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Have You Gone Global? Can You Afford Not To?

Does your company do business overseas? Have you explored your opportunities in China, Europe or Latin America? This article explores how midsize businesses are expanding internationally—and offers food for thought if you've ever considered a foreign venture.

In today's global economy, doing business internationally is more than an expansion strategy—for many companies, it's the key to survival. Reasons why midsize companies go global include:

• Lower manufacturing costs for labor and facilities
• Lower costs for products and services
• Customer requirements

A plan for doing business internationally can be an important component of your strategic business plan.

Follow your customers

Many midsize companies find themselves going overseas to serve long-time customers. Doing so can determine whether you retain or lose an important customer.

For example, one Blackman Kallick client was selling a lot of products to U.S. manufacturers who were moving their operations to China and said, "We like doing business with you—can you provide material for our plants in other parts of the world?" (See the Oxford International story and the East Balt story for examples of how client relationships led two midsize companies to expand overseas.)

Sourcing product overseas

Even if you don't open an overseas facility, you might find yourself going abroad to procure products. Overseas manufacturers are now a primary source for many of the products sold in the U.S. One Blackman Kallick client employs a full-time agent in China to interface with vendors, facilitate orders and handle logistics.

A Blackman Kallick client who manufactures metal castings gradually built a vendor base in China, where a significant percentage of castings are made. The client now brings the castings over from China and machines them in the U.S.

Identify an alliance partner

If you're thinking about expanding internationally, don't underestimate the resources you will need to devote to managing your international operations. Your investment in the management team's time will be substantial. Oftentimes, it's best to get assistance from organizations already on the ground in those countries. There are consulting organizations that can help midmarket companies identify and hire key local management and establish:

• Strong relationships with reliable vendors
• Business and manufacturing operations
• Customer relationships
• Sales and distribution capabilities

Whether you choose to work with a consultant or not, take the time to develop a well-conceived strategy before making the international leap. Doing business in foreign countries will present you with many challenges, including cultural, legal and business practices that are completely different than what we experience in the U.S. As in any business venture, doing your homework and developing a solid business plan will help ensure your success.

Questions about doing business overseas? 
Contact Paul Oetter at 312-980-2920.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.