6/12/97 Transcript: "Gateway to Russian Markets"
James Meenan (JRM IMDI) is vice president of the International Management and Development Institute, a non-profit educational body that brings together the top leaders in business. He is a US trade representative based in suburban Washington DC and a US trade advisor to the federal Department of Commerce. He advises US negotiators on trade matters, as well as raises issues of specific concern to small businesses and minority-owned firms. He also participates in a State Department forum on electronic commerce on the Internet.
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YBizSharzi: JRM IMDI, if you'd like to introduce yourself or say a few words, we'll start taking questions when you're ready.
JRM IMDI: Greetings, the field of e-trade is expanding quite rapidly.
YBizSharzi: JRM, would you like to explain just a bit about what you do?
JRM IMDI: At present I advise government on small business issues and, through IMDI, assist US businesses enter the Russian market with Finnish firm assistance.
YBizSam: What are the growth sectors in the Russian economy that offer the best opportunities for US business?
JRM IMDI: Over three years, our firms have identified the Timber, Construction, Telcom, and environmental industries as best.
YBizSharzi: Is it feasible for someone with a small business to truly consider trade with Russia? What type of trade would this involve?
JRM IMDI: Yes, with caution. If they already have good contacts then go ahead. Otherwise, they may wish to first get their feet wet in Canada or a overseas market closer to home.
YBizSharzi: Safety, your question?
YBizSafety: Should a US firm have prior overseas experience before entering the Russian market?
JRM IMDI: Yes, prior experience will help them through any problems that may develop. Work first in a developed market before entering an emerging country market.
YBizSharzi: Elanjae, you're on!
Elanjae: How would a small business begin to "get their feet wet", even close by?
JRM IMDI: Based on your experience or contacts, select a country you are familiar with then you can use the Trade Info Center at USDOC to see how best to enter that market.
YBizSharzi: Sam, your question?
YBizSam: Is investing in Russia a good risk? Is the economy stable? I hear people are having problems getting paid there.
JRM IMDI: I just returned from Finland and a meeting with our Corp. members. They find the environment in Russia to be the best in 10 years. But structure the deal to minimize your exposure. Just a note--Come July 1, the White House will release a Policy Paper on Electronic Trade called "Framework for Global Economic Commerce". You can get a copy from the USDOC.
YBizSharzi: How do you go about the task of linking US businesses with Finnish and Russian firms in expanding operations in the Russian growth sectors?
JRM IMDI: We are now collecting company profiles to then have them matched between Russian, Finnish and American. We are also preparing Russian growth sector info.
YBizSharzi: Safety, your question?
YBizSafety: How can an American firm register to participate in this effort?
JRM IMDI: Provide us with your e-mail address and we will get back in touch.
YBizSharzi: Elanjae, your question?
Elanjae: What are the main pitfalls for a small US company doing business overseas?
JRM IMDI: Rushing too soon into an unknown market. The USDOC has industry and country specialist that can help you plan a workable strategy. They can be reached at 1-800-872-8723.
YBizSharzi: MRastogi, you're on!
MRastogi: I would like to sell medical insurance to overseas visitors and execs coming to the US How do I reach to these foreign visitors?
JRM IMDI: For inbound travel, you may have to work through travel services both private and public.
YBizSharzi: Sam, go for it!
YBizSam: Why are Finnish firms helping US business to enter Russian markets? What is in it for them?
JRM IMDI: Good question. They find they need US technical and related skills to augment their own. I have seen such cooperation. OPIC, a US financing vehicle, is also teamed with the Finnish to fund investments.
YBizSharzi: How is promoting trade and investment with Finnish and Russian concerns going to be helpful to the US by way of our own economy? While it might bring a sudden growth for them, and perhaps for us, in the long range, will it harm our economy?
JRM IMDI: Not so, the US is exporting the goods and technical skills the Russians urgently need to establish a sound market economy. The Finnish provide the "Gateway" to enter with our eyes open and not get burned. One more note--for those interested in Electronic Commerce, visit the Federal Electronic Commerce Program at <www.ec.fed.gov>.
YBizSharzi: Sam, your question?
YBizSam: At the turn of the century, Russia was about 50 years behind the West in the industrial revolution, is that still true? Is that why they need us, or is it a capital thing; they just need infusions of money?
JRM IMDI: You are right, money is not the answer. They need our goods and skills. In short, roll up your sleeves and work along with them.
YBizSharzi: MBTRADING, your question?
MBTRADING2: Would you suggest that a company wishing to break into the Russian market look at going through Finland?
JRM IMDI: Yes, if the product or service can be matched with a Finnish firm that is willing to help you enter that market. Of course, if you have family or other Russian ties, they work good also.
YBizSharzi: Sam, your question?
YBizSam: Are there other countries besides Finland that are interested in being trading partners that also have the knowledge of Russia to be in a position to help?
JRM IMDI: The Finnish go back a long time with commercial ties to Russia and now both sides feel that expanding these ties will insure peace in their region. While others have worked with the Russians, the Finnish are open to help US firms.
YBizSharzi: Once you collect company profiles, how do you match them to Russian or Finnish companies, and why? Can you give us a step-by-step example to the eventual end result?
JRM IMDI: The US and Finnish Commercial Services will help us market the sector profiles along with the company profiles to identify others and match firms.
YBizSharzi: Sam, go ahead!
YBizSam: Is agriculture, tractors, etc., a viable idea in Russia?
JRM IMDI: Right now refrigeration is a growth market to help agriculture move their products to market. I recently met with the US Carrier Corp. rep and he noted this is a key area for his company.
YBizSam: Can Americans buy land in Russia now?
JRM IMDI: You are often better off with a local partner to handle the land and some marketing issues.
YBizSharzi: You mentioned that one of the pitfalls of foreign trade was rushing into an unknown market, but how can you truly know a market you don't live in day to day?
JRM IMDI: That is why a local dealer or partner is critical. You need to first search out a good local contact before moving into any foreign market.
YBizSharzi: Thanks, JRM! Elanjae, your question?
Elanjae: Regarding electronic commerce -- what kinds of products/services would be needed/wanted?
JRM IMDI: Right now just about everything is sold on the Net. The IBM rep at our recent conference noted he even orders over the Net now with his credit card because he has confidence in the encryption capabilities that now exist.
YBizSharzi: Sam, your question?
YBizSam: Is arbitrage a worthwhile idea in Russia?
JRM IMDI: Yes, cash payments have and continue at times to be a problem so arbitrage is a natural. That is one area in which the Finnish can help the Americans.
YBizSharzi: Once the Finnish have matched us up with Russian companies, what is the next step?
JRM IMDI: The Finnish will not only help match, but become a partner to insure all goes well for all three sides. Also, do not look to enter for a quick profit. Some of the crime items noted in the news are more fast buck operators coming up short.
YBizSharzi: How about marketing, etc., in a foreign country? How does that work?
JRM IMDI: Market as much as possible through existing networks and build your own contacts. For AOL, one of our members has a sub-firm that is looking to expand the Internet in Russia since they have a tie with Cisco systems. AOL may even want to try this connection.
YBizSharzi: Thanks JRM. On to you Sam, your question?
YBizSam: There is a lot on the news about the Russian mob, is it a major problem, or over rated?
JRM IMDI: According the United Technologies representative in Moscow, he is safer on the streets of Moscow than Washington, DC. His firm employs 11,000 and is well respected.
YBizSharzi: Why would I, as a small business, want to go out of the confines of my own country? Why not use all my resources here in the US instead?
JRM IMDI: The world markets offer the best growth potential for many years to come. I have found that in emerging markets, the local firms are more at home dealing with another small/medium firm than with some multi-national.
YBizSharzi: Makes sense! Thanks! Sam, you have the last question of the day!
YBizSam: What about the downside? Can't a small business get killed in that market?
JRM IMDI: Use CAUTION, and structure your deal to limit risk. Use all available US federal resources to both help you enter the market and then to make sure the playing field stays level while you expand.
YBizSam: What if they lack long term capital?
JRM IMDI: If you have a viable product or service, capital can be arranged with Federal guarantees if needed.
YBizSharzi: Unfortunately, our time is up. JRM IMDI, thank you for being such a wonderful guest speaker! It was a pleasure and very informative! Do you have a website, newsletter, book, etc., where we can contact you or learn more?
JRM IMDI: My pleasure. I will keep you posted on the "Gateway" program. Note: IMDI's Home Page is "under construction" but my own International Trade Desk can be reached at http://www.intl-trade-desk.org -for follow-up, E-mail me at JRMIMDI@aol.com
YBizSam: Thanks a bunch, Jim! Come see us again!
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