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SMALL BUSINESS

Putting a New Face on Trade

Refurbishers Find a Niche Overseas, and Some Critics

December 23, 1998|DON LEE | TIMES STAFF WRITER

This has been a dreadful year for most exporters to Asia, but John Dawoodjee is a notable exception. He has had a breakthrough year there, as orders and calls from South Korea, Japan and China have poured into his West Los Angeles company, National Advanced Endoscopy Devices.

"It has not been a factor at all," he said of Asia's economic crisis.

Actually, the financial woes abroad have probably helped Dawoodjee, because his company deals in not just any endoscopic devices, but largely secondhand ones. By repairing and refurbishing older endoscopes, which help doctors view the inside of the human body, Dawoodjee sells them for as little as a third of the cost of new ones. And bargains like that have become even more attractive lately to customers overseas who have lost much of their buying power.

"Until this year, I didn't do much in Asia," said Dawoodjee, who started the business in 1985. Earlier this month, his crew of 29 packed a big shipment to South Korea, his sixth to that country this year. "We're going to have a lot of growth," he said.

Other exporters of used goods--whether medical devices, computers or exercise equipment--are saying much the same thing. The latest government statistics indicate that California's exports of secondhand goods, which are in the hundreds of millions of dollars, have increased sharply this year, even though exports overall have dipped because of lower demand from Asia.

In some cases, Asian customers appear to be substituting used goods for new ones. Meanwhile, government officials say the North American Free Trade Agreement has expanded the market in Latin America, long a major destination for secondhand goods from the U.S.

But the increase in demand for used goods has also heightened concerns. Some countries currently restrict imports of certain secondhand merchandise, including medical equipment, because governments have received complaints about products that were inoperable or came without instruction manuals, parts and other support that consumers in the United States normally receive. Buyers of used equipment overseas often don't receive warranties and have little recourse if they don't get what they were promised.

Although U.S. trade officials say there's less bad equipment being shipped and better servicing today than in the past, many people say the problems persist.

"There's tremendous demand for U.S. used medical equipment, but there are enormous problems," said Frank Tuft, a Compton exporter of refurbished medical supplies who is trying to develop, through the Internet, a network of certified providers of used medical goods.

The Internet, in fact, is likely to speed the movement toward a more open exchange of all kinds of used goods worldwide.

Chris Newberry, owner of Export Computer Exchange, has been shipping used personal computers and peripherals for four years. He says he gets most of his orders via his company's Web site.

"It's a lot of work finding the stuff," said Newberry, who scrounges for used PCs by poring over newspaper ads and visiting auctions. He resells some of the older 486 machines for as little as $38 apiece. Buyers foot the shipping cost and must pay for the goods in advance.

"We guarantee it works but don't give any extended warranty. You really can't with used stuff," Newberry said, although he does cover the cost if the product breaks during shipment.

"It's not a super-great business," he added. But Newberry said of his home-based business, which is in southern Utah: "It pays the bills."

No one knows for sure all the kinds or value of used goods being exported. The official data indicate that California companies shipped $300 million worth of secondhand goods from January to September, a tiny fraction of the $73 billion of the state's total exports during that period. But trade officials say the $300-million figure tells only part of the story, because shipments of used merchandise is often lumped into the same category as new products.

Exports of secondhand goods are likely to grow faster than most other categories, since new technology and competition have shortened the life cycle of many products. That has created a burgeoning supply of functional equipment that seems obsolete in this country but is prized by many outside the United States.

"People love used American cars," said Gladys Moreau, director of the Export Small Business Development Center in El Segundo. She says her center has worked with firms also exporting copy machines, refrigerators and golf carts.

David Shaw, president of Fitness Plus, recently walked through a health club in Costa Mesa, eyeing a dozen older Tectrix stair climbers. Shaw figures the gym will probably sell half of them next year to make room for more popular treadmills and a newer generation of exercise bikes with displays that measure heart rates. That's where he comes in.

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