Forging new frontiers: never ones to shy away from new ventures, B.E. 100s companies are making their mark - and market - internationally.

Taking any business abroad can be fraught with peril. Trade laws, currency fluctuations, governmental politics and cultural consumer preferences can be significant hurdles when doing business in the international marketplace. But political stability and economic reform are making foreign markets attractive in almost every corner of the world. Conversely, domestic market saturation and competition, even among African American product lines, is forcing black-owned companies to look elsewhere for new customers. "Made in the U.S.A." is still an attractive label to sell almost anything--from cosmetics to technology--abroad.

Several BE 100s companies are poised to compete in the world marketplace. Their goal, of course, is to increase revenue, but they also realize that there's a broad market of potential buyers outside our borders. To remain competitive, they are expanding their base by forming partnerships with foreign-owned entities. These joint ventures, distributorships and resale agreements help them provide services or distribute their products globally.

Three BE 100s companies, Pro-Line Corp., Black Entertainment Television and Johnson Publishing, are trading on an inherent edge--their ethnicity--to make inroads into foreign markets. Early financial results have been mixed: the majority of these companies are making little, if any, money. Their biggest hurdle is cost, whether they spend the money to establish a physical presence in a target country or travel back and forth. International tariffs, which can range from 15% to 100%, are another big cost added to the bottom line of doing business abroad. But, these and other BE 100s companies are buoyed by the U.S. government's commitment to international trade and the support of Commerce Secretary Ron Brown to include women-and minority-owned companies in the process. Now they can focus on the long-term prospects that the global marketplace offers as key to their corporate growth strategy.

MARKET POTENTIAL DRIVES PRODUCT PUSH

If there's one category that sells well in the international marketplace it's cosmetics. The revenue for U.S. cosmetic companies exporting abroad has grown over the past five years by $1 billion to $2.4 billion, as of 1994. Black hair care products are staking out their share of this niche. According to the Chicago-based American Health and Beauty Aids Institute (AHBAI), all 18 of their African American-owned company members are selling hair care products abroad, to the tune of $70 million, and growing.

While demand may be strong, getting supply into the hands of consumers is a challenge, says AHBAI Executive Director Geri Duncan Jones. But companies like Dallas-based Pro-Line Corp. are meeting the task head-on. Despite tariffs that average 15% to 30%, Pro-Line has managed to be very successful at making inroads abroad. The company now sells its line of hair relaxers, shampoos and conditioners in 43 countries around the world.

"We've been distributing products internationally for 15 to 20 years, and that's where we see the growth of the company," says Paul Owsley, Pro-Line's director of international government sales. That market share has grown from next to nothing to 10% of the company's $43 million revenue. And, international sales were up 25% in 1995 over the previous year. To get its products in the hands of professional consumers--hairdressers and barbers--Pro-Line enters into distributorship agreements with local vendors. It backs up its sales with technical training and support, including bringing international customers stateside for hands-on workshops, clinics and "hair fairs." The company also works with distributors to translate its product instruction sheets into several languages.

The company has targeted foreign countries for sales growth as the domestic market has become saturated, both in the volume of products and the number of companies targeting the African American consumer. He points to countries such as England and Canada, where blacks tend to assimilate to the dominant culture, as accounting for a sizable share of the company's international growth. "Our best market is England. There is a high literacy rate, a high enough income and an aesthetic consciousness about what is going on both here and in Britain."

But there are some surprise markets in the mix as well, including the Middle Eastern countries of Saudi Arabia, Yemen and the United Arab Emirates, along with Australia and Malta. "I think when people think of the Middle East, they don't think about selling relaxers and texturizers there. It's not an issue of race, but one of texture," notes Owsley.

Not surprisingly, relaxers dominate sales, and Pro-Line's "Just For Me" children's line of relaxers is the number one product in that category. He also points to a preference for American-made cosmetics. "The end users of our products think that the best hair care products are made in the U.S.," says Owsley.

He also attributes the company's success over the past 18 months to taking advantage of the Department of Commerce's matchmaker program. Through its International Trade Development Center, foreign businesses are paired with U.S. companies. The program has helped Pro-Line to access markets in Jamaica and Brazil. In some cases, Pro-Line has exclusive distributorships with only one vendor in a market, but that kind of clout is based on performance and the ability of the distributor to handle and grow the market. Distributors also bear the cost of all import duties and taxes.

In other countries, such as South Africa, with a developed, mature hair care market and strong locally made products and distribution system, a 100% tax on imported products has been a formidable obstacle for a company like Pro-Line. The company sold its products there until 1983, then pulled out in support of economic sanctions against apartheid. This support of sanctions may have cost the company its business there. Now, a 10-year-old South African-owned company, Black Like Me, has staked out a foothold during Pro-Line's absence. With President Mandela's focus on generating local jobs for his countrymen, companies like Pro-Line are finding it hard to sell in a market that essentially doubles the cost of its products.

These kinds of measures keep Owsley cautiously optimistic. "We're not making the same amount of money on an international shipment that we do on a domestic one," he explains, "it's not the same margin. But you can't even be a player if your products aren't competitively priced. No one is making as much money as they'd like, but no one is loosing money either,"

Still, Owsley says that for companies with products like Pro-Line, they must look beyond a target market of 32 million African Americans, if they want to grow. "You've got to commit the same resources to developing internationally the way you would domestically. There must be a commitment to staffing, to building an international team that's focused on developing the markets and knowing the culture," explains the former military brat, who was born in Scotland and has lived as far east as Taipei, Taiwan. "How do we export our culture, while still being sensitive to what people in those markets want? You've got to meet with your distributors," he suggests.

Issues of money and currency are less likely to be a problem, says Owsley, if the company has an irrevocable letter of credit between banks. This is particularly helpful in countries with episodes of fraud and unsavory banking practices in their recent history. He also suggests establishing relationships with governmental agencies for references for both you and your distributors.

But when it gets down to it, a company's success will be predicated upon its people skills. "There's a lot of hype, but the international market is the new arena for doing business," declares Owsley.

BETTING ON BLACK BROADCAST

When Robert "Bob" Johnson launched his cable network, Black Entertainment Television, in 1979, he took a chance that black-oriented programming would sell to consumers and advertisers. Seventeen years and 44 million households later, his gut instinct proved him right. Now that same instinct has leaf Johnson and a team of programming pros to expand their sights to the international market.

In August 1993, Johnson launched BET International (BETI). Charged with overseeing its direction is Debra L. Lee, president and chief operating officer of BET Holdings Inc. and Black Entertainment Television, Inc. Together with Curtis Symonds, executive vice president for affiliate marketing, and George Amoah, vice president of BETI, the triumvirate have targeted the fledgling international subscriber market to distribute its programming, this time with a slightly different approach: a network exclusively devoted to the jazz format, called BET On Jazz: The Cable Jazz Channel, to be launched via satellite next month.

"We're in the business of starting cable networks," says Lee. "BET On Jazz is a completely separate network," she explains. This has been BET's strategy since its inception: find a niche to market its network's programming by getting in on the ground floor, even with limited resources, then develop it over time through alliances to build a following. With domestic cable households at a near saturation point of about 63 million homes, and BET in about 85% of them, there's almost nowhere to turn--except abroad.

"Less than 5% of our audience is international. So we are aggressively pursuing this market, and BET On Jazz is what we're looking to expand on," says Lee. The company has targeted music, specifically jazz, because it has an international following already. Additionally, BET's other programming is primarily syndicated shows licensed by other entities that they don't necessarily have the rights to sell internationally. The balance of programming is geared to a U.S. audience. However, several of these programs, including "Our Voices," "Teen Summit" and "Video Soul" are distributed via tape delivery to South Africa, Nigeria, Poland and Japan.

Lee does not see packaging these shows and selling them individually to various international systems as the company's future. "k costs a lot to bicycle (copy) the tape, dub it (voice over) in another language and mail it over. It costs more than you want to spend. Satellite is the way we want to go," she explains.

To that end, BETI will start its international satellite coverage in South Africa and neighboring countries including Botswana and Zimbabwe over the MultiChoice PAS-4 system, and in Europe, via Nethold's digital satellites or directly from BET distributors, reaching 300,000 households by June. BETI will roll out over four other satellite systems, including Central Europe, (Germany, Sweden, Austria, Belgium, Luxembourg and the Czech Republic) North Africa and the Middle East and the South Pacific (Australia and New Zealand) by October. It also has a United Kingdom partnership with Identity Television to provide six hours of BET programming which the local company then wraps around its programming. The company is also looking to sign a distribution agreement with an Italian network, Telepiu, by October.

While the $115 million BE 100s company formally started its international division only three years ago, BET has been sending up its programming signal via satellite for over 10 years to the Caribbean. "Most of the countries can pull down our signal," says Lee. "We were unscrambled, and some countries (or their operators) didn't want to pay. Now we've scrambled the signal, so they can't pull it down without paying for it."

"Historically, the international communications arena has proved to be a difficult marketplace," says BET's Amoah. "However, [we] don't anticipate any real competition in launching [our] new channel internationally because of the uniqueness of BETI's jazz music programming and its appeal to those viewers," he adds. Both Lee and Amoah point to other cable networks including Viacom's MTV as trying to break into the international market in a similar fashion. But with a different music format and focus, neither perceive the network as competition.

Venturing abroad, while strategically promising, does offer challenges, including the issue of collecting revenues. The problem is that BETI is dependent on a local service to tell them how many subscribers they have, which determines how much the company is paid based upon prenegotiated rates. Language and culture are also issues. "That's one of the primary reasons we've focused on jazz. We've also found that once a country gets cable, they want to produce their own shows," says Lee.

The other big challenge, says Lee, is to convince a cable operator, whether international or domestic, that they need what the company has to offer. The same holds true for marketing their magazines, Emerge and YSB, abroad. "When we were in South Africa, we had some discussions," says Lee. "We hadn't pushed that aggressively, but now we're starting to do that," she adds, admitting that the company's focus will remain primarily domestic when it comes to its magazines. That expansion has recently included the insert of an entertainment magazine supplement, BETWeekend in local newspapers in several domestic cities.

But moving into the international arena is not for the fainthearted or those companies with shallow pockets or commitments to development. BETI has yet to make any money overseas, says Lee. "We probably won't know how much money we'll make until we start getting paid back. We'll spend $2 to $3 million to get BET On Jazz on chose four different market satellites. Up to now, we've spent about $300,000 on staffing, travel and distribution," says the chief executive officer.

Programming and distribution comprise about 80% of costs, since all programs will be produced and owned by BET. Buying satellite time and finding the best system to reach the largest audience is the network's other big challenge.

"International distribution is about satellite," explains Lee. "You have to decide if it's really a business for you, based on the costs and interests." She points to other elements such as the lack of copyright protection, the variations in laws within the international market, the difficulty in collecting finds and gauging the market appeal of your product as the biggest hurdles for businesses in the international arena.

"You must invest the time doing the business model and not just the sexiness of selling internationally. You must do it slowly to make sure the numbers work across the board. But this is a five--year plan for us, and we haven't even rolled in the advertising dollars, yet. We're looking to get a 20% to 30% return on our investment in the first five years-after that, the sky's the limit," extols Lee.

REPLICATING A MAGAZINE'S LEGACY

At first glance, the two ebony beauties on the magazine cover look familiar, warm and friendly. At second glance, most Americans wouldn't know them, although both are famous among South Africans. Still, there's something about this magazine's cover that's familiar the world over--the name, Ebony. Only this one also says South Africa.

Ebony South Africa is the newest creation of Chicago-based publisher and tycoon John H. Johnson. He has created, molded and framed the new magazine in the image and likeness of its 50-plus year-old stateside parent, from its covers to the kind of faces and features inside.

"South Africans had expressed an interest in Ebony all those years. [Even with apartheid] they still found ways to read it," he boasts. In its inaugural November issue, Bishop Desmond Tutu relates the story of when he saw his first Ebony--the Jackie Robinson cover--at the age of 9 in a ghetto township, 30 miles outside Johannesburg. Tutu says he had no idea who bought the copy or how it got to his township. It's a tale Johnson can relate impromptu.

Johnson says he made the decision to formally enter the South African market tWo years ago. But trade tariffs on incoming products, which are taxed at 100% of cost, make South Africa the most expensive export market in the world. To avoid paying the stiff taxes and other restrictions, EBCO International, a subsidiary of the $316 million Johnson Publishing, has teamed with five South African partners. Johnson holds a 51% share and his partners a 49% share of this South African version of Ebony.

Production costs, says Johnson, had been a driving factor in why he hadn't done this sooner. "The real problem is that the magazine costs a lot internationally. In Nigeria we have restrictions on how many we can sell there. In South Africa, it's printed and sold there, so we can sell it much cheaper," explains Johnson.

With the partnership, Johnson has set up editorial offices in Sandton, near Johannesburg. Here, the magazine's seven South African editorial employees work under the direction of African American Managing Editor D. Michael Cheers, who formerly worked for Ebony and Jet in Washington. After being awarded a Fulbright scholarship, which he used to study in South Africa, Cheers contacted Johnson about heading up an office there when he heard the publisher was interested in expanding to produce a South African edition.

"We're always looking for new opportunities, but there's not always the potential," Johnson says. "In some places, it's a military government; in some countries, there aren't enough people. And in others, not enough advertisers. But black people are the majority in South Africa; so you don't have to convince advertisers that we can cover the market. That set the tone for doing business there," explains Johnson.

He readily admits that he's responsible for the editorial product and his partners, the advertising and printing of the magazine. He also says that it would have been more difficult and costly without today's advanced computer and telecommunications technology.

But Johnson Publishing is not a new player in the international marketplace. For years, the company has sold its magazines in Africa, Europe and the Caribbean. Its success, especially for Jet, was predicated upon the number of African American soldiers stationed abroad, and on those foreigners who had lived in the United States before and understood the black American culture it covered.

Through EBCO, Johnson has also had success internationally with his Fashion Fair line of cosmetics sold in over 2,500 stores in the U.S., Canada, Europe, Africa and the Caribbean. But he won't say how much the line of makeup, lipstick and skin care products contribute to the company's bottom line. The biggest barrier to selling more cosmetics abroad isn't competition, says Johnson, but high tariffs and restrictions on imports in countries like South Africa, which make the products unaffordable for most women. Although it's exported to eight countries around the world, the Fashion Fair line sells best in England, the Caribbean and France.

To get Ebony South Africa going, Johnson says he has invested $2 to $3 million in facilities, equipment and staffing. With only six issues published thus far, the Chicago entrepreneur says he has no idea whether the magazine has became profitable yet. But those who know Johnson, know better: He wouldn't do it, if it wasn't profitable. The first issue was projected to have 50 paid advertising pages; it sold 80 pages--60% over its original projections. About one-half of the editorial content in the foreign issue is taken from its American counterpart, and its circulation is based upon 100,000 copies of the magazine being sold at a cost of R4,80 or about $2.50 U.S. With margins like that, the cost of generating just the South African-based stories was one-quarter of what it would have been otherwise.

While Johnson admits money is key to taking your product international--"you have to have access to enough capital"--it's not all you'll need to be successful. Forming a strategic partnership has been the key to creating the international version. "Whenever you go into a foreign country, you need someone who has an understanding of the foreign market. I don't think I could have done this alone," he admits.