to get access to capital to fund the creation of a machine that can be shipped abroad.
The strategy his company used was to ask for deposit money with the order to allow subcontractors to build the machine.
XiGo Nanotools makes its products through a network of eight subcontractors, and the products are assembled at Britech, a contract manufacturer in Hanover Township, Lehigh County.
CONDITIONS UP FRONT
For Bitronics LLC, a manufacturer of power measure instruments for the utility industry, many challenges have been mitigated because terms and conditions of the contract are addressed up front with its one client overseas.
Primarily, its end users are electric utilities around the world, and it uses one company in England to supply its products to all of those international customers.
That’s according to Frank Wendt, vice president of Bitronics, based in Hanover Township, Northampton County, where the company, which has about 50 people, has been making and shipping products for nearly 10 years. The company is a division of Novatech LLC, headquartered in Pleasant Valley.
Bitronics ships all of its global products to the English company.
As the original equipment manufacturer, Bitronics private labels the products so the client in England can supply them to customers in other countries around the world.
“We only ship to one location, and they ship it to the end user,” Wendt said. “You pick the product that you want with the features that you want. We try to streamline the process ahead of the game before we execute it.”
The products, though different, can only be of the same size, which also makes shipping smoother.
Bitronics produces its user manual in English, and the client translates the language, when needed, to the end user, Wendt said.
“They also provide the first line of defense in technical support,” he said. “Those calls don’t come to us; they support that service.”
Since the product is technology based, the electronic transmission of files, documents, orders and invoices has made the operation much faster and less prone to errors, Wendt said.