Markets Broaden, Providing Opportunities

SEMA News—September 2013

INTERNATIONAL
By Linda Spencer

Markets Broaden, Providing Opportunities

SEMA Programs for Global Exports

“The Middle East plays a big part in our international growth strategy, as does China and Brazil. It helps take the potential inconsistency out of the U.S. market and gives us a strong off-shoot to sell into the United Arab Emirates (UAE). Consumers there love the American brand and are passionate in displaying ‘Made in America.’ It sells in the UAE and throughout the Middle East. After multiple trips to the region, we see the UAE as the gateway to opening up sales opportunities in the Middle East,” said Rick Trudo, SCT Performance president (third from right) at a prior SEMA Middle East trip.

Growing demand for U.S. products among the more than 95% of the world’s consumers who reside outside the country has resulted in a five-fold growth in American exports from 1985–2012, according to a Federal Reserve Bank report, and a record number of American companies are seeking to meet the demand. Yet for all that growth, the Small Business Administration reports that only 1% of small businesses are involved in exporting. And for those that are, 58% export to only one country and 83% to less than five markets.

There are huge benefits for companies that export. Diversifying the customer base can lead to an improved bottom line; companies that export are better positioned to ride out future U.S. economic downturns and can increase the firms’ overall competitiveness through access to new customers; exporting leads to new ways of doing business; and exports provide contact with new cultures.

The top markets for U.S. automotive specialty-equipment products have traditionally been nearby customers in Canada, the English-speaking markets of the United Kingdom, the rest of Europe, including Scandinavia, and strong markets in Australia and New Zealand. But the coverage is broadening.

U.S. manufacturers of specialty products have seen increasing demand from Brazil, Russia, India, China and South Africa (the so-called BRICS) as well as the Middle East. Growing local car culture, increasing interest in customizing, disposable income to personalize vehicles and a positive perception of U.S. brands fuels it all. American firms are growing their reach to the far corners of the world well beyond Europe, Canada and a few select other countries. The overall trade numbers reflect this shift.

According to a Federal Reserve report, the bulk of U.S. export goods “historically has been destined for developed countries, but the share of goods exported to developing countries has increased considerably since the ’80s. In 1985, the share of goods exported to developing countries was only about 29%. This share increased to 38% in 2007 and rose further to almost 45% in 2011.

Business outside the United States may seem daunting for companies seeking to begin selling where customers may speak different languages. However, SEMA has made it a priority to help members—both those new to exporting and those who want to grow this portion of their businesses—succeed overseas by providing resources and programs to help firms lay the groundwork for global expansion. This is the first of a two-part series highlighting SEMA’s international resources and programs at the SEMA Show and year-round. The association’s international programs are designed to assist members to address such hurdles as:

Lack of knowledge about the best international markets to target and the criteria to judge the options.
Unfamiliarity with which vehicles are on the road so that companies can identify the best markets for their products.
Lack of access to vehicles not sold in the United States but for which there is demand for products overseas.
The need to identify potential customers and the opportunities to meet with these buyers.
Lack of information on the laws/regulations regarding the sale of products in a target country.

Overseas Business Development Conferences

SEMA organizes business-development trips to “hot” emerging markets each year. They are designed to provide members with a low-cost, high-value way to explore new markets. Upcoming venues include China, the United Arab Emirates (UAE) and Russia. Taking part in these programs is an effective way for businesses to test markets, build brand awareness and set-up distribution networks. For those with distributors already in the selected country, the trips are an excellent time to gauge how these arrangements are working and let your customers know that you are there to support their efforts to market your products. SEMA identifies these markets by looking for three elements:

	SEMA, in partnership with the U.S. Department of Commerce, has created a program to bring to the United States vehicles popular outside the United States but not sold in this country. Pictured here are SEMA members measuring the ’13 Ford Ranger T6. A ’12 Toyota HiLux is also available. Member manufacturers can measure the vehicle free of charge at SEMA headquarters.

Enthusiasts interested in customizing.
Sufficient numbers of consumers with the financial means to purchase specialty products.
Receptive and forward-thinking governments looking to develop a pro-industry climate to grow the market while meeting safety and environmental concerns.

China

The annual SEMA China Business Development Tour is held each September, with the next trip taking place September 11–14. Activities include a booth at a major Beijing-based trade show, visits to specialty-equipment shops, briefings by U.S. government officials based in China and the opportunity to network with both buyers and fellow SEMA members in an informal setting. Costs include hotel, meals and an interpreter assigned to each company for two days. Qualifying trip participants can receive a $1,000 grant to help defray the costs of participating.

Sample agenda:

First Evening: Hotel check-in; U.S. Embassy briefing and dinner.
Day Two: Delegation breakfast; visit local retailers/installers (interpreters provided).
Day Three: Full day to meet with pre-vetted buyers from throughout the country (China) or region (Middle East). Each company is provided a booth and an interpreter. Networking events with the buyers provide additional opportunities to meet with potential customers.
Final Morning: Breakfast; departures for the United States.

United Arab Emirates

A similar program in the Middle East is scheduled for mid-March 2014. Participants at that event will visit specialty-equipment retailers and installers in Dubai; meet with pre-vetted buyers from the six Persian Gulf countries as well as buyers from Egypt, Lebanon and Jordan at a day-long event comprised of meetings and networking events; participate in a briefing and meet one-on-one with U.S. Embassy officials from throughout the Gulf region; and work with local buyers to create project vehicles featuring participants’ products. Qualifying trip participants can receive a $1,000 grant to help defray the cost of participating.

Russia

Russia is the next market to be added to the agenda, with an initial trip tentatively planned for late May 2014. Details will be available soon.

For complete details about SEMA’s international business-development programs or other global initiatives, visit here or contact SEMA Director of International and Government Relations Linda Spencer at lindas@sema.org.