Opportunities abound outside America’s borders
St. Louis Business Journal
Rudi Roeslein is founder and CEO of Roeslein & Associates, which specializes in process manufacturing systems, with 250 employees worldwide and $110 million in 2012 revenue.
Reading the numbers for the U.S. economy is like reviewing the report card of a promising but underperforming student: You know it should be a whole lot better. Everyone from the Congressional Budget Office on down expects continued slow growth as the U.S. economy only gradually improves in 2013. A strategy to counteract the sluggishness is to look around the globe for opportunities that drive real growth at home.
One formula we’ve employed for more than 23 years is using world-class U.S. technology and labor to serve customers needing state-of-the-art components in the beverage container, oil and gas, refinery, alternative energy and other industries. Our employees have perfected the concept of unitized and modular construction. Sophisticated components are preassembled before being shipped from manufacturing facilities in Red Bud, Ill., to more than 50 countries.
Does it work? Roeslein & Associates is on track for double-digit sales growth in 2013. The company’s employment base increased 10 percent in 2012. We also just finished expansions of our U.S. manufacturing and engineering facilities. Much like Mark Twain, rumors about the death of American manufacturing are exaggerated. But you must be willing to adjust tactics to thrive.
Such was the case in China. Thanks to relationships with U.S. companies, we built a strong customer base when China’s economic resurgence started two decades ago. But we came to the stark realization that despite our quality advantage, selling manufactured components in China came down to price. After looking at shipping costs, labor differentials and import issues, the only way to overcome the price issue was to manufacture locally in China or risk losing valuable customers.
The Shanghai facility opened more than two years ago staffed by local Chinese employees trained according to our quality and operating standards. It was essential the U.S. operation understood the Chinese entity was established to serve the unique realities of the Asian market and would not cannibalize work they were doing for customers in the rest of the world. Transparency fostered good cooperation and avoided pushback. Now the Asian operation is on the cusp of potentially exponential growth, just like what our U.S. operation has experienced since 2001.
Small and Mid-sized Enterprises (SME) are positioned to take advantage of global opportunities. U.S. exports to China increased 542 percent in the last decade, according to the U.S. Commercial Service. SME accounted for 78 percent of the value of Chinese exports in 2010. These trends should continue even with China’s slowing economy. But at a projected 7 percent growth in 2013 China will remain one of the world’s top performers. Long term, an emerging middle class will transform China into the largest consumer market in the world.
Nearly three-quarters of businesses in a recent American Chamber of Commerce in China survey reported optimism for the next two years. These same companies noted risks, including market access barriers for foreign companies and regulatory uncertainty. Yet a record-high 71 percent plan to sell directly into the China market this year. The U.S. Commercial Service said “significant opportunities exist” for U.S. businesses in the Food and Beverage sector in China. There are additional opportunities in pharmaceuticals, renewable energy and environmental infrastructure.
Maybe China is not your cup of tea. The emerging markets of India, Indonesia and Vietnam may offer greater potential. Companies with a higher risk appetite can look to developing African nations like Angola and Nigeria where we are engaged in a fourth major project. Political unrest in the Middle East notwithstanding, there is economic opportunity in Egypt, Saudi Arabia, Dubai and Morocco.
Technological improvements in transportation and communication have lowered trade costs. So have reductions in certain trade barriers and tariffs here and abroad. There has never been a better time to take advantage of opportunities in what is clearly a shrinking world.
Look for opportunities with your eyes wide open. Identify and cultivate them with a strategy to minimize risk. Thoroughly investigate the market you are targeting, understand the country’s product standards, protect your intellectual property and make sure to check out all your potential business partners. Success will go to the small and medium businesses willing to take prudent risks for global growth.
(NOTE: you may need to be a subscriber to The St. Louis Business Journal online in order to view complete article text).« Previous Next »