Managing director, Interlink Capital Strategies,

Falls Church, Va.

International trade requires awareness of culture, costs

How difficult is it for a small or medium-size company to export?

The lines between international and domestic trade are blurred. We drive foreign cars and we don't think a thing about buying foreign goods. The first step is to be realistic about what product or service you have. For instance, you're not going to sell pizzas to Japan from Salt Lake City. The next step is to know what kind of modifications that must be made to sell in a foreign market. Go to the markets you're interested in doing business with and learn the culture. Then contact the Department of Commerce or World Trade Association (801-422-6495 or visit www.utahworldtrade.org). It's a lot cheaper than hiring a consultant like me.

Can you talk specifically about Utah companies?

There might be an inferiority complex when it comes to international trade in Utah. But there shouldn't be. There are unequaled language skills here, in part because of the Mormon church's missionary program. Utah also has a good reputation for technology. When I look at some neighboring states, I see that Utah companies have more to offer. Certain overseas markets are a natural fit for Utah. For instance, Mexico is much closer than the East Coast.

What are some common mistakes in dealing with a foreign culture?

To assume the goods and services you offer will be understood exactly the same in another country. General Motors is a classic example. They sold a small subcompact, the Nova, to Mexico, and they didn't think to change the name. In Spanish, "no va" means "it doesn't go." The next is pricing. Companies will have shipping costs, airfare, customs and other expenses. Yet in their eagerness to export, small to medium firms sometimes don't think through the price. The No. 1 reason more small to medium firms aren't in international trade is payment risk. The importer wants to be paid when the goods are shipped, while the importer wants performance assurances, and therefore they want to delay payments.

What are some of these finance arrangements?

Overseas sales risk is a function of the kind of terms your company offers. To the extent your company has a limited-risk appetite, you can insist on cash-in-advance terms, but then the volume of sales is likely to suffer. On the other hand, your sales staff may appreciate the possibility of selling everything on open-account terms with extended terms, but unfortunately the corporate controller will then not sleep at night. Using letters of credit, credit insurance and government risk programs allow both the buyer and seller to reach some middle ground where the risk is acceptable to both parties. This will then facilitate more trade.

- Dawn House, dawn@sltrib.com