From cars to fashion and electronics to consumer-packaged goods, most product categories see the world as their oyster. One product category, however, that seems to take the opposite approach is the US building material industry, which remains largely provincial. Why? Perhaps it has something to do with a fear of the unknown. In my experience, I’ve learned that most American companies are afraid and lazy. They are afraid of the risk involved with something that is not a sure thing. They have become lazy by being addicted to chasing big orders from a few big customers—like big boxes, big builders or big commercial projects. That’s a lot easier than developing a larger number of smaller customers who may be more loyal and more profitable. Each country or continent has its own building and distribution practices. That said, it’s much easier for an American company to stay in the US where nothing new has to be learned and there is little risk of failure. There’s probably also some of our American sense of superiority involved as in “those other countries are poor; they can’t afford our products.”
InSinkerator is not afraid
A couple of things got me thinking about this. The first was this article in the Wall Street Journal about the InSinkErator division of Emerson Electric who is breaking the mold and actually working to be successful in the vast Chinese market. They are facing several hurdles; one is that they’ve had to make product changes in order for their disposers to work with different foods such as eel, which is popular in China. The second and probably bigger challenge is that garbage disposers are not a product that people are accustomed to buying in China. So, they have to create a market. More US building material companies should follow InSinkErator by expanding their markets beyond the US. The world is getting smaller every day, and US companies are at risk of being left behind by more worldly manufacturers from other countries. Many US companies will tell me that I am wrong. They will say that they already sell internationally.My response to them is this: I think they are doing a half-hearted effort.
The 3 lame ways US companies export
1. They put a person or a small staff in a country and tell them to sell what you can without changing anything about their product or business practices. 2. They sell their product to a local distributor and see what happens. They don’t make an investment to learn the market and help the distributor sell more. 3. An architect or contractor who works globally specifies their product so they get an order through no effort of their own. When I was at a large international building show in Paris, I asked several manufacturers why they weren’t in the US. I was surprised by their answer. They said, “We are making so much money in markets outside the US, including developing markets, that we don’t see what we would gain by being in the US. The US market is so cost competitive, that we would make less profit, so it doesn’t make sense to us at this time.” The most common refrain I hear from US manufacturers is how hard it is to charge enough to make a decent profit margin. It seems like becoming more global is an answer to their biggest problem of low profits. It’s just easier to keep doing the same thing and expect a different result. I also have a few more reasons as to why I think US companies could be more successful outside of the US:
Europeans are arrogant
European building material companies are more successful than US companies at selling their products outside of their region. In addition to other countries, I believe they come into the US more than the US comes into their markets. They are successful in the US despite the fact that they tend to be poor marketers in the American marketplace. They frequently put a European in charge who brings along all of his biases and sense of self-superiority. His goal is to put a notch in his belt and get back home as soon as possible.
He just needs to not F#*k it up.
He has no need to actually learn how the US is a much different marketplace. He thinks decisions are usually made rationally and are based on the facts. He doesn’t understand that emotion and gut feelings play a larger role in US business decisions. The other way they manage the US is to hire an experienced US executive whom they manage from afar. They insist on the same approach that works in Europe but not necessarily in the US. I am biased in that I believe companies from the US are the best marketers in the world. I think if they really committed to be global and applied their marketing expertise, they would be very successful.
And the Chinese? Those guys have their heads up their asses.
I see Chinese companies selling their products all over the world. I see them at many US trade shows. They spend all that money to travel and exhibit, but their approach makes no sense to me as they are stuck in the past. When I talk to them, they think their only advantage is price. They also can’t wait to show you an aerial photo of what they claim to be is their factory, as if that matters. They frequently don’t have an English speaking person in their booth. If they can be successful globally with all those handicaps, I know US companies could be, too. And I’ll stand by my statement that Europeans are arrogant and Chinese companies are clueless when it comes to marketing because in comparison to what I see people achieving in the US, they are.
Now, if US building materials companies—like most Americans—could only learn a second language and accept the fact that not everyone speaks English, they’d stand to win some serious sales not only at home but also abroad.
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