Global Trader August-September ’12
Don’t Pull Your Hair Out
How HairMax sidestepped the stress of international regulations
Lexington International’s Managing Director David Michaels is confident his hair growth product, HairMax is a cut above, but understanding duties and tariffs became an obstacle when first exporting to Brazil and Japan. As seen on Dr. Oz, HairMax is a laser hair treatment that guarantees hereditary hair growth. David comments his product is “like no other on the market,” but it wasn’t easy for this hair master.
“There are always new regulations and rules you need to follow in order to ship something, and the cost for shipping adds up,” says Michaels. There are medical device registration licenses, electrical-safety compliance and ISO compliance, which can delay the process for years. Some countries have “great marketing potential,” but from a logistics standpoint, it doesn’t make much sense to continue.
David learned to work around the system. His company currently deals directly with the users instead of shipping “through a middle man,” which allows HairMax to sell into Brazil, where the marketing potential is limited due to extensive taxes and duties. Challenges related to traditional shipping would present the company with a business loss. “The products in Brazil are approximately 100 percent to the end user as they are here in the United States,” says Michaels. “This hurts us because if you go through importers, the end user is 100 percent, the cost is so expensive and you do not have a successful retail business.”
Japan presents many of the same challenges due to what Michaels calls “expensive regulatory medical device regulations. It would take approximately two years and $500,000 to apply—too much for us.” Not to lose out on Japanese customers, Michaels once again ran an end-around the system, shipping directly to Japanese consumers. The company focused on advertising internationally to potential consumers and shipping directly via UPS. “We are able to ship individual items as opposed to shipping through a distributor,” Michaels says. The new approach is more productive, safe and guaranteed. —Kendra Phares
Business is No Royal Flush
Falcon Waterfree Technologies learned important lessons in exporting urinals to Asia
Bill Stimer of Falcon Waterfree Technologies will tell you dealing with customers in more than 55 countries is not an easy task. “Because we are a small company, we are a company of doers,” says Stimer, VP of operations. “We do it all.” Two years ago, Falcon had plenty to do when it ran into problems dealing with America’s shipping agreement with Asia.
Stimer likes to call it “the NAFTA of Asia.” Knowing whether to fill out forms D or E rather than forms A or B in order to get duty-free status on Falcon products became a problem. “It was a real test for us,” Stimer concedes. We needed to work assertively and had to work directly with customs and crate exports.” This is when he learned “the phone is powerful,” a lesson he would adhere to in the coming years.
“When you get on the phone with someone and share with them the challenges, they will know a chunk of the puzzle that you may not,” Stimer says. “By taking four or five conversations with four to five different people, suddenly each one’s chunk is put into the puzzle, each piece of the puzzle comes together and the picture is clear.”
To get that clear picture of his paperwork, Stimer stayed up late to communicate with Beijing, Singapore, and the Philippines. “Even our suppliers did not know,” he says, and the uncertainty of not speaking directly with his foreign counterparts was likely to result in tension and fines. To be sure he got everything right, he even contacted a trade attorney in China to work through trade personals. “It was a really good experience,” Stimer says. “It took us a couple months and we had to work with people, and work around it.”
These days, Bill applies the simple principle of working directly with people in his everyday operations. “We are not shy with contacting logistic companies and communicating with them and understand what they do,” he says. “A lot of people are too afraid to get on the phone, and they sit there and spend hours on the computer Googling.” –Kendra Phares
A Thirst for Exporting
How LightStream Technologies Found an Indian Partner with Help from Commercial Services
LightStream Technologies’ safe and reliable water purification system disinfects water with intense bursts of UV light. With so many countries around the world in need of clean drinking water, exporting was an easy decision, but finding distributors in foreign markets and weathering the expenses was not a process the company was prepared to tackle alone.
“There are markets around the world that meet our criteria,” says Josh Lanier, the company’s vice chairman and co-founder. “One, an immediate need; and two, the ability to buy.” Lanier and his team would have to find buyers without sacrificing the company’s financial state.
Lanier was introduced to the United States Commercial Services’ Sandra Collazo, a trade specialist at the Northern Virginia Export Assistance Center, who helped plug Lanier in with a trade mission to India. Traveling to New Delhi, Mumbai and Chennai, Lanier found there were “dozens of companies interested in becoming LightStream Authorized Solution Providers.” He met with representatives of companies that Commercial Service officers had prescreened to fit LightStream’s needs and wants. “We were able to survey and better understand the Indian market by participating in the trade mission,” explains Lanier.
He narrowed his list of potential partners and later decided to work with Subhash Projects and Marketing Ltd., one of India’s leading construction and engineering firms. Lanier describes Subhash as “a good group; they’re solid, they have a growth potential, and they are publicly traded.” Both companies expect sales of $15 million in India over the next five years.
Thrilled by his success in India, Lanier plans on taking advantage of more Commercial Service products and traveling around the world ”facilitating sales to multiple markets simultaneously,” selling LightStream Technologies. —Kendra Phares
Going the Distance
For McLanahan Corporation, Servicing Clients Means Setting Up Shop in its BackYard
With a large global consumer base in Europe, Australia and the Pacific Rim, McLanahan Corporation has much to navigate in staying connected with its worldwide catalogue of customers. “Our industry prefers a people-to-people approach to sales and service,” says Sean McLanahan, executive vice president and chief administrative officer for this global supplier of products like aggregate processing equipment for “washing, classifying, crushing and screening construction aggregates such as limestone, granite, sand, gravel and other similar minerals.”
“Customers want a company committed and available to provide parts and service after the initial sale,” McLanahan tells us. It’s a challenge that scales up as the company continues to grow both domestically and internationally. “Our business expanded after 2008. As the USA markets cooled, the world mineral markets were expanding,” he says. “We concentrated on working the global markets and as a result our business grew,” giving the company many more clients to manage and maintain.
McLanahan’s solution was truly global. The company stationed sales, engineering and project-management offices in key areas in an effort to “stay connected to our customers in terms of time-zone differences, cultural-sales differences, and local preferences for vendors,” McLanahan says. “Since we custom manufacture everything, we need to have long dialog with customers—no matter where they are located—to make sure our equipment works in their application and that we are prepared to service the equipment for years to come.”
Today, McLanahan has four offices in the United States, two in Australia and another in the U.K. At its current growth rate, the company expects to add an office in either Peru or Chile within four years, and another in southern or western Africa within seven years. McLanahan continues its relationships with customers by staying engaged through various trade shows, e-newsletters, quarterly newsletter publications and direct visits to the companies’ offices. “We go all out to ensure our customers are happy with every order, all the time.” –Kendra Phares
NAFTA Under Trump