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Overseas expansion

The human body doesn’t recognize items coated in carbon as foreign bodies. So, medical treatments that use such products often respond better to treatments because patients have fewer allergic reactions. 

The technology has been around since the 1970s, but St. Paul-based Carbon Medical Technologies has developed a line of products expanding said carbon coding into different areas, such as tissue markets used in breast biopsies.

During company meetings a couple years back, the company began exploring whether there might be an opportunity to diversify by expanding through selling those products overseas. But while the company had done some sales previously in Europe, none of its 25 employees was an expert on how to make a more focused move into exporting. 

“I knew that those sales (existing) were still pretty minor and that there was an opportunity to grow into more markets internationally,” says Stephanie Kent, president and CEO. “I wasn’t sure where to start.”

Foot in the door

She got a referral from a contact she met through Medical Alley Association who suggested the U.S. Commercial Service. When Kent followed through, she was assigned a commercial officer and completed a questionnaire about the company’s plans. The office ran a report on the markets where Carbon Medical might have the strongest potential to succeed, investigated trade and tariff data and provided information about the healthcare market in several countries. 

Kent and her team took that information and decided to focus on a list of 10 countries, ultimately choosing Japan and Singapore as its first choices due to their advanced healthcare systems and prevalence of people who pass away from cancer.

“That was just the start of the story,” Kent says. 

After picking her potential markets, she says her commercial services officer reached out to contacts at the U.S. embassies there. The embassy contacts set up meetings in those countries and facilitated research on those markets to see about competition and whether similar products exist there, and then helps pre-screen for legitimate distribution partners.

“They come back with very transparent feedback on whether or not they think you have an opportunity there,” Kent says. “They won’t hesitate to tell you ‘This is a really loaded market and I’m not sure you’re going to find a niche.’ This is really helpful feedback to get when you’re unsure what is in that market.”

“I don’t think I ever would have known that was an option for small businesses,” she says. “It’s been incredibly helpful. It’s so hard to know where to go and what to do and, the thought of moving into a new market, especially when there is a language barrier, can be really overwhelming.”

Stephanie Kent,
president and CEO
at Carbon Medical Technologies

Big benefit for small business

Through the process, Carbon Medical identified a potential distribution partner in Singapore. Company officials are in the process of negotiating a distribution agreement while, simultaneously, embarking on the six to 12 month process of registering its products, an area where its new partner can help.

A similar potential partnership in Japan fell through, so the company is still working on that market. But Kent is tremendously appreciative of the support she received in getting started with overseas growth. 

“It’s such a huge benefit to small companies who cannot afford huge headhunter types, organizations to go out and figure out who are potential partners for you,” Kent says. “Large companies can afford to go out and hire private organizations to help with these processes. I think they really, genuinely enjoy supporting the growth of small businesses that might not otherwise have any idea how to do this.”

Erik Hinkie, chief information officer at Holmes Corp., went through this same process several years ago and he still utilizes the various resources available through the U.S. Export Assistance Centers, which is a federal agency under the umbrella of the U.S. Department of Commerce.

Holmes Corp. designs, develops and distributes educational projects people use to prepare for professional certifications in several fields. It offers its services to both businesses and consumers and through distributors, which domestically would include colleges and universities.

Internationally, Holmes Corp. uses a network of international education distributors, typically consisting of companies offering certification preparation classes, in several markets. It also partners with affiliates of other partner professional associations.

The company began exporting to Canada in the early 1990s and overseas to markets like the Middle East starting in the late 2000s. It started with the opportunity to partner with a company based in Beirut, Lebanon. Hinkie says he prepared for a meeting with representatives by working with the government to get background checks to determine its legitimacy.

“That was a critical step,” he says. “Here we are in the Minneapolis-St. Paul area and we don’t have any business currently in the Middle East. And we’ve got this company that could be a big partner for us. Obviously, we were wanting to make sure that this is an upstanding business.”

Exporting has become the source of about 35 percent of the company’s revenue and, as such, it has gotten better at leveraging its own resources, including established relationships with international partners, to do some due diligence. But Hinkie also calls on folks at the Commercial Service, an agency of the Export Assistance Center, and the U.S. embassies in its export markets.

Due diligence and use of resources

Exporting, Hinkie acknowledges, is not without significant challenges. Regulatory requirements differ in every country. Documentation issues in many markets, such as India, are becoming increasingly rigorous. Some markets, including the European Union, have tax collection requirements. Companies looking to do business overseas need to study what those requirements will mean to them before proceeding.

But it’s also important to note that 95 percent of the world’s consumers are outside the United States and international business can provide huge growth opportunities. 

“It does require some due diligence, but there are great resources to get there,” he says, adding that it has been a great move for Holmes Corp.

“We just realized there’s a big opportunity for us to broaden our reach and diversity of revenue,” he says. “The U.S. market may be on a downturn, but we still have significant revenue coming in from international markets. So, it’s been a great way for us to diversify our revenue and insulate us from ups and downs in local markets.”

Santiago Dávila, commercial officer with the Minnesota U.S. Export Assistance Center, says his organization’s focus is on helping small- and medium-sized businesses succeed overseas.

“That’s where I enjoy my job the most is when we can take a small company that has a good product or good service and we can expand their international market presence,” he says. “We are kind of a knowledge broker, an information broker, and most of the time what we’re doing is we’re redirecting small businesses to information they need in what we call the ‘export journey.’”

A successful approach starts with being proactive. If approached by someone about an overseas opportunity, he says, look at organizations like the Minnesota Department of Employment and Economic Development (DEED), which offers grant programs and other financial and technical assistance to qualifying businesses that want to work in foreign markets. Conduct a self-assessment. Ask if your business is ready. Do you have the capacity? Is your web presence right? 

“A web presence is actually very important because if you have a good website, as a small business, just doing a few improvements or tweaks to it, you might be able to start processing credit payments overseas or you might be able to translate key pages into other languages to further your reach,” Dávila says.

After that, they should start developing a network of local resources that can help. That should include the U.S. Export Assistance Center, which can provide information about financial programs, connect small business owners with potential partners abroad that can help navigate rules and the sales process abroad and, in the case of embassies, provide background checks.

Businesses also could consider attending international trade shows to market their product or service and find potential customers or partners, Dávila adds. Build up a rolodex, he says, of partners who know your desired international markets and can make sure you are proceeding in a legitimate manner.

“The export process is extremely complicated,” Dávila says. “But if you follow the different steps, you should be safe. … We kind of act like a little bit like an information and knowledge broker and we always say to think of the Export Assistance Center as one tool in your toolbox.”

Private sector partner

Another option if you’d prefer to largely hand off your international market work, would be finding a private sector partner who would consider signing on as your agent.

Michel Locquegnies, president and owner of Mark-Tech International LLC, says anyone in business can export, though not everyone should. It takes an innovative product and some moxie.

“It has a lot to do with the ambition and the drive of the owner, but also the product itself,” he says. “I think that this country is pretty good at coming up with innovative, creative products, whether they’re brand new or just a better mousetrap.”

He’s used the Export Assistance Center many times himself over several decades. But after 30 years of working for specific companies, he started his own business about six years ago with the specific aim of helping small companies expand their sales, both domestically and internationally. He does so by offering up his own services in a hands-on way, often when it’s too early for those businesses to hire someone full-time. He works on setting up the right sales channels, building relationships and helping determine plans. He’ll attend and work the sales floor during trade shows. 

“We do very individualized services for clients,” he says. “I might not have their specific industry experience, but I know where to look for things and how to do things. I can do that sort of thing for a client, just do the research for them. I can also do it where I’ve done trade shows for clients in places like Europe or Japan and other places. Part of my service is to actually become the person or part of the sales team.”

Exporting, he says, typically starts with a single inquiry. The company might be able to figure out how to handle a single order, but as additional orders come in, they need to formalize the process. 

“You’ve got 95 percent of the rest of the world that could be a potential customer for you,” Locquegnies says.

There have been times where he’s warned companies off of becoming an exporter. But if there is some creativity to their product line and some willingness to put the time and effort in to doing it well, there are more opportunities than ever.

“The world,” he says, “has shrunk significantly in the last, say, 10 to 15 years compared to the way it was.” 

Santiago Dávila is commercial officer with the Minnesota U.S. Export Assistance Center and U.S. Commercial Service Minnesota: 612.348.1639; santiago.davila@trade.gov;
www.trade.com/minnesota-mineapolis; LinkedIn

Eric Hinkie is chief information officer at Holmes Corp: 651.905.2606; erikh@holmescorp.com; www.holmescorp.com.

Stephanie Kent is president and CEO of Carbon Medical Technologies: 651.653.8512; info@carbonmed.com;
www.carbonmed.com; Carbon Medical Technologies; Linked In

Michel Locquegnies is president of Mark-Tech International LLC: 612.836.3566; michel@mark-tech-intl.com;
www.mark-tech-intl.com