This article was originally published in Az Business magazine.
It’s 2018 and easier than ever to take your business beyond U.S. borders and into the global marketplace. The global banking system is there to help with any transaction, free trade is allowing goods to fly across borders and the Internet allows us to be anywhere, anytime.
Still, despite these tools and resources, many business leaders still have trouble finding the right guide to help them grow their business internationally. Thankfully, Metro Phoenix is a hub for global connections.
The Global Chamber, a growing network of cities tethering the Greater Phoenix region to places like Mexico City, Johannesburg, Madrid and Tokyo is headquartered inside SkySong, The ASU Scottsdale Innovation Center.
Global Chamber acts as a connector for businesses across the globe that are looking to expand beyond their homeland borders. In this global world and economy, the Global Chamber has been very busy.
Doug Bruhnke founded Global Chamber three years ago with the goal of connecting 525 metro areas together to help community business leaders find success in global marketplaces. In just three years, Global Chamber has grown into more than 200 cities, Bruhnke says.
Bruhnke has always been something of an international connector. He worked in international marketing and sales at DuPont for 19 years and went on to work on the international side of things for a string of big league companies, including General Motors, Johnson & Johnson and Microsoft.
Often, Bruhnke would be one of the few, if not only, advocates for expanding the business into global marketplaces. Eventually, Bruhnke would host monthly meetings, where business leaders would get together to talk about their global efforts. He quickly saw a growing demand for help in the global marketplace.
A few years ago, Bruhnke says the biggest issue for companies was finding out which markets they could go in to and who would support the company. There wasn’t the broad knowledge about going global then as there is now, he adds.
“This is important because 85 percent of opportunities in the world, business opportunities, are outside the U.S. In the 1950s, most of the business opportunity was in the U.S., so you could be U.S.-centric,” Bruhnke says. “Now, nearly everything is outside the U.S. and so it’s just more important that people go global.”
In 2016, the United States’ Gross Domestic Product by purchasing power parity ranked second in the world, behind China, according to the World Bank. The U.S. accounted for 15 percent of the world GDP by purchasing power, leaving 85 percent of the world’s GDP by purchasing power outside of the U.S., and an entire world of opportunity out there.
While Bruhnke is the founder and CEO of Global Chamber, he is also the executive director of Global Chamber Phoenix and is the point-man for helping local businesses go global.
With so many opportunities out there, it can still be a struggle finding the right partners who can help you land a deal. Bruhnke often works with companies that are “accidental exporters,” or firms that have some level of global operations but aren’t going all in with their global efforts.
Firms that come to Bruhnke tend to run into a few issues that present a lot of risk for the business, and Bruhnke is there to help those companies along, and hopefully lower the risk in the process.
Looking for help
Companies tend to come to Bruhnke for three things:
• Help finding customers
• Help finding partners, whether it’s in sales or logistics
• Help with finding a resource the company needs, such a legal expert in another country
The biggest barrier keeping local businesses from going global is that they don’t have a connection in the countries in which they wish to do business, Bruhnke says.
A business might know someone in one part of Europe, but no one else in the region who could help the business grow.
“It’s building that network out, it’s the most important thing. That’s really what the Global Chamber is all about,” Bruhnke says.
Members in the Global Chamber then have connections in hundreds of member cities, he says. Local businesses won’t be so alone in their global efforts once they’re part of a growing global network like the Global Chamber, which starts by asking questions when working with a company.
Bruhnke looks to identify the state of readiness for a business by seeing if it’s well-established in the U.S. already. He’ll also examine the firm’s distribution channels, along with the banking structure and international protections of the business’ products.
Bruhnke will guide companies to the right local resource who can help those businesses eventually go outside the U.S. border.
Michael Patterson, a Polsinelli shareholder who works with businesses that are expanding globally, recommends that businesses should really do their due diligence when it comes to global matters.
Finding the right partner, making sure they have a good reputation and examining how much they’ve penetrated the global market are all key things to examine, Patterson says.
And be familiar with local laws, especially ones that may favor distributors, he adds.
“Don’t be the only person in Mexico to find out that if you don’t have two entities, you’ve got to do profit sharing and now you’re at a disadvantage with all your competitors,” Patterson says. “Going global is not good or bad, it’s just different.”
Patterson says that with time and good preparation around tax structures and sourcing the right partners, businesses could be well-prepared before they expand internationally. Your firm may not have to hire whole departments or teams, he mentions. Current employees at the firms could be equipped to lead global efforts with a little bit of training.
Going global may sound like a scary process, but there could be a lot of positives to expanding internationally.
Your company may have many competitors here in the U.S. squeezing profit margins, but outside the country, there could be a market with high demand and no competition, Patterson says.
Patterson stresses that the world is going global at a rapid pace. Barriers that once existed are disappearing as folks use tools to connect with international marketplaces and become more aware, he says.
“The question of whether you go global or not, we’re beyond that now,” Patterson says.
Changing the mindset
About three years ago, while the Greater Phoenix Economic Council was looking inward at the region’s economy, it found that innovation, exports and entrepreneurship have been defining sustainable economies, says Chris Camacho, president and CEO of GPEC.
Culturally, exports haven’t always been the talk of the town for local businesses, so it was time to go to work.
Metro Phoenix Export Alliance (MPEXA) was founded to help bring exports front of mind for businesses. The group was founded as part of the Velocity Program and funded by J.P. Morgan Chase.
“We created this kind of grassroots, bottom-up approach to help small business export their product,” says Camacho, who is the vice chairman of the Metro Phoenix Export Alliance. “Exporting is one of the pillars that we’ve talked about as part of growing the regional economy.”
MPEXA consists of public and private leaders leveraging resources that already exist, such as the work being done at groups like the U.S. Commercial Service and Arizona Commerce Authority, and bringing them to local businesses, Camacho says.
MPEXA leads by hosting challenges where businesses can learn the ins and outs of exporting, raise money and connect businesses with advisors in the Phoenix region who are familiar with supply chains and exports.
“We’re already seeing the culture on exports change,” Camacho says. Exports are now in the conversation among leaders, just like how innovation and finding more startup capital are part of local conversations, he says.
“That’s what we’re hoping for, that it becomes a cultural change around the recognition that exports matter,” Camacho adds.
Ever since Joel E. Barthelemy founded his telemedicine company, GlobalMed, in 2002, he believed his technologies would be used globally. The medtech industry can be a challenging one, especially when it comes to getting technology certified by international and global groups. Barthelemy was up to the challenge, because he believed good healthcare isn’t just needed in the U.S., it’s needed everywhere.
These principles can be applied to any industry.
Even Barthelemy’s customers who are based in the U.S. — be it a mining or oil company or the Department of Defense — have international operations. So, Barthelemy built his systems to transcend borders, just like the customers. As a result, GlobalMed is in 55 countries, with installations in more than 30 countries, he says.
“I think to not be global minded, on the distribution of your products, is short-sighted,” Barthelemy says.
Europe and the U.S. are older and smaller markets compared with the rest of the world, Barthelemy says. Places like China, India and beyond make up most of the world’s population, and those regions and the growing populaces within them are all potential customers.
One challenge that exists in the global realm is getting paid. Working with a bank that can enable international wire payments through the Society for Worldwide Interbank Financial Telecommunication, otherwise known as SWIFT, is crucial to finding success overseas.
Local banks like the Alliance Bank of Arizona can facilitate international transactions, as well as provide exporters with lines of credit, which can be tough to come by, says Mark Roberts, senior commercial loan officer at Alliance Bank.
Foreign accounts receivable are ineligible for advances on a line of credit, Roberts says. That puts exporters in a “precarious situation,” he adds. Banks like Alliance Bank are members of the Export-Import Bank of the United States, which allows Alliance to give exporters lines of credit, so those businesses can grow, Roberts says.
Roberts says many banks don’t understand what it takes to go global, especially when it comes to facilitating relationships between international banks to guarantee payments through letters of credit.
With these types of local resources and groups like the Global Chamber and the Metro Phoenix Export Alliance, exporting and expanding the business is easier than ever.
When local firms like GlobalMed had issues or concerns abroad or wanted to open new markets, Barthelemy called Bruhnke at the Global Chamber, who made the right introductions.
“I feel it is extremely beneficial to have such an entity right here in Phoenix,” Barthelemy says.
Jeanine Jerkovic, economic development director for the City of Surprise, is the board secretary of the Metro Phoenix Export Alliance and has seen how businesses believe that going global is a daunting task. Surprise was recently named Global City of the Year by the Global Chamber of Phoenix.
Local firms, especially in the early days, can be so busy making sure the business gets off the ground that the business doesn’t fully evaluate the huge, positive impact a new market can bring to the firm, she says.
They’ll view it as complicated resource drain, she says. Yet, going global is still something to be looked at and groups like MPEXA help connect companies with the resources to bring them into the global marketplace.
These groups don’t guarantee success in the global marketplace, but as Camacho says, they’re here to “de-risk” the prospect of entering a global marketplace.
“I think it’s important for those companies that are really hitting their stride, to continue to stretch their potential and continue to look at the global market,” says Jerkovic, whose city has attracted global entities like Ottawa University and IRIS USA, a Japanese plastics manufacturer. “Going global is a tremendous pathway to success for companies reaching a certain point in their growth cycle.”