Sales & Marketing: The Challenges of International Trade
 
November 1st, 2006

By Janet Arden


November-December 2006

When CTDA traveled to Istanbul in June for its first trade mission, the participants—like the association itself—were a mix of large and small companies, some with extensive importing experience and some with much less. Some of the participants had been to Turkey before and, of course, many had not.

TileDealer recently talked with some of the trade mission participants to take their pulse about doing business with Turkey as well as other countries. Almost without exception, the overwhelming sense of these conversations has been that the value of the trade mission was in the personal connections that can only come from visiting the country and the factories, getting to know the people and the culture.

The participants I spoke with all had extensive experience importing tile, most often from Italy, but some, like Tom Kotel, president, Mid-America Tile, Elk Grove Village, Illinois, import from a substantial number of countries including Italy, Turkey, England, Spain, Mexico, Japan, Korea, China, and Thailand. In fact, Kotel says, Mid-America Tile has been doing business with Turkey for 15-20 years directly and indirectly.

“Turkey manufactures a quality product at a fair price,” said Kotel. “Now that I have experience [with] the country and the people, I feel more comfortable doing direct business if the category permits itself to being exclusive.”

Gail Schovan, president, Turner Distributing Co., Inc., Detroit, Michingan, approached the trade mission from the other end of the experience continuum. Although she has imported from Italy for 18 years, Schovan says she had never had any experience with the Turkish manufacturers before the trip. “I went on the trip with no expectation and had very little knowledge about their tile. I guess I look at their products differently now that we got to meet them all face to face and understand their format for doing business.”

Mike Robbins is president of Tuscany Tile & Stone, Inc., in Memphis, Tennessee. The company has not imported product from Turkey in the past, but he said, “We were very impressed with our hosts and found their tile product of interest.” Robbins says his criteria for importing will be style and/or a price point not available from current suppliers, domestic or imported.

Like many CTDA members, Schovan learned much about tile and importing from working with the Italian manufacturers and their agents and representatives. “They made me learn about the import business,” says Schovan, “and the questions you need answers to when dealing in that field. Most of my experience with them was built on comfortable relationships, so I feel I learned as the years passed.”

Tuscany Tile & Stone currently imports tile from Italy, Mexico and Spain as well as travertine stone from Italy. “Overall our experience has been positive,” says Robbins. “We have products that have a particular style or color that is unique to us or at a price point that helps us be more competitive in the market. We continue to look for sources all over the world and will import product that meets our needs.”

In general, the trade mission participants—and others who did not travel with us to Turkey but who spoke to me about imports—agree that importing from Italy, Spain, Brazil and Argentina is often simpler thanks to experience. Those manufacturers and their representatives have a better sense—more defined in some countries than in others—of what works in the American marketplace. US businesses are increasingly knowledgeable about doing business with these manufacturers.

But that does not necessarily mean that importing is always a simple, straightforward experience. As Robbins points out, importing requires additional delivery time, freight costs, port entry delays and the costs of inventory. “When we are out of product, it takes six to eight weeks to get replacement product. Freight costs have increased significantly over the past two years,” he said. “We have looked at importing tiles where the landed cost is as much as or more than the tile cost.”

Inventory turns are very important to a distributor, says Robbins. “When we import tile, we try to buy enough inventory to last until the next container arrives. That is easier said than done. If the product doesn’t sell, we have to discount it to move it out. If the container is delayed at the factory or the port, then we have potential problems with our customers who are disappointed with us when we are out of stock.”

Barbara Vasquez, president of Vasquez Enterprises in Tempe, Arizona, believes the tile import business has changed significantly in just the four years since she joined her husband in the business. “Independent agents are less and less and factories are looking hard at the USA market and whether or not they can produce what is needed for the East coast and then the West coast, which is so different.”

Although Vasquez did not have previous experience buying tile from Turkey, she did have some experience with Turkish stone importers and in those cases did not always get what she expected. “If you are a small player in this market, you will not necessarily get the product you order.” After meeting with the tile companies, however, she believes their approach is “more professional.”

Vasquez also does business with Egypt and China. Here also, she says, you are dealing with a different culture that indeed affects how the business is transacted. For example, says Vasquez, “You must make sure that they understand what you are saying and that they do not just say ‘yes’ to please you.”

Sometimes, the problems are the result of the way other countries view production. For example, they may not have warehouse procedures to indicate that production from the same “dye lot” is really coming from more than one day. In the US marketplace, the variations that would result from that could—and often do—impact a job. Another variation may come in the way some countries define porcelain. Once again, it’s important to know who you are dealing with.

The import business does vary from one part of the country to another, says Vasquez. What sells on the East Coast is not what sells on the West Coast or in the southwest. Transportation costs vary significantly from one end of the country to the other. Geography definitely plays a role. It’s simply easier to get Italian tile to New York and Chinese tile to California.

So what’s the key to making the most of your import business?

Robbins says that once a buyer has selected a vendor and a freight forwarder, the order process is fairly simple. But as with all lines—domestic and foreign—you have to do your homework and make sure the vendor is reputable, the landed price is what you expect, and the product is something that will sell once it arrives.

It’s growing a trusting relationship with whomever you deal with—agents, manufacturers, etc. Taking the time to get to know them, understanding their business model and working with it are important.

Schovan’s advice is straightforward and applies to any importing proposition. “I think you learn by doing. If you deal with American manufacturers, you can deal with European manufacturers. Make sure you are comfortable with the rep and that he is honest. Ask for references and take the time to call some of them. Even if you don’t know them personally, a phone call can save a lot of time and money. Find out how close their other customers are to you and who else has their lines in your state.”

Kotel agrees. “If I was asked to advise someone on buying internationally, the best advice I could give someone would be to handle the business the same way you handle any relationship. You usually get out what you put in. If you put in more than you get out, get out!”

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