By: Pam Reichert Issue: Global Trade Section: Jewel Of Collaboration
Opening the Door to Exports and Investors
In these challenging economic times it can be difficult to retain a global outlook. Nonetheless, the ripple effect, or more appropriately the tidal wave effect of the U.S. financial crisis globally demonstrates how intertwined our world has become and the importance of retaining a global vision at the government policy and company level to emerge from the worldwide recession together. Exporting is a strategy that can be employed to diversify sales and risk.
Consul General Dale Eisler from the Canadian Consulate in Denver, Colorado Governor Bill Ritter and US. Consul General Tom Huffaker in Toronto Canada meet prior to the Colorado reception at the US Consul General’s residence during the Governor-led Economic Development Mission to Canada in November 2007.
The Colorado International Trade Office (ITO) is just one of the many resources available to Colorado companies that can assist with export training, market research, strategy and execution.
Here are the facts about Colorado exports and what they contribute to our economy. In 2008, Colorado exported $7.7 billion in manufactured, agricultural and mineral products, to 199 countries, an increase of 4.3% relative to 2007
In 2008, Colorado exported $7.7 billion in manufactured, agricultural and mineral products, to 199 countries, an increase of 4.3% relative to 2007. A total of 4,133 companies exported from Colorado in 2006 (latest data available from the U.S. Bureau of Economic Analysis). Of those, 3,618 (88%) were small and medium-sized enterprises with fewer than 500 employees, according to the U.S. Department of Commerce, International Trade Administration.
Exporting can be the easiest, and is certainly the most popular form of international business for small companies to enter and is one strategy for growing company sales. The world is smaller than ever, and many products and services can be easily integrated to suit the needs of overseas businesses or the tastes and preferences of those from a different culture. International markets are more accessible than ever with the internet. Does your company have a website? If so, you are already global and can grow your business outside of Colorado and the United States strategically with knowledge of basic export fundamentals and an active marketing plan.
Exporting can increase your overall sales and profits, enhance competitiveness, utilize excess capacity, and diversify market risk. It may also extend the life-cycle of your products, stabilize market fluctuations in demand, enhance the image and trademark of your company, and, most importantly to ITO’s mission, create domestic jobs. With every new business proposition, there are risks to be weighed. On a macro level, there are the inherent challenges in crossing a national border to do business. Country risk - the political and currency risk inherent in doing business overseas - needs to be assessed. The stability of a country, the availability and free movement of currencies, policies and attitudes toward trade should all be considered. Trading with a country with which the United States has a free trade agreement might be a consideration as these agreements can give Colorado (U.S.) products an advantage over competitors from other foreign markets.
Many other challenges to be considered are similar to issues that companies analyze as they consider any market, but some are unique to foreign markets. There will be costs involved in developing promotional materials, modifying products, or re-packaging. Furthermore, there will be added administrative costs, added travel expenses to the given market, and political cost in locating a local distributor, agent or buyer. The payment cycle is likely to be longer, and additional paperwork is involved. A Road Map to Success
While the ITO may be better known for its high-profile Governor-led missions, the main focus of the office is to provide export counseling services to companies, in particular small and medium size enterprises. The office can assist companies to:
Evaluate readiness to export. Advise on how to conduct market research and develop an export plan. Identify market opportunities and provide market intelligence. Determine export requirements and provide information on shipping and tariffs. Identify potential distributors, agents, buyers and other partners. Counsel on foreign business and cultural practices.
Export counseling is the primary activity of the ITO, but trade promotion activities in foreign markets are equally important to introducing companies to new markets and getting them one step closer to executing an export strategy. Programs that ITO has organized and supported with partners over the past two years include Governor led economic development and investment missions to Canada, Spain, and Japan and China. These missions have helped to put Colorado on the map, in particular as a leader in renewable energy.
ITO has also supported Colorado companies with trade show booths at the Chinese International Environmental Protection Exhibition and Conference in Beijing, China (June 2009) and at Expomin in Santiago, Chile (April 2008), the largest mining show in Latin America. ITO led a trade mission to Taiwan in June 2007, and organized a Colorado Forum at GLOBE 2008 in Vancouver, where ITO provided assistance for one-on-one appointment setting through the Foreign Commercial Service. These trade show efforts have equaled over $30 million in immediate export sales, with much more expected over the long term. trade show efforts have equaled over $30 million in immediate export sales, with much more expected over the long term.
This year, ITO initiated a new program to assist exporting companies this past year - the Colorado Export Development Grant. Seventeen companies from around the state were awarded $1,000 grants to facilitate their travel, attendance at trade shows, or business-matching services in order to assist them in entering a new export market. This program will continue going forward on a bi-annual basis to reach existing and new potential exporting companies.
ITO also co-hosts business and investor groups that come through Colorado. Visitors have included larger delegations, such as a 22-member Spanish Renewable Energy group, a 12-member French high-tech delegation, and numerous individual companies looking to site headquarters or manufacturing in Colorado. Our role is to introduce them to the state, provide platforms for exchanges on public policy, Colorado’s business climate and potential business opportunities. ITO assists with business matching services with potential partners and suppliers or provides them with information on locating facilities in Colorado.
Foreign Investment: Welcome to COLORADO
State trade organizations nation-wide are taking a more proactive role in investment attraction. Colorado is no exception. ITO’s statute calls for this, and the office has taken it a step further over the past two years by tasking each regional director with a mandate to proactively market Colorado to potential foreign investors. As the data demonstrates, there is a strong case for promoting foreign direct investment in the state.
Foreign majority-owned companies in Colorado employ close to 76,000 people and pay 15 percent higher wages on average. Colorado’s largest foreign investors include the United Kingdom, Canada, The Netherlands, France and Switzerland.
Partners are the Key
The ITO does not work alone - key to the success of our export assistance activities are our partners co-located in the World Trade Center in Denver who are also engaged in promoting and supporting global trade. The U.S. Export Assistance Center in Denver, part of the U.S. Department of Commerce’s International Trade Administration, utilizes its global network of trade specialists to connect U.S. companies with international buyers worldwide, with offices in more than 80 countries. The World Trade Center is the focal point for export training, networking, non-partisan trade policy advocacy, and serves as a platform for seminars on doing business in foreign markets.
The World Trade Center is the focal point for export training, networking, non-partisan trade policy advocacy, and serves as a platform for seminars on doing business in foreign markets.
Within the State government, the Department of Agriculture provides export services for the agricultural community. In addition to our core partners, the ITO works with the local consulate offices of foreign governments, other economic development groups, and business and industry chambers to support the global activities of Colorado businesses.
Despite already strong ties to the region, Colorado’s current economic development strategy was not well known, and the Governor-led Asia Economic Development Mission set out to change that. This multi-faceted mission put Colorado back on the map in Asia through official meetings, seminars on Colorado’s bioscience and renewable energy sectors, press conferences and interviews, and a number of networking events. It was a comprehensive state-wide community approach to growing the relationships and introducing Japanese and Chinese government and businesses to Colorado. “Colorado is a blank page to us,” noted one Chinese official in his introductory meeting with Governor Ritter.
The mission promoted direct air service between Narita Airport, Japan and Denver International Airport. It also provided a platform for Colorado’s bioscience and renewable energy sectors - private businesses and research institutions - to discuss current research, highlight existing businesses and the collaborations bringing technology to commercialization. A side trip to Yamagata Prefecture in Japan explored new business and exchange opportunities with our sister state of more than 20 years. The mission planted the seeds to advance research, education and business relationships for years to come.
The mission created some immediate interest from companies interested in joining the Colorado Renewable Energy Collaboratory. Officials from the Japanese Ministry of Economy, Trade and Industry and from the Japanese National Institute for Advanced Industry, Science and Technology have met with NREL to discuss research collaboration, Colorado State University has been working with two Japanese companies about collaborating with the CSU engine conversions lab, and other foreign investors have expressed interest in investing in Colorado companies or setting up operations in our state. ITO maintained momentum from the mission by leading 14 Colorado companies and research institutions to the China International Environmental Protection Exhibition and Conference June 3-6 in Beijing., where ITO organized a Colorado booth to cultivate business relationships and begin exporting to China.
The Asia Mission is just one example of ITO’s strategy to support the objectives of the administration of Colorado Governor Bill Ritter, Jr. to support the development of a 21st Century Economy in Colorado through the development of a New Energy Economy, the Bioscience Sector and Colorado Tourism.
Whether it is large collaborative economic development missions, international trade shows or one-on-one export counseling, the ITO and its partners are here to assist.
Pam Reichert is the Colorado International Trade Director at The Colorado International Trade Office. The ITO was created by state legislative statute in 1983 to assist Colorado companies in developing their business overseas and to promote Colorado to potential foreign investors. The ITO is a division within the Office of Economic Development and International Trade, tasked with the creation and retention of jobs to support Colorado’s economic development and growth. Regional directors have responsibility for specific regions: The Americas, Asia-Pacific, and Europe, the Middle East and Africa. A trade specialist handles general inquiries and supports the directors. The office director is the state point of contact for the US Trade Representatives Office to provide input and to analyze the impact of US trade policy on Colorado. For more information on ITO’s services, visit www.colorado.gov/trade or call (303)-892-3850.