Happy loving couples
BW Technologies Ltd., Calgary
Cody Slater used to get involved in lots of lousy long-distance relationships after hooking up on speed dates. Back in the early 1990s, just about anyone who approached his company’s tradeshow booths and showed an interest in selling its gas-detection equipment overseas became a distribution partner.
“We’d say, ‘Great, here’s a form. Sign that.’ And away we’d go,” recalls Slater, president and CEO of Calgary-based BW Technologies Ltd. As a result, BW ended up with untrained “pen pals” who disappointed customers and generated less than impressive sales.
Slater’s love life has much improved since then. Last year, BW generated three-quarters of its $54 million in sales abroad; this year, Slater expects to hit the $70-million mark. Playing a key role are 300 distributors in 60 countries — and they’re the kind you’d want to live with for a lifetime.
Founded in 1987, BW began exporting through distributors in 1991. “Our view was that we have to be in international markets,” says Slater. “If we were going to be a leader in this marketplace, we weren’t going to do it in our backyard.” But through the mid- to late ’90s, BW’s ragtag crew of foreign distributors was producing only 30% of its annual sales.
Slater knew BW had to be more selective of its distribution partners, but how? BW revitalized its sales network by locating prospective clients in new markets and winning them over first-hand. Then it simply asked its new customers to recommend local distributors they’d like to deal with. “Any distributor will tell you they’re an expert in your area,” says Slater. By asking customers, “you’re getting information with a lot more value.”
No matter how talented they are, BW’s distributors are never abandoned. As sales grow in each territory, BW hires locals who understand market needs and culture to manage and motivate distributors in their region and to deal directly with large accounts. It also operates sales and service offices in Dallas, the U.K., Australia, Dubai, Singapore and Hong Kong that deal directly with customers and co-ordinate with the regional managers.
Channel partners also benefit from localized advertising (regional managers have a voice in its content and placement), plus product manuals and marketing materials supplied by BW in 13 languages. “You need to be perceived as local,” says Slater. “Customers want to deal with someone who can support them and their personnel.” But BW does its best to design products that need little after-market service. For instance, says Slater, BW has adapted common microelectronics technology for its products, making them simpler to operate. Some of its devices even use off-the-shelf batteries. “If we provide products that need ongoing service and support from the factory,” says Slater, “it’s very difficult to enter into a market that’s halfway across the globe.”
While the U.S. continues to be BW’s largest market, expansion in Europe, the Middle East and Asia continues, and Slater has selected South America as his next target: “There really isn’t an area that we don’t want to be in.”
One simple rule
Lotek Wireless Inc., Newmarket, Ont.
Jim Lotimer knows the first rule of exporting, and he can express it as succinctly as anyone: “Know what the market wants in a product, and focus on developing it.” But it’s knowing how to execute that simple mantra that separates Lotimer’s company — Lotek Wireless Inc. — from the rest of the global pack.
Headquartered in Newmarket, Ont. with offices in St. John’s, Nfld., Lotek designs and manufactures “biotelemetry systems” — scientist-speak for stuff like radio tags and satellite-linked collars that might be used to track the passage of salmon around hydroelectric dams or an elephant across an African savannah. “Understanding biology and the ecology of the world will lead to many of the answers of sustainable and renewable resource utilization,” says Lotimer, president and CEO. In a global environmental market worth $500 billion last year, he notes, “We hold one market key.”
Lotek generated revenue of $21 million last year, with 90% of those sales going to 38 foreign markets. Much of its strength comes from ad hoc partnerships with scientists on leading-edge research projects around the globe, some of which last for years. The scientists tell Lotek what they want to study and how, and Lotek builds the tool for the job. When the study results are published in scientific journals, Lotek gains credibility and demand for the product behind the data. “It’s a symbiotic relationship,” says Lotimer, “that results in products that the world wants.”
A bigger challenge is installing and supporting its instruments in extreme environments halfway around the world. “We send engineers, research biologists, oceanographers and other scientists all over the world,” says Lotimer. The effort is aided by employing a large pool of highly skilled workers. In fact, more than half of Lotek’s 130 staff hold graduate or post-graduate science degrees.
Because serving the world costs money, Lotek keeps a few financing tricks up its sleeve. For instance, Lotek insures overseas receivables through Export Development Corp. While the insurance offers peace of mind if a Lotek client defaults (which has never happened), it also helps the firm access additional working capital that can be used to tap new markets. “With the insurance, our receivables are a far more desirable security,” says Joan Blackwell, Lotek’s business-relationship manager. “The bank will usually give you 90% leverage on those receivables.”
Going forward, says Lotimer, Lotek will “continue to develop good business practices and the best technologies and products in the world.” If it can do that, Lotek’s future will be bright. “An industry like ours,” says Lotimer, “which brings advanced technology to the study of environmental issues, is going to grow for a long, long time.”
Building a worldbeater
Mega Bloks Inc., Montreal
Americans have Mcdonald’s, Coca-Cola and Microsoft. The Japanese have Sony and Nintendo. The Finns have Nokia; the Swedes Ikea. In Bacardi, even tiny Bermuda can boast one of the world’s top 100 brands. What marketable icons is Canada known for? Niagara Falls, the Mounties and Celine Dion.
But Canada might soon find itself among business’s brand elite thanks to Mega Bloks Inc., a Montreal toy maker that’s taking on the world, piece by piece. Mega Bloks manufactures plastic construction blocks (think: Lego) and accompanying toys such as action figures and doll houses. In the year ended Sept. 30, 2003, Mega Bloks notched sales of US$211 million. Its annual sales have doubled over the past four years.
What’s driving Mega Bloks’ mega growth? Given that exports account for more than 90% of the firm’s sales, one can’t help but credit a “think global, act local” approach that has resulted in happy customers in 100 countries.
In most countries, Mega Bloks sells directly to retailers, typically recognized mass-market players such as Wal-Mart and Toys R Us in the U.S., and, in Europe, Carrefour and Tesco. “Our approach is to have our own people on the ground selling directly to those major brands,” says Brahm Segal, Mega Bloks’ vice-president of corporate affairs. Its local representatives help tailor retailers’ stock and marketing campaigns to suit local culture and product preferences. They visit stores frequently to ensure the product is displayed effectively and neatly, and even help translate advertising into the local tongue. “Retailers feel that they’re getting an international brand,” says Segal, “but are dealing with someone local who’s looking after their needs.” And when these large retailers expand into new markets, Mega Bloks follows.
Where the megachains haven’t penetrated — as in Latin America, the Middle East and Africa — Mega Bloks often sells through agents or distributors. However, Mega Bloks consults reliable independent research, supported by in-person visits, to identify the best potential partners: those that are growing, financially sound and well respected. “That’s all very basic research that doesn’t cost a lot to do,” says Segal. “It’s the price of a plane ticket and a few long-distance calls.”
Typically, Mega Blocks doesn’t adapt its products to local tastes, but it is making an exception in Japan, where the construction-toy market is underdeveloped. Last June, it entered a joint venture with Bandai Co. Ltd., a Tokyo-based toy manufacturer that’s big on proprietary and licensed characters, such as Power Rangers. They’re huge asset in Japan, where licensed product accounts for half of toy sales. Segal says the venture could generate Japanese sales of US$16 million a year by 2005.
As that business takes off, Mega Bloks may turn its attention to the next crop of countries that join the European Union. But no matter where it aims, there is opportunity. “There will always be a core construction-toy market in any area,” says Segal. “We want to be there.”
© 2003 Susanne Baillie