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Greater Richmond Exports Initiative:
Research Results Briefing
Center for Urban & Regional Analysis (CURA@VCU)Greater Richmond Partnership
Virginia Commonwealth UniversityOctober 21, 2015
Greater Richmond Partnership: Chesterfield, Hanover, Henrico, Richmond
Virginia’s Gateway Region: Chesterfield, Dinwiddie, Prince George, Surry, Sussex, Colonial Heights, Hopewell, Petersburg
Virginia Economic Development Partnership
Local Public
& Private
Partners
CURA @ VCU10/21/2015
Area Chambers of Commerce: Greater Richmond, Hopewell-Prince George, Petersburg, Henrico, Hanover, Chesterfield, Richmond -- fix names
Virginia Asian Chamber of Commerce Virginia Hispanic Chamber of Commerce
Virginia Council of CEOs
Virginia Manufacturers Association
GenEdge Alliance, Virginia Bio, RichTech
Retail Merchants Association
Virginia Small Business Development Centers
Virginia Department of Agriculture and Consumer Services
U.S. Small Business Administration
US Commercial Service
Other Public
& Private
Partners &
Supporters
CURA @ VCU10/21/2015
Our Funders
and Technical
Assistance
Providers
CURA @ VCU10/21/2015
Why This is
Important
10/21/2015CURA @ VCU
The
Opportunity
is Overseas
10/21/2015CURA @ VCU
10/21/2015
Exporters enjoy higher productivity
Source: Bill Burnett, Milwaukee 7
CURA @ VCU
Exporting is
Good for
Companies
Exporting is
Good for
Companies
10/21/2015
Exporters grow faster
Source: Bill Burnett, Milwaukee 7
CURA @ VCU
Exporting is
Good for
Companies
10/21/2015
Exporters become more innovative
two years after starting to export
Source: Bill Burnett, Milwaukee 7
CURA @ VCU
10/21/2015
Exporters have higher business value than their non-exporting peers
Source: Bill Burnett, Milwaukee 7
CURA @ VCU
Exporting is
Good for
Companies
And That’s
Good for the
Regional
Economy
10/21/2015CURA @ VCU
• Initial Kick-Off Meeting (April 2015)
• Research – Fact-Finding (April – September 2015)
• Discussion & Strategy Formation (Nov. 2015 – February 2016)
• Next Report-Out (February 2015)
• Finalize Strategy (March – May 2016)
• Implementation (Summer 2016 and ongoing)
• Monitoring & Follow-Up (Annual)
How Do We
Get There?
Process
CURA @ VCU10/21/2015
• Review of literature on exports & Brookings’ Global Cities Initiative (GCI) Documents
• Extensive Research on Data & Metrics
• Interviews w/ local stakeholders (service providers, businesses, government agencies)
Fact-Finding
Process
CURA @ VCU10/21/2015
Today’s
Presentation
10/21/2015
• Business Survey (201 participants)
• Focus Groups w/ VALET Program Graduates
• Visits to & Phone Conferences w/ other GCI communities
• Your Thoughts and Feedback
• Discussion of Next Steps in This Process
Business Survey
CURA @ VCU10/21/2015
Business
Survey
Thanks to Brookings & VEDP for Assistance
Thanks to Partners for Distributing Survey
201 responded
More Manufacturing & Professional Services
Fewer Healthcare, Accommodation & Food Services
50% Henrico, 18% Richmond, 8% Chesterfield, 7% Hanover, 7% Petersburg
CURA @ VCU10/21/2015
CURA @ VCU10/21/2015
Business
Survey
exporters
• Mostly Canada, UK, China, Mexico, Germany
• Almost half reacted to demand from company or client overseas – most export to 1 or 2 countries
• Two-thirds received no services from government or private service provider
• Those who did receive services deemed them influential in decision to export
Business
Survey
non-exporters
CURA @ VCU10/21/2015
83% are
non-exporters
Why not?
46.0%
15.3%
20.7%
6.0%
4.0%
10.7%
8.0%
Product/service cannot be exported
Enough business from domestic market
More interested in expanding in U.S.
Workforce, equipment, etc. at capacity
Lack of financing
Concern about foreign cultures/regulations
Do not know what to do to export
CURA @ VCU10/21/2015
Business
Survey
non-exporters
What have non-
exporters done to
explore exporting?
78.7%
2.7%
9.3%
4.7%
2.7%
3.3%
Nothing
Talked to family and friends
Talked to business peers
Visited websites of VEDP, SBA, etc
Talked to VEDP, SBA, etc.
Participated in trade shows
CURA @ VCU10/21/2015
Business
Survey
non-exporters
What could get you to consider exporting?
55% -- nothing
45% would consider exporting if:
• easier access to financing
• easier to identify right market
• trouble-free transactions & shipping
• finding the right trade partners
CURA @ VCU10/21/2015
Business
Survey
What
businesses
want
19.3%
11.4%
13.9%
17.5%
Export workshops
Training for corporate excutives
Overseas trade shows, conferences
Export mentorship & networkingopportunities
CURA @ VCU10/21/2015
20.5%
7.8%
10.8%
7.8%
Reduce Government paperwork
Trade missions abroad
Export Financing
Better ports and airports
Business
Survey
What
businesses
want
CURA @ VCU10/21/2015
11.4%
10.2%
18.7%
More free trade agreements
State/National stretegy
Cut Taxes
Business
Survey
What
businesses
want
CURA @ VCU10/21/2015
50% of all respondents
stated they are not aware of
federal, state or local government export
assistance
Business
Survey
Focus Groups w/
VALET Program Graduates
CURA @ VCU10/21/2015
Focus Groups
w/ VALET
Program
Graduates
CURA @ VCU10/21/2015
VEDP’s VALET Program –
Virginia Leaders in Export Trade• 2-year, intensive program for selected companies • Ready / committed to export or increase exports
• Assistance includes • Strategic planning
• Export services
• Market research
• Trade missions & contacts abroad
• Expense reimbursement
Focus Groups
w/ VALET
Program
Graduates
7 manufacturers
2 service businesses
CURA @ VCU10/21/2015
Why did your company start exporting?
• Domestic market saturated or declining
• Personal – family connections or personal desire
• Bought a company that was already exporting a little
• Acquired by a company that pushed us to do it
• Company has been doing it for many years
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
Concerns or reservations at outset
• None
• Finding manufacturers or distributors abroad
• Cultural differences – finding partners who accept our way of paying for selling / distributing product
• Protecting our intellectual property
• Local regulations & documentation requirements
• Credit risks & getting paid
CURA @ VCU10/21/2015
Concerns that arose after starting
• Marketing – convincing countries of our product’s value
• Currency fluctuation
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
Where did you go for help (before VALET)?
• Distributors / Manufacturers’ reps
• Export management companies
• Consultants
• US Commercial Service
• Freight forwarders
• Other VEDP services, e.g., market research
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
Changes to your organization or business plan
• Changed our product base
• Changed our approach to selling
• Decided to acquire existing businesses rather than create new franchises
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
What might have made exporting smoother?
• Class on business in various countries / regulations
• Knowing where to find services
• Central place to find information – but networking is also important
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
What might have made entry into exporting smoother for you? (cont’d)
• More marketing research
• Knowing more about currency fluctuations & currency hedging
• Focusing completely on international & doing no domestic sales
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
How can Richmond MSA increase exporting?
(A) Improve the Fundamentals
• Better infrastructure – roads & shipping w/in US
• Improve labor force, especially
a. Skilled, certified manufacturing workers –
create programs, remove red tape
b. Software engineers
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
How can Richmond MSA increase exporting? (cont’d)
(B) Reduce Tax & Regulatory Burden
• Reduce costs of regulation
• Cut taxes, especially machinery & tools tax
• Lower costs of doing business, especially exporting
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
How can Richmond MSA increase exporting? (cont’d)
(C) Provide Additional Export Services / Publicize
• Help businesses get info – more quickly & efficientlyo One-stop shop
o Better coordination / alignment among service providers
o Increase visibility of services for SMEs
o Network & referrals system abroad
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
How can Richmond MSA increase exporting? (cont’d)
(C) Provide Additional Export Services / Publicize
• Exporting overwhelms SMEs. Localities should direct them to initial services.
• Mentoring - seasoned exporters help companies in related businesses:o Existing business organizations; cluster groups
o Show them how exporting helps their business
Focus
Groups with
VALET
Program
Graduates
CURA @ VCU10/21/2015
How can Richmond MSA increase exporting? (cont’d)
(D) In General
• Build on 1,000-year role as trading post at Fall Line
• Encourage exporting
• Welcome & celebrate immigrants
• Better planning of jobs & housing location, transit
Focus
Groups with
VALET
Program
Graduates
9/16/2015
Benchmarking with 5 GCI
(Global Cities Initiative)
Communities
Benchmarkin
g with 5 GCI
Communities
CURA @ VCU10/21/2015
• Upstate (Greenville-Spartanburg), South Carolina
• Louisville / Lexington, Kentucky
• Columbus, Ohio
• Milwaukee 7, Wisconsin
• Des Moines, Iowa
CURA @ VCU10/21/2015
• Single service provider, all “team members” know their “position” – overcame tensions, overlapping services and competition
• All reported more regional collaboration after Export Strategy implemented
Benchmarkin
g with 5 GCI
Communities
CURA @ VCU10/21/2015
• Private-sector leadership and “Champions,” but challenges identifying private-sector players
• Export Plan or Strategy and SWOT analysis
• All use Metrics but various measures: sales, jobs, new exporters, new markets
Benchmarkin
g with 5 GCI
Communities
CURA @ VCU10/21/2015
• Most reported there are “enough resources” from private, state and federal sources, but sources not well known
• Need for dedicated staff & resources to sustain initiative
• All focusing on SMEs
• Most integrating FDI into export strategies
Benchmarkin
g with 5 GCI
Communities
CURA @ VCU10/21/2015
Take-Away Points
CURA @ VCU10/21/2015
• Approach must be Metro wide
• Create Metro Strategy for Export Services, including “road map” – time horizon of 5 years
• Define Goals and Metrics in the Strategy Conduct ongoing monitoring & improvements
Take-Away
Points for the
Richmond
MSA Exports
Initiative
CURA @ VCU10/21/2015
• Greater Richmond has resources for export services, but better alignment & promotion needed
• “No wrong door” approach
• Web-based portal connecting the service providers is suggested as a tool for this effort
Take-Away
Points for the
Richmond
MSA Exports
Initiative
CURA @ VCU10/21/2015
• Coordinating organization (hopefully existing organization) should help open communication & share service load
• Identify public & private “Champions” to put “face” on exporting and lead peer support and mentoring.
Take-Away
Points for the
Richmond
MSA Exports
Initiative
CURA @ VCU10/21/2015
• The target customer should be small and medium enterprises (SMEs).
• As the Export Strategy gains traction, integrate it with the region’s Foreign Direct Investment (FDI) efforts to create holistic approach to Global Trade.
Take-Away
Points for the
Richmond
MSA Exports
Initiative
CURA @ VCU10/21/2015
QUESTIONS OR COMMENTS?
Next Steps
CURA @ VCU10/21/2015
• Discussion & Strategy Formation (Nov. 2015 – February ‘16)
• Next Report-Out (February 2015)
• Finalize Strategy (March – May 2016)
• Implementation (Summer 2016 and ongoing)
• Monitoring & Follow-Up (Annual)