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SMALL BUSINESS STRATEGIES | TECHNOLOGY

Foreign Concept

All Those Inflated Expectations Aside, Many Firms Are Finding the Internet Invaluable in Pursuing International Trade

October 14, 1998|MARLA DICKERSON | TIMES STAFF WRITER

A few years ago, Irvine-based Cardiac Science Inc. was like a lot of small firms itching to break into international markets. The manufacturer and distributor of cardiac medical devices had products it knew foreign customers would like. But where in the world to begin?

"Figuring out how to export is a daunting task for a lot of small businesses because they simply don't know where to start," said Raymond Cohen, president and chief executive of the publicly traded company. "We were no exception."

Today, 85% of Cardiac Science's revenue is international. And though the Asian economic contagion pulled sales down 13% in the second quarter, and other foreign markets are looking queasy, Cohen is convinced that overseas markets still are a good long-term bet for his company.

Much of that business was developed through conventional channels, thanks to export assistance provided by the U.S. Department of Commerce. Still, Cohen says a growing contingent of overseas customers are finding the company's defibrillators and heart monitors through his company's Web site (http://www.cardiacscience.com).

"We've found it attracts international businesspeople like bees to honey," said Cohen, whose company posted a net loss of $1.8 million for the first half of 1998 on revenue of $802,000. "Last year, we shipped to 46 countries."

Making money on the Internet still is the best-kept secret in cyberspace, where the "e" in e-commerce could just as well stand for "elusive" as "electronic." Still, amid all the hype and overblown expectations, many small companies are finding the Net a cheap and efficient base from which to launch a viable export strategy--even in these unsettling times.

Companies lacking international contacts or big travel budgets are using the Web to market to foreign prospects, slashing communications costs that otherwise would prove prohibitive.

"I couldn't have done this business 10 years ago," said Jeffrey Tober, who sells environmental cleanup products all over the globe from a small office in North Hollywood, corresponding almost exclusively by e-mail and fax. "The technology allows us to be bigger than we really are."

Likewise, trade experts say the Internet has become the premier source for small-business owners to research foreign markets, troll for trade leads and educate themselves about exporting. Although no one is pretending that a laptop and a Web site can turn the corner taco stand into a multinational conglomerate, the Net is proving to be the great equalizer when it comes to spotting opportunities abroad.

"Small companies now have instant access to information and customer leads that could have taken weeks or months to get before," said Vance Baugham, director of trade development for the Los Angeles-Long Beach World Trade Center Assn. "It has leveled the playing field."

U.S. small businesses last year rang up $3.5 billion in sales of goods and services over the Net, according to a study by Access Media International (USA) Inc., a New York-based venture capital and consulting firm. Those revenues are projected to exceed $25 billion by the turn of the century, making e-commerce one of fastest growing new markets for the nation's small firms.

"Small businesses [are] . . . harnessing the power of the Web in record numbers, extending their enterprises across geographic regions [and] time zones," said Andy Bose, president and founder of Access Media.

Just how many of those 1997 sales came from abroad isn't clear. But small-business owners say the global reach of the Net makes it inevitable that some foreign customers will come calling at their Web sites--presenting a natural opportunity to snag some export sales.

"It's easy to do business with people who are already interested in your product," said Cohen of Cardiac Science. "The key is following through."

Cohen said his company tries to respond to e-mail inquiries within 24 hours, sending out product information to promising sales leads by express mail. But he warns would-be exporters not to feel pressured to extend credit to--or accept anything but dollars from--untested clients in a bid to win goodwill and build export sales.

"Get the money upfront before you ship product to someone you've never done business with," Cohen said. "Because if they don't pay, the logistics make it virtually impossible to collect. . . . An account in Brazil left us holding the bag for $75,000."

Baby Tech International Inc., a Laguna Hills maker of infant thermometers, has watched the Asian financial crisis slash its foreign sales by 50%. Still, its Web site (http://www.babytechint.com) has allowed the company to maintain an inexpensive international presence that continues to snare three to five foreign sales leads a week, according to Baby Tech President John Olsson.

"We're laying the foundation for future sales," Olsson said. "This isn't for fair-weather people."

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