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Popular opinion is that the fast-growing economies in India and China are primarily sources of low cost labor, through outsourced services or manufacturing.  The Economist article points out that they are also growing markets, especially for – surprise! high end services and manufacturing.

America’s export boom is likely to be led by firms that are already global in scale and by sectors in which America has a clear competitive advantage: sophisticated, knowledge-intensive capital goods like microprocessors, and high-end services like engineering, oil-production services and even (witness KPF) architecture.

Few companies better capture that trend than Intel, a microprocessor giant. It is one of America’s most successful companies, and 80% of its revenue comes from outside its home country.

80%!  Another company with a similar strategic profile, which I wrote about here, would be EMC, which derives about 75% of its revenue from overseas.  Yet the other examples in the article are not as predictable: an American-based architecture firm, KPF, discusses a key project in Hong Kong.   The firm has used the same internet applications that help Indian businesses to send IT services to the US, to help send their architecture services to Hong Kong.  Their Asia business is a big part of why they did not have to lay off employees last year.

So where are the opportunities?  The Economist says that “Services are playing an increasingly important part in America’s exports. Their share of the total has gradually increased, to nearly 33% last year. Within that category, the private side, which covers things like business, professional and financial services, has been growing fastest.” Is it time to start opening up new sales territories at your firm?

Tagged: American exports, emerging markets ]]> http://localworldstrategy.wordpress.com/2010/04/14/selling-american-services-to-emerging-economies/feed/ 0 localworldstrategy http://localworldstrategy.wordpress.com/2010/01/10/higher-international-sales-led-to-higher-returns-in-2009/ http://localworldstrategy.wordpress.com/2010/01/10/higher-international-sales-led-to-higher-returns-in-2009/#comments Sun, 10 Jan 2010 22:03:57 +0000 Cindy Carpenter http://localworldstrategy.wordpress.com/?p=313 ]]> I think this falls into obvious category:  In a year when the GDP growth was higher in emerging economies, companies that built markets in those countries were likely to do better.

Business Week reported on a Goldman Sachs report that showed that the 50 companies in the S&P 500-stock index with the highest revenues from international sales (a median of 68% from outside of the US, vs. a median of 25% for the total S&P 500) returned an average of 51% in 2009, vs. 26% for the S&P 500 overall.

Their mild comment: ‘The trend may well continue. Goldman strategist David Kostin favors “firms with high sales exposure to Brazil, Russian, India and China…given the significantly higher GDP growth outlook.”‘

What a difference a few years makes.  In the past, business saw the BRIC countries as being primarily a source of lower operating costs, and companies with significant sales in the BRIC countries were viewed as having a risky strategy.  What will see in another decade?

Two recent articles in the Boston Globe about EMC illustrate exactly this point.   One article titled “EMC sees a bright future in India” immediately attracted a string of vitriolic comments about giving away American jobs, fining American corporations for “moving” jobs to India, and dealing with customer service in India.  But what the article actually said is this (italics are mine):

EMC Corp. of Hopkinton is betting big on India as a major market for data storage hardware and software, and as a key source of first-rate engineering talent.

…Meanwhile, Gelsinger saw major growth opportunities at EMC, especially in international markets. “EMC is not nearly as globalized as it needs to be,’’ he said. While Intel derives about 75 percent of its revenue from outside the United States, EMC gets about half its revenue from abroad. Gelsinger believes that EMC must expand its sales in fast-growing overseas markets like China and India.

EMC’s push towards growing markets in emerging economy countries is paralleled by similar strategies by leaders across many industry segments: technology, consumer products and services, pharmaceuticals, and financial services.

A narrow focus on preventing job losses through greater regulation misses the big picture, that growing jobs requires growing businesses, and the greatest opportunities in business growth at this time are in international markets, especially in emerging economy markets.  What’s different in this phase of international business is that while both markets and production are globalized, they are not necessarily in the same country.  Functions are more likely to be regionalized and networked, rather than organized into country silos.  Using EMC as an example, it has R&D centers  in a few key technology hot spots around the world, a regional customer service center for Asian markets in India, and it’s headquartered in the US.  The challenge in front of us is learning how to manage these new global business structures effectively.

Nadia Nassif writes about two kinds of problems in sales emails: first, spelling and grammar errors; and second, using a generic message that is not personalized to address your potential client’s needs.  She has a great example of an email she received, and how she would re-write it to increase its effectiveness. Check it out here.

I think there is another message in this example that still needs to be teased out, about the challenges of using new social media channels in cross-cultural selling.  (The email in her example was written by someone who is in a LinkedIn group and referenced a discussion there.)  There’s lots of excitement and interest about using social networking tools such as LinkedIn, Facebook and Twitter to enhance the relationship-building process and increase overall sales effectiveness (see this discussion of Sales 2.0).  These tools tend to have a culture and style of their own and, no surprise, they vary across different countries and cultures.  Trying to follow the style that fits both the channel and the regional culture of your intended prospects requires extremely careful attention to nuance.  What makes it more tricky is that, to be effective, web 2.0 messages should be highly personalized – that’s the whole point, users are involved in relationships, not just taking in one-way pushed content.  That means you can’t count on the carefully crafted sales messaging put together by your marketing team, each message should be unique, and the risk of communication gaffes across languages increases significantly.  How can globalized businesses use these tools effectively to sell across cultures?