In the late 1980’s, Bo Young had an idea for a business and along with some partners approached venture capitalists in Tulsa, Oklahoma. At first the business focused on equipment for people with disabilities to help them in their homes.
Young remembers burning through the investment money pretty fast with limited success in building the business. He and his partners hired a new CEO and in 1992 formed SCIFT Systems Inc. New product lines included physical therapy equipment, then exercise machines. They designed cardio equipment and predicted that the wellness market was moving towards an emphasis on physical fitness.
SCIFT Systems Inc.
The new formula and management worked and SCIFIT now has 50 employees including engineers and other specialists who do limited product assembly, the rest of which is contracted out. The company main customers are fitness clubs and hospitals.
Rather than waiting until the company was firmly established in its home market, SCFIT pursued international sales from the beginning. To Young’s surprise his U.S. competitors were not well known overseas. At first, clients in England, Ireland and Korea were picked up by accident.
“An Irishmen, who’d read about us on our website, called me one day from San Francisco. ‘I’ll pay your expenses if you come to visit us,’ I told him.” He came, Young paid, and the visitor became a distributor for SCIFIT.
Exporting expanded quickly and now accounts for nearly 20% of sales. International sales are growing about 15% per year. “The U.S. market is 50 to 60% of the world market, so you can imagine the demand as certain populations age and become more affluent,” Young said. SCIFIT has customers in more than 30 countries. “We are well-established in Japan, where demand is strong, and are moving into Italy and Spain.”
In each of these markets SCIFIT received assistance by trade professionals at the U.S. Commercial Service. “We’ve worked with the Commercial Service for 20 years,” recalls Young. “I was 30 and with a new company. I called the organization. Don’t remember why. It was telexes then, and the trade specialist sent a bunch to her colleagues abroad. I got inundated with requests and I got into all kinds of new markets.”
After all this time, Young still considers it essential to involve the U.S. government in his business—in a totally positive way.
“Thanks to my previous work with the Commercial Service and my own experience, I know a lot about the export process including financing, trade law and logistics,” said Young. “But the Commercial Service saves me time and money, and the legitimacy the U.S. government gives me in market after market is just invaluable.”
SCIFIT’s fastest overseas market entry was in 2005 into Brazil. Young did prep work with his local Commercial Service office in Tulsa and with the Commercial Service office in Sao Paulo in August. He then traveled to Sao Paulo later that month, and attended a fitness trade show there in September. In October, he was selling product.
He was assisted in Sao Paulo by U.S. Commercial Service specialist Patricia Marega, who follows the Brazilian fitness industry and spends time cultivating best of breed distributors. Young used the Gold Key Service in Sao Paulo and Rio de Janeiro which matches U.S. suppliers with overseas buyers and distributors.
“Patricia did a great job researching the market for us,” said Young. “We had 20 interviews in 4 days. The Commercial service people asked great questions of the candidates. If I wasn’t covering my butt, Patricia was.”
“Bo was extremely impressed with one of our local clients, Portico Artigos Esportivos,” said Maregas. “We went to their factory and met their distributor. The fact that the U.S Commercial Service was accompanying Bo to this meeting made the Brazilians comfortable.”
“We settled on one distributor for the entire country,” said Young, “Because we found that if you have more, they start competing with each other and pretty soon they’re cutting the prices on each other.”
And that distributor wanted SCIFIT’s equipment for the big trade show only a month after the deal was made. A month is normally not enough time to ship large pieces of equipment and clear customs. Again, Marega went to work and successfully expedited the goods through customs in time for the show.
It took three months for SCIFIT to enter Brazil, six years to enter Japan. Does this mean your business should forget about Japan? The answer is no, according to Young, because there are things of value to learn about your business, products and yourself from every market you enter.
“The Japanese will absolutely improve your product,” says Young. “They can see more things wrong with what you make than any other culture. They’ll check everything. ‘On the left side of this piece of equipment you have two different screws. Why?’ If our software has 20 stages in it, they’ll suggest a way to reduce it to 10. These insights are very valuable to our competitiveness in all markets.”
In England, SCIFIT partnered with the British government and improved paint bases and also added instructions in Braille. “Australians helped us identify a new and better tread for our treadmill machines. “We tell them: ‘don’t be afraid to tell us how we can improve our products.’”
From his export partners, Young learned that business is about relationships. “We Americans tend to be colder or in too big of a hurry,” observes Young. “Building relationships has become a mantra in our company. Invite your customers home. Stay in their homes. Send flowers when they’re in the hospital. Remember birthdays of wives and children. When my daughter got married, she got gifts from my distributors.”
Young laments that U.S. companies and businesspeople are on the whole “myopic.” He says: “Mention a letter of credit and people’s eyes glaze over. Most people don’t even have passports.”
If they only knew what’s possible. I have the best job in the world. I travel around visiting friends.”
Check out websites in other countries where the Commercial Service has offices. There you’ll find local trade events, directories of specialists in your industry, and links to other useful information about doing business.
The Commercial Service offers a number of channels for meeting qualified buyers: the Gold Key Service, the product catalog Commercial News USA, and the Export Yellow Pages. The last two products are joint ventures with private sector partners and have a circulation focused on foreign buyers. An on-line service, Featured U.S. Exporter, is available on most Commercial Service country websites and includes product descriptions and links to the exporter’s web site.
Trade shows, which provide Commercial Service assistance to U.S. producers and foreign buyers, are a proven way of generating sales. The Commercial Service certifies more than 100 overseas trade shows that have U.S. pavilions and recruits international buyer delegations for more than 40 major U.S. trade shows.
This success story is also featured in our publication A Basic Guide to Exporting: The Official Government Resource for Small and Medium-Sized Businesses. To purchase this book, please visit the U.S. Government Bookstore.
The U. S. Commercial Service is a U. S. Department of Commerce agency that helps small-and medium-sized U. S. businesses sell their products and services globally. With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce's International Trade Administration utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. For more information, visit www.Export.gov.