When it comes to exporting, many minority businesses are reaping the rewards of selling internationally, while other firms have yet to explore sales. In the below question and answer, members of the Minority Business Development Agency (MBDA) Access to Market Business Development Team, George Mui and Gabriela Morales discuss exporting and how these businesses can take advantage of U.S. government export resources to successfully navigate their first or new export markets.
1. Why should minority-owned firms consider exporting or expanding into new foreign markets?
Ninety-five percent of the world’s potential consumers live outside of the United States, so minority-owned firms that want to grow in size, employees, and revenue should absolutely consider exporting to at least one country. Many minority business enterprises (MBEs) are part of a diaspora community and have a distinct advantage in conducting business in their home countries. Those MBEs can leverage their understanding of the language and business culture to export and expand into their native countries and the surrounding markets.
2. What do you see as the potential to increase minority-owned business exports?
Only a small share of U.S. businesses export, which includes minority-owned firms. But studies have shown that minority businesses are twice as likely to export as non-minority-owned firms. In addition, among all U.S. export firms, 59 percent sell to only one foreign market. According to the U.S. Census Bureau, minorities compose 37 percent of the U.S. population and are projected to grow to 57 percent of the population by 2060. This means a growing potential for more MBE startups and exporters.
In 2016, MBDA created four export centers to provide technical assistance and business development services to generate increased financing, contract opportunities, and greater access to new and global markets for MBEs. The MBDA Export Centers, located in Chicago, Miami, Sacramento, and San Antonio, are also designed to help identify, screen, promote, and refer MBEs to export resources.1
3. What would you say to MBEs who may view exporting as too burdensome, so why bother?
That’s a common belief that prevents many companies, particularly MBEs, from exporting. Exporting doesn’t have to be burdensome. With improved logistics options, global connectivity, e-commerce, and the availability of federal government export assistance, exporting is more viable than ever. There are a plethora of resources available to help, including U.S. Export Assistance Centers. If you have a track record of selling in the United States— one of the world’s most open and competitive markets— that’s a good indicator that you can become a successful exporter. We encourage MBEs to partner with other MBEs to conduct business globally. For example, a partnership between two Chinese American firms can leverage language, business, and cultural understanding to export to China.
4. Do minority-owned firms have certain attributes that would make them successful exporters?
According to the Census Bureau, minority-owned firms are six times more likely to conduct business in a language other than English and three times more likely to generate 100 percent of their revenues from exporting compared to non-minority-owned firms, regardless of size. Overall, MBEs are uniquely positioned to expand their business operations through exports.2
5. Are you seeing any trends in terms of regions or markets for minority-owned exporters?
How about types of products or services? MBEs are taking advantage of the increased bilateral trade opportunities between the United States and China, in addition to other countries in Africa and South America for U.S. agricultural products and “Made in America” manufactured products. We’ve also seen a trend toward online business and e-commerce platforms, which have a diversified line of products and services that can be delivered to international markets. These platforms create expanded opportunities for minority-owned firms to export, particularly in the business consulting and educational arenas.
6. From your experience, what are some challenges minority firms face in getting started in exporting?
The challenges we see most frequently are typical of many new businesses: Where do we start? How do we get paid? How will we finance exporting? Who should we reach out to for help? There are a number of federal and state agencies that offer access to technical assistance. When deciding whether your company is ready to export, there are a number of things to consider: internal resources and capabilities, top management commitment to exporting, and a clear export strategy. To overcome these and other challenges, it is important for companies to conduct their due diligence and utilize the resources offered by the federal government entities, such as the MBDA Export Centers.
7. In the past, the ability of MBEs to access working capital financing programs has been a major challenge. Have you seen this trend changing in recent years?
MBDA is working closely with EXIM Bank to provide its clients the access to trade financing they need for global transactions. The MBDA network of business centers and export centers are also exploring alternative financing solutions, including venture capital, equity investment, and foreign direct investment.
8. The U.S. government offers a wide range of export resources. Could you describe MBDA’s partnership with the International Trade Administration (ITA)?
Our national network of 40 MBDA Business Centers coordinate and collaborate with ITA to leverage the resources that we each offer to the clients we serve. When coordinating trade missions, MBDA partners with ITA to provide certification of trade missions. We also collaborate with ITA’s U.S. Commercial Service and its worldwide network of commercial service officers domestically and internationally. The U.S. Commercial Service supports export counseling, business matchmaking, market intelligence, trade show support, and more. MBDA Business Centers and Export Centers coordinate with the national network of more than 100 U.S. Export Assistance Centers, where the ITA U.S. Commercial Service, Export-Import Bank, and SBA International financing staff often collaborate to provide a one-stop shop for MBEs to start or grow their global footprint through exporting.
Learn more about Minority Exporters
1 U.S. Census Bureau, released December 2012.
2 U.S. Census Bureau, 2007 Survey of Business Owners, released June 2011.
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