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)