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MODERN BUSINESS
LECTURE No. 15
ALEXANDER HAMILTON INSTITUTE
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Selling in Foreign Markets anº

By
WELDING RING
Chairman of the Executive Committee of the
New York Chamber of Commerce
One of a Series of Modern Business Lectures
Especially Prepared for the
Alexander Hamilton Institute
ALEXANDER HAMILTON INSTITUTE
NEW YORK
Copyright, 1918, by Alexander Hamilton Institute
Copyrighted in Great Britain in 1918
All Rights Reserved
WELDING RING


WELDING RING
Welding Ring was born in Cornwall, Orange
County, New York, February 22, 1846, and was
graduated from West Town (Pa.) Seminary in
1861. Three years later he began his business
career in an importing house and ever since has
devoted his business activities to the field of
foreign trade. After spending a year in the im-
porting establishment, Mr. Ring spent several
years in the grain and flour commission business
and subsequently engaged in exporting to Aus-
tralia, New Zealand, South Africa and countries
of Europe. He personally visited all these coun-
tries as well as China, Japan and the East Indies,
and studied their trade problems at close range.
Mr. Ring is a member of the exporting firm of
Mailler and Quareau. He is also Vice-President
of the United States and Australasia Steamship
Company, Chairman of the Executive Committee
of the New York Chamber of Commerce,
Director of the Battery Park National Bank and
member of the Produce and Maritime Exchanges.
Mr. Ring has frequently appeared as a speaker
and writer upon subjects of interest to those
engaged in foreign trade.
NOTE:—This Lecture, which
is based upon the author's ripe
experience in his special field,
should be read in the light of the
Modern Business Text, and
should be studied as an authori-
tative message from the field of
present-day business activity.
Selling in Foreign Markets
By
WELDING RING
Conditions everywhere have changed so radically
during the last few years that it is almost impossible
to follow them step by step. The trade of the United
States has developed rapidly in practically all those
parts of the world that are not actually within the
war-zone. With the shutting off of supplies from
countries where they were formerly obtained, such
as England, France, Germany and Italy, it has be-
come necessary for buyers from other parts of the
world to come to the United States for the placing
of their orders. .
The export demand has increased many fold, and
has been limited only by the ability of manufacturers
and producers to meet the requirements of all these
markets. In fact, in many lines and at different
times it has been impossible to place orders with any
degree of certainty that they would be filled within
a reasonable time. When the United States Govern-
ment demanded first call on every product necessary
for war requirements, the result was that merchants’
orders had to take second place. This priority cov-
5
ered all crude products as well as manufactured arti-
cles, and extended very largely to agricultural prod-
ucts, including meats of all kinds.
It has not been difficult of late for American manu-
facturers to secure foreign trade. Buyers have been
so anxious to get their orders filled that they have
been willing to pay almost any price. Manufacturers
are loaded up with business for a long time to come,
and it will probably take years after the war is ended
before business can be put into anything resembling
a normal condition.
Demand for American-made Goods
Naturally, as the result of war conditions, Amer-
ican goods have come rapidly to the front, and are
becoming favorites in markets where formerly it had
been almost impossible to introduce them. In part
this was a matter of necessity; yet in many instances
buyers have found that the American goods were
not only the equal of those produced in other coun-
tries, but distinctly superior to them. The figures of
our export trade are now so large that already it is
almost impossible to comprehend them; yet they con-
tinue to grow. While our import trade has also im-
proved to a large extent, its growth does not approach
in volume that of our export trade.
This continued demand for our manufactured goods
has necessarily placed American manufacturers in a
very advantageous position, and as a rule they have
shown their realization of the fact that they have
become the world's suppliers by their endeavor to
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make the goods of the best materials and attractive
to the buyers as well as to the ultimate consumers.
With such abundance of crude materials, iron,
steel, wood, paper, etc., the advantages enjoyed by
the United States are very great. It has, moreover,
the advantage of possessing large supplies of fuel,
both coal and oil, for turning its crude products into
finished articles. Added to this is the water-power
in the United States which, tho larger than that of
any other country, so far has been utilized only in a
very limited way. The future possibilities of this
power are beyond calculation.
As against this prosperous condition—probably as
a result of it—the price of labor has advanced rap-
idly to a point where it is higher than ever before in
the United States, and therefore greatly in excess of
that of other countries. When the supply of labor
became insufficient to meet the existing demand, pro-
duction necessarily became limited in a proportionate
manner. In view of the increased development of
new factories, it is probable that the demand for
skilled labor will continue to exceed the supply for a
period of years to come.
Inland transportation in the United States has in
the past been relatively very cheap; but the increased
cost of labor and materials—in fact, of everything
that is used in transportation—will undoubtedly force
higher rates on our railroads, and thereby increase
the delivered cost of goods at the seaboard,
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Shipping in Foreign Bottoms
No one could have foreseen a few years ago the
wonderful development in this country of the ship-
ping trade; yet this trade is as yet merely in its in-
fancy. War necessities forced the Government to
encourage the building of tonnage to the fullest ex-
tent of available labor and materials, and it is at least
probable, as a result of this ship-building activity,
that eventually the United States will rank not merely
as the second maritime nation of the world, but as the
first. Under these conditions it is to be expected
that our tonnage will visit all parts of the world, so
that if any one has a preference for shipping under
the United States flag, he will find no difficulty in
doing so at rates in competition with those of the
ships of any other country.
There is a widely mistaken view on the part of
many with regard to the shipping that enters and
leaves our ports. Many believe that such shipping
properly belongs to this country, and that we should
not pay tribute to the shipping of any other nation.
As a matter of sentiment, this may be entirely proper,
but with regard to the development of trade it is
obviously a matter of indifference under what flag
our goods are transported, provided the freight-rates
are sufficiently low to permit our shippers to compete
with those of other countries. I consider it unwise
and probably unnecessary to discuss here at length
this phase of the subject, but I desire to place it
clearly before our manufacturers and exporters gen-
8
erally, that the question of the flag does not enter
into the matter of securing American trade in foreign
countries.
The Merchandise
To meet the ever-increasing stream of our Euro-
pean competition certain fundamental conditions are
important, and must be kept constantly in mind by
the American manufacturer and exporter. Among
the first of these is that the merchandise be manu-
factured of the very best materials, and in a thoroly
workmanlike manner. It must be carefully assem-
bled and securely packed for transportation. Every
case or implement should bear upon it the legend,
“Made in the United States,” and this should be equiv-
alent to a guaranty that the article is first-class in
every respect.
To think, as some have done, that the way to secure
foreign trade is to manufacture cheap lines of goods
at low cost with the expectation of underselling, and
thus driving out of the market the goods of other
countries, is a great mistake. A small attempt of
that sort will speedily convince any manufacturer
that there is no money to be made in trying for
business on such a basis. All articles produced should
be carefully finished, so that when they are displayed,
whether for purposes of exposition or for actual use,
their general appearance will be attractive. The for-
eign buyer likes to see an article superior in appear-
ance as well as in quality, just as does his brother on
this side of the ocean.
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In addition, manufacturers in the United States
must learn that it does not necessarily follow that
because their goods satisfy trade demands in this
country, they will also be found satisfactory to those
of other nations. If we are to try successfully for
foreign trade, we must employ the same care in cul-
tivating buyers abroad as we do in cultivating buyers
at home, namely by endeavoring to please them. It
is important to remember that people abroad must
not be expected to change their ideas and their meth-
ods every time a new article is offered them. It is a
commonly recognized fact that our people are always
ready to take up anything that is new or that is an
improvement upon old methods or styles; but this is
not always true of the people in other countries. Their
habits and prejudices are frequently very strong, so
that many of their buyers are well content to con-
tinue buying what they have always bought, and fre-
quently insist upon this, even tho new and decidedly
superior goods may be available. To educate such
buyers to a change of desire is usually a long, tedious,
and often unsatisfactory process—frequently it can-
not be done at all. Therefore, it is generally bettcy
to try to please them by meeting their requirements,
provided, of course, that to do so does not impair the
character or detract from the value of the goods we
produce. -
To illustrate this point, let us take the article of
gas pipe and tubing: For many years the principal
production of this line was in England and Scotland,
and the threads that unite the foreign pipe and the
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couplings that connect it are all based on what is
known as the Lloyd & Lloyd thread. In this country,
since the manufacture of this line has grown to such
a large extent, we have adopted what is known as the
American thread. The difference between the two is
so slight that it is hardly perceptible; yet it is suffi-
cient to prevent the tubes from joining, and to de-
stroy, therefore, the usefulness of the couplings.
Since many foreign countries have been accustomed
to importing the English and Scotch pipe, they are
carrying large supplies of it, and it would be useless
to send out from this country pipe cut with the Amer-
ican thread. It would not match, and would simply
require re-cutting at a heavy cost. The principal
manufacturer of pipe in this country, long since real-
izing this important necessity, adapted his works so
that he can cut the pipe with the English thread when-
ever it is required to do so. The result has been an
enormous growth in his export trade, with the pros-
pect of still greater growth in the near future.
Packages of Proper Sizes
Manufacturers must also be prepared to put up
their goods in packages of the size usually sold in
the countries to which they are exporting. In the
United States we employ the decimal system of tons
and pounds. English countries use the old system of
tons, cwts., quarters and pounds, and all such coun-
tries are accustomed to selling their goods according
to that system. To try forcing them to use the deci-
mal system would merely result in our failure to se-
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cure their business. Sizes, gauges and weights must
be made to conform to those that have been estab-
lished thru long use in the countries with which we
are developing trade. To some of our manufacturers
who are doing a large trade in this country, these
may seem minor items; nevertheless, they are essen-
tial and of great help to our salesmen and agents in
competition with other sellers.
Banking Connections
Owing to war conditions, our banking connections
have changed radically. Prior to the war, by far the
greater portion of our foreign business was trans-
acted under credits issued by England, France and
Germany, to which countries we had to pay tribute
in order to receive payment for our goods shipped
to no matter what part of the world. The operation
was a three-cornered one; goods were being shipped
from this country to foreign ports in South and Cen-
tral America, Australia, South Africa, China, Japan
and India, and paid for by means of drafts drawn
in the currency of those countries or in that of Eng-
land. These drafts passed thru the European money
centers to be presented for payment to the buyers
in foreign lands. This process involved paying a
tribute to the various banking institutions that issued
these credits, and was a handicap to business from
the United States. As the war practically closed all
these avenues for credit, with the exception, in a
limited way, of England, it became necessary to in-
troduce new methods. A number of our large finan-
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cial institutions immediately made arrangements for
establishing branches or agencies thruout foreign
countries, particularly in South America, Central
America, China and Japan, but also to a limited ex-
tent in some of the countries of Europe. One of the
cardinal principles of this new movement was that
business should be done on a dollar basis; and while
at first it was found very difficult to introduce this
system, inasmuch as buyers were wedded to old-time
methods, yet the United States is gradually coming
into its own, and the dollar is becoming as well known
abroad as is the pound and the franc.
It is as yet too early to predict the full extent of
success that will attend this movement, but in view of
the large amount of capital available in the United
States, the necessity for using this capital in develop-
ing our foreign trade, and the impossibility of get-
ting funds from any other source, everything seems
to indicate that our foreign financing is a fixed fact,
and that not only will the merchandise part of the
business in the United States continue to advance with
rapid strides, but also our banking facilities will be
extended so as to provide for this increased trade
wherever needed. These facilities are necessarily of
greater importance to the United States in its trade
with foreign countries than they would be in domestic
trade, and it is believed that the wisdom of our bank-
ers and financiers will be able to cope with any com-
petition that may develop after the war.
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Representatives in Foreign Countries
While, as a direct result of the war, conditions have
changed somewhat, so that it does not now require
so much effort as formerly to induce foreign buyers
to purchase American goods, yet it will not do for
the United States to rest secure in its ability to hold
this trade unless our young men are thoroly equipped,
both by education and by experience, in the home
office, before they are sent out to other countries to
take what often is so willingly given. Employers
must keep in mind that inasmuch as the American
young man prefers to live in America where he may
enjoy the advantages that this country affords, only
a liberal inducement will make him willing to spend
some of his best years in foreign lands. This country
might do well to adopt the system so well carried on
in England and Germany, where young men are given
this special education, then sent abroad for a period
of years to assist in the establishment of foreign con-
nections and ultimately brought home to fill positions
in the main office. It would be a constant inducement
to the young American if he were made to feel that
his efforts were being appreciated while he was build-
ing up trade in foreign lands, and that there was a
fair probability of his coming back to the land of his
birth to take up the duties and responsibilities of the
home departments.
It is very necessary to their success that these young
men should become thoroly acquainted with the lines
which they expect to represent. Unless a traveler is
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constantly in the field, he cannot very well know all
the prevailing conditions. There may be certain lines
of manufactured specialties for the sale of which he
would be well fitted, and for which, by exclusive ap-
plication, he could make more rapid progress than
would be possible if they were sold thru a general
commission house. This, however, applies only to
a few lines, the bulk of our foreign trade being se-
cured by commission houses thru their representatives
in the field:
Credits
On the outbreak of the war some of the foreign
countries expected that the United States would
promptly take the place of England, Germany, France
and Belgium in affording long-time credits to their
customers. This idea was quickly dissipated, how-
ever, when it became generally known that the mer-
chants of the United States were not disposed to give
these long extensions of credit, but, on the contrary,
insisted that business abroad must be conducted—at
least in a degree—on the same credit lines as in this
country. Foreign buyers urged that they could not
continue their business on such a basis, and that they
required the old-time credits of six, nine and twelve
months in paying for the goods bought. A general
movement took place among exporters with a view
to reducing this time materially; and at the present
time most foreign business is conducted on the basis
of thirty, sixty or ninety days from the date of draft.
This gives ample time for the goods to arrive at the
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port of destination and for the buyer to prepare him-
self for payment of the draft. If he is not in suffi-
cient credit to take up the exporter's draft, then such
credit should not be extended to him by houses in
the United States. Quite naturally, the development
of this movement was not without difficulty, but the
plan is becoming so well known and so firmly estab-
lished in practice that only rarely do buyers ask for
long-time credits. When they do, they are, as a rule,
refused.
Consular Service
The United States Government had developed a new
department for sending out its representatives to cover
the foreign field, seeking information as to trade re-
quirements that could be filled from this country, and
keeping the home Government advised as to the ways
and means of conducting this trade. A very great
improvement was noticed in the caliber of the men
sent abroad, who, as a rule, were chosen for this work
by reason of their experience in private business.
They were men of character and standing. Unfor-
tunately, owing to the exactions of war conditions,
most of these representatives have been withdrawn,
so that at present there is very little representation
of this sort in foreign fields. It is greatly to be hoped
that Congress will soon reinstate this department
which proved of so much value and which will un-
doubtedly prove still more valuable after the war.
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Looking Forward
If one could forecast the future, even for the next
few years, it would be found to be full of interest-
ing events. Conditions change so rapidly, however,
that any prophecy made today might be discounted
entirely a month hence. No one can predict with cer-
tainty what the future holds in store for trade gen-
erally. Of one thing we may be sure, however, name-
ly, that the commanding place now obtained for this
country thruout the world will be maintained, no mat-
ter what future conditions may be. We have gained
wonderfully in experience and have increased our
ability in like manner as a result of the war, and
our manufacturers, suppliers and financiers are wide
awake to the trade possibilities of this country. There
can be no question about their ability to accomplish
their desire in that respect.
The future of our foreign trade will, of course, be
governed largely by the demand created for our
goods; but we are certain to get our full share of such
trade, and probably a larger share than any other
country. If we are wise enough to cultivate our
friends abroad by giving them everything that is fair
and reasonable in the way of credits, by supplying
goods that are of the best material and workmanship,
by giving prompt attention to all orders so that ship-
ments may be made at the earliest possible date, and
by keeping our foreign customers informed as to what
is being done for them, the good-will of our foreign
friends will undoubtedly be maintained and increased.
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Summary
The building up of foreign trade is not the work
of weeks or months, but of years. It can be accom-
plished only by consistent efforts persistently main-
tained. Methods may be adopted that will materially
hasten that achievement and these should be duly
considered if best results are expected.
To summarize briefly, the following are some of
the requirements:
FIRST: Goods should be of first class materials
and manufactured in a superior manner. The
standard, once established, should be firmly main-
tained.
SECOND: The requirements and preferences of
foreign buyers should be carefully studied and,
whenever possible, these should be complied with.
THIRD: Regularity of supply must always be con-
sidered, since a distant market cannot wait too
long for the receipt of goods.
FOURTH: Business abroad should be cultivated
thru established commission houses familiar with
local conditions, unless in the instance of special
lines of sufficient volume to warrant the manu-
facturer’s personal application to marketing
them.
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FIFTH: Credit and the standing of buyers, both
from a financial and a moral viewpoint, must be
of early consideration if the seller is to avoid
serious losses.
SIXTH: Due efforts on the part of manufacturers
and commission houses, with a view to putting
our foreign public service on the highest plane,
are constantly necessary.
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