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Opening new markets.

OPENING NEW MARKETS

As the iron curtain lifts, it reveals exciting opportunities for an association and its members.

Last Spring, the National Printing Equipment and Supply Association, Reston, Virginia, became the first American trade association to open an office in Moscow. The opening marked a major milestone in a three-year-old NPES program to help its members create and expand business opportunities in the Soviet Union.

NPES's international trade program is one of the oldest managed by the association, and our members have consistently viewed it as among our most valuable. For many years, it has supported NPES's export-minded members with seminars and workshops, its Directory of International Graphic Arts Suppliers, group participation in major European and Asian trade expositions, trade missions, business leads, a newsletter, and a variety of other services.

During the mid-1980s, two nations--the U.S.S.R and the People's Republic of China -- began to assume ever-greater importance to our international programs. China's recent political events have slowed NPES's progress toward opening that market, but much has been accomplished in the Soviet Union, an exciting and promising market for NPES members for a number of reasons.

The U.S.S.R. would command the attention of any international marketer based on market size alone. Its population should exceed 300 million this decade. And of vital importance to the printing industry, this is a very literate population. Among some ethnic groups in the U.S.S.R. -- Russians, Ukrainians, and Uzbeks, for example -- literacy rates top 99 percent. Our firsthand experience in Moscow revealed a country hungering for more print: more books, more magazines, even more advertising.

In addition, the computer publishing revolution that has changed the face of our industry in the West has bypassed the U.S.S.R. entirely, leaving the nation in sore need of more advanced printing technologies. Even phototypesetting, which became our industry standard in the 1960s and 1970s, still shares the Soviet workplace with hand-set metal type.

Enhancing the promise of the Soviet market still further are the extraordinary events of the past few years under President Mikhail Gorbachev; glasnost, or "openness," has liberalized Soviet society and perestroika, or "restructuring," is seeking to reorganize the economic infrastructure.

Both of these developments should in theory be good for United States--U.S.S.R. trade. Glasnost should foster increased demand for consumer goods of all kinds, particularly printed matter, while perestroika should make it easier for foreign firms to find, communicate with, and sell to Soviet customers.

Yet another factor -- the aggressive export promotion programs European governments and associations offered their companies -- also helped convince NPES it could help American firms compete successfully in both nations.

Initiating relationships

A number of interesting encounters -- both planned and spontaneous -- led to NPES's decision to open a Moscow office. In March 1988, I visited the Soviet Union to gather information and assess business potential for American firms. This exploratory trip was prompted by several members' views that major potential export opportunities existed in the U.S.S.R.

A number of our member firms had well-established business relationships with the U.S.S.R. before we began our program. We found, in fact, that our members were an invaluable source of expertise -- key to getting that vital first introduction or that seasoned view of new developments.

NPES has also long enjoyed cooperative relationships with printing industry associations in Europe and other parts of the world. It was partly through these relationships as well that we were able to obtain introductions to key people in the Soviet arena.

During this familiarization trip, I met with leaders of the Soviet printing industry and the relevant ministries, visited plants, and saw firsthand the technology being used in the U.S.S.R. I also collected my Soviet hosts' opinions about the product types that most interested them -- including computerized phototypesetting, binding and cutting machines, scanners, book production equipment, and direct production plate systems.

Soviet officials stressed their interest in seeing the equipment in operation. As a result, we began planning an exposition in Moscow by our members. Our interest in producing an exposition in the U.S.S.R. was by no means universally welcomed by our Soviet hosts. Some were skeptical, and a minority of our contacts felt we were being opportunistic in pursuing the Soviet market.

As in any other sales relationship, we felt the answer to these concerns was to be responsive, demonstrate our sincerity, and let time work in our favor.

Early in our relationship, we also began to come to grips with such continuing practical problems as interpreting. We found that very few Soviets spoke fluent English, and even those who did could not handle the technical terminology of printing. We often found translators--fluent in English and Russian--who were natives of third countries like Italy.

A second visit to Moscow in July 1988 involved several meetings with officials of Goskompechat -- the Soviet State Committee for Publications -- and ministries responsible for exhibitions. Plans were finalized to hold a trade show called Polygraph in Moscow in August 1989. Goskompechat agreed to support the exposition with promotional activities, management, and other assistance, while NPES vigorously promoted participation among its members.

In March 1989 several members of NPES's board of directors and I visited Moscow again to make final arrangements for a trade mission to further promote cooperation between the two markets. The key result of the four-day meeting was the signing of a protocol of cooperation with Goskompechat.

This protocol expressed our mutual interest "in establishing and developing our long-term business, scientific, and technical cooperation in the field of printing equipment, materials, and technology," and our intent "to expand our relations through the exchange of technical information and scientific knowledge."

Information has indeed been the key to building our relationship with the Soviets. They have been well aware of their own needs but largely unaware of how our members' products could meet those needs. NPES has worked to create new avenues for exchanging product information and answering questions.

Very few forums are better for this purpose than a good trade show, so the Polygraph exposition--the first such show in Moscow to include an American pavilion--was a strong start. Twenty-three U.S. companies, plus leading firms from all over the world, took part. Polygraph was also the first Moscow trade fair to be certified by the U.S. Department of Commerce. NPES sponsored a cooperative pavilion exhibit that presented the products of eight U.S. firms.

The U.S. embassy in Moscow aided us in a number of ways during the exposition. Ambassador Jack Matlock hosted a reception at his residence, and the Commercial Office of the U.S. Department of Commerce helped us solve a variety of nuts-and-bolts operational problems that arose both before and during the exhibition. For example, the office provided contact names--so we could invite appropriate parties to the reception and other events--and backed us up with some much-needed technical equipment.

In October 1989 we switched roles and played host to a delegation of Soviet representatives attending GRAPH EXPO 89 in Chicago.

In addition to touring the exhibits at McCormick Place, our guests visited manufacturing facilities, print shops, and other sites in the Chicago area and elsewhere. Again, the key goal was to create new relationships and to provide a conduit through which our members could communicate with potential customers in the U.S.S.R. and those customers could make known their needs and interests.

Setting up shop

At this stage in the development of our relationship with the U.S.S.R., the NPES Board of Directors voted to establish a Moscow office to help members assess and compete in the Soviet market. The office would be staffed by an English-speaking Soviet national and would offer translation services, interpreters, meeting rooms, industry literature distribution, and other services. The basic administrative costs of the office would be met from the budget of NPES's international trade program, while certain add-on services, such as interpreting and translation of sales literature, would be charged to members on a pay-as-you-go basis.

The site selected for our office was the Research Institute for Complex Problems in the Graphic Arts in Moscow.

Because of the new openness of United States-Soviet relations, we were able to approach contacts directly to discuss and negotiate for sites we wanted instead of having to do it all through the government. We talked with Pravda, for example, because it had a training institute already equipped for printing, and we wanted such a location. But the site did not work out. Later, we spoke with the editor of Polygraphia, the U.S.S.R.'s only graphic arts magazine, who suggested the research institute. Our Soviet ministry contacts also supported this site, so we contacted the institute and negotiated an arrangement that benefits both organizations and offers NPES member firms some new opportunities. In addition to NPES establishing its Moscow office at the institute, NPES members have been invited to provide equipment to be used in the ongoing technical training programs of the institute.

The office opened March 1, 1990. One of the first key roles of our Moscow representative was to begin preparations for the participation of U.S. companies in the next Polygraph exposition in May 1991. Our representative attended the giant DRUPA graphic arts exposition in Germany in May 1990 to meet NPES member companies exhibiting at the quadrennial show and discuss potential Soviet markets for the products on display.

In day-to-day operations, member firms meet with the representative, who then arranges appointments for them with appropriate buyers. The representative also helps expedite processing of supplementary visas for NPES members who unexpectedly need to follow business leads or make visits outside the radius of their initial visas.

Major roadblocks remain

Many of the remaining obstacles in the path of modernizing the Soviet economy--and increasing East-West trade--are well known. Paramount among these is the currency problem. As long as the ruble remains unconnected to other currencies and good only for purchase inside the U.S.S.R., companies dealing with Soviet customers will have to work out satisfactory payment arrangements on a case-by-case basis.

Many companies experienced with the Soviet market have become adept at barter arrangements. One firm that specializes in printing plates, for example, has regularly traded with a U.S.S.R. customer for supplies of raw plastics and similar materials.

The point is, every transaction is unique, and each company has to decide for itself whether a particular deal, or an entire trading relationship, is important enough to merit the extra work it requires. NPES's members feel that in the case of the Soviet Union, it is important, and the association's role is to facilitate this trade relationship.

Another of the major difficulties in Soviet--American trade today is political uncertainty. The Soviet economy is not providing for even the most basic needs of many of its citizens. On all sides, Gorbachev is surrounded by Soviet republics seeking independence, conservative critics attacking his reforms, more progressive critics accusing him of working too slowly, and so forth.

This kind of uncertainty goes along with an export business almost anywhere in the world. Both NPES member firms and their Soviet customers depend on events beyond their control. The only real resources they can apply to deal with this uncertainty are flexibility and up-to-date information. NPES seeks its most accurate information from friends we've established in Soviet business circles, association counterparts in Europe, and members who make regular trade visits to the U.S.S.R.

I was recently asked if NPES is prepared to suffer the loss of its entire investment in the Soviet Union, and it must be acknowledged that such a setback is possible. While our direct financial investment in our program is not great, we have invested a substantial amount of staff time, attention, and association prestige in building our relationship with the U.S.S.R., and we would hate to see that investment lost.

But all of our members realize that making any business decision involves weighing a risk against a benefit. In those terms, we're convinced our investment in the U.S.S.R. is sound and will pay off handsomely in the years ahead.

Lessons for the future

Attitude plays a part in promoting trade with the U.S.S.R., as was made clear to me when I received a very stern "talking to" from several of my hosts on my first Moscow visit. Their view was that American companies often aren't interested in long-term relationships but only in one-shot deals--that U.S. firms can't be counted on to provide training, technical support, replacement parts, service, or even an accessible representative to answer questions. They only want to sell, collect the money, and move on.

I argued then--and still believe today--that this type of scenario is isolated. But the Soviet point is well taken. To do well in the U.S.S.R., American firms must be prepared to invest time as well as money and to listen to their customers. The importance of a local representative, or at least someone in an adjacent or nearby country, cannot be overstated. That's one of the reasons West Germany has become the Soviet Union's largest trading partner and why the unified Germany is going to pose such a formidable competitive challenge to U.S. companies in the Soviet market.

Clearly, many American firms need to learn how to sell to the Soviet market. How can they find their way through the maze of central and decentralized ministries, committees, and other buying authorities? How can they move from expressions of interest to a hard sale? How can they arrange payment terms satisfactory to both sides? Our Moscow office helps our members answer such questions.

"The NPES office in Moscow has proved to be valuable as a means of keeping in close touch with our U.S.S.R. contacts because it gives us a convenient means of arranging meetings, answering inquiries, demonstrating products, distributing literature, and handling other sales and customer-service tasks," says David A. Wright, vice president of Martin Automatic, Inc., Rockford, Illinois, and chairman of NPES's international trade committee. "It has also helped ease the logistical problems associated with visits to the Soviet Union."

Your association could have a similar role to play in the international arena of your industry. But a concerted effort may be needed to raise your members' awareness of what a good market the U.S.S.R. could be--and to help them realize that in spite of the difficulties, the market can be penetrated. NPES has approached this task through newsletters, special publications about the Polygraph expositions, detailed reports to members after each U.S.S.R. trip, and extensive one-to-one exchanges with our members.

Good assistance is also available from the U.S. government. The Department of Commerce, for example, can designate your trade mission as government-approved (see Association Management, June 1990, "Not Mission Impossible"), making it more official in many international contacts' eyes. But I'd caution association managers not to rely on U.S. aid to the exclusion of your own efforts. Explore the ways the Department of Commerce and other agencies can help you with such matters as visas and contact names, but be prepared to do most of the legwork yourself.

Trade expositions are a key to building new international relationships. If you don't already do so, start attending the major international events in your field and pursue every opportunity to meet new people and spread the word about your members' export interests.

Be prepared to update your information continually. If our experience in the U.S.S.R. taught us one thing repeatedly, it is that conditions change--sometimes very quickly. For example, if the U.S.S.R. indeed makes a transition to a free market economy over the next two years, the change will be profound. We'll find ourselves having to relearn everything we thought we knew.

All of these factors underlie the strongest recommendation I can make to others interested in approaching the Soviet market: There's simply no substitute for direct personal contact over a long period of time. Trade in the Soviet Union is built on long-term relationships. Demonstrate in concrete terms that your interest is real and continuing. Over time, you'll create a genuine new opportunity for your members. The potential benefits of building such a strong new bond between our peoples go far beyond immediate sales.

Regis J. Delmontagne is president of the National Printing Equipment and Supply Association, Reston, Virginia.
COPYRIGHT 1991 American Society of Association Executives
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Delmontagne, Regis J.
Publication:Association Management
Date:Jan 1, 1991
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