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International Business NewsAugust 2015
Women who run InternationalManufacturing Companies
In this issue:A CPA from the Midwest accounting firm of NelsonMarks details a new compulsory filing for people owning 10 percent or more of a foreign entity
A FTZ president who outlines a strong export sales platform.
Kathy Xuan, PARC Corporation
Jennifer Ellis,Cosmetic Specialty Labs
Rocki Shepard, Highway Equipment Company
Marianna Slivkova,Fosali
Callie England,Rawxies
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Advertorial
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Held & Associates
TOC & Letter from the Publisher
Women Who Run Int’l Mfg Companies
Foreign Activity Filing Required by the BEA
Transimpex, Translators & Interpreters
Women Who Run Int’l Mfg Companies, cont’d
Greater Kansas City Foreign Trade Zone
Women Who Run Int’l Mfg Companies, cont’d
Five Women, cont’d / Al Figuly, GKCFTZ
InterMark3
IBNewsmag TM: in this issue
They can talk about boosting job growth until the cows come home, but the reality is that most of the regulations that come out of Washington inhibit international trade and subsequent employment.
These growth inhibitors typically come in two forms: exces-sive taxes and burdensome third party regulations.
As my colleague John Manzella points out in his August Manzella Report, The US antiquated tax code punishes US companies and inhibits corporate investment here. Our cor-porate tax rate, coupled with state taxes, brings the US tax rate to the highest among developed countries.
How can this be? When you combine our corporate tax rate of 35% with the average estimated state rate of 4.1%, it brings your total to 39.1%. No wonder our companies re-frain from bringing home an estimated $2.1 trillion in prof-its earned abroad. According to OECD numbers, Japan is 37%, France is 34.4% while Canada comes in at 26.5%. The lowest of the developed countries is Ireland at 12.5%.
Then there are the ubiquitous third party regulations that stunt sales growth in terms of both time and money. One of the latest to rise up and menace our entrepreneurs is the Bureau of Economic Analysis (BEA) BE-10 required filing for any US citizen who owns ten percent or more of a foreign entity. See Sara Stubler’s article on this subject on page 6 of this IBNewsmag edition. It’s not an IRS requirement, but a survey instigated through our US Dept of Commerce with severe penalties for non-compliance.
This coupled with Dept of Energy’s Energy Star regulation, the US Coast Guard-administered ballast water testing from the International Maritime Org, and FEMA’s untold burden-some regulations, blunt our small to medium-sized traders’ growth opportunities.
The Obama administration established guidelines to lessen these burdens to help stimulate exports. One such touch-stone for small business is the SBA Office of Advocacy in Washington. They are “taxed” with the responsibility of in-vestigating unnecessary obstacles.
Go to www.sba.gov/advocacy for details. Is it yielding results for our exporters? Ask your congressman.
— Frederick Baehner
Government road-blocks that stymie job growth.
IBNewsmagTel 816.616.7779 Fax: [email protected]
6655 Troost Ave., Kansas City, MO 64131, USA
In God we trust!PUBLISHER/EDITOR:Frederick Baehner
DESIGN & PRODUCTION:Tom Gilland www.GillandGraphx.com
CONTRIBUTING WRITER: Jennifer Wietelman
ADVISORY BOARD:Jo Anna Edgerton, Doris Ganser, Paul Mastilak
page 3August 2015
They tend to be a tough breed. They are the women who deal day in and day out with foreign counterparts – most-ly males. They also work in cross-cultural hemispheres, where product and market knowledge are imperative. What does it take to be a successful woman manufac-turer CEO selling internationally? Here are four stories from the Heartland and one from the Slovak Republic in Central Europe.
Kathy Xuan, CEO of Chicago’s PARC Corporation, is Chinese by birth. She studied metallurgy and math-ematics, and worked in international business in China before moving to the Chicago area in 1994 to continue studies and learn more about the Ameri-can way of doing business.
“I knew how to do business with people in Japan, N. Korea, Vietnam and Malaysia,” said Ms. Xuan, “but I knew very little about doing business with and in America.”
While an MBA student at Chicago’s North Park University, she was contacted by one of her Chi-nese co-workers from a state-owned manufacturing company in Beijing. Ms. Xuan said. “He asked me to check into plastics re-cycling.”
The Chinese were seeking sources of plastic to con-vert to fuel, and had completed a study revealing that Americans burn through a great deal of plastic versus Chinese consumers. The ratio is reported to be 5 lbs per person a year in the US, versus less than .5 pound per person in China.
“I knew metallurgy, of course, but nothing about plastics,” she said, “ I became a fast learner. I spoke with an EPA official who told me that plastics re-cy-cling struggled with getting rid of what they consider “low value” plastic waste – plastic bags and other flexible packaging and thermo-forming materials la-bor intensive and low value materials that were des-tined for incineration and the landfills.”
Pure, high quality plastic remains with US recyclers who re-use the material, while and all others are
sent to landfills.
Chinese manufacturers saw an opportunity to use the low value plastics for their own recy-cling uses. With a capital loan from her previ-
ous company in China, Ms. Xuan set to work identi-fying and sourcing tons of low-value plastic, hauling it to her Chicago-based facility where she shredded, stripped and chopped the material into bales , and
Women Who Run International Manufacturing Companies By Frederick Baehner and Jennifer Wietelman
Kathy XuanRocki Shepard Callie England Marianna Slivkova Jennifer Ellis
IBNewsmagTM
August 2015page 4
compressed to be shoved into ocean carrier contain-ers and shipped to the Qingdao facility.
She traveled to Qingdao offering her plastic materi-als for buyers to see and select what they needed. Her first shipment consisted of 18 truck-loads of plastic which she sold for several hundred US dollars – enough to cover her costs and provide a healthy margin to boot. This took place over a summer while a graduate student.
It wasn’t long after her triumphal return to Chicago, that her phone began ringing off the hook for more low-value plastic. That was back in 1996. Thus her company, PARC Corporation was born.
Today Ms. Xuan owns two factories/warehouses – one in Chicago and one in Oshkosh, Wisconsin, as well as in Qingdao China, with some 150 employees to offer a full-service recycling operation bridging two countries.
She typically spends two to three weeks each quar-ter overseeing the Chinese part of the recycling pro-cess and works with associated companies through-out the US to obtain low-value plastic, often referred to as garbage plastic.
“I firmly believe that we Americans need to use and dispose of fewer plastics,” she noted. “I have be-come a strong advocate for Zero-landfills.”
For more information, visit www.parcusa.com
Lawton, Oklahoma, may be one of the last places you would expect to find an exquisite fragrance and cosmetic company. But there it is, in the heart of southwest Oklahoma, better known for its 1800s army post during the Indian Wars. Founded in 1972 by Edna Hennessee, Cosmetic Spe-cialty Labs, Inc., also known as Aloe-Vera, private labels formulations for major cosmetic companies in 42 countries. Now, more than 40 years later, Ms. Hennessee’s granddaughter Jennifer Ellis is Presi-dent and Chief Chemist.
Ms. Ellis studied to become a medical doctor, but switched to chemistry at Oklahoma University with the goal of becoming part of her grandmother’s company. Ms. Ellis has been at the helm for the past decade keeping the family business flourish-ing with a simple formula for success. “I think it’s not really a secret. It’s just hard work,” said Ms. El-lis. “Coming to work every day and being persistent and not giving up!”
You won’t find Aloe-Vera branding on the finished products sold to women worldwide. “We are a pri-vate label manufacturer, so we only make product for companies who resell,” said Ms. Ellis. “These products can mostly be found in department stores across the globe.”
Currently the biggest difference Ms. Ellis faces with-in the international marketplace involves packaging. “Many Middle Eastern markets want super sophisti-cated packaging, and the USA does too, but there is a segment of the market that is becoming much more ‘natural’ and going with ‘less is more’ even in cosmetics.”
Ms. Hennessee began exporting in the early 1980s. Five Women, continued on page 6
page 5August 2015
Kathy Xuan runs the Chicago-area Parcusa recycling company.
By Sara Stubler/CPA/ MarksNelson
The Bureau of Economic Analysis (BEA) is a division of the US Department of Commerce, and is requir-ing that any US person who had a foreign affiliate at any time during their 2014 fiscal
year must file a Benchmark Survey of US Direct Invest-ment Abroad (Form BE-10). A direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, triggers the need to file.
The benchmark survey is extensive and there is no dol-lar minimum to avoid filing. However, US persons with smaller investments only have to fill out a portion of the survey. The survey and instructions can be found at:http://www.bea.gov/surveys/respondent_be10.htm
Note that penalties for failing to report range between $2,500 and $25,000, as well as an injunctive relief com-manding compliance. Willfully failing to report can result in a fine not to exceed $10,000 and imprisonment of up to one year.
Many are not yet aware of the requirement to file. In fact, the June 30 deadline has already passed. However, Mark Goddard, the Chief of the Foreign Operations Section of the BEA, has indicated that even if a written extension request wasn’t submitted, penalties won’t be assessed on BE-10s filed prior to the extended due date of August 31.
For more information, you can reach Ms. Stubler by email - [email protected]
5 Women, continued from page 5
Since then, the company has developed thousands of formulations and continues to develop new ones every year.
For more information, visit www.aloe-vera.com
Tucked into the historic area of central Slovak Re-public is the city of Banska Bystrica, where relics of World War II tanks can still be seen in outlying areas. Today, it has become an emerging manufacturing hub of Central Europe, where substantial automo-
bile manufacturing takes place, and where a special-ized fiber optic lighting company has come to light.
The company is FOSALI®, a recent offshoot of anoth-er large lighting manufacturer. Fosali has become in-ternationally known for its exquisite fiber optic, LED lighting designs, which include dazzling chandeliers, flower chalice bed-side lights with original Bohemi-an glass, and other highly creative applications.
Much of the company’s success in Europe and the Middle East has come from its unconventional ap-proach to conventional lighting. Its engineers and designers have substantial experience working with lighting components and material used in the manu-facturing process.
Marianna Slivkova heads up international sales and marketing for Fosali “We work primarily with archi-tects and design companies here in Europe and in
Five Women, continued on page 8
Jennifer Ellis is CEO and Chief Chemist of Lawton, Oklahoma’s, Cosmetic Specialty Labs.
Foreign activity filing required by the Bureau of Economic Analysis
IBNewsmagTM
August 2015page 6
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Five Women, continued on page 10
Five Women, continued from page 6
several Middle Eastern countries, such as Dubai, Jor-dan and Bahrain. We rarely interact with end clients, because our lighting designs results from meetings with the design companies.”
Ms. Slivkova typically studies the culture of the countries she visits to get a better understanding of how male counterparts may react to her as a wom-an offering the Fosali products. “Then, it depends on the individual” she said. “For example, many of the German men are strict and may insist on speak-ing with one of our male colleagues. In those cases, I acquiesce and allow sales to proceed as they wish.”
“In other cases, such as in Middle Eastern countries, it really depends on the individual. Some are strict in not wanting to deal with a woman, and others are much more receptive and treat me as an equal busi-ness partner. I demonstrate my understanding by helping them find technical solutions to their light-ing needs, which they much appreciate. This gives me credibility with them,” she explained.
Fosali is now looking to enter the North American market and has had several inquiries from lighting companies and architects in the US. DuraComm Lighting is one in particular, introduced by Ross Marine, Honorary Consul of the Slovak Republic for the Midwest.
“Based on our preliminary research, we think there is a good market for our lighting designs in the US,” Miss Slivkova said.
Will she have any difficulty dealing with male coun-terparts in the US? Probably not.
For more information, visit www.fosali.com
Although fairly new to the gluten free food business, Callie England, CEO of Rawxies in Kansas City, Mis-souri, has been importing ingredients and packaging materials from worldwide sources since the compa-ny’s inception. But exporting is always on Ms. Eng-land’s mind.
“International business specialists tell me that I shouldn’t even be thinking about exporting, when there is so much of the US to cover,” said Ms. Eng-land. “But it’s Europe where gluten-free foods are much more in demand than here. In fact, we con-stantly get requests from Europeans asking for our products that they’ve seen on our website. Why wouldn’t I want to go where the market is?”
In the US, Whole Foods is one of the company’s ma-jor customers. Ms. England spent a couple of years in the California Bay area, identifying suppliers and developing recipes, before returning to her native Kansas City area.
Prior to establishing Rawxies (a combination of the word, “raw” for its natural ingredients, and “foxy” the way Ms. England desires everything about the brand to look and feel), she worked in Brussels, Bel-gium, as a creative director for a firm there. Her edu-cational background in design guided her decisions for packaging, décor and marketing materials.
“I source many of my natural ingredients from Peru and Indonesia, getting favorable pricing because I know how to negotiate internationally,” she contin-ued. Rawxies imports most of its colorful packaging materials from China. She is savvy sourcing online
Marianna Slivkova runs the international sales for Fosali Lighting in the Slovak Republic.
Callie England places ingredient import orders for Rawxies’ gluten-free products.
IBNewsmagTM
August 2015page 8
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through Alibaba.com, and has worked it consistently.
As ingredients come into the 1,000 sq ft facility, they are mixed, formed, baked and packaged for dehydra-tion, prior to being shipped to the West and East coast markets. The company’s product assortment includes gluten-free treats, vegan foods and raw foods, all de-hydrated for shipping to other destinations.
“Rawxies are my way of sharing with the world what whole foods have done for me,” Ms England report-ed in one of her many blogs on the subject. “I want everyone to experience their many benefits! After all, we all deserve the right to live healthy and happy lives! And, provide that for our loved ones – i.e., par-ents, children, friends, etc… ”
Or, more bluntly, her prolific T-shirts read, “Stop Eating Crap.”
For more about Rawxies, www.rawxies.com
Owners, Rocki Shepard and her brother Matt Rissi run Highway Equipment Company (HECO) in Cedar Rapids, IA. HECO, originally founded in 1939, is a leading manufacturer of Hi-Way deicing spreaders and road maintenance equipment plus New Leader crop nutrient applicators for agricultural OEMs such as John Deere, AGCO and Case IH.
Due to these affiliations, HECO, with its New Leader ag products, is an indirect exporter, with approxi-mately 5 – 10% of the OEM partner products ex-ported to countries globally.
Originating as a line of road maintenance and de-icing equipment, including solutions for large and small truck, dump bodies, spreaders, tailgates, snowplows and pre-wet systems, Hi-Way primarily is sold throughout the US and Canada.
Its New Leader OEM sales represent approximately 70% of the company’s total ag sales which account for approximately 90% of HECO total sales. HECO employment has grown to 150 people, with all of the manufacturing done in its 157,000 sq. ft. facility in Cedar Rapids.
Working with Peggy Kerr and Iowa’s International Trade Office, HECO attended the Agra 2015 trade show in Brazil. While there, Rocki met with like-minded manufacturers and advisors to find joint venture candidates capable of providing vehicle beds to its ag partners made in Brazil.
“After some pretty rigorous evaluations, we nar-rowed the field of manufacturers down to one in particular,” said Ms. Shepard. “At this point, we’re in the process of exploring a joint venture agreement with attorneys both in Des Moines and Sao Paulo.”
As HECO finalizes an agreement with a Brazilian manufacturing partner, it will hire several people there including a manager and a few service techs to provide high levels of service to its ag partners. In the US, HECO sells exclusively through agricul-tural dealers who, in turn, sell to both large farm-ers (5,000 acres or more) and custom applicators. In conjunction with its future Brazilian partner, Brazil, HECO plans on establishing OEM and dealer relation-ships as they have in the USA market. These dealers would then sell directly to the Brazilian farmers.
Five Women, continued from page 8
Rocki Shepard and her brother Matt Rissi own the Cedar Rapids Highway Equipment Co.
IBNewsmagTM
August 2015page 10
HECO has been working with Deere, AGCO and Case for years, and has established integrated working re-lationships with all three. Moving forward in a coun-try as challenging as Brazil which has now added weight parameters to its 65% trade barriers, allows HECO’s marketing approach in Brazil to become a model for other international countries, according to Ms. Shepard.
Once HECO becomes established in Brazil, addition-al countries worldwide could offer opportunities in addition to those through MERCOSUR and other trade agreements Brazil has with South American countries.
“Other opportunities on the horizon for us include the huge African market,” said Ms. Shepard. “There are developing ag markets throughout the world that are advancing to the point where they need the technological solutions we provide.”
Graduating from the University of Iowa with a de-gree in finance, she worked in various industries be-fore her brother Matt asked her to join HECO.
“What I found was that farmers and ag industry pro-fessionals are essentially the same the world over – sincere, hard-working and seeking to improve their yields more than ever. Matt brought me into
the business after our father had passed away. We bought the majority interest in the company a few years after his death. I had to learn the ag industry ways of dealers and farmers. I was very fortunate to have excellent mentors who coached me in the chal-lenges and concerns faced by dealers and farmers,” she said. Mr. Rissi heads up engineering and design. Togeth-er, they make a well-rounded team as they continue to steer HECO’s New Leader agricultural equipment into more countries.
For more information, visit www.highwayequipment.com
Alfred Figuly, Presi-dent and CEO of the Greater Kansas City Foreign Trade Zone (GKCFTZ), and a key member of the Na-tional Association of Foreign Trade Zones (NAFTZ), told a panel of worldwide small to
medium-sized enterprises/businesses (SMEs), that there are three main areas that have driven exports since 2010.
He pointed out that a combination of 1) cost savings, 2) supply chain velocity and 3) supply chain security, are essential elements of the ex-port platform that has contributed to the 168% increase in US exports under the National Ex-port Initiative (NEI). Mr. Figuly’s panel, “The Trade Agenda – Building A Stronger Plat-form for Exports,” was one of several discussions under the theme of how America is at the center of global trade networks through FTAs and the FTZ program.
Al Figuly, GKCFTZ, cites key areas driving exports at SME conference
International Business News
page 11August 2015
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