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BUSINESS
WITHOUT
BORDERS
LOCAL BUSINESS
LEADERS OVERCOME
WORLDWIDE CHALLENGES.
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By Bob Schaper
Relaxing in his office at Sunnen Products Co., David R. Arthur,
vice president for sales and product development, remembers the
scene well.
“My first visit to China was in 1993,” he says. “I stayed in a very
nice Western hotel near Shanghai. They took me out to look at a
piece of property, an empty field with a pond on it. Everywhere
I looked there was nothing but fields. They told me, ‘That’s where
our joint venture is going to be.’”
DAVID
R. ARTHUR
vice president for sales
and product development,
Sunnen Products Co. |
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Less than 10 years later, everything has changed. Sunnen, which
manufactures precision abrasive bore sizing and finishing products,
has a joint venture facility in the middle of a thriving metropolis.
“Now you drive down a double-lane highway, past the largest airport
in Asia,” Arthur says. “A high-tech monorail runs past the back
of our property at 300 kilometers per hour. It’s like looking at
New York City. They went from a bicycle to a Ferrari.”
The unimaginably shifting dynamics Arthur describes is just one
of the many challenges facing St. Louis business leaders as they
explore and capture overseas markets.
“We impress in our meetings here that one in three jobs in this
company is because of international business,” Arthur explains.
“That’s where our growth is.”
With two wholly owned subsidiaries, two joint venture operations
and a worldwide network of independent distributors spread throughout
50 countries, Arthur’s job is to integrate the entire organization.
“We try to keep them somewhat autonomous,” he says, speaking of
the 120 or so Sunnen employees based overseas. “But from a financial
standpoint, they’re starting to understand the rigors and requirements
of rolling everything back into an American system.”
Steve Perkinson, the Asia business manager for Sunnen, says channeling
the energies of the Chinese workforce can be a major challenge.
“The Chinese are some of the hardest workers I’ve ever seen,” says
Perkinson, who once lived in China for two years. “But they need
strong leadership.”
DAVE
GRAY
CEO and founder,
XPlane |
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Dave Gray, CEO and founder of XPlane, agrees that local management
is essential for any overseas divisions. His company, which produces
comic book-style communications products for businesses, has launched
a joint venture in Cape Town, South Africa.
“You’ve got to have strong, on the ground management overseas,”
Gray says. “That’s imperative. You have to have someone who’s very
self-motivated. You have to have a compensation system that keeps
them motivated, one that’s tied to profitability.”
The advantage to an overseas operation, Gray says, is that it counters
the strong American dollar.
“A major issue for us is the cost of doing business in the U.S.,”
Gray says. “It raises the cost of our product overseas, often prohibitively.
The strength of the dollar has been the biggest barrier to developing
an overseas customer base.”
With a handful of employees, the Cape Town office handles all of
XPlane’s international customers—10 percent of its overall business
and growing.
“We’re also exploring Asia,” Gray says. “Either by acquiring a small
business and working through that office, or potentially setting
up another joint venture.”
Combined with the Cape Town and St. Louis time zones, a facility
in Asia—most likely in Singapore—would give the company a 24-hour-a-day
operation. It also would expand the company’s corporate culture.
“The more cultures we can cover, the stronger we are,” Gray says.
John Zisser, president of Zisser Tire and Wheel, is another St.
Louis business owner who does considerable business overseas. Like
everyone else, Zisser’s business is heavily influenced by monetary
fluctuations.
“A lot of our business depends on the valuation of the dollar,”
Zisser says. “Since the dollar has been strong the last two years,
the export market has been kind of limited for us.”
On the other hand, a strong dollar favors importing tires and selling
them domestically.
“Our Chinese imports have increased,” Zisser says. “Taiwan has increased.
Even though the dollar has gotten weaker in the last few months,
the European imports have not slowed down significantly.”
Zisser estimates that in October, 30 percent of his wholesale business
was tied to international trade. Often he meets his suppliers through
face-to-face networking at European auto shows.
“We were at a show in Essen, Germany, and a guy stopped by and said
he really wanted to buy tires,” Zisser says. “But we said at this
stage of the game you’re probably better off selling them to us.”
At Sunnen, Arthur says modern information technology has placed
“incredible pressure” on traditional distribution systems.
“Today, everyone knows the price at the point of manufacture,” Arthur
says. “When I sell a product internationally, there’s a discount
associated with it. And there’s a cost of distribution in those
territories and those costs can be extreme.”
For that reason, Arthur favors distribution systems that are closely
tied in with the local marketplace. Adaptability, he says, is also
key to international business success.
“One of my philosophies is don’t try to impart or dictate the American
way,” says Arthur, a naturalized citizen who was born and raised
in Great Britain and lived in South Africa for 21 years. “Try to
find common ground that will allow you to be successful, both in
the product you manufacture and the product you market.”
And always, he adds, be sensitive to other cultures. “Their environments
have been there a lot longer than ours,” he says. “We cannot expect
the world to pander to our ideas.”
Bob Schaper is a freelance writer based in St. Louis.
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