International Trade and Global Business

 

Dishing it Out: Selling Food Products from the U.S. to Other Countries

Michael Strange's family has been in the ice cream business for generations.  His great-grandfather founded Bassetts Ice Cream Company in Philadelphia in 1861.
 
The business remained local until the 1970's when Michael's mother took the leap and expanded to the Jersey Shore, New York and even farther afield in Chicago.  Michael had thought about exporting when he took over the company but didn’t take action until he went to a seminar to network with other area food producers.  While there, he met a Chinese businessperson whose friend was interested in importing American ice cream. We have heard that 90 percent of success in life involves just showing up.  Michael is a believer now in that axiom and showing up has a place in his business plan.
 
Samples were requested, and a dubious Michael decided that he could afford to lose $400 worth of product.  China has more than a billion people, he thought.  They could consume a lot of ice cream.
 
Getting his ice cream across the ocean and into cones and on to dishes took some legwork but not as much as he anticipated.  He could have relied exclusively on the friend of the acquaintance but wanted instead to learn as much as he could about the market.  So, he approached local representatives of the federal government, specifically the Agriculture and Commerce Departments who helped him understand how the market works.   It’s fairly common to be found by a Chinese buyer who does a lot of the paperwork to get the product into China.
 
Getting the scoop
 
Similar to other countries, China has rules governing the importation of food products, and it’s usually necessary to have a product tested by a third-party testing entity that is approved by the Chinese government.   Because ice cream is perishable, it must be shipped in an ocean container with a constant temperature of minus 15 degrees Fahrenheit.  The risk of something going wrong and the product ending up destroyed is high, so Michael was counseled to purchase risk insurance through a program managed by the federal government.  Another program loaned him money against receivables, so his funds were not tied up as inventory made the journey across the Pacific. Sometimes the buyer will agree to pay in advance, but most will want terms, and that's where government export finance programs are an important benefit, especially for smaller companies who need working capital.
 
Unfortunately, many commercial banks will not loan money for exports without a government guarantee.  The best practice is to work with banks that work with government programs such as the Export Bank of the United States and the Small Business Administration Export Express Program.
 
Before the Chinese distributor placed a first sizeable order, they did a blind taste test with a well-known European brand.  The testers preferred Bassetts and also liked the fact the company is family-owned.  The made in the USA label helped too. 
 
It’s been a few years since Bassetts entered the market, and now China accounts for 20 percent of sales. In a nod to local tastes, a green tea flavor has been added to the mix.  Not to put all his ice cream in one freezer, Michael has entered other markets near and far.
 
“As my exports continue to grow, so has my confidence in exporting.  Truth is, I’m more comfortable exporting to China than Chicago.”

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