to the Far East, to do business with us,” Smith says. “Usually this kind of business goes through an agent, a trading company and a company representative. We saw a way to provide a product at less cost and more quickly.”
Clients pay Smith’s company to create products that they either use or resell to another company. Kar Lai evaluates manufacturers in China to find the one best equipped to handle the contract if it isn’t able to manufacture the product itself.
Today, the $5 million firm, which has 1,500 employees in two facilities in Shaker Heights, Ohio, and Hong Kong, manufactures bags such as portfolios and briefcases, and sources products, such as electronics and fashion and business accessories, for American firms. Smith’s firm handles a minimum order of 5,000 units and ships products within 21 to 45 days. A unit, or one item, can vary in price depending on materials and design.
He advises firms looking to develop distribution agreements and other alliances with foreign concerns to enlist the support of the U.S. Department of Commerce in the host country. It’s also critical, he adds, to learn the capabilities of the other firm and maintain close contact throughout the relationship.
“Establishing a relationship with a banking institution that has offices in the U.S. is very helpful,” Smith says. “On very large deals, we use letters of credit. Basically, our bank guarantees funds are available for payment
. I, in turn, issue a transferable letter of credit to our manufacturers in China. This eliminates the need for us to chase invoices and receivables.”
Because the Hong Kong dollar is pegged to the U.S. dollar, Smith doesn’t have to worry about an unstable economic climate, as with other currencies. American clients’ transactions are done in U.S. dollars and Smith pays for materials in the Hong Kong dollar or Chinese yuan.
Smith also advises entrepreneurs to have their business associates sign confidentiality agreements when trademarks are involved. “Documentation is very important to us,” Smith says. “It’s essential that we have letters stating we have permission to import a certain product, especially licensed products.”
Some of his major clients include Polaroid, the National Basketball Association, P&K International, Whitney Designs and the licensee for the Walt Disney Company. Polaroid hired Smith International in 1991 to produce a credit card-sized calculator it planned to use in promotions. Over a three-year period, Smith International produced more than 2 million units.
Smith is in the process of launching yet another venture to produce glove box portfolios and has negotiated a strategic alliance with a Milwaukee firm to produce other products. “With the expansion, we’re looking to get into new markets and products,” Smith says.
Helping entrepreneurs enter new markets is Kathryn Leary’s passion. She has parlayed close to three decades of marketing and advertising experience with such powerhouses as General Foods, Citibank, Young & Rubicam, BBDO and Saatchi & Saatchi into an eight-year-old firm that assists businesses with establishing contacts and coordinates trade missions, among many other services.
After viewing the proverbial glass ceiling firsthand at