Trade Missions Bring Foreign Markets to Metro Detroit
As in other mature economies in history, American businesses are looking beyond their borders for business opportunities. Several time a year, private and public sector trade missions from Southeast Michigan fly to foreign countries on trade missions.
Noel Nevshehir, director of International Business Services for Automation Alley
, says the soft recovery from the recent recession has compelled American companies to explore foreign markets.
"We're emerging, little by little, from the recession of a few years ago. We don't want people (businesses) to be solely reliant on the U.S. economy for future growth, particularly given that the trends in growth are really more in Asia and other parts of the world."
Nevshehir, who recently returned from a trade mission to Singapore and Southeast Asia, says Automation Alley selects locales based on the needs of its members and emerging markets it identifies. Businesses are invited to learn about opportunities in foreign markets and the concept of exporting in programs sponsored by Automation Alley.
"What we do really well is demystify the process of doing business overseas and helping break through the fear threshold." For many businesses, particularly start-ups, the idea of foreign sales isn't part of their marketing plan.
Maureen Krauss, vice president of Economic Development and Business Attraction for the Detroit Regional Chamber
, also recently returned from the Frankfort Auto Show, in Germany, one of four or five trade shows her staff attends in international locations, in addition to trade missions. The Chamber focuses on recruiting foreign companies to establish operations in the region, primarily targeting the automotive and defense sectors.
The work is grueling and exciting, but not glamorous, Krauss says. Last February, the Chamber conducted a mission to Germany and Italy, calling on businesses and other contacts. It was fast paced and involved moving to 10 different hotels.
"That's where you become a real road warrior," she says, a veteran of 35 trade missions over 15 years. "Coordination is key... to get everyone lined up when you need them and to make sure that the people you want to talk to are available. The one day you're going to be in Milan you want to make sure that the key company in Milan is also there."
Krauss says her work is basic sales. "It sounds more exotic because it involves foreign travel and foreign companies. Really, it's just sound sales principles, doing your research, thinking about it strategically, then going to your customer, don't wait for them to come to you. ... We look at the companies we want to call on, map it out, getting our team set... It's a little bit of an art and a little bit of a science."
Trade missions aren't cheap, running between $3,000 to $10,000 per person, depending on the length of the trip, accommodations and event costs. They involve a mix of public and private professionals, and usually a state or county government official. The trips involve considerable research and planning on the front end, and follow-up afterward.
Nevshehir researches the markets and businesses he introduces his members to, making personal visits to the areas in advance, meeting U.S. Embassy officials to screen business prospects so meetings have the greatest chance of success. Meetings may involve direct sales of product, service, or technology, or joint venture arrangements.
Krauss maintains active international relationships through her membership on the of the British-American Business Council, the Swedish American Chamber of Commerce, the Italian Association of Business and Technology, German American Chamber, among others... "It's important for us to talk with people and learn about the different (cultural/political) nuances between the countries." She also does a lot of research stateside.
While many trade missions focus on well-documented markets like Europe and China, Automation Alley focuses on lesser known emerging markets, such as Saudi Arabia.
"We try to go where nobody else goes...to be ahead of the curve," Nevshehir says. While many trade missions go to the markets that have been traditionally open to relationships with American businesses, "we've shifted our focus to ‘MIST' countries,'which include Mexico, Indonesia, South Korea, and Turkey." Automation Alley, this year, received its second U.S. Presidential E-Star Award for Export Service.
Despite the recent diversification of Michigan industries, the region remains known internationally as an automotive manufacturing center. Nevshehir avoids direct references to the auto industry in his trips, stressing that "we're involved in other high tech emerging technologies, defense, aerospace, clean tech, life's sciences, nano technology -- that's shock when we tell them."
While trade missions don't typically include start-ups, Nevshehir looks for opportunities to link international clients with these businesses. For example, Automation Alley connected Electroject
, a 10-year old Brighton company, with the Chinese market, resulting in a multimillion dollar technology transfer deal, Nevshehir says.
Southeast Michigan trade missions share the challenge of explaining Detroit's bankruptcy to foreign countries, where bankruptcy has a graver implication. "The Chinese definition is that everything is shut down," Krauss says. A Chinese reporter asked her about the state of affairs in the region, thinking the worst. Instead, she answered matter-of-factly, "It's the same as it was yesterday."
On the positive side, she says, the city's economic malaise offers a platform of discussing the dual narrative in the region: one involving the economic collapse of the old urban city, and the regeneration of the regional economy. "Any time you have a platform to tell your story, it's a good opportunity. ... Companies have asked about it (Detroit bankruptcy). Frankfort, Italy, China... but they still see the business opportunity here. It's almost more of a curiosity. We've had no projects drop because of bankruptcy."
Krauss and Nevshehir devote considerable effort in preparing their business clients to effectively engage their international prospects. Krauss recommends that all of her mission participants read the country-specific editions of Culture Shock, a series of books that outlines cultural practices in countries.
"Sometimes, you have to learn from experience that when you cross the border of a country you're going to have to not only speak differently, but act differently and respond differently to company's needs. It does take time but it's very rewarding," she says.
Nevshehir learned the hard way that multicultural sensitivity training is essential to preparing for a trade mission. On one trip, one business participant "made extremely inappropriate comments in front of our Mexican hosts, which included people from the federal ministry and a state governor." The participant was later counseled, but it taught Nevshehir a lesson. Subsequently, he established a mandatory trade mission orientation session, covering cultural issues, idiosyncrasies, and common business practices."
Trade missions are long-term, strategic, relational programs that are costly to participants, and don't always offer immediate results. However, Nevshehir says that 40 to 50 percent of the businesses participating in his trips achieve their objectives. He says trade missions have helped create $300 million in exports since Automation Alley began conducting them in 2006.
For Chamber trips, the results are slower coming, but when one company settles in the area, invests $10 million and creates a couple hundred jobs, it justifies several trips.
"It's expensive and it's long term," Krauss says. "You don't go on one trade mission and bring back five deals. That rarely happens. You might bring back five opportunities, but you have to work them. ...The Detroit region has 1,300 foreign firms. They didn't just stop here on their own."
The reward, she says, comes when driving along I-75 and seeing "many of the companies we met a long time ago that have since started with one or two people, then added and added. That's the reward; you know that they've invested in our communities and added jobs for our residents."
Dennis Archambault is a freelancer writer living in Detroit, and is a regular contributor to Metromode, Concentrate and Model D.
All Photos by David Lewinski Photography except where noted.