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May 201
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EDA Office of Foreign Trade • Riverside County, California • USA •
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The Joy of the Small Markets
“
If I could only sell one light bulb to
every consumer in China…” I heard a
Westinghouse executive tell me that in
the early 1980’s before China opened
to trade and while there still was a
Westinghouse. We all dream about the
Grand Slam homerun in the big market.
But you have to be careful what you
wish for. How much money will you
spend to get to the market? If you have
to advertise, can you afford the costs of
a national exposure campaign? Could
you supply the potential orders?
For small exporters, I’ve always been
the fan of small markets. In those
economies, personal connections
are more important, making market
research and entry easier. I’ve found
that there is frequently less competition
because the mega-multinationals
are focused on the big markets.
Here are a few examples to
illustrate the point:
Central American countries (+ the
Dominican Republic) have a Free Trade
Agreement (CAFTA/DR) with the US.
That gives US exporters duty free access
plus a level playing field. The US exports
more than $20 billion annually to the
region, but that fact rarely shows up in
the press. One US electronics reseller
has a warehouse in El Salvador that then
reships to the Central American region,
which has no internal trade barriers.
Internet commerce works well in Central
America and this provides the electronics
reseller a profitable base of operations.
Persian Gulf Coast (GCC) countries
represent a small but highly profitable
market. With high per-capita incomes,
this region is a favorite with Southern
California nutritional and herbal
supplement exporters. I met one
nutritional supplement company
which is exporting to the region
with an internet based strategy.
Central Asian countries are growing
rapidly as world commodity prices,
especially oil, have remained high.
One Southern California exporter is
representing various pharmaceutical
and medical products in the region
–
the cost for the major companies is
too great to justify a local presence. For
the exporter, this is a lucrative market
that is the backbone of his company.
Pacific Islands are a natural for Southern
California with many residents having
family ties to the region. Transportation
is a major cost but that keeps out the
larger companies. The bonus is that
once you get in this market, there is
tremendous personal and brand loyalty.
So think “small markets.” There is a
lot to be said about being the big fish
in the small pond. Think about these
and other smaller markets when you
are making your expansion plans.
Chris Lynch is co-founder of the Community Vitalization Council
(www.civic180.org)
which helps communities implement economic
development programs. Chris is a retired Foreign Service Officer who specialized in economic and business policy and was last US Consul
General to Hamburg, Germany. He is also an adjunct professor of International Business at Golden Gate University.
Thanks!
Chris Lynch
949-236-9637
