• WisBusiness

Monday, July 22, 2013

Tom Still: As global marketplace grows, so do opportunities –and a few risks – for U.S. companies


By Tom Still
MILWAUKEE – Simple demographics should tell U.S. business owners all they need to know about the size of the opportunity: About 95 percent of the world's population lives outside the United States and a rising percentage of those people are "middle class" consumers.

Less obvious to many business owners, especially smaller firms and startups, is how to efficiently and safely break into that global marketplace.

Understanding how to do business overseas was the topic of a July 18 Wisconsin Innovation Network meeting in Milwaukee, where a veteran of more than 25 years of global business development walked through the basics of getting through international doors – and resources that can help while you're knocking.

Mark Rhoda-Reis, who leads market development efforts in the Americas and Europe for the Wisconsin Economic Development Corp., described how companies in Wisconsin can work with his agency to gain access to sales in emerging markets. Those pathways range from taking part in trade missions and trade shows to gaining business intelligence through a network that spans 36 countries.

Among the resources available through WEDC, Rhoda-Reis said, are grant programs for small- to mid-sized companies to cover some of the costs related to developing an export strategy and growing sales over time.

While Wisconsin's exports have been steadily climbing in recent years – it hit a record $23 billion in 2012 – there are still plenty of companies that could be exporting goods and services but have yet to do so. Why? Rhoda-Reis believes a combination of routine business pressures in existing markets, awareness of market potential overseas and fear of the unknown – languages, red tape and economic espionage – are primary barriers.

The dangers of economic espionage were evident in a case, reported on the same day as the WIN meeting, involving a firm with offices in Middleton. Federal prosecutors say clean energy software developed in Wisconsin was stolen over the Internet by a Serbian man accused of being bribed to supply the trade secrets to a Chinese wind turbine manufacturer.

Economic espionage and cyber-theft happen everywhere in a digital age, however, and Rhoda-Reis said he believes companies can take common-sense precautions to greatly reduce their risk of exposure.

"Doing international business does have additional administrative burden and should be factored in to the cost benefit analysis," he said. "For the large majority of companies, the scale tips in favor of a larger more diverse customer base, more robust and competitive products, greater long-term revenue."

Protective measures may include registering trademarks in key markets, filing international patents in markets where there may be strong global competitors, conducting reviews of potential sales and marketing partners, including intellectual property protection clauses in contracts, and generally seeking out international partners who have a vested interest in protecting your company's economic interests.

"Competitors, whether domestic or international are always looking for ways to find advantage either by reverse engineering, copying and improving your designs, obtaining trade secrets or supplier information," Rhoda-Reis said. "From personal experience, companies will gain far more in the way of competitive intelligence and product development benefits by being able to compete on a global level than the risk of competition from copies."

Byron Franz, a special agent for the FBI in Wisconsin, often alerts companies to simple steps that can better protect their trade secrets. Like Rhoda-Reis, he believes companies should pursue global opportunities "but do so with their eyes wide open."

When traveling abroad, Franz said, companies should travel with minimal digital information that could be lost or stolen. "Smart phones" are storehouses of data that can be valuable to cyber-thieves, he said, so consider carrying a dedicated phone abroad.

Franz said executive travel, online computer intrusions and insider data theft are leading sources of economic espionage, along with lax monitoring of corporate tours by foreign visitors and simple solicitations for information, which often target academic researchers.

As Franz noted, organizations such as the FBI, the U.S. Department of Commerce and WEDC have experts in place to help companies reduce their risks of doing business overseas. "There are people who can sit in the foxhole with you," he said.

That foxhole will get larger and more crowded as Wisconsin companies look to find ways to crack into a growing global marketplace.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal. To learn more about WEDC's export programs, visit http://inwisconsin.com.

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