Robert Lees, president of Pacific InterTrade Corp. in Westlake Village, was on a plane flying to China recently, when he struck up a conversation with someone who hoped to sell packaged health food in China.
Lees told the businessman his trip was a waste of time. "The Chinese are not going to waste their precious money on this," he said.
"We're not going to sell raisins to China," Lees said. China's importing tastes run more to products that will help it build power plants, rail lines and telecommunications systems, he said.
Lees ought to know, because he has helped manufacturers sell refrigerator parts, electronic components and TV picture tubes to the Chinese. He has also helped identify and develop business opportunities in about 15 other countries.
Since founding Pacific InterTrade in 1986 with his partner, Maarten Fleurke, Lees has helped concerns like Corning Glass sell TV picture tubes in China, Goodyear Tire & Rubber sell tires in Ethiopia and the U.S. subsidiary of the Swedish company Electrolux sell lawn trimmers in Japan.
Lees and Fleurke have built Pacific InterTrade into a company with an expected $25 million in revenues this year, compared to about $1 million during its first year of operation. They say the company will post an operating profit (not including interest expenses) of about $2 million.
Their 17 employees, mostly foreign trade specialists, speak a total of 15 languages and have traveled to more than 100 countries. The Dutch-born Fleurke said he easily logs 200,000 miles in air travel each year.
Pacific InterTrade is something like a middleman, and for its expertise in identifying customers, wading through bureaucratic mazes and re-gearing products to suit foreign tastes, the company earns both flat fees and commissions of as much as 10% of gross sales.
The company also lines up foreign buyers for American goods, purchases the products with borrowed money and resells them at a markup. It doesn't hold any inventory, however, since it arranges for the buyer to receive the shipment directly from the manufacturer or distributor.
There are about 1,500 to 2,000 companies in the United States that, like Pacific InterTrade, act as intermediaries in international trade, according to the Commerce Department. Although a few are owned by large banks or corporations, most are independent operations that specialize in one or two industries or countries and have fewer than six employees.
Demand for these intermediaries is growing, said Stanley Epstein, president of American Export Trading Co. in North Hollywood, because of increasing pressure on American companies to sell their products abroad. But foreign trade can be "complex to the point of being intimidating" for manufacturers, he said, so they often turn to specialists like Pacific InterTrade to help smooth the way.
Lees cites Pacific InterTrade's cracking of the Japanese consumer products market for the Paramount division of WCI, the U.S. subsidiary of the Swedish concern Electrolux, as one of its success stories. Pacific InterTrade found that the Japanese were hungry for the kind of lawn trimmers and blowers that Paramount makes. It helped set up distribution, translated all the marketing materials and even convinced Paramount to shorten the handles by a few inches to make them a better fit for the smaller-statured Japanese.
"It's a good market for American consumer goods," said Pradeep Roy, Paramount's director of international sales. Thanks to Pacific InterTrade, Roy said, the Japanese market now accounts for "a significant portion of our international sales."
Just last year, however, Pacific InterTrade narrowly escaped disaster. It had focused almost exclusively on trade in China, which had thrown its doors wide open to foreign goods. But several months before the Tian An Men Square massacre last year, Lees noticed the doors beginning to close as the Chinese government began curbing imports to try to stall growing inflation.
Products like the TV tubes and other electronic components that Pacific InterTrade helped import to China, as well as machinery and parts used for refrigerators and videocassette recorders, suddenly were subject to a more lengthy and stringent permitting process. And in order to get the permits at all, importers had to prove the products would be used to make finished products that China could export.
Within a matter of months, Pacific InterTrade's roughly $20 million in annual business in China was cut in half.
But Pacific InterTrade turned its sights on other countries, such as the Soviet Union, Japan, Poland and Brazil, to make up for the slowdown in China.