New Orleans entrepreneur Kyle Berner is taking his all-natural rubber flip-flops to one of the world's fastest-growing markets: China.
This year, Berner plans to list his eco-friendly flip-flops on Chinese e-commerce site Tmall.com, joining the ranks of large American companies such as Levi Strauss that are already on the web site. It's a step that Berner hopes will help take the small company he founded, Feelgoodz, from a "bootstrap business" that generated about $330,000 in sales last year to one with as much as $50 million in sales in five years.
The U.S. will continue to be Feelgoodz's primary market, but exporting overseas helps protect against the risk of an unexpected domestic downturn, according to Berner, who also sells his flip-flops in New Zealand.
"The Chinese are starting to consume and spend money," he says. "You couple that with the gigantic size of the market, and it makes sense to us" to enter the market.
For large American corporations, exporting — especially to booming markets such as China, India and Brazil — is often seen as a logical part of their growth. But small and midsize businesses, with limited resources and staff, may see it as a hassle, according to Ed Marsh, a principal at Consilium Global Business Development Advisors, which advises U.S. companies on exporting. While more than 99 percent of U.S. businesses are small or midsize enterprises, they account for a relatively small share of U.S. exports, according to a 2010 report by the U.S. International Trade Commission.
"The government can jump up and down and talk about the benefit of diversifying your market and the opportunity to reach more than 90 percent of the world's consumers, but for a business owner who is frantically trying to keep up with his e-mail, the perceived benefits may not outweigh the perceived impediments" of exporting, Marsh says.
The mindset of many small business owners is starting to change, however, as e-commerce sites make it easier than before to get products affordably marketed and distributed to consumers overseas. The Obama administration, as part of its goal to double U.S. exports to $3.15 trillion by 2015, is also working to remove export barriers. The administration has increased the credit and financing available to small and midsize businesses, struck trade agreements to expand access to new markets and pushed for greater protection of intellectual property rights overseas. A relatively new pact between the U.S. and South Korea is expected to boost American exports by $10 billion to $11 billion a year.
The government could do even more to help American businesses export, says Frank Vargo, vice president of international economic affairs for the National Association of Manufacturers trade group. Steps that he advocates include raising the lending limit for the Export-Import Bank, the federal export credit agency, along with promoting exports aggressively and signing additional free-trade agreements.
In the meantime, private companies are springing up to assist U.S. businesses in dealing with foreign currency and communication issues in complex markets, such as China.
Export Now, a company started by Frank Lavin, a former U.S. undersecretary of Commerce for international trade, is helping Feelgoodz and other American businesses list their products on Tmall. Export Now translates the description of the company's product into Mandarin for the website, takes care of customer questions and sends out the product. It also collects the sales proceeds in yuan, China's official currency, then remits the money to American businesses in U.S. dollars.
"China has a booming middle class, and there is real appetite for American products, but (language and currency) barriers can make it difficult to export there," says Lavin.
Lion Brand Yarn, a Carlstadt, N.J., family-owned business that is working with Export Now, plans to enter the Chinese market this year with a collection of yarns "made in the USA," because of their potential appeal to Chinese consumers, says Evan Blumenthal, the company's sales director for international accounts.
A growing number of small and midsize U.S. businesses — many that have never exported to China — are seeking help to do so because of the uncertain global economy, says Pat Long, chief executive of Rare Bird Trading, an export adviser with offices in Raleigh, N.C., and Suzhou in eastern China.
"They realize that in order to grow, they have to expand to international markets, and there is no market bigger than China right now," Long says.
The appreciating yuan, by boosting Chinese consumers' purchasing power, also appeals to U.S. exporters, she says.
One caveat: The ebb and flow of trade tensions between the U.S. and China could complicate matters, as the U.S. government weighs anti-dumping duties on a range of Chinese products, including Chinese solar cells. China's Ministry of Commerce has launched its own investigation of American solar-cell makers.
Still, despite sometimes strained trade ties between the U.S. and China, "a company's export success is not tied to the politics of the moment," Lavin says.