World market

Area companies go globe-trotting for new markets

Manufacturers along the Northern Front Range are looking for new markets, and increasingly they are looking to Asia.
Exporting is an effective way to expand the market for goods. Many Northern Colorado and Southern Wyoming producers and manufacturers recognize the potential of overseas markets.
Of the 750 area companies listed in the 1996-97 Northern Front Range R&D/Manufacturers Directory, 38.8 percent report that they do some exporting. Almost all instrument, computer and peripherals manufacturers export some products.
Asia poses an increasingly attractive market for all kinds of goods produced in Colorado. There are several reasons for this. Jim Wilson, president of Quantum International in Longmont, said that Asian economies are booming and Asian consumers ready to buy.
“People clearly have the liquidity and the interest that makes (Asia) a promising market,” Wilson said.
An odd phenomenon adds to the attraction of the Asian market.
“Trends in Asia,” Wilson explained, “tend to lag a little bit behind the United States. So you have an indicator based on how a product did here.”
The inception of one-stop flights to Seoul, South Korea, which were to begin this October, has been postponed until March or April 1997. With some 265 Colorado companies exporting $140 million worth of goods there in 1995, South Korea already is a substantial market for Colorado goods. The one-stop flights are expected to increase opportunity for and awareness of export possibilities to that country.
To succeed in Asian countries, exporters will have to do some market research.
“(Asian countries are) all different,” Wilson said. “If you’re not willing to customize your product, they don’t buy it.”
Tim Larson of the Colorado Department of Agriculture said U.S. officials have led a long, grueling campaign to open up the Japanese market to U.S. beef. Much of that campaign involved hiring a Japanese market-research company to do taste tests of U.S. beef in Japan. The results helped convince Japanese officials that there was indeed a demand for U.S. beef in their market. In 1995, Colorado exported more than $160 million of meat – mostly beef – to Japan.
High-tech companies also look toward worldwide markets, with an emphasis on a growing Asian market.
Atrix Laboratories Inc., which just began commercial sales of its periodontal-disease treatment kit, is looking first to Europe, where it began marketing Atrisorb this spring. It is now being sold in seven countries: Denmark, Norway, Spain, Switzerland, Italy, Israel and Saudi Arabia.
Company spokeswoman Kimberly Marks said first-year sales of $100,000 to $110,000 should increase significantly in 1997. She said Atrix is looking next to Asia for 1997-98.
About 10 percent of Symbios Logic Inc.’s revenues (about $53 million in 1995) come from offshore, said spokeswoman Lea Schwartz. The Asian market accounts for most of Symbios’ computer-parts sales, while the European market buys its storage solutions and LAN (Local Area Network).
“We anticipate that we’ll be selling more of everything in the Far East,” Schwartz said. “That market is growing faster than the European market.”
Depending still more heavily on the export market is Fort Collins-based Advanced Energy Industries Inc., which in 1995 won the Governor’s Exporter of the Year Award for the second time. Exports total 25 percent to 30 percent of Advanced Energy’s business, said managing director of European operations Brent Backman.
“(The award) is not just about volume of exports but that it is possible for a small Colorado company to successfully export,” Backman said.
The greatest part of Advanced Energy’s exports go to Western Europe and Japan. Although Advanced Energy has had distributors in South Korea, Taiwan and several Pacific Rim countries, Backman said, the company now anticipates establishing subsidiaries in South Korea and Taiwan “in the next year or two.” And the company is planning to set up new distributors in Singapore and China.
From its position as the 13th-largest exporter from the United States in 1995, Hewlett-Packard Co. looks like the 800-pound gorilla of Northern Colorado high-tech exporters. Nationally, more than half of HP’s sales are in 120 countries other than the United States.
“You probably can’t find a country in the world where you can’t find our products – except Cuba, and even there they probably manage to get them,´ said HP’s international public-affairs manager Brad Whitmore.
HP has been selling in Japan since 1963. That country is now HP’s second-largest market after Germany.
Foreign markets will become only more important in coming years.
“The U.S. (market) is not growing as quickly as others,” Whitmore said. “We anticipate 70 percent of our growth in sales will be in non-U.S. markets.”
Hewlett-Packard’s Colorado Memory Systems division in Loveland produces electronic testing and measurement products used by electrical engineers. For the Loveland plant, the largest market is Europe, followed by Taiwan and Japan.
“China is becoming very large for us,´ said Jim Willard, spokesman for HP in Loveland. “China has really just come on it seems in the last three to four years.”Agriculture: wheat and beef
Colorado wheat exports totaled $3.87 million in 1995, 7 percent of all U.S. wheat exported. That number is expected to peak at $4.49 million in 1996 and then decline as the U.S. supply and world prices decline.
Livestock constitutes 39 percent of Colorado’s exports. Virtually all of it is slaughtered in Greeley and Sterling by Monfort and Excel. The importance of exporting can be seen in the fact that fully 8 percent of the beef produced in the United States is sold abroad. As beef production increases, as it has, only expanding the worldwide market can prevent the price of beef from falling.
U.S. beef is banned from Europe because of growth hormones typically administered to U.S. cattle, making Asian and former Soviet Union markets that much more important. About 59 percent of U.S. exports of meat, dairy and eggs go to Asia, while 13 percent go to the former Soviet Union.Eastern Europe: a new frontierMeat producers are not the only exporters who have begun selling to former communist countries.
As former Eastern Bloc countries began to revamp their infrastructures, Hewlett-Packard began providing them with everything from computer networks to test equipment for their new telephone system.
“Two or three years ago, we started, as they’ve developed more currency and more of an appetite,” Willard said.
Advanced Energy, too, is looking at distributing in Eastern Europe, Backman said.Exporting 101Opportunities for would-be exporters begin at home: The Small Business and International Development Center of Larimer County offers educational seminars and print materials on exporting. Director Frank Pryor said the U.S. Small Business Administration wishes to increase the number of loans it makes to businesses that export.
The SBIDC assists business people who now export and wish to expand that operation and also those who might like to try exporting.
The greatest challenge in moving from a domestic market to an international one, Wilson said, is “making sure you get your money.”Other business arrangements, such as understanding regulations of the importing country, paying the proper taxes, complying with special labeling requirements, and lining up reliable freight carriers, are getting easier. The U.S. Department of Commerce has a World Wide Web home page, Wilson said, that has improved over its two years of existence.
“It’s very explicit about what it takes to ship to other countries,” he said.
Whatever the difficulties, the growing importance of foreign markets to Colorado companies should not be ignored.”We have to get the small companies competing and not afraid to export,” Advanced Energy’s Backman said. “If you don’t become a worldwide company, our philosophy is you will soon have somebody in the local country who will fill that opportunity and who someday will compete with you in the U.S. É If we hadn’t gone out and started exporting when we were a much smaller company than we are now, we would have foreign competitors here now.”
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