Red Dot President Offers 6 Tips for Successful Exporting

KENT, Wash. (March 23, 2009)—Be pulled, not pushed into international markets, Red Dot Corp. president and CEO Randy Gardiner told a group of businesspeople last week at an export symposium presented by the Washington State Department of Community, Trade and Economic Development (CTED) and Kent, Wash., Chamber of Commerce.

Randy Gardiner, Red Dot president and CEO. Click image for download options.Based in Seattle, Red Dot designs and manufactures heating and air conditioning products for commercial vehicles and equipment used in construction, agriculture, defense, and other heavy-duty applications. The company had $86 million in revenue during 2008, $18 million from exports to China, India, South America, and other markets.

Delivering the symposium’s keynote address, Gardiner offered six points manufacturers should consider as they explore export opportunities:

1. Pull, don’t push. “Whether you establish a manufacturing operation in a foreign country or you have agents who can receive your product and represent you there, your chances of success are greater when there are customers or obvious opportunities pulling you into the market,” said Gardiner.

In 1998, Red Dot opened a manufacturing operation in the United Kingdom to support the European business of one its larger customers. “We had wanted a presence in Europe for a long time,” Gardiner said. “Having a cornerstone account clarified what our approach should be in Europe. Because we were associated with one of the leading manufacturers of construction equipment in the region, and we hired talented local people to manage the operation, it made it easier for us to develop new business.”

2. Be cautious with credit. Creditworthiness can be hard to establish with unknown businesses. A Letter of Credit is typical, but don’t be afraid to ask for cash in advance even from foreign subsidiaries with familiar names. “A local operation may take the name of a multinational company even when that multinational owns just a fraction of the business,” Gardiner said. “If you’re offering credit, make sure the relationship between the local company and the corporate headquarters is a strong one.”

3. See the markets yourself. “You can’t fully appreciate the needs and wants of a market—and the nuances of doing business there—until you’ve experienced it yourself,” Gardiner said. “When you sit down with a customer, and you’re in his or her environment, you’ll exchange ideas that you couldn’t have conceived during a phone call or exchange of email.”

Attend trade shows and use Chambers of Commerce to do basic research and introduce yourself to potential partners for your business. The costs are often minimal, and there is a wealth of information that can be gathered from just these two resources.

4. Protect your brand name. That means having a corporate presence or a reputable agent who will be vigilant on your behalf. “You want to make sure every first impression is a good one. There’s nothing like visiting a customer for the first time and he says, ‘I’ve already met your representative’ but you don’t have one,” Gardiner says. “You find out that a competitor came in with one of your catalogs and tried to sell your products so they can be substituted with the competitor’s products later.”

5. Watch for special taxes and duties. Trade laws and tariffs can and will affect your decisions about distribution and pricing. “For example, we ship directly to vehicle manufacturers in India,” Gardiner said. “We don’t go through a typical distribution arrangement because doing so would add taxes and duties that would more than double the price of what we would normally charge. So we pay a commission to a representative to handle the sales for us, and then ship direct.” It may be less expensive to pay an agent to handle sales than to incur charges associated with warehousing and distribution.”

6. Corruption. It’s a fact of life in many developing countries and may seem like a part of doing business. It doesn’t have to be, Gardiner said. “Establish a strict set of principles for your agents and representatives to follow, and make it clear how you feel about favors and special payments,” he said. “You can be successful and competitive without having to conduct business this way.”

Gardiner said developing export opportunities has enriched his experience as a company leader. “It’s like playing three-dimensional chess,” he explained. “There’s an added level of complexity that’s fun and stimulating, especially if you’re feeling like you’re ready for a new challenge.”