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As Firms Test Overseas Market, State Offices May Return

When Tarzana business owner Milt Morris went to France late last year for a building products trade show, he came away with what he called a priceless lesson. Getting out of the office and talking to more than 200 people who came by the Fabric Wallmount Systems booth at the Salon International de la Construction was a valuable way to make overseas contacts, Morris said. “Once you demonstrate your product to someone, even if there is a language barrier, they know just what it is,” Morris said. With its acoustic treatment products being used in projects in Japan and New Zealand and interest expressed in France and South Africa, Fabric Wallmount Systems is among the companies in the Los Angeles area that helps contribute to a steady rise in exports. A recent study by the World Trade Center Association of Los Angeles and Long Beach said there were $78.4 billion in exports in 2005 leaving the Los Angeles area. That was a 10 percent increase from 2004 exports. Just how companies go about attracting that business in foreign markets is not a simple process although business owners such as Morris and others agree that personal contact with foreign partners is essential. “They eye does it; the handshake does it,” said Peter Antoniou, a consultant with Pomegranate International in Toluca Lake. “Constant communication from here as well does it.” Antoniou was a speaker last month at an event sponsored by the Valley International Trade Association, an organization operated by the Economic Alliance of the San Fernando Valley to provide guidance and assistance to doing business in foreign markets. International trade is just one of three areas the Economic Alliance assists business, said its President Bruce Ackerman, with the others being guidance on better ways to operate, and assistance with regulatory and legislative processes. “We look at international trade not as a separate thing but as an economic development tool to expand and grow a business,” Ackerman said. Meeting with visiting foreign delegations and assistance from the U.S. Department of Commerce were also mentioned as ways companies can gain a foothold overseas. Using existing clients Depending on the industry, existing clients may also provide entry into foreign markets. “A lot of our clients are international companies by nature and they might have us do an install in different locations around the world,” said Jim Gaynor, vice president of business development with Xytech Systems Corp., a Burbank software provider serving the entertainment industry. Xytech has been approached by the German government to open an office there with the assumption that local people will be hired to help ease unemployment. “That’s a model we have not adopted because there is not a lot of business for us in Germany,” Gaynor said. Missing in the overseas trade picture is a strong presence by the state. That void was created in 2003 when the legislature closed down its 12 overseas trade offices and the California Technology, Trade and Commerce Agency following media reports the agency took undeserved credit for increases in exports and investment and claims of nonexistent business deals. Now there is pending legislation before lawmakers in Sacramento to bring back some trade offices, although with much stricter oversight. There are two pending bills before the state Senate that would allow for the state to open trade offices in South Africa and Seoul with the use of private funds. An Assembly bill that is also pending seeks to have the Business, Transportation and Housing Agency develop a strategy on international trade and re-open overseas trade offices on condition that certain requirements are met such as a business plan for each office and naming of a manager to supervise the offices. “I would be interested in that if only because it is another direction for me to explore,” Morris said. Tim Newman, a senior trade investment consultant with the Los Angeles office of the Korea Trade-Investment Promotion Agency, said that state trade offices would be most helpful to smaller and medium sized companies that don’t have the resources of larger companies. Overseas challenges The challenges that U.S. companies face in Korea are primarily getting the lay of the land, finding distributors and partners and getting the access to markets, Newman said. In China, similar challenges face U.S. companies, Antoniou said, adding that if certain advice is followed, the way into the world’s most populous country can be eased. “Starting slow is helpful,” Antoniou continued. “Take six months, a year, a year and a half to find out what the real meaning is of what you want to achieve.” And then there is the Internet factor, which shrinks world boundaries and can make for easier access to information on foreign opportunities. But use of the Internet may not always necessarily be a two-way street. KOTRA’s Newman explained that it is easier for Korean companies to start from scratch in the U.S. because information on the Internet is so transparent. “You can get a lot of information on (American) markets and companies,” Newman said “The reverse is probably not true. The depth of coverage of potential business partners is not going to be the same.”

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