bizSanDiego the business of san diego county

Foreign Exchange posted on July 3, 2007

Foreign Exchange Tech firms comb the globe to open up new avenues for increasing revenue

For many American high-tech firms, now is not the time to be patriotic—in some ways. While the United States is a primo market for technology businesses, increasing global competitiveness has caused corporate America to increase its focus on foreign markets. In the 1990s, outsourcing became all the rage as tech companies looked to places like China and India to set up manufacturing facilities and call centers, citing cheap labor.

Over the last couple of years, local firms have racked up the frequent flier miles to growing global tech hot spots such as the UK, Canada and Australia in search of new revenue streams. Foreign expansion equals long-term success for many of these companies as they move toward a new international business-development paradigm.

San Diego–based NextWave Wireless realized it was in the company’s best interest to go global the minute it opened its doors in 2005. Operating on the notion that there is not just one technology for all six billion people on the planet, NextWave has penetrated several foreign markets with its abundant wireless solutions. The company has been able to do that by gobbling up smaller wireless-based firms that have had an insider’s view of certain foreign markets.

“As opposed to focusing on one technology and trying to push it around the globe irrespective of the particular needs and requirements on a country-by-country basis, we went out and acquired companies so we could focus on different customer needs and provide a solution that’s best for them,” says Roy Burger, NextWave’s senior vice president of marketing and communications. “We have identified several technologies that we believe give us a broad capability to address customers on a global basis.”

GO Global
One of the companies NextWave acquired recently is GO Networks, which is helping implement an increasing interest in global markets. GO develops mobile broadband wireless solutions based on Wi-Fi and emerging 802.16 (WiMax) standards for commercial and municipal wireless broadband service providers around the world. GO’s expertise in these new wireless platforms allows NextWave to provide alternative technologies both to developed and underdeveloped countries, Burger says.

GO just announced that a customer in Switzerland is expanding its broadband networks.

“Besides having excellent technology, one of the reasons GO is experiencing success is because they have local expertise in these markets,” Burger says. “They have people on the ground who understand the unique attributes of each market.” The markets that GO’s Vice President of Marketing Jeff Baher sees as producing rich opportunities in the wireless space include South America, Africa and Eastern Europe. To further penetrate the Chinese market, GO launched a website that has been translated into Chinese. Even the larger firms like Cisco Systems are restructuring their sales forces to go after these emerging markets.

“We have just begun building our sales force,” Baher says. “We’re also building our family of technologies. As NextWave continues to make acquisitions, we have an increasing portfolio to tap into. We have a lot of work in front of us. A lot of it comes down to what our offering is and what we can produce to shine uniquely in the market.”

Overcoming Cultural Differences
For international software firm ESET, bizSanDiego’s number one fastest-growing company, having a longtime European presence has given the company a leg up on the competition. ESET, which was launched in Bratislava, Slovakia, 20 years ago, established a U.S. presence in 1991, just as the market here for antivirus protection was beginning to grow. ESET, which creates high-performance virus protection, has big-name clients such as Microsoft, Dell Computer and Subway. ESET’s strong presence in America has allowed the company to branch back out into foreign territory. Darrin Andersen, chief operating officer of ESET, says that some of the strongest markets for the company in the next few years will include Southeast Asia and in Eastern European countries like Russia. He says it’s important to strike foreign markets when the timing is right. The IT infrastructure buildout in these countries has been happening at an accelerated rate, and as they develop the infrastructure and support systems to run their industries, Andersen is counting on them needing technology like ESET’s in order to ensure safe and efficient operations of their computers 24/7.

ESET’s technology may be the answer to many companies’ security problems, but the company has managed to have staying power around the globe by forming a worldwide network of strong and knowledgeable partners.

“There are a lot of cultural differences as you operate throughout the world,” Andersen says. “The key is to have strong personal relationships with partners and distributors. We tend to think that the U.S.–Western way is the only way to do things. What we discovered is that other countries have their own way of doing things. So we have created a culture that is very flexible and leverages relationships to work through difficult challenges together.” ESET’s acknowledgement of different cultures has brought much success for the company in Latin America, for example. Andersen says it was key to have a physical office in that region, so ESET set one up. Canada has also been a strong market for ESET, which has set up a virus lab there. The company also has virus labs in Slovakia, England and the Czech Republic. The company is currently building a lab in Australia.

“You really get a strong boost by going global,” Andersen says. “If you’re willing to develop the right strategy—which means having the right partners and making your product unique to each market—you can really leverage the work that is done at the manufacturing and development level. It’s all about taking a great piece of technology and leveraging it across the globe. The key to doing that is flexibility and tailoring that technology for each local market.”

Every Corner of the Globe?
Thinking globally is something tech firms must do from day one, says Peter Cowhey, dean of UC San Diego’s School of International Relations and Pacific Studies (IR/PS). A tech firm’s market plan today has to show an addressable market not just in the United States but also in a major growth market overseas. Customers, Cowhey says, judge the credibility of a new product on its potential global reach. Investors will also look at a company’s global potential before writing that check.

Cowhey sees a rapidly growing interest by local tech firms in places like Australia, Canada, Korea and Singapore. He believes that in the next 15 years the emergence of a much more sophisticated technology infrastructure in Brazil and Mexico will bring major market expansion opportunities for U.S tech firms in those regions.

Opportunities are rich for U.S tech firms wanting a piece of the global pie, but that doesn’t mean it’s an easy deal. One challenge is that many countries have complex government rules that govern both pro-duction and marketing activities. U.S. tech firms wanting to be successful in these regions must become very familiar with all the international laws and regulations, Cowhey says. The good news, he says, is a lot of these foreign markets are exploring San Diego for partnering opportunities.

One of the challenges, however, will be for local tech firms to take advantage of those opportunities. One way to connect with foreign business leaders is through forums such as one IR/PS hosted, called the Australian American Leadership Dialogue, which brought in a group of senior Australian government and business leaders to UCSD to talk about societal issues and the growth of their economies.

“One of the major goals of the universities in the region is to facilitate that networking,” Cowhey says. “One of the challenges for the university and business communities will be to leverage those networking opportunities.” Global Tech Action

Tech companies wanting global action will have to heed some advice from the experts, however, if they want to enjoy success. Having a credible partner to help introduce and deliver a product to a foreign market tops the list as one of the most important global business strategies a tech company can have.

Having the right strategic investors who not only have big bucks but also a keen knowledge of certain foreign markets is also a must. Overall, success in a global world really comes down to market intelligence, which means understanding the economic conditions, political conditions, regulatory environment and the competitive climate in each market.

Visit the New Job Board at bizSanDiego.com