SUSAN LENTZ : Making International Inroads : World Trade Center Helps Smooth the Border Crossings

Orange County is quickly becoming a major player in world trade. Mega-corporations and entrepreneurs alike are selling everything from doghouses to disk drives in places as formidable as the Communist bloc.

For instance, Phoenix Group International in Irvine recently made headlines around the world after it signed an unprecedented joint venture agreement to help provide as many as 6 million IBM-compatible personal computers to the Soviet Union.

The U.S. Bureau of Export Administration in Newport Beach said export license requests increased more than 80% in 1988 compared to a year before. And that federal agency’s jurisdiction only covers high-tech products.

Susan Lentz is the executive director of the World Trade Center Assn. of Orange County, based in Santa Ana. She was interviewed by Times Staff Writer Gregory Crouch about Orange County’s new-found worldliness.

Q. What is the World Trade Center Assn?

A. Our purpose is to make business happen for our members. And to encourage international trade in Orange County in general. We try to answer questions and create services that will really help people with their businesses and not just be another place you come to hear another speaker.

Q. The World Trade Center Assn. of Orange County is part of a larger group, isn’t it?

A. The World Trade Center Assn. is headquartered in New York. There are 204 other associations in 52 countries.

Q. How big is your organization in Orange County?

A. We’ve grown from 350 members three years ago to 800 now, including 550 companies. The remainder are consulates and students.

Q. What kind of services do you offer?

A. First, we created an institute in conjunction with Coastline Community College that has been running for 2 1/2 years now. The institute has a resource center including a library we contributed that now has about 5,000 publications. Its focus is strictly international business and it is open from 9 a.m. to 5 p.m. Monday through Friday. What’s more, the institute offers approximately 13 different classes and has had over 1,500 business people go through it so far. We have also created a trade development department in the last year to match businesses with distributors or to do market research projects.

Q. Who takes the classes?

A. The kind of person they attract is usually a beginning or mid-level manager who is sent by his or her company. They also have a high concentration of entrepreneurs who are beginning some kind of international company or wanting to market a product overseas.

Q. What types of classes are offered?

A. The calsses range anywhere from “How to Do a Letter of Credit” to a general overview of international business to doing business in specific countries like Japan, China or Korea.

Q. Members also have access to computer databases about international trade, don’t they?

A. Yes. NETWORK is our computerized trade lead system and database run by our headquarters in New York. You can use it with your personal computer. Here in Orange County, we are fortunate because there is a computer in Newport Beach so you simply link into that with a local telephone call. It has trade leads that are posted on a daily basis from all over the world. Trade leads are offers to buy and offers to sell as well as companies looking for distributors.

Q. How extensively do Orange County business people use NETWORK?

A. I’m proud to say Orange County is third in the world in our association in the use of NETWORK. We are right behind Taipei and New York. So for our county, I think that’s pretty impressive.

Q. How strong is Orange County’s involvement in world trade?

A. I think Orange County is a very viable international center and I think one reason is because there are so many entrepreneurs and small business people who really see this as a good tool for their businesses. Orange County itself is just a small business county. There is a lot of leading-edge technology here. That’s why the Bureau of Export Administration located its office here. When they decided to locate for the first time outside of Washington, D.C., they thought they would go to Silicon Valley. But when they ran their license applications by ZIP code, it turned out that it was really primarily Irvine, Costa Mesa and Santa Ana businesses that were filing these. Orange County is the leading county in the nation now for export of high-technology products.

Q. What kinds of products are Orange County companies exporting?

A. I would say that there are lots of smaller companies here that are doing cutting-edge technology. The other mix we see is a lot of biomedical and medical equipment supplies. And I see quite a few trading companies, people trying to be the middlemen. Plus I’ve noticed a number of people looking seriously at California life style products. The bathing suits that are made here, surf goods, the sort of things that symbolize California. I think it’s hard to characterize this market because it’s so diverse and there are so many different types of businesses here. And we’ve seen in the last couple of years much more of an interest in international trade generally across the board.

Q. How do you account for Orange County’s explosive interest in world trade?

A. I think a lot of people have been approached by people from other countries wanting to represent their products so it kind of spurs their interest. I also think one reason too is because Orange County businesses do tend to be risk takers and are entrepreneurial so they are willing to look at something that is unique and different. And I think the falling dollar has something to do with it as well. It has become easier for people to sell their products overseas.

Q. Which countries buy the majority of products exported from Orange County?

A. Interestingly enough, the last survey we did--which is a couple of years old--indicated the No. 1 country was the United Kingdom, followed by Germany and then Japan third. Now I don’t know if in the last couple of years those numbers could change. But Orange County companies do a tremendous amount of business with Canada and Europe as well as the Pacific Rim because Canada and Europe are easier markets to start in. There are trade barriers that make it difficult to export a lot of products to Japan.

Q. Are some business people resistant to the idea of selling overseas?

A. For a long time the United States was top dog and we dominated the world both politically and economically and like everything else times change. And it’s hard to change with them sometimes. But I’ve found that once people see the advantage of international business they do it. Good business people can understand good business concepts whether they are international or domestic. The problem is if you have a good product and a good market, you’re not just competing domestically; you are competing internationally because companies from other places, other lands, come here and compete in that same market. That’s why businesses have to be international or they won’t survive into the 21st Century. It isn’t any longer just a domestic or international market. It’s a global market.

Q. What are the typical questions you receive from Orange County business people?

A. How do I do it? How do I get into international trade? What is a letter of credit? We get a lot of questions on how do I go about finding a distributor in this particular country. We get a lot of specific questions about specific products in specific areas of the world.

Q. Can you give me an example?

A. How do I distribute my faucets in Mexico? Who are my competitors? What is the market there now? What is the market share? How much of a market is there? And who are the people and what percentage do they have of the market? You get a lot of very sophisticated questions for people who are trying to decide if they are going to expand their business or if they are even going to start.

Q. Does your trade development department answer such specifics?

A. Yes. Our interns go to the library, contact our sister world trade centers in, for example, both Mexico City and Guadalajara, use the Department of Commerce and use databases. And sometimes we’re real successful and sometimes we’re only partially successful.

Q. How much do you charge for such a service?

A. We’ll answer basic questions and we give everybody two free hours of market research time. And then we always answer basic questions without charging, such as those about letters of credit, customs brokers etc. For an in-depth project like faucets in Mexico, we will charge maybe between $600 and $700.

Q. How do you find a company to export your product?

A. They are listed in the Yellow Pages under customs brokers and freight forwarders. Customs brokers are the people who handle importing of goods and freight forwarders are the people who ship things out of the country. Some companies are both.

Q. What kinds of questions should you ask to make sure the customs broker or freight forwarder is reliable and reputable?

A. When you look for either one of those, one thing I always tell people is that you have to remember that they are only an extension of your business. If your customs broker screws up and you don’t get your shipment and you can’t ship to your customers, or your freight forwarder screws up and your shipment doesn’t reach your customer, they are not going to call the freight forwarder. They are going to call you and they are going to yell at you and it’s going to reflect negatively on you. So you should pick four or five companies and interview them as though you would interview a prospective employee. One area of concern is rates. You have to look at that because freight is an expensive portion of doing business overseas. But you also have to look for service and commitment and I always ask for a few references of companies that they do business with.

Q. What is a letter of credit?

A. A letter of credit is an instrument of payment that has been used in international trade since the Babylonian times. It can be very complicated but it is a way of ensuring that you are going to be paid. Basically a letter of credit is issued by your customer’s bank. Say, for example, you are selling 3,000 widgets and it’s a million-dollar order. Your customer will issue a letter of credit from their bank which is then transmitted to your bank for a million dollars. The most secure letter of credit is a so-called confirmed letter, which is issued by your customer’s bank to your bank and your bank confirms it, which means that they will pay it regardless of whether or not there is any money in your customer’s account. So you are insured no matter what. So when you make the shipment, you submit all of the documents that are required under the letter of credit and then the bank will pay you immediately. The complicated part is that the documents required can be very complex and if they are not exact--down to typos in the description of your product--the bank will often refuse to pay.

Q. How do you find a good, reputable distributor for your product?

A. You’ll get lots of letters from people overseas who want to represent your product. We at the World Trade Center Assn. will a lot of times do searches on a distributor. We will contact, for example, the World Trade Center in Paris and ask them if they know about this company or ask if they can find out any information about them. We also recommend that you go through the Department of Commerce, which has a similar kind of distributor qualification service. Don’t just jump into bed with anybody in business. Be as careful as you would in the United States.

Q. Let’s say I make surfboards and I’ve gotten the idea I want to sell my product in Australia. What should I do first?

A. Do some research, through us or the Deparment of Commerce. First of all you must figure out if there is a market for surfboards in Australia. Obviously there is. But then who in Australia sells surfboards? And is there domestic competition? Who is there and what is their market share? Without good information you can’t make good business decisions. So once you figure out there is a market, you need a business plan. You need to decide if you are going to manufacture them here. Then you need to get a good freight forwarder and work on your pricing for your freight. Then you need to decide how you are going to sell the surfboards in Australia. Do you want to try and sell them directly from here? Most companies probably would say no, especially with surfboards. So then you find out who are the major distributors for surfboards in Australia and then you start contacting them. My recommendation is that you go to the country and meet with people face to face. If you don’t have the money, you can at least get some kind of introduction through a consulate. Talk to the potential distributor and start negotiating the first order.

Q. What is the cheapest way to familiarize yourself with a country?

A. There are some low-cost alternatives to traveling alone. The California State World Trade Commission’s office in Long Beach does lots of trade shows and they buy space as California and then they turn around and take companies with them. It can be really reasonable to participate in a trade show because you meet a lot of people. Furthermore, the Department of Commerce does matchmakers, which are trade missions where they will take a group of companies in a specific industry to a specific area for a relatively low cost, maybe $2,000 or so. For example, you go to Australia with a group of other leisure people and what the Department of Commerce does is set up appointments with all the right people.