Respondents Emphasized U.S.-Based Solutions or Rep Offices Rather than More Resource Intensive Commitments ...

Deviation remained above average for most of the factors included in this question. While this indicates a wide divergence of opinion, 19% accorded "Export Sales" (6.73) with the highest (10) ranking. Similarly the second highest rated factor was "Marketing Trips" (6.06). This was followed by "Representative Office" (5.85), "Licensing/Distribution Agreement" (5.65), "Joint Venture/Partnership" (5.32). "Prefer Initial Research" (3.97) and the most resource intensive options "M&A/Strategic Investment" (3.93), "Greenfield Investment" (3.20) and "Portfolio Investment" (3.17), received the lowest rankings.

It should come as no surprise that most respondents preferred US-based, over more complex and resource-intensive, solutions, given these are usually the first steps and precursors to greater foreign involvement, and reflect the bias inherent in a sampling that includes firms of all sizes. At the same time there seemed to be a notable lack of realization that a "demand-driven" effort to generate revenue growth from foreign markets requires a far different orientation than one that seeks to rely on international sourcing as a means to reduce costs and raise margins on sales within the US.

Respondents, however, appeared to be reluctant to make this step, perhaps due to the difficulties noted in previous questions. One Consultant stressed the ongoing problems in managing an overseas enterprise commenting, "Communication is still a big barrier for overseas business even though people speak good English. They cannot understand each other very well." Another noted even if one were able to establish themselves, this does not necessarily translate into long-term success. This Industrial Equipment Manufacturer noted "One of our former customers, a manufacturer of printed circuit boards, has shifted almost all of their production to a Chinese supplier. In the short term, they may see an increase in profits due to weak environmental standards in China and poverty level wages. Soon, the Chinese supplier will discover the names and contacts of the American end-users. Then what function will our former customer perform? NONE. They will be out of business. So much for short-term profits!!!" Finally, with a touch of irony, a Chief Engineer highlighted the difficulties that US managers have in managing far-off operations when he noted, "Might use 'marketing trips' as a cover for museum crawling!"

On the other hand those that know these markets best, stress the need for attention and commitment. One Scientific Equipment Manufacturer stated, "In China I am OK as I speak the language, but a lot of companies have problems. One of the important things to know if you do business in the PRC is how to access the law to protect your business or you may run into IPR issues. It is very tricky to do business offshore unless you know the area, language and have relationships. It is also good to work with governments, especially in South Korea. I also speak Japanese and that helps as well. I think a lot of American businessmen would do well to learn the language before they start doing business over there."

Respondents' quotes

"Communication is still a big barrier for the overseas business even though people speak good English. They cannot understand each other very well."

"One of our former customers, a manufacturer of printed circuit boards, has shifted almost all of their production to a Chinese supplier. In the short term, they may see an increase in profits due to weak environmental standards in China and poverty level wages. Soon, the Chinese supplier will discover the names and contacts of the American end-users. Then what function will our former customer perform? None. They will be out of business. So much for short term profits!"

"I think I might use 'marketing trips' as a cover for museum crawling!"