Sharon Freeman, Ph.D., is the President of the All American Small Business Exporters Association. She is highly regarded as an expert on international trade and trade policy. She has worked in over 100 countries in the past four decades. In May, she visited Slovakia to take part in a discussion about the data transfer to US and we have got the opportunity to talk to her.
Given your broad experience and international exposure, from your point of view what are the main differences between Central Europe and US in terms of entrepreneurship, startups and innovation?
In the U.S. we receive a lot of assistance, particularly from the federal government, and also from state and local governments. There are three aspects of such assistance that are very important and which helps us to grow faster and to be more innovative. One form of help is making information available. A key government agency that provides relevant export information is the U.S. Small Business Administration Agency (SBA), which in addition to providing information also provides loans and financing. Whatever I am endeavoring to do in the international trade realm I first consult the resources of SBA.gov. At my fingertips, through the SBA, I have all kinds of information that will inform me about opportunities, competitors, and other pertinent data. Thus, I never have to start from scratch, the U.S. Government is a helpful resource.
Another important resource for U.S. exporters is the U.S. Department of Commerce. Its Export.gov resource consolidates literally millions of data sources and it’s available for free, even to those overseas such as in Slovakia.
You took part at the discussion about the data transfer to US. What are the main takeaways from the discussion?
I met with a broad range of parties with an interest in trade. For instance, I met a group of IT companies that were interested in knowing about the E-commerce chapter of the Transatlantic Trade and Investment Partnership (T-TIP). While it’s still being negotiated I informed them that if the Asia FTA is an example there would probably be 16 main anchors of what the intentions are of the E-Commerce chapter (see ustr.gov). Key issues include, for instance, data privacy; the desire not to tax goods sold over the internet; and the desire to ensure that digital products have equivalent in terms of how they are treated even if they were physical products. In short, this chapter seeks to create a positive, enabling environment for the growth of digital trade between our countries.
Recent global trend is that startups have become a unique way of building businesses; people follow startups all over the world. What is your take here? Is it a bubble or do you think it´s a natural development of humankind and realization of people´s dreams thanks to technology advancement?
I´m reminded of this quote of somebody having climbed Mt. Everest when someone asked him why he had done that. He said: “Because I could.” It´s the same with startups. There are many enabling technologies that allow startups to happen such as the internet itself which makes information more available. Then there are many other ingredients to support that, such as financing and know-how, and increasing the education of people. So we do it because we can do it.
You are an expert in helping companies to grow internationally. In regards to business development what would you say are the, let´ say, three main barriers or issues that are there for startups if they decide to go global?
One key requirement for traders is the need to possess knowledge of regulatory requirements and how to comply with them; the greater the regulatory burden, the greater the requirement for such knowledge. The purpose of T-TIP is to reduce such burdens. Remember, there are always two parts of any export transaction. One is getting exporting from your country and then importing into another country. Both of those things require a lot of regulatory compliance, which is time-consuming and costly.
The need for export capital can be barrier as well. Agencies that help firms obtain export-working capital play an important role. In the U.S, we have the U.S. Export-Import Bank that provides loan guarantees and working capital. This relates to the trade agreement in terms of its purpose being to minimize the time it takes to get paid when the regulatory burden is lessening and hence the need for export working capital diminishes.
There is a trend in Central Europe that businesses´ focus is local. Either there is a big trend of regional or local production as well as kind of the support of local businesses rather than regionally or globally based. On the other hand the trend on the global scale is to support businesses to grow internationally. Do you think there is any type of a hybrid that businesses can leverage from being both regionally based and at the same time start doing the global business?
It´s all about supply chains and strategic alliances; one thing being connected to another. Through such connections we multiply our opportunities. The aim of T-TIP is to promote such connections and linkages by, for instance, recognizing the credentials of individuals and firms in each other’s countries. Additionally, many opportunities are A partnership with a firm in particular location can help you enter that market and grow on that market faster than you can do by yourself. So if I am a subcontractor to a larger primal contractor I can learn from the prime but also get into the chain quicker. That would be the key to faster success.
I also found out that you focus on helping and promoting minorities, immigrants and people that have harder starting point. Given the current situation in Europe with the migration crisis, do you see any opportunities in the situation that Europe can leverage from and on the other hand what might be the threats where it can go if not taken seriously and in the right direction?
I´m going to refer you to a book I wrote which you can get online for free. It was written for the US Department of Commerce, Minority Business Development Agency. It examined the characteristics of minority exporters and found that immigrant linkages are an important advantage in exporting. For instance, Chinese in America tend to export more to China; Mexicans in America export more to Mexico, and so on because they have home country linkages that inform them about demand and supplier networks, to have intermediaries in those countries in order to distribute the products. Immigrant don’t have to start from scratch or to figure out the whole market; they have in-country connections who can help them penetrate the market.
How do you see the future of international trade? Do you think it´s rather going to be focused on fostering the globalization or there would be more regional focus and everything will be more split into regions and nations?
I don´t know the answer to that. However, one thing we can be very sure about is that given what´s going on in American politics at this time there will be a greater requirement to justify and explain all trade agreements. And that´s not necessarily a bad thing. It just means that there will be more pressure to prove their worth.
We have already touched the topic of how startups can enter different countries but in particular what do you think the startups in Slovakia should do if they were to expand to the US? What is the essence when trying to enter market in the US and eventually succeed there?
We have a large market and lot of different states; one must have a “plan of attack”. You need to figure out where do you want to focus, where´s the demand for your product, how can you get into that market, etc.? One key question is what resources do you have at your fingertips that can help you understand the potential of the U.S. market? It´s not easy to figure out the U.S. market but it’s worth trying, as it is worth it to U.S. firms to learn about doing business in the U.S. The goal of T-TIP is to make it easier to do business together.
Photos: Melman Production
