Note: This is a summary of an event releasing Global Atlanta’s Export Stories 2014 special report. Download the PDF here.
When Atlanta-based consultancy Newfields was pulled by oil giant Shell into Brazil’s vast market for environmental remediation services, CEO Billy Hall says his firm was plenty busy.
The problem is that even with all the client work, Newfields was “losing money hand over fist” in the complex country.
That’s when Mr. Hall understood that he needed a new approach to staffing the local operation. Not only did his managers need engineering credibility and expertise, but also a keen sense of cross-cultural understanding.
For Americans, the “potency of the language barrier is easily misunderstood” in Brazil, even for those who have mastered some Portuguese, said Mr. Hall, who has studied the language for 10 years and still finds himself bewildered in business meetings.
“They may have learned a language in college, but there’s a huge difference in being able to speak a language and just knowing some words,” he said at Global Atlanta’s Export Stories event Oct. 9.
To address the issue, he looked to what he now perceives as one of the greatest untapped resources for American firms looking abroad: foreign students here.
“We didn’t have to screen these students, because they’re all coming from federal universities in Brazil, which is top of the top. There’s 100 people applying for every position, so a Brazilian student here is going to be the cream of the cream,” Mr. Hall said.
Recent Brazilian graduates from the University of Georgia helped retool his operations in the country and – after spending years here – now have the understanding needed to apply American standards there. Three former interns turned permanent employees, the oldest being 32, are helping run the firm’s four offices in the country.
Mr. Hall was one of three exporters recounting their experiences at Global Atlanta’s forum on Export Stories, an event highlighting a special report on Georgia companies selling goods and services abroad.
The language barrier was just one factor in AdEdge Technologies’ failed foray in China, which sent the company looking back toward the Western Hemisphere.
AdEdge still needs multilingual engineers and is also working with foreign students, but countries like Chile and Canada have proven easier to crack for the Buford-based provider of filtration systems that remove arsenic from water in mining, industrial and municipal settings.
One key to entering new markets, Mr. Cavagnaro said, is following larger American clients, who will often pay at home for work done overseas.
“It’s a different level of competition but you gain a lot more respect,” he said of competing globally. “Some of our customers in the U.S. – they’re pulling us now into international markets. It’s a great mechanism to use,” he said.
One of Mr. Cavagnaro’s first export deals involved quickly supplying a filtration system for a large mine run by a North Americanfirm in Indonesia, where the local project manager had been jailed for returning arsenic-laced water to the local water system.
That performance under pressure paved the way for less dramatic deals closer to home. Since diversifying away from the U.S. as stimulus funds dried up in 2010, AdEdge has built up exports to the point that they now account for nearly half its revenues.
“If it wasn’t for the export market, we may not even be a company any longer,” Mr. Cavagnaro said at the event.
Brickstream, which provides cameras, communications devices and software programs that help retailers track shoppers’ behavior in stores and malls, has also seen its international business complement its domestic efforts.
“We’re the eyes in the sky tracking you while you’re shopping – anonymously,” said Steve Hornyak, vice president in charge of international sales, which make up 80 percent of the company’s business.
Not only have customers like Gap Stores Inc. taken Brickstream to new markets, but the company’s strength abroad has positioned it well in a U.S. retail environment that is just now catching up to other countries in customer analytics.
Russia and China are among the most promising of the 50 countries where Brickstream does business. Only the U.S. and United Kingdom are handled directly, while “channel partners”, or distributors, help the company make inroads in the tougher jurisdictions.
“Russia’s been huge for us. China has been huge. It’s our fastest growing area. They’re building malls like you wouldn’t believe over there,” and unlike the U.S., landlords often charge rent based on the sales or foot traffic in their stores, he said.
One Russian mall represents about $3 million in Brickstream sales, about $500,000 of which will go directly to the company. There’s only one problem: Conflict in the region has made it a “pain” to do business there, and tariffs push the product outside the range of affordability. Beyond that, factoring companies won’t even provide credit insurance in Russia.
To cope, Brickstream has played on its unique role as a provider of both software and hardware. Russian partners buy the devices at cost in the U.S. and take them back to their country, where the software is downloaded for a fee. That’s where Brickstream makes its margin.
“Essentially they’re assembling the product over there because the product without the software is just a dumb box. Put the software on it, it becomes an appliance,” Mr. Hornyak said.
Especially for small companies, imaging building such elaborate supply chains is tough, but Gail Morris, managing director of Georgia’s Canada trade office, said using the right resources can help mitigate risk.
Ms. Morris helped AdEdge attend a trade show and works closely with smaller firms across a variety of sectors. Ms. Morris recounted one story of a Georgia-based craft ice cream company that sought sales in Canada. After an initial visit to a food show, the company was able to find a dairy packer that helped distribute the products and overcome trade barriers.
That’s just one example of how the department can help, Ms. Morris said.
“The Georgia Department of Economic Development is just at your disposal once you decide that you’d like to explore another market,” she said. “The main goal is job creation. Once you start exporting you’re going to increase your capacity, you’re going to hire more people, and that bottom line is where I fit in.”
Georgia has trade and investment offices in 11 countries.
