Business tips from the US

On the way to and from the Competitiveness Forum of the Americas (ACF) in Panama recently, I stopped in the US, where I took the opportunity to meet with some of our overseas representatives in Los Angeles and San Francisco.

One of the people I caught up with was ex-pat Kiwi Hema Dey and we talked about her business Iffel (export marketing and distribution, based in LA).

Hema offers NZ exporters marketing expertise in California; and also logistics, like warehousing, picking, packing and dispatching.  Hema is keen to promote Riverside County as an affordable place in the USA to situate manufacturing and logistics from.  It is a “free trade zone” so goods don’t get held up at Customs – it is close to the coast, Long Beach and LA.  If there are any tariffs, you don’t have to pay until the goods are sold and it is a lower cost place to conduct business from.

She says on-line and e-commerce sales are growing in the US at about 10% per year, and you need to optimise websites for online marketing.  Hema has a team she can tap into with an alliance called GLOCAL which includes a group of trusted advisors, lawyers, accountants, and freight forwarders. You can contact Hema Dey at hema@iffelinternational.com.

Los Angeles

Meetings with Leon Grice – NZ Consulate General, Los Angeles, Marta Mager, Regional Director, NZTE and Carl Voight, Professor of Entrepreneurship at USC Marshall School of Business and Beachhead advisor to NZTE.

I had some good discussions with these representatives who help NZ companies in LA.  Below are the salient points of a wide ranging discussion:

  • On a positive note we are getting closer to our markets via bigger (faster) aeroplanes.
  • The services spend in the US is significant and a lot of it is driven by intellectual property & we are starting to see NZ companies do well in this space – like Orion Healthcare, Xero, Vista etc.  As more of these entrepreneurs succeed, they can influence other NZ business leaders and a sense of community grows.
  • We have one of the highest spends on education in the OECD – if we can connect smart innovative people with US capital and connections we will do well.
  • The wine industry has continued to do well and the premium pricing is holding up. Tourism is holding up. Meat could be better marketed in the US; it needs a brand story that does not try to compete with US beef, because they are very different tastes and products (grass fed tastes very different to grain fed beef).
  • NZ companies need to do more trade missions, the learnings are immense and doors open when you are in a group.  Too many NZ companies get to the USA with limited horizons – they need to learn to think big and have the courage to fail (much is a more acceptable trait in the US and thought of as part of the journey).
  • In the US – speed is everything and may need to give up some ownership to raise money to execute with speed.  Burning cash is seen as positive and means you are growing and you are not going to own 100% of the business by the end of the journey.
  • Executives cost more to hire in the US and they could be earning more than the owner of the business, but good executives with good local knowledge and contacts are worth it.
  • NZ companies need to be ready to go with the market if it takes off.
  • Amazon – get listed with them if selling online. Search engine optimisation is critical – you have got to be in the top few companies listed.
  • Pick a niche and be really good at it.
  • American sales and marketing leaves NZ companies for dead.  They are very customer focussed, it’s not about the product or service, it’s about the customer – their needs and experience.
  • Pulse marketing.  If your competitors have bigger marketing budgets you need to be strategic to get noticed.  For example if you know your product sells well in a particular season, concentrate all of your marketing budget to out-spend the big competitor in those few months and don’t spend throughout the rest of the year.
  • There is a lot of FDI from China going into the US in agri-business e.g. Chinese investment in the biggest pork producer in the US.  They have realised that the US can produce pork cheaper (US has relatively cheap energy) and at consistent quality.
  • NZ companies need to step outside NZ and also be prepared to visit any company they think they can learn from.  They could be in a completely different sector but be doing innovative things in their supply chain, marketing, processes etc.  For example there was a cement company in the US that looked at the processes used by a Pizza delivery business, because speed was of the essence in both businesses.  It is not necessarily your competitors that you learn things from

San Francisco

In San Francisco I arrived after the America’s Cup was over and was surprised by the number of Americans who were hoping the Kiwi’s would win.  We were well liked in the competition and NZTE got some great leverage with Venture Capitalists turning up to cocktail functions and very interested in being introduced to NZ companies.

I met with Catherine Robinson, Director of the Kiwi Landing Pad – an office space where NZ technology companies can “hot desk” and have a base from which to check out the US market and get networked with the technology scene and technology investors in Silicon Valley.

Catherine joined the Kiwi Landing Pad as its Director in September 2012, and brings her extensive experience in commercialising technology and strategies for entering the United States market. See more at www.kiwilandingpad.com

Catherine had some good advice to share, which I have summarized below.

  • Don’t underestimate how much you will have to adapt, from employment law to how people get paid.  The faster you can adapt, the quicker you will succeed.
  • Kiwi Landing Pad is a place to do your market research – being in the market allows you to pick up the nuances that can get lost in translation if you just outsource the market research.
  • You need to know if you can sell your product in the US market; if you can’t sell it how is a sales person going to be able to?
  • You need to find the right level of venture capital.  It probably won’t be the big name brands because they are looking for really big investments.  It pays to look at who has invested in your competitors or who has the skill set or knowledge in your market, and what deal sizes are they doing.
  • Can get a visa waiver if you are only going to be in the US for a couple of weeks at a time, so that is what some companies do – go backwards and forwards for a while.
  • Don’t appoint sales people from afar.  You need to understand the quality of the relationships they have and you can only do that by being there on the ground.
  • There are lots of tech events going on all the time in SF.
  • Kiwi Landing Pad is a place where technology companies can be part of a networked community and there are lots of benefits in that.  It becomes a supportive ecosystem.

By Catherine Beard

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