BUSINESS consultants abroad.

Entreprenuers act as middlemen in assisting others with overseas business affairs

DURING A 1991 TRIP TO TOKYO, KATHRYN D. Leary says she fell in love with Japanese culture and was intrigued by the business customs. As president and CEO of The Leary Group Inc. in New York, she specializes in international marketing, trade development and executive training programs for succeeding in a global market.

With years of marketing and communications experience, she has successfully guided dozens of companies into markets such as South Africa and Japan. In fact, Leary says she fell so much in love with Japan that she began to immerse herself in the language and culture. She took classes, read books and subscribed to magazines and newsletters on Japanese business customs and culture as she readied herself to do business in the country.

Leary is one of a growing number of African Americans who have formed lucrative businesses as consultants to American firms looking to do business in foreign markets.

Herbert C. Smith, Ph.D., is chairman and CEO of Smith International Enterprises Ltd. in Shaker Heights, Ohio, a general merchandise sourcing company with an office in Hong Kong. Smith's firm supplies premium products, from baseball caps to duffel bags and documentation services for North American companies and organizations.

Ronald Ford Jr. is president and CEO of Ronald Ford Jr. Inc. Consulting Group in Camden, New Jersey, an accounting, taxation, importing, publishing and real estate firm that also has an office in Rotterdam, the Netherlands. Leary, Smith and Ford represent the small number of African American frontiersmen and women doing business overseas. According to the Office of Advocacy of the U.S. Small Business Administration, of all black-owned firms, only 0.8%, or 5,078, export goods and services from the U.S.

But with the continuing development of the global economy, now more than ever African Americans are seeking opportunities on foreign shores.

"Historically, African Americans haven't been encouraged to think internationally, and have had our plates full trying to focus on problems here, such as civil rights and affirmative action," says Leary. "But through connections with family and friends living in the Caribbean and other places abroad, our minds have opened to thinking internationally."

We'll focus on how Leary, Smith and Ford established their international businesses and what advice they have for expanding your business abroad. They address issues associated with doing business globally, such as currency exchange and the logistics of establishing a business and generating a client and supplier base.

THE FINANCIAL AIDE

As a medical logistics officer for the Army Reserves, Ron Ford, 30, first traveled to the Netherlands in 1996. With a background in corporate and personal accounting, Ford was appointed by the Army division in the Netherlands as a senior tax advisor from 1997 to 1998.

Ford, who was supposed to be deployed to Germany in 1995, had developed plans for starting a business there. But he saw an opportunity in the Netherlands, and set out to execute his plan there.

"As an officer, I made contacts by attending embassy affairs," Ford says. "I was exposed to Americans working for American-based companies who expressed a need for someone to help them take care of affairs stateside, such as property management and taxation. With the six-hour time difference between the Netherlands and the East Coast, they only have a two-hour window to conduct any business with U.S. firms operating from 9 a.m. to 5 p.m."

Today, Ford's company has revenues of $1 million, a staff of 10 overseas employees and numerous clients, both military personnel and civilians, in the Netherlands, Belgium and Germany. The firm provides tax, legal, real estate and business management as well as importing services. "I put together a sales team of largely African Americans to find Americans who need help," Ford says. A minimum retainer is approximately $1,200.

One client, who served in the Army, needed to find someone to rent her home in Florida while she was in Germany for a four-year tour. Ford found a property manager by networking with his contacts in the real estate industry.

Setting up his corporation in the Netherlands required filing with the city of Rotterdam and other agencies. His overhead expenses were low (less than $5,000), because much of his business is based on creating partnerships with foreign and government officials and Americans abroad. His employees work from home and most of his business is conducted by phone via a 24-hour, toll-free number. Placing ads in American newspapers, such as Stars and Stripes, that are sold abroad also helps drum up business.

"One of the keys to success is that you have to have people that you can trust in a country," Ford says. "From meeting people, they can show you the inner workings of their country and find people to work with you. If you don't understand the culture, people will take advantage of you. It also helps to speak the language for better communication and relationship-building."

PARTNERING FOR SUCCESS

Prior to launching Smith International Enterprises Ltd. in 1991, Herbert Smith, 50, founded H.C. Smith Ltd. in 1984, a $7 million nationally renowned executive search firm. Smith was able to use his expertise as a management consultant to undertake an international venture. He also studied Mandarin Chinese and worked with the U.S. Department of Commerce and the Ohio Department for International Trade for East and Southeast Asia in Hong Kong.

In 1990, Smith bought a Hong Kong-based import company from Schiller & Associates, a Detroit firm, that distributed products to discount stores. He found key suppliers in Hong Kong for products American firms needed and expanded his client base. He accomplished this by forming a joint venture partnership with a Hong Kong firm, Kar Lai Enterprises Ltd., in 1994.

Under the agreement, Smith International is the exclusive North American distributor of all products manufactured by Kar Lai Handbag Manufacturing and handles sales, marketing, financing, research and development and distribution. Kar Lai is the exclusive representative in East and Southeast Asia for offshore procurement for Smith International and handles pre-production, manufacturing and purchasing. Both concerns handle shipping, logistics and advertising.

"The biggest challenge at the beginning was convincing companies that hadn't gone to the Far East, to do business with us," Smith says. "Usually this kind of business goes through an agent, a trading company and a company representative. We saw a way to provide a product at less cost and more quickly."

Clients pay Smith's company to create products that they either use or resell to another company. Kar Lai evaluates manufacturers in China to find the one best equipped to handle the contract if it isn't able to manufacture the product itself.

Today, the $5 million firm, which has 1,500 employees in two facilities in Shaker Heights, Ohio, and Hong Kong, manufactures bags such as portfolios and briefcases, and sources products, such as electronics and fashion and business accessories, for American firms. Smith's firm handles a minimum order of 5,000 units and ships products within 21 to 45 days. A unit, or one item, can vary in price depending on materials and design.

He advises firms looking to develop distribution agreements and other alliances with foreign concerns to enlist the support of the U.S. Department of Commerce in the host country. It's also critical, he adds, to learn the capabilities of the other firm and maintain close contact throughout the relationship.

"Establishing a relationship with a banking institution that has offices in the U.S. is very helpful," Smith says. "On very large deals, we use letters of credit. Basically, our bank guarantees funds are available for payment. I, in turn, issue a transferable letter of credit to our manufacturers in China. This eliminates the need for us to chase invoices and receivables."

Because the Hong Kong dollar is pegged to the U.S. dollar, Smith doesn't have to worry about an unstable economic climate, as with other currencies. American clients' transactions are done in U.S. dollars and Smith pays for materials in the Hong Kong dollar or Chinese yuan.

Smith also advises entrepreneurs to have their business associates sign confidentiality agreements when trademarks are involved. "Documentation is very important to us," Smith says. "It's essential that we have letters stating we have permission to import a certain product, especially licensed products."

Some of his major clients include Polaroid, the National Basketball Association, P&K International, Whitney Designs and the licensee for the Walt Disney Company. Polaroid hired Smith International in 1991 to produce a credit card-sized calculator it planned to use in promotions. Over a three-year period, Smith International produced more than 2 million units.

Smith is in the process of launching yet another venture to produce glove box portfolios and has negotiated a strategic alliance with a Milwaukee firm to produce other products. "With the expansion, we're looking to get into new markets and products," Smith says.

MARKETING MAESTRO

Helping entrepreneurs enter new markets is Kathryn Leary's passion. She has parlayed close to three decades of marketing and advertising experience with such powerhouses as General Foods, Citibank, Young & Rubicam, BBDO and Saatchi & Saatchi into an eight-year-old firm that assists businesses with establishing contacts and coordinates trade missions, among many other services.

After viewing the proverbial glass ceiling firsthand at majority firms, Leary, 47, felt it was time to venture off on her own.

"Once I realized the large companies had overseas offices, it became my goal to go abroad," Leary says. "But this was denied me. I started my company to help Americans market in other countries."

To prepare for doing business in Japan, Leary took language classes to master basic greetings and common phrases, studied the culture at the Asia Society in New York, subscribed to the international edition of the Japan Times and other magazines and newsletters and read books on Japanese business customs.

"I'm great at [the art of] observation," Leary says. "I go into stores and homes in Japan to obtain insight into their consumer behaviors."

Some of her clients have included Ben & Jerry's, AT&T, Colgate Palmolive, Corning Consumer Products and Estee Lauder, as well as many African American- and women-owned businesses. Consulting rates vary, ranging from a daily fee to a negotiated per-project rate based on revenue projections.

Initially, she worked with clients with whom she had had a relationship from her corporate years. Other clients have derived from audiences at her speaking engagements and through referrals.

Diane Stevens, CEO and founder of New York-based Natural Face New York, hired Leafy to help her with a $50,000 launch of a cosmetics and skin-care line in South Africa this year. Stevens will rent a small salon in an upscale shopping mall in Johannesburg. She is leasing space in a manufacturing facility where South African workers will mix, bottle and package her products to her specifications. She also has commitments from two major department stores there, including Edgar's, to carry the line.

"Kathryn was able to provide me with business connections both here in the U.S. and in South Africa," Stevens says. "She helped me develop a strategy to cut through the red tape so I could work with the South African Consulate in New York to get things done. She has access to key business and government people, and made a point of getting information pertinent to my business to me. She has been an excellent resource for me."

Leary also arranged for Stevens to attend networking events to meet top South African business, trade and financial representatives.

Jerusha Stewart, founder of Adventures of Jerusha in Oakland, California, wanted to market a workshop that teaches company executives how to develop product promotion and marketing strategies aimed at international firms. She sought out Leary last year to help her find a strategy.

"I contacted Kathryn because I realized brand development would be terrific to market overseas, especially in emerging markets," Stewart says. "Kathryn identified and networked with companies in Asia and South Africa. We've developed the workshop and a seminar, and are finding groups who want them."

Given these examples, African Americans looking to expand their horizons are apt to find distant shores where a wealth of opportunities abound.

RELATED ARTICLE: Global Dynamics 

Here are some other points to consider before expanding your business overseas

* Know your product or service and focus on perfecting your market niche. Identify the need for your product in a market and familiarize yourself with the buying habits of your target customers.

* Understand your chosen country's trade and investment flows, general economic and political trends and cultural factors, including business customs.

* Analyze the country's history, infrastructure, employment laws and transportation system.

* Know who your domestic and foreign competitors are.

* Seek out alternative financing options to fund your expansion, such as distribution, subcontracting or licensing deals with overseas partners.

* Become knowledgeable about the registration processes, costs and fees associated with starting your business.

* Develop a long-term logistical strategy for staffing, capital and other aspects of your business.

* Build relationships with business and government officials in your chosen country and keep them abreast of your company's activities.

* Contact the American Embassy or Consulate in your chosen country, as well as the local mayor's office. Some cities may also operate local chambers of commerce in foreign lands. Ask officials to place you on a mailing list so you can be informed about future conferences or briefings.

* Learn the language--take lessons, if necessary.

* Consider the services of an international trade consultant.