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China vs. the United States

A Popularity Contest in the Global Court of Public Opinion

Economic Power

The two superpowers went head-to-head in a worldwide survey, recently published by the Pew Research Center. Comparisons in the survey included perceptions of global image, world power, ways of doing business, popular culture, political views, individual rights, science and military threat, among others.

Based on the survey, the Pew Report identified the following general global opinions:*

Strong Ties with US or China

China’s economic power is on the rise, and many think it will eventually supplant the United States as the world’s dominant superpower.

  • Overall, the U.S. enjoys a stronger global image than China.
  • Globally, people are more likely to consider the U.S. a partner to their country than to see China in this way, although relatively few think of either nation as an enemy.
  • The military power of both nations worries many.
  • China’s growing military strength is viewed with trepidation in neighboring Japan, South Korea, Australia and the Philippines.
  • Meanwhile, the Obama administration’s use of drone strikes faces broad opposition – half or more in 31 of 39 countries disapprove of U.S. drone attacks against extremist groups.
  • Across the nations surveyed, a median of 70% say the American government respects the personal freedoms of its people. In contrast, a median of only 36% say this about China.

US consider your interestsChina consider your interests

Not surprisingly, attitudes towards the U.S. and China varied significantly by region:

  • In Europe, the U.S. gets mostly positive ratings. President Barack Obama has been consistently popular among Europeans, and since he took office in 2009, Obama’s popularity has given America’s image a significant boost in the region.
  • European perceptions of China are much less positive – among the eight European Union nations polled, Greece is the only one in which a majority expresses a favorable view of China.
  • Moreover, ratings for China have declined significantly over the last two years in a number of EU countries, including Britain, France, Poland and Spain.
  • America’s image is the most negative in parts of the Muslim world, especially Pakistan (11% favorable), Jordan (14%), Egypt (16%), and the Palestinian territories (16%). Only 21% of Turks see the U.S. positively, although this is actually a slight improvement from last year’s 15%.
  • But the Muslim world is hardly monolithic, and America receives largely positive ratings in predominantly Muslim nations such as Senegal in West Africa and Indonesia and Malaysia in Southeast Asia.
  • Elsewhere in the Asia/Pacific region, the U.S. receives particularly favorable reviews in the Philippines, South Korea and Japan.
  • Chinese investment in Latin America and sub-Saharan Africa has increased significantly over the past decade, and views toward China are largely positive in both regions.
  • Attitudes toward the U.S. also tend to be favorable, and overall the U.S. receives slightly higher ratings than China in in Latin America and sub-Saharan Africa.

The survey also finds rising tensions between the American and Chinese publics:

  • Just 37% of Americans express a positive view of China, down from 51% two years ago.
  • Similarly, ratings for the U.S. have plummeted in China – in a 2010 poll conducted a few months after a visit to China by President Obama, 58% had a favorable impression of the U.S., compared with 40% today.
  • Young people in both countries express more positive attitudes about the other, a finding that is part of a broader pattern – in many countries, both the U.S. and China receive more favorable marks from people under age 30.
*Note: Survey conclusions above are quoted verbatim to avoid external  interpretation of the results.

For more details, the full 132-page report may be downloaded from the Pew Research Center at the following link:

http://www.pewglobal.org/files/2013/07/Pew-Research-Global-Attitudes-Project-Balance-of-Power-Report-FINAL-July-18-2013.pdf

The report above is shared courtesy of Ray Hays, Member of Arizona District Export Council.

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Is America really terrible at globalization?

I disagree with this post, but I feel that it merits discussion. What are your opinions?

Re-blogged from qz.com courtesy of Ray Hays, Member of Arizona District Export Council.

“The Big Mac Mirage”: America is actually terrible at globalization

By Tim Fernholz — March 5, 2013

Shockingly, this is about as good as American globalization gets. AP Photo/Ng Han Guan

Coke is so prevalent around the world that non-profits look to its supply chain for help on distributing aid. McDonalds, in 122 different countries, is so widespread that there’s a foreign relations theory that no two countries hosting the burger franchise will go to war, although the strong version of that theory is well dead. And Wal-Mart is the world’s third largest global employer, after the American and Chinese militaries, respectively.

The US must be great at globalization, right?

Unfortunately, no, according to Bhaskar Chakravorti, the director of Tufts’ University’s Institute for Business in the Global Context. He says all these examples represent “the myth of American global market power”—they are outliers that disguise the real failing of American multinationals to succeed around the world, and especially in fast-growing emerging markets. Despite what you might hear, he says “we are extremely under globalized.” Here’s an excerpt from a forthcoming paper he’s written with fellow economist Gita Rao (emphasis mine):

In 2010, emerging markets represented 36% of global GDP; these markets already account for the majority of the world’s oil and steel consumption, 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions. With two-thirds of global growth coming from these markets, in a decade they will account for the majority of the world’s economic value. Yet U.S. companies derived less than 10% of their overall revenues from emerging markets: about as little as 7%, according to HSBC estimates for 2010. The 100 largest companies from the developed world overall made 17% of their revenues from emerging markets, according to a McKinsey report; in other words, the U.S. lags not only emerging market firms in capturing share in emerging markets, but it lags the developed world overall. By considering the difference between the “absolute potential” represented by the 36% number or, to take a much more conservative benchmark, the global peer average of 17% and the U.S. share of 7%, we derive two measures of the gap – and the degree to which U.S. industry has not participated in global growth.

There are several reasons the US is being held back. Some are the intrinsic challenges of doing business abroad: Besides language and cultural barriers, there are underdeveloped supply chains, incomplete capital markets, corruption, etc. But European companies earn 25% of their revenues from emerging markets, so these must be surmountable. What’s America’s problem?

America doesn’t have a legacy of colonization. Despite a hefty history of foreign interference, the US didn’t set up the same deep linkages that Spanish and Portuguese companies did in South America or European countries have in Africa or South Asia. Chakravorti, who was a McKinsey executive for many years, recalls European competitors in Africa asking, ”What are you doing in Africa? Africa belongs to us.” Meanwhile, he says, ”the executives I was working with had no understanding of the socio-cultural context of the continent.”

America is actually pretty insular. Because it’s a big country, and has had many decades of consumer-driven growth, US businesses haven’t necessarily had to look over the horizon for new opportunities. After the 9/11 attacks, Chakravorti says, things got even worse, and most businesses stayed home. It doesn’t help that less than 20% of Americans speak a language other than English, while 56% of Europeans speak a second language.

American business is all about standardization. Companies get economies of scale from selling the same product, but many emerging markets are stratified and require different products and price-points in the same country; while American executives want a  ”Brazil strategy,” what they really need is a strategy for Sao Paulo state and another for more rural areas.

Chakravorti argues that American companies do have what it takes to surmount these challenges, and they’ll need to if they want to bring more growth back to the US.

His strategy starts with a focus on sectors where America can compete abroad but isn’t taking full advantage of the opportunities, particularly in consumer products and large-scale services such as education, elder- and child-care. American companies need to start thinking about tailoring their strategies to demand abroad—particularly at the bottom of the pyramid— but the market can’t do it alone: The government needs to work more closely to tailor its foreign policy to America’s commercial needs while opening education to a more international view.

“That gap has been closed completely in China, because the most powerful companies are state-owned,” Chakravorti says. “We are still talking about the Asia pivot as though it is something dramatic and new, while China has been pivoting for a while.”

Original article link: http://qz.com/59506

How does the U.S. Federal Export Promotion Stack Up to Other Exporting Countries?

Re-blogged from the National District Export Council website www.districtexportcouncil.com.

Export Expenditures

On February 28, 2013, Daniel Ogden, Chairman of the National District Export Council,  testified before Congress during a hearing of the House Small Business Trade Subcommittee on the development by the 113th Congress of a small business trade agenda.

In the Testimony, Daniel Ogden provides a comparison of U.S. federal export assistance programs with government-funded export assistance in other large exporting countries. Highlights include:

  1. The UK’s Passport to Export program for SMEs provides free one-on-one mentoring, subsidized training, and a subsidized visit to an overseas market.
  2. Germany provides support to firms exhibiting in trade fairs abroad.  60 percent of all German firms participate in trade fairs; two thirds of which exhibit abroad.
  3. France’s Trade Missions Overseas program provides up to $3,750 to SMEs and includes French pavilions at trade fairs, products and displays, and other t trade promotions.
  4. The Netherlands and Australia have grant programs that pay (up to $110,000 in the Netherlands) for new exporters’ market development costs.

Ogden’s testimony also includes several useful facts on US export assistance including:

  • An overview of the District Export Councils and their purpose
  • Opportunities and challenges for U.S. small business exporters
  • Current organization and proposed reorganizations in federal trade promotions
  • National District Export Council’s position and recommendations to Congress on federal trade promotion

Click here for a PDF copy of the Testimony Transcript, or see the Testimony video below. (Testimony starts at time marker 8:55.)

For more information on the National District Export Council, please refer to their website at http://www.districtexportcouncil.com.

Re-blogged courtesy of Ray Hays, Member of the Arizona District Export Council

$30 Million in Grants for SME Exporters of U.S. Products and Services

In fiscal year 2011, SBA awarded 52 grants totaling $30 million

money globe

By Ray Hays, International Consultant and Member of the Arizona District Export Council. 

Re-blogging of this post is permitted and encouraged.

As many U.S. small and medium-sized enterprises (SMEs) compete for revenue from new markets, they often overlook the global picture: Promote your products and services internationally. While it sounds daunting, it’s often a simple matter of funding and international expertise to sell your products and services into global markets.

What if your company had the opportunity to leverage international business experts from the public and private sector to market your product internationally? At no cost?

Welcome to the best kept public secret in international business.

The Small Business Administration (SBA) offers grants through the State Trade and Export Promotion Grant (STEP) program. Over the last year, $30 million in export promotion grants were awarded through the SBA, and the same amounts are expected for 2013 and 2014

The rules and amounts of the grants will vary by state, but in many cases, U.S. exporters of products and services are eligible for thousands of dollars in export promotion grants.

Depending on the state, these grants may be applied toward the travel and fees of several export promotion opportunities:

  • Trade Missions – These are usually managed through the individual state trade agencies or through federal agencies, such as the U.S. Commercial Service. These trade missions typically gather attendees from a sector to participate in a multi-country promotional visit, supported by the the Trade Representatives at U.S. Embassies in those countries.
  • Trade Shows and Fairs – Similar to the trade missions, your state and federal agencies may attend a industry-specific Trade Show, with U.S. small businesses representatives.
  • Individual Company Promotion Events – Through the U.S. Commercial Service and other organizations, U.S. businesses have the opportunity to have a custom program that helps the American company to identify buyers, distributors, licensees or other partners in key international markets. These programs (such as the USCS Gold Key Program) typically leverage the resources of the U.S. embassies and consulates in the international markets.
  • Privately Contracted Export Marketing and Promotion — A range of U.S. companies work closely with the USCS and other agencies to provide contracted export assistance to SMEs. Often these private contractors supplement existing U.S. government programs, providing small businesses with the management guidance and experience to maximize their success in their export marketing efforts.

As a (very rough) example, a Trade Show may require a travel budget of $5,000 and exhibition costs of $5,000. Some U.S. companies can qualify for reimbursement of 75% or more of the travel cost and 100% of the exhibition costs through the STEP Grant program. This would bring the cost of a $10K trade show into the range of $1,250… Other export promotion activities may be covered in-full.

Of course, a U.S. company should not strike out blindly into the international marketplace. Your company will need to identify target markets, evaluate risk/returns based on the country regulations and demographics, build a model for international expansion and finally, execute on this plan.

If you do not have the international expertise in-house, you can work with a U.S. contractor — a consultant or management firm — to plan and deploy the export promotion strategy.

Whether your company builds an international team in-house or contracts international management specialists, this would be a good time to take action. The second year of SBA STEP Grants are already awarded, and the third (and final) year of STEP Grants are awaiting proposals. Go get your piece of the international pie.

In addition to these grants, export financing programs for SMEs are available through SBA and Overseas Private Investment Corporation (OPIC).

For resources, please contact your regional District Export Council (Google it for your state), or the nearest U.S. Commercial Service Export Assistance Center.

Having personally participated in over 40 international events and trade missions through the USCS, I highly recommend using their services. I am currently a Member of the District Export Council in my home state of Arizona, which works closely with the USCS on export promotion efforts.

Regardless of your location, please feel free to contact me if you would like more information on these programs, and I would be happy to point you to the appropriate export assistance resource in your local market.

This article is based on current knowledge to-date of STEP Grants based on various government websites. The program details may vary by state and rules are often updated. For the latest information please click on this link for the SBA website page on the STEP Grants.

Please re-blog or re-post this article to your social media groups and professional contacts interested in international business.

Copyright Ray Hays, Envoy Investments LLC. All rights reserved. Re-blogging of this post is permitted. Referrals to http://www.rayhays.com are appreciated.

Ray Hays owns Envoy Consulting, which provides international business development guidance for U.S. product and service exporters. Ray is a Member of the Arizona District Export Council.  Email: ray@rayhays.com, cell: 714-797-3386, Skype: Ray_Hays.

U.S. Green Exporters Get Support from Two Federal Agencies

windmillDepartment of Commerce Working with EPA on Export Promotion

December 14, 2012

Todd DeLelle is an international trade specialist in the International Trade Administration’s Office of Energy and Environmental Industries.

Commerce Department and the Environmental Protection Agency (EPA) officials will be participating in a series of collaborative activities to promote exports of U.S. environmental solutions during POWER-GEN International, the industry leader in providing comprehensive coverage of the trends, technologies and issues facing the generation sector.  At this year’s show, EPA participation has been folded into the International Buyer Program, a joint U.S. government-industry effort designed to stimulate U.S. exports by promoting U.S. industry exhibitors to foreign markets. Department of Commerce and EPA representatives are meeting with power industry delegates from international markets and U.S. companies at the show’s Global Business Center.

The Department of Commerce and EPA continue to work together to promote U.S. technology exports by integrating EPA’s technical analysis into Commerce’s export promotion and trade policy activities. The two agencies lead The Environmental Export Initiative – an effort to enhance interagency efforts to support U.S. exports of technologies relevant to air emissions, water treatment, and solid waste management.  The Initiative was publicly announced on May 14, 2012 at American University by then-Commerce Secretary Bryson, EPA Administrator Jackson, U.S. Trade Representative Kirk, and Secretary of Agriculture Vilsak.  In 2010, the United States  industry that supplies these goods and services generated an estimated $312 billion in revenue, employed 1.7 million Americans, and experienced a trade surplus of approximately $13 billion, according to Environmental Business International. Its export activities underpin the advancement of environmental quality and human health in other parts of the world, while supporting increased jobs and economic activity in the United States.

While at the show, Commerce and EPA officials will be touting the recently developed Environmental Solutions Exporter Portal. The portal represents a on-line resource for companies interested in U.S. government services and products that facilitate exports. It provides a direct line to U.S. trade and environmental protection specialists and includes information on foreign environmental markets, export facilitation services, export finance products, trade promotion events, and policy initiatives that support the U.S. technology exports.

The Portal also links EPA analysis of key global environmental issues with U.S. solutions providers in the U.S. Environmental Solutions Toolkit.  Currently, the Toolkit includes modules on groundwater remediation,  nutrient removal in municipal water treatment, emissions control from large marine diesel engines, and mercury control from power plant emissions.  The addition of supplemental air pollution control areas is currently underway, including those relevant to: nitrogen oxides emissions control from power plants, air issues relevant to the oil and gas industry, and emissions from non-road diesel engines.

For more information, including how companies can participate, please visit the portal at  www.export.gov/envirotech or www.epa.gov/international/exports.

Article Re-blogged from International Trade Administration, courtesy of Ray Hays, Member – Arizona District Export Council.

Blog: www.rayhays.com

American SME Merchandise Exports Grow 24% in 2010

Article from ITA Blog, re-blogged courtesy of Ray Hays – Member Arizona District Export Council

Brief Review of U.S. SME Trading Companies in 2010

December 6, 2012

David Moore is an economist in the Office of Trade and Industry Information within the International Trade Administration.

This week the International Trade Administration’s Office of Trade and Industry Information released an annual update to its website for the U.S. Commerce Department’s Exporter Database (EDB) for 2010. This joint project with the U.S. Census Bureau’s Foreign Trade Division is the cornerstone of ITA’s Trade Data Enhancement Initiative, the goal of which is to develop and disseminate improved statistical information on U.S. international trade and its role in the U.S. economy. Additional information on the EDB can be obtained by viewing the U.S. Census Bureau’s Profile of U.S. Exporting Companies, 2009-2010.

In 2010, more than 293,000 U.S. companies exported goods, up 6.0 percent from the revised 2009 estimate of 276,600. In 2010, nearly 98 percent of U.S. exporters (286,661) were small or medium-sized companies (SMEs*) with fewer than 500 employees, a 6.1 percent increase over 2009. Further, the known merchandise export value of SMEs rose to $383.4 billion in 2010, up 24.1 percent from 2009 and this accounted for 33.7 percent of the $1,138 billion total known merchandise export value of all companies.

Known Merchandise Export Value of Trading Companies, 2009 and 2010 in U.S. dollars. All identified companies $940,400,000 in 2009 and $1,137,600,000. SME's $308,900,000 in 2009 and $383,400,000 in 2010. Companies with 500 or more employees $631,500,000 in 2009 and $754,200,000 in 2010.

SME Exports at the State Level

SME exports are concentrated in the largest exporting states, with the top four exporting more than $30 billion from SMEs.  California had the largest value of SME exports ($68.1 billion) in 2010, followed by Texas ($51.2 billion), New York ($34.4 billion), and Florida ($33.6 billion).

SME export value at the state level in U.S. dollars. California: $68,087,967,616, Texas: $51,200,446,724, New York: $34,394,384,363, Florida: $33,557,306,907, New Jersey: $15,122,026,840, Illinois: $14,445,622,703, Pennsylvania: $12,519,691,700, Washington: $11,017,998,632, Michigan: $10,506,510,110, Massachusetts: $10,051,122,079, Ohio: $9,321,029,844, Louisiana: $8,806,538,601, Georgia: $8,448,288,399, Puerto Rico: $7,051,941,052, Minnesota: $5,740,296,134, Oregon: $5,649,311,876, North Carolina: $5,599,660,584, Wisconsin: $5,531,778,198, Connecticut: $5,372,732,418, Indiana: $4,974,567,439, Virginia: $4,139,241,848, Tennessee: $4,023,677,667, Missouri: $3,775,289,203, Arizona: $3,578,474,711, Kentucky: $3,484,101,860, Kansas: $3,258,410,258, Maryland: $2,819,330,154, Colorado: $2,671,823,591, South Carolina: $2,632,285,300, Utah: $2,584,426,888, Alabama: $2,561,215,935, New Hampshire: $1,776,065,210, Iowa: $1,745,671,009, Oklahoma: $1,622,778,640, Nebraska: $1,409,866,973, Mississippi: $1,407,996,974, Nevada: $1,210,149,129, West Virginia: $1,144,895,941, Montana: $1,059,154,716, Rhode Island: $1,054,668,411, Idaho: $1,031,234,308, Maine: $992,455,877, Arkansas: $898,080,029, Delaware: $775,404,661, District Of Columbia: $688,447,135, New Mexico: $680,508,632, North Dakota: $562,363,709, South Dakota: $443,896,862, Alaska: $394,898,004, Hawaii: $161,527,055, Wyoming: $141,245,194, Vermont: No data available for Vermont in 2010.

Note: SME values for Vermont are unavailable for 2010.

However, SME exporters represent a large share of the value of U.S. exports in both small and large states.  79 percent of Montana’s exports in 2010 were from SMEs, the highest share in the nation.  Florida, Rhode Island, Wyoming, and New York all had an SME share of exports over 50% as well.

Selected state SME share of exports: Montana: 79%, Florida: 68%, Rhode Island: 63%,   Wyoming: 56%, New York: 55%.

SME Exporters at the Metropolitan Level

The New York metro area had the largest number of known SME exporters at 32,300, followed closely by Los Angles (32,100), Miami (26,300), Chicago (13,300), and Houston (10,500).  Further world destination break-outs by the European Union-27, NAFTA, ASEAN, and DR-CAFTA are shown below. Other country groupings such as APEC and OPEC can also be accessed using the EDB website.

Number of Known SME Exporting Companies to Select World Regions by Metro. New York Metro: 11,645 to the EU, 10,540 to NAFTA, 2,370 to DR-CAFTA, and 3,436 to ASEAN; Los Angeles Metro: 8,938 to the EU, 12,242 to NAFTA, 1,947 to DR-CAFTA, and 4,548 to ASEAN; Miami Metro: 4,194 to the EU, 3,985 to NAFTA, 5,730 to DR-CAFTA, and 1,234 to ASEAN; Chicago Metro: 4,184 to the EU, 6,639 to NAFTA, 910 to DR-CAFTA, and 1,614 to ASEAN; Houston Metro: 2,640 to the EU, 3,653 to NAFTA, 649 to DR-CAFTA, and 1,740 to ASEAN.

SME Exporters at the Five-Digit Zip Code Level

Of the 25,754 zip-codes in the U.S. reporting at least one SME exporter, nine of these zip-codes reported one thousand or more SME exporters. Miami had the largest concentration in five zip codes (33166, 33172, 33178, 33122, 33126), followed by New York in three zip codes (10036, 10018 and 10001) and Los Angeles in one (90021).  Further, 673 zip-codes reported between 100 – 923 known SME exporters, while the remaining balance of zip codes reported between 1 and 99.

SME Exporters by zip code. In Miami, zip code 33166 has 4,023 SME exporters, zip code   33172 has 2,317 SME exporters, zip code 33178 has 2,033 SME exporters, zip code 33122   has 1,573 SME exporters and zip code 33126 has 1,203 SME exporters. In New York, zip   code 10036 has 1,625 SME exporters, zip code 10036 has 1,354 SME exporters, and zip code   10001 has 1,273 SME exporters. In Los Angeles, zip code 90021 has 1,109 SME exporters.

In closing, the EDB offers a whole host of information on U.S. exporters, not only by company size and type (manufacturers, wholesalers and other non-manufacturing firms) but also by 3 and 4 digit NAICS product codes, and export country destination, etc. This is just a small slice of EDB data available on our website, but we encourage U.S. companies and professionals working in global trade, policy, cooperation and promotion to utilize this snap-shot of 2010 as they continue to map out their strategies for export success in the future.

*SMEs are defined as firms that have fewer than 500 employees. All figures in this overview include only identifiable or “known” exports, i.e., exports that can be linked to individual companies using information on U.S. export declarations.

Exporting to Vietnam – Quick Tips for Smooth Sailing…

Seeking untapped export opportunities? Then take a look at Vietnam.

From the U.S. National Export Initiative (NEI)

Vietnam is a true emerging market, offering ground floor and growing opportunities for U.S. exporters and investors. Vietnam’s economic growth rate has been among the highest in the world, expanding at an average of 7.2 percent per year from 2001 to 2010.  Since the 2001 Bilateral Trade Agreement, trade between the U.S. and Vietnam has increased over six-fold, from $2.9 billion in 2002 to $18.6 billion in 2010.  In 2010, U.S. exports to Vietnam grew by 19.8 percent to $3.7 billion.

For more information about Vietnam:

Brought to you by Ray Hays, Member Arizona District Export Council.

Ray Hays serves as an international consultant for businesses that wish to enter new global markets or expand current operations abroad.

Click here for more information on consulting services of Ray Hays.

The Global Competitiveness Report 2011-2012

For those of you doing international business, this is a must-read.

The U.S. falls to 5th place, after Switzerland, Singapore, Sweden and Finland.

Enjoy… and please let us know your thoughts!

Click here: The Global Competitiveness Report 2011-2012

Obama’s American Jobs Act – What it means for U.S. Exports

President Obama plans to create 2 million new jobs within five years by doubling U.S. Exports.

By Ray Hays, http://www.rayhays.com

Good news on the economy? Actually, yes, for U.S. Trade. Yesterday, the Department of Commerce released the following update based on July’s numbers: Today’s report showed that U.S. exports of goods and services in July increased 3.6 percent from June to $178.0 billion. The value of exports in July, as well as the individual export values for goods and services, was the highest on record. 

In his speech last night, President Obama put a spotlight on America’s competitiveness on the world stage. American technology innovation. American manufacturing. American infrastructure development. American education… And, yes, American exports.

Obama proclaimed his vision is that “Made in America” must continue to be a worldwide brand leader. He received a bi-partisan ovation for that part of his  plan. Little to argue on that point, but is it possible in a world where U.S. businesses cannot compete with cheap overseas labor?

I’ll leave the political views to the pundits… Politics aside, Republicans and Democrats both have good ideas on how to increase exports. However, in the real business world, shareholders generally don’t care how you make profits; it’s the financial results that matter.

Yesterday’s report from the Department of Commerce suggests that the U.S. is heading in the right direction.

Can the U.S. double exports and grow jobs over the next five years? The short answer is yes, we can succeed, and we must succeed in growing exports.

First, the U.S. cannot afford to become a second-rate exporter. We have too much vested in the global economy to allow us to fail.

Second, the global economy wants the U.S. to succeed, because the U.S. economy is too big to fail. An unstable U.S. economy means an unstable global economy. That’s why the IMF, the EU and other global players are pleading with Washington to get our economic house in-order.

In a nutshell, U.S. exports equals U.S. jobs. Exports represent 11% of the U.S. gross domestic product. Exports support 10 million U.S. jobs. If the U.S. could double exports in the next five years, we would put millions of Americans back to work. (I will leave the exact calculation to the economist gurus.)

Impossible? Absolutely not. The U.S. achieved this rate of export growth in the 1970s, and with the right focus, we can achieve it again.

Why can I say that confidently? Because I’ve worked with companies that have doubled or tripled their exports in a few years, especially small businesses. My professional opinion is that a focus on helping small businesses to export can make a significant impact on U.S. exports and U.S. jobs.

According to the latest figures from the SBA, small businesses are a big part of U.S. exports. For example, 97.5% of U.S. exporters are small businesses, and they represent 31% of U.S. export value. Small businesses also provide half of the private sector jobs in the U.S. I believe that small businesses have considerable opportunity for improvement and growth in export revenues and export-related jobs.

Many small businesses in the U.S. are willing to export, but they just don’t know how to do it. We need to recruit these potential exporters, train them and assist them in launching into foreign markets.

The advantage of small businesses, it they can make quick decisions and implement an international export strategy, with a tangible revenue impact usually within 3 to 6 months. The only thing they need is some guidance… Their entrepreneurial spirit will take if from there.

If we focus on helping current U.S. small business exporters and identify new small business exporters, here is what I believe the U.S. can realistically achieve:

  • Within three years:
    • Double the number of new small business exporters.
    • Increase small business revenues by 50%
  • Within five years:
    • Triple the number of new small business exporters
    • Double small business export revenues.

Combining small business export support with the organic growth of large business exports, (helped by a weak U.S. dollar), the goal of doubling U.S. exports in five years is quite achievable.

How much is this going to cost U.S. taxpayers? Nothing. Currently, the U.S. has thousands of volunteer executives working with small businesses to help them export. These volunteers are members of the U.S. District Export Council, state trade promotion programs, local chambers of commerce and other non-profit organizations. This volunteer initiative can be expanded with zero tax dollars.

What about the tax dollars spent on export promotion? The fact is that U.S. export promotion is run on a shoestring budget, with the collaboration of the U.S. Commercial Service, International Trade Administration, SBA and others agencies. As a business executive, I have used the services of these export programs to generate revenues for U.S. companies and more jobs for U.S. workers.

Export promotion has a multiplier effect because it is a collaborative effort among government agencies, business and individual volunteers. By my estimate (which could be debated), for every tax dollar spent on export promotion generates five to ten times their value in direct and indirect revenue. Export growth results in more business revenues, more U.S. jobs and a healthier economy.

My personal opinion is that export promotion provides a significant return on investment because it is a revenue generator, which very few government programs can claim. I would feel 100% confident in putting more tax money toward export promotion.

That said, I also understand and respect the view that government programs need to run more efficiently, and throwing money at a problem is not the best solution. Perhaps with better measurement of return-on-tax dollars, these programs will merit their fair share of federal and state budgets.

It is good that the issue of export promotion is in the spotlight. Let’s hope that Washington can agree on a strategy that will produce tangible results. Meanwhile, I will continue to do my part, working with like-minded international executives, to help small businesses grow their export revenues and put America back to work.

For more information on the District Export Council and other exporting resources, please see the links on my blog.

Watch for my future articles:

  • Is China eating away at American brand equity?
  • The National Export Initiative – What’s the plan to grow U.S. exports and U.S. jobs?
Copyright 2011, Ray Hays. All rights reserved
www.rayhays.com

Small Businesses of the World Unite!

….We have nothing to lose but our chains!  

A Small Business Manifesto by Ray Hays, www.rayhays.com  

Bottom line, it’s up to small businesses to save the world. Big business, financial markets and politicians have lost touch with the common man.  

They’ve also lost touch with reality. They worship false deities – mysterious and faceless entities, with names like DOW, S&P, DAX and Hang Seng. When the financial gods become angry, the politicians and Central Banks attempt to appease them through complex rituals in which they manipulate magic potions with names like the debt ceiling, interest rates, financial regulation, fiscal policy, money supply and stabilization programs. They posture and debate how these potions should be mixed, while the world’s economy sits on the brink, awaiting some miracle to emerge from the voodoo fog bank. 

So what can we do as small business owners? 

For one thing, spend more time working on your business and less time worrying about the economy. It seems that the only certain thing in the financial markets is uncertainty.  Over the past week, we’ve heard it on the news ad-nauseam: “The market shows signs of uncertainty.” Really? What the heck does that mean? Just tell me how I can retrieve my retirement account as it swirls down the toilet. 

Then some talking head comes on the TV screen and explains that the uncertainty might be attributed to unemployment indicators… or the debt ceiling… or the Standard and Riches credit rating… or rumors that a camel passed gas in Oman. 

We stand back and scratch our heads, inwardly embarrassed that — despite our years of business experience, and regardless of our academic pedigrees — we have no clue what they’re talking about. Join the club of ignorant masses. Unless you are one of the minions in the financial markets, you are probably mystified by the swirling market forces that shape the destiny of the global economy. 

However, in the real world, business is not about some abstract financial benchmark or macroeconomic policy. As small business owners, we know that business is about people: our employees, our customers and our community. It’s about hard work and good management. It’s about simple concepts, like sales, costs and profits. 

Who will be our economic savior from the economic winds of uncertainty?

Politicians? Stock market gurus? Central Banks? The banking sector? The real estate sector? Multinational corporations? China? God? Superman? … Superheroes aside, I would place my bet on the small business sector.

 Look at it historically. Prior to the industrial revolution, small businesses represented the heart of economic development in most countries. Before the days of “big business” and the stock market, small entrepreneurs built the foundation on which the industrial and financial giants of today stand.

However, today, big business and politicians are tied to the hip with global financial markets. (Or is it vice-versa?) Comparatively, small businesses have significantly more freedom and leeway from the market. Sure, small businesses are impacted by global market forces, including inflation, interest rates, labor costs, fuel prices, etc.  Sure, economic downturns destroyed many small businesses, which were defenseless to the onslaught.

Yet small businesses are more nimble than their large brethren. We can adjust more quickly to market risks or opportunities. A small business can re-brand in a week, whereas it takes United and Continental Airlines over a year. We can completely change our business strategy without worrying about the perception of shareholders and our stock price on Wall Street.

That said, increasingly small businesses are burdened with chains of the global economy, which prevent us from change and strip us of our independence.

It’s time to take control of our destinies. Long Live the Small Business Revolution!

Yes, small businesses DO have the power to change the global economy. Let’s take the example of the U.S. market. According to the Small Business Administration, small businesses (fewer than 500 employees):

    • Represent 99.7 percent of all employer firms.
    • Employ just over half of all private sector employees.
    • Pay 44 percent of total U.S. private payroll.
    • Have generated 64 percent of net new jobs over the past 15 years.
    • Create more than half of the nonfarm private gross domestic product (GDP).
    • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
    • Are 52 percent home-based and 2 percent franchises.
    • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
    • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

Definitions and perceptions on small businesses vary. For example, in Europe a small business is identified as fewer than 50 employees compared to 500 employees in the U.S.  Some consumers perceive franchises as “big business chains” that kill off small business competitors. In reality, a significant majority of franchisees are small businesses that are locally owned. In terms of franchisors (the franchise headquarter companies), the majority of them are also small businesses. The big players, such as McDonald’s and UPS, are more the exception than the norm.

Definitions aside, small businesses play a critical role in the worldwide economy. Think about it this way. If the small business sector could add 10% more jobs, the U.S. economy would erase the rise in unemployment since 2008, which improves consumer spending, which grows retail sales, etc. In short, shifts in the small business sector can make a big impact on the world economy.

Okay, I’m on-board with the small business revolution. What’s our goal?

Break the chains of the financial markets!  What are the chains that shackle our small businesses?

Big government or a big business clients – If more than 25% of the revenue of your small business comes from on government or big business, you are chained to the market.

Big business vendors or suppliers – If your business relies on big businesses suppliers, you are chained to the market.

Big banks – If your small business is dependent on large banks – for small business loans, etc. – then you are chained to the market.

Financial services – If your small business is in a sector that deals with financial services or commodities, you are chained to the market.

Real estate – If the health of your business is impacted by booms or busts in the real estate market, you are chained to the market.

“Discretionary” consumer products and services – If your revenues comes from non-essential products and services that are subject to discretionary income, you are chained to the market.

Which chains weigh down your business? How heavy are they?

Realistically, most small businesses will always be connected to the market to some degree. As a small business owner, what chains can you break and what chains can you weaken? How can you minimize your dependence and exposure to big business and financial markets? Possible solutions include:

Completely reinvent your business – If you are in real estate or financial services, either get out of the business or diversify into other sectors. Ask yourself:  If I were not in real estate or financial services, what other business would appeal to me? Don’t wait. Start building your business life boat now.

Introduce new products and services – Ask yourself what new, innovative products and services you could introduce, which are recession-proof? For example, if you own a catering company, you could begin to sell affordable school lunch packages for kids.

Replace your big business and government customers with small business customers – Ask yourself, if my big customers disappeared tomorrow, what other types of small businesses could I service? This may require changes to your products and services, as well as changes to your strategy of marketing and sales. Don’t wait for those big clients to disappear. Do it now!

Replace your big business vendors with small business vendors – This may be difficult, and it may cost you more money, but ask yourself: As a customer, am I more valuable to a big vendor or a small vendor? A small vendor is more likely to provide you with personalized service, they are more likely to refer clients to you, and they are more vested in the success of your business. Is that worth paying a premium for the product? In most cases, the answer is “yes.” Most importantly, you will help another small business owner to break their chains to the market.

Cut out the big company middle man – One advantage of the global economy is that small businesses are better able to simplify their supply chain. Ask yourself: Why can’t I just go to the source for products? For example, if you sell uniforms that are made in China, do you really need to purchase through a large distributor? Why not work directly with a small manufacturer in China? Again, you will have more control over your supply, better leverage and in some cases, better pricing.   Tip: If you have no idea of how to import, you may wish to engage an international business consultant to help you identify overseas suppliers, and engage a small, licensed customs broker to manage the import process for you.

Replace your big bank with a small bank – Like all small businesses, small banks are more flexible than big banks. Small banks are hungry for your business, and relatively speaking, your small business will be a much larger client to them.

Hire more employees – During a downturn, fear of “uncertainty in the market” prevents small business owners from hiring. Step back and evaluate your values as an employer and the mission of your company. Do you believe that your employees are your most important asset? Many good employees are on the market today. If you add two or three… or ten “top-performers” to your team, what would this do for your operational capacity or your sales growth? How can do your part to reduce unemployment and still prosper as a business?

Entrepreneurship, innovation, customer service, employee loyalty, family values…  These are the enduring hallmarks of a successful small business. With these values in-mind, it’s time to level the playing field and allow small businesses to chart their own destinies.

Now, small business revolutionaries… Go forth and save the global economy!

Article Copyright © Ray Hays 2011 All Rights Reserved. Electronic distribution is permitted with citation of author’s name.