What Owners Need to Know About Doing Business Overseas – Wade Merritt

As anyone can imagine, expanding your business is a huge undertaking in itself, but trying to enter into the foreign markets brings its own set of challenges and hurdles. 

Bangor native, Wade Merritt, has made it his mission to help Maine businesses break into foreign markets by overcoming these challenges through his job heading the Maine International Trade Center (MITC)

 

Rich: Our guest today is the President of the Maine International Trade Center and State Director of the International Trade within the Maine Department of Economic and Community Development. Quite a mouthful. He is responsible for directing the trade and investment policy for the state, including the delivery of international trade services to Maine’s business and academic community,

During his 22 years at MITC, he has served as Maine’s business community through the creation and development of several major sub programs including the Canada Desk and Invest in Maine, MITCs Investment Attraction Initiative.

A native of Bangor and graduate of the University of Maine, he currently resides in South Portland with his wife and daughter. We’re very happy to be speaking today with Wade Merritt. Wade, welcome to the show.

Wade: Thanks for having me, Rich. Good to see you, Yury.

Yury: I appreciate that. Thank you for coming. Wait, you’ve been at MITC for a long time, 22 years. Do you get to go on trade missions, and what is it like?

Wade: Yeah, absolutely. I mean this is kind of one of the cornerstones of what MITC does is take groups of companies to the market. We do a lot in terms of teaching companies how to do the work, but one of the kind of next important steps for them is to actually get out and meet the companies where they’re at. It’s an important experience for them.

I’ve done, I think I’m up to probably 15 of these trade missions that I’ve put together or traveled on. I recently added country number 20 to my list. I had the opportunity to visit Montenegro in the summer of 2018. So it’s very rewarding to be able to kind of see the international business community where it resides, but also be able to bring main businesses to see it too.

Yury: Do you have a favorite place that you’ve visited in your 17 years of travel?

Wade: Oh boy. There are so many of them that I have really enjoyed. It’s difficult to pick. My sleeper pick was always Santiago, Chile. I enjoyed my couple of days that we had a chance to visit. The problem with this job obviously is that – it’s not really a problem, you know, cry me a river here, right – you get to see these amazing places for a couple of days and the context of a work trip. So I’ve seen 20 countries I’ve been to two or three days at a time and, but I really enjoyed my time in Santiago.

Kazakhstan was actually another kind of favorite that I really didn’t know what to expect when we were out there.

Yury: We’ve been there several times.

Wade: It’s a beautiful city. It’s a beautiful, amazing environment. We actually had some schools that went there to try to attract Kazak students to come to Maine. And we’ve been really active in the North Atlantic and Nordic markets recently. So Iceland, Norway, the UK, spending a lot of time there, too. And of course those are fabulous places to visit as well.

Rich: Awesome. Have you found the companies in Maine have a lot of international opportunities and should this be part of their growth strategy?

Wade: Oh, absolutely. I mean, I think there are lots of opportunities for lots of different companies if they know where to look. And one of the statistics that we like to throw out there is that 95% of the consumers in the world live outside the United States borders. And for growth, any company really when they reach a certain point of development, really ought to start thinking about where International’s going to fit in their overall growth strategy.

We’re seeing a lot of good opportunities in food and food products. Because basically that spans the state. Lots of good opportunities in life sciences and technology. The cluster particularly around Portland, but also in other places in Maine, up the coast, Mt.Desert Island, and others. And we’re working with the four main initiatives as well on trying to find new places for Maine’s forest products and trying to bring technologies in there. So there’s lots of great opportunities, that’s really only kind of scratching the surface, but those are the ones that we find ourselves focused on these days.

Yury: Do you think with, you know, proliferation of technology and the intranet, like e-commerce allows us to basically sell to the entire world regardless of the geography?

Wade: Definitely. I mean this was, and actually this is not kind of a new thing anymore. It feels like it’s a new thing because I’ve been doing this for so long, but I remember back in the mid nineties when I started in this job. This was a Governor King-era innovation was the creation of the trade center. One of the things that he would like to talk about was the fact that any small business in the state had the same amount of real estate on their website that AT&T did. And it allowed them to be globally competitive at an earlier stage than they would have been prior to. And that has just, you know, that has only progressed through sales platforms like Amazon, eBay, Etsy, where you can become a global company. Ali Baba. Exactly. Things like that where you can become, you can at least have international aspirations much, much earlier than you did before. If a company has never sold internationally, how do they start? And what role does or can, MITC play?

Wade: Good question. So one of the things that we’re really looking for when we talk, I mean, it’s so different too. I mean, and this is the evolution of all of this over the 22 years that I have been doing this. You know, when I first started out working in the field, I was our Bangor office representative. My job at the age of 24 was to drive up and down the down east coast convincing companies from Bangor down to Machias. Yes, giving you guys a shout out here at Machias, and inland to be talking about international and why you should be thinking about it. There’s a lot of proselytizing that was going on at that point. Companies kind of get it now I think and understand why they need to do it. So the role that we’ve played, um, has changed a lot over time.

What we’re looking for really from companies, and what I think kind of the baseline for companies to be successful with all of this, is that they are at least selling their products outside their local market. We’re looking really for regional, have you sold to Massachusetts. You know, maybe we shouldn’t be talking about China, and ideally we’re talking about somebody who’s got some sort of national distribution. And it’s really because that shows a certain amount of company growth in their systems.

It’s no longer that the president is also doing the books. They professionalized their internal systems and they’re ready to take on what the complexity of that is. That’s what we’re looking for in a client. What we do for them can vary broadly from, they have a question that’s very specific, “What’s my duty rate for going into Canada?” And we can give them that. Or, “I make a product, I’m ready to go international. What are the markets that I should be looking at?” And that, you know, that’s a big, broad scope, but that’s really the area in which we’re playing.

Rich: But I’m thinking about companies that may just be starting off, and let’s say, I’m just thinking alewives or something like that. Like there’s a product that might do really well in say an Asian market that might not ever sell in Massachusetts as your example, a company just like that. Is that still something that you might work with?

Wade: Oh absolutely. Yeah, for sure. And some of that is, and I’m glad you picked a food product because I have a particularly good staff member in food that is able to work with the company and say, “Okay, here’s what your product is and here’s where I think the market is for that.”

So even though you may, in your case, may not be what the exact fit of what I’m saying about regional or national distribution, they don’t necessarily have to. If you think you’ve got a good idea that’s got an international applicability where we’re they’d be able to help support it through our own organization, but also through the network of people we’re able to, to bring to bear on the problem.

Rich: So talk to me a little bit about the process. How hands on is MITC if I decide that I need to be growing by selling internationally?

Wade: Well, you know, we’re, we’re in the business of making sure that companies have the information that they need. So a lot of the work that we do and would provide to a company is kind of secondary market research where they’re saying, okay, we’re looking to go to the UK and help us identify who the companies are that might buy our products, tell us what our barriers are to the market.

We’re educating them at that point to get them up to a certain level. At that point, once they’ve had a chance to review the information, we’ve given them, this consultation that occurs between our staff member that’s focused on that particular industry. And then the company kind of needs to make a decision at that point. Whether this is a go or a no-go, you know, whether they feel comfortable with what they know that they can make next the step or that this isn’t going to be for me, this is too complicated.

And assuming that they are ready to take that next step, then we’re also there to help with that next step, which is connecting them with resources like the federal government has a great program to introduce the companies to foreign buyers. We can do that through the private sector as well through a network of consultants that we work with so that you’re actually then connecting seller to buyer and helping them kind of figure out the answers to some of the questions that will arise from that. How do I do the packaging? How do I get the stuff there? How am I going to get paid? All of that sort of thing. It was really kind of in the education of the company in that regard.

Rich: So one thing that you had said earlier – Yury brought it up with the e-commerce side – and I guess this is just a little bit of confusion I have. So, are you connecting Maine businesses with businesses around the world, or do you ever try and help them kind of get into direct to consumer? Is there always going to be another business on the other side, whether it’s a distributor or whatever the case may be that you’re putting them in touch with? Because e-commerce feels more like a business to consumer play.

Wade: I would say that we’re overwhelmingly B2B. Yeah. We’re, we’re not really in the B2C world. I mean, we certainly can consult on that. But usually in the context of a B2C transaction, it’s much more, “How do I get my stuff there and how do I take an international credit card payment?” And, “How do I ship something small consumer like in a box and get it to a customer?” As opposed to I’m a full on marketing strategy of like, how do I get to consumers in market X directly. There’s generally going to be a business partner in there somewhere.

Rich: Makes sense.

Yury: How many international trade missions does MITC do with Maine businesses, and how does a Maine business get involved with one of your trade missions?

Wade: So there’s usually anywhere between four and six of these a year that go on. We kind of draw a distinction between a trade mission and a trade show. I kind of lump them together to be international trade events. They’re mostly of the trade show variety where we will take a group of companies that are within the same industry space to a market. We’ll support them with staff on the ground. We’ll support them with business to business matchmaking support so that they know that they’re going to have 10 to 15 companies that they are going to meet with while they’re at the show and not just waiting for traffic to kind of go back and forth in front of them. Those are obviously fairly resource intensive. So those are, you know, four to six of those a year.

Mainly those are in life sciences and food. We’ve had some work recently in the defense and aerospace sphere. And as far as how do companies get involved, we have a great database. But I don’t pretend to say that we have every company in the state that are kind of locked down on that. I would say, you know, for people who are listening to this, if people want to get involved in that absolutely reach out to us. And, you know, we’re, we’re always happy to sit down and have a conversation about what the company is, what they’re doing, and how they might fit in with the programs.

And it’s also good to be able to start to see other clusters emerging. Just because we’re doing stuff in food and defense and medical, it doesn’t necessarily mean we wouldn’t do something in oil and gas, let’s say, which is not a sector that you typically think of when you think of Maine. But we do have a number of companies around that are doing other things that are interested in doing some work in the oil and gas field. And that helps us kind of drive, um, what the next priorities might be once, if we know what the companies out there are looking for.

Rich: I’m sorry if you’ve already answered this, but do the companies pay to get on these trade missions or is that something that you pick up as part of your funding? And if they’re not paying, what type of barriers do you have in place to make sure that these are actually people not looking just to go to Montenegro?

Wade: Yeah. Right. Exactly. No, this is a fee for service. So the companies we derive, we develop a budget and we put a price out there. The companies are absolutely paying for this. We think that’s important because this is an enormous level of commitment that goes into this. And there needs to be some skin in the game. They’re not cheap. You know, they can be $3,000, $4,000, $5,000, and that’s just in the kind of the infrastructure piece of all of this, this isn’t including their travel costs.

But you know, we also feel that, despite that there can be a fairly significant price tag, that it’s an investment in – if they’re serious – this is a good investment in getting into that market. We do also receive some funding from the federal government through the small business administration to offset some of those costs that go into the matchmaking part of it or go into the booth space part of it. That can be used either in the context of an activity that they’re doing with us or in the context of an activity that they’re doing on their own that they might need some support for. So we start with the price tag and then we do have some other resources to kind of put towards that, so long as the company meets, you know, kind of the eligibility requirements, that sort of thing.

Rich: All right. Now were you always doing physical products? Are there services, like if a service based company comes to you, do you have something to offer them?

Wade: Yeah, I mean, I would say we’re, we’re overwhelmingly on the product based side, but we have done work in the past with environmental technologies, a little bit with consulting around the life sciences industry. Probably the biggest single service export sector that we’re working with is in education, working with high schools and universities all around the state to attract international students to Maine. And that is viewed by us, it’s viewed by the federal government as well as the export of a service. That’s had fantastic success, we’re looking for ways to kind of expand that beyond just attracting students to how do we leverage that to connect like the research that’s going on at the University of Maine and all of the kind of broad span of what educational services mean. Not just education, but that’s one we’ve had going on for about 10 years that’s shown some great success.

Yury: You know, this is how I was introduced to Maine and thorough the academic exchange program came to Maine, stayed here and learn a little bit and love it. And here I am back on the show.

Wade: Yeah. Well, I mean it kind of fit together with our informal theme within MITC for years of visit, study, invest. It sort of leads up to trying to get a company from overseas to consider investing in Maine. This came out of a conversation we had in Japan 12 years ago. First you want to get them to visit here, then you want to get them to send their kids here to study, and then you have the conversation with them about let’s talk to you about our opportunities to do business here too.

So they all kind of link together. It’s just a matter of, you know, how and what’s the best way of approaching that.

Yury: Do you help with any inbound sales, you know, products coming to Maine?

Wade: A little bit. The trade center is not a program that’s unique to Maine. There’s, I think 47 other States that have an international trade program. We’re a public private partnership, most of my counterparts in other states, they’re all state employees on there and there’s some sensitivity there around the import side. Because of the nature of the public private partnership, we’re able to take a bit of a broader view on that. So we do work with people that are looking to try to import product.

This is not an uncommon question for us from particularly the new Mainer population that’s coming in and wanting to reestablish a business connection with their home country and how do they, how might they approach that. We’re really only in the position of being able to advise them on the import transaction part of it. And then we would refer them onto a place like CEI or others to kind of work with them on the development of the business itself of we can help you with the import transaction, but we can’t really help you with the marketing of it into the broader community, that’s just not within the scope.

On the sort of intermediate manufacturing inputs of a company needs to buy and sell stuff to go into the things that they’re making. We do a little bit of that too, but again, it’s mainly on advising just on the transactional part of it, of, okay, what does this document look like, or can you connect me to a customs broker that’s going to help me get this stuff in here.

Rich: I’ve heard this from a few businesses and actually came up at a recent Maine biz forum that I went to. Tariffs seem to change drastically day to day in our current political climate. Is this something that you advise on or can help businesses with or is this just, it is what it is?

Wade: Right now it kind of is what it is, you know, I mean we’ve spent a lot of time trying to figure this out alongside the business community, we take this question a lot. And I’m assuming I was at the same Maine Biz thing as you are, which is just a couple of days ago with day Five on the Future. And it is very interesting because when all of this started coming up last summer, summer of 2018. You know, we were kind of one of the first ones to be asked about it cause you know, the international trade center and that’s the people that we’re talking about.

We started talking about the impacts on the lobster industry. Then we started talking about, okay, well actually yes this is important but we also need to start thinking about what the impacts are on every manufacturer in the state because we’re talking about steel and aluminum tariffs. Because what we heard at the Maine Biz forum was really interesting that now you start to hear it from the construction companies, from real estate companies. There is a significant amount of uncertainty. That’s the word that emerges around all of this issue is how do you plan for this. And, you know, there’s a couple of things that we’ve, you know, products and things that companies can do to help try to help mitigate this uncertainty.

But unfortunately we were finding ourselves that we’re kind of in a place where we need to live with this. And, you know, we heard from the woman from Hardy Pond Construction talking about you just sort of have to lock in the price and you have to change how you do business with your customer because this is the world that we’re living in right now.

Rich: Right. Yeah. Okay.

Yury: Wait, how does a MITC get funded, and what KPIs do you track?

Wade: So we are, as I said, a public private partnership. We are funded through a direct appropriation from the general fund through the Department of Economic and Community Development. And we are also supported by a membership base of about 300 companies from all around the state and also corporate sponsorships. We have a little bit of money that comes in from the federal government, I mentioned, to support the business community. So there’s a lot of different funding sources, primarily from the state and private sector. That’s how we were set up 25 years ago and it’s been a great model.

I think as far as KPIs are concerned, we are very outcome driven here. So we’re looking at sales, what are the companies telling us that they were able to do as a result of working with us.

That’s much easier to capture in the context of a trade show. Like we can say, here’s a moment in time, here’s something that you did, here’s what we were able to do as opposed to kind of the project to project base of hanging a dollar sign on. I gave somebody access, I told somebody what their tariff rate was exporting to the UK.

And then also the kind of hard dollars and cents side that the other ones that I look at too is as a statewide entity, how are we doing in projecting ourselves outside of Cumberland County. How many businesses are we able to touch in a given year. And what’s the distribution of that across the state. Are we getting to Aroostook County, are we getting to Washington County and Franklin County?

This is something that I continue to pound the table on. You know, as a Bangor kid this is just sort of the way it is for me, and we do well with this. I mean, I think I just signed off on our annual report for last year and we’re coming back with something on the order of a 25 to 1 return on investment. And that’s just based on the overseas trade shows. That does not, as I said, include the probably 60% of our time that we spend actually working with companies and answering questions for them, because that’s in some ways unquantifiable. We know there’s value obviously, because people keep coming back. But that’s a difficult one to hang a dollar sign on. But just on that, you know, 25 to 1 ROI.

Rich: You know, on your website it says that there are 2000+ companies that explored it, almost $2.8 billion in goods and services to Hungary and 74 countries. Do you have the number in mind that you want to grow the number of participating countries where Maine conducts business and actually grow the number of companies that participate in the international trades?

Wade: Yeah, I would love to grow the numbers of companies that work with us. I think that’s probably the better number. That 2000 number is great because it certainly shows that lots of people are involved in international at lots of different levels. That is a largely self-reported number, however, so if somebody had delusions of grandeur, they would report themselves in there as an exporter.

Yury: It’s a little bit of a vanity metric, right?

Wade: It can be. I think the number, that’s a number that comes out of the Department of Commerce and we put it out there because we can have a citation for it. We’re kind of guessing probably about 800 to 1,000 companies in the state that are really doing something international.Of that, probably about 300 of them work with us on an annual basis. Some of them, obviously more than others.

So, you know, could we go from 300 to 400? Probably. I think that would be a great place to start. So I guess the short answer is yes, we want to try to grow this and grow that number as much as we can. And also diversify the markets. We do a lot in the North Atlantic these days. Almost 50% of that $2.8 billion number that you put out there goes to Canada. So market diversification is also important for a lot of different reasons. So yeah, we’re always kind of looking to how do we grow this and evolve this and our client base and where are we sending products and what are we working with companies on.

Rich: Wait, if somebody is listening right now and they’re like, “Wow, this is a real opportunity for me. I’d never really thought about talking to MITC before.” What would be the first thing that they should do, where would we send them?

Wade: Oh, just send them to the website, mitc.com. They can certainly come through me, and depending on what the product is and where they are in their evolution, we’ll send them onto the appropriate member of the staff.

I have a fantastic business development team right now who’s taking calls and going out and visiting companies. I’ve been working with him on his trip to Piscataquis County in a couple of weeks, which is fantastic. So yes, absolutely. mitc.com we’re on social too, Twitter, LinkedIn and Facebook, kind of the standard places. They can find us if they’re looking for us and we’re happy to answer anybody who calls.

Yury: Oh, that’s great. Well, Wade, now we get to the part of the show where we ask all of our guests this question and hope you’re ready for it, so here it goes. If you could change one thing to improve the business ecosystem in the state of Maine, what would it be?

Wade: Well, I think I started to get at this a little bit early in the conversation when you were asking me about what are we looking for in exporters? And I think a focus on getting out of Maine. You know, I think that’s something that we’ve been spending some time talking about over the years of what exists to help companies get out into the regional market or out into the national market.

The way I used to refer to it as what exists between Startup and Create Week and when they show up at my door. So because for us this makes them that much stronger when they’re ready to step into the international market. That they’ve spent the time to develop their company, they’ve spent the time to develop their market, they know who they are and have shown that they can be successful outside their immediate home market.

And there’s been some kind of fits and starts at this. I think my partners at the Department of Economic and Community Development have taken on development of a domestic trade program ,where they will work with companies to try to help encourage them to get out into the national market. We’ve tackled that a bit. We do some domestic trade shows, but with an international context. We’ve got six small food producers going to San Francisco for the Winter Fancy Food Show next week. We’re there really for the international buyers, it draws a lot of Asian buyers to the show. But the bycatch of having access to the West coast market has been huge for the companies that participate in all of that.

So if we could make one change, I think that’s something that I would like to see added to it, is how do we encourage more companies to go national, or at least regional, to develop them and get them out of their home market.

Rich: Awesome. You mentioned, obviously for people who are interested in learning more about the trade center, we can go to mitc.com. Where can we send people if they want to connect with you, Wade?

Wade: Oh, they can come right to me on my email. I’m happy to do that. It’s Merritt@mitc.com. I feel like I’m on email all the time, I’m happy to have people reach out to me and happy to talk to anybody.

Rich: Awesome. Wade, thank you very much for your time today, we appreciate it.

Wade: No problem. Thanks for having me guys. It was a great show.