When a Minnesota delegation heads off to a foreign market on a governor’s trade mission, the participants can have very different motivations for going on the trip and very different things they hope to accomplish in the target market.

So, who goes – and why?

The Promoter-in-Chief

Let’s start with the governor and other high-level elected or appointed officials. They tend to focus on promoting the state, its key industries and institutions. Their broad goals are simple:

• Position Minnesota as a successful competitor (and in several industries, a dominant competitor) in world markets
• Enhance Minnesota’s visibility, credibility and reputation for innovation and high quality in foreign markets
• Promote Minnesota exports in the target market and showcase the state as a prime location for foreign companies looking to start, relocate or expand operations in the United States
• Help Minnesota companies that have joined the delegation get access to the right people and information they need to be successful in the market
• Visit Minnesota companies that have operations in the target market
• Use the trade mission as an opportunity to publicize the benefits of exporting to small and midsized Minnesota companies that have export potential but have not yet considered selling goods or services in foreign markets

Governors and other officials advance these goals by appearing at important conventions and trade shows, giving speeches and presentations before key business and industry groups, hosting and attending receptions with high-ranking government and business leaders, touring facilities of Minnesota companies with successful operations in the target market.

In addition, governors help formalize strategic agreements and alliances between the state and foreign countries that are mutually beneficial. On rare occasions, governors will help lay the groundwork for – or seal – a business deal. That influence, however, is usually reserved for deals that greatly benefit the whole state (by creating several hundred well-paying jobs, for instance), not just an individual company.

On Monday, the delegation visited Grupo FH, a firm that handles customs brokerage, warehousing, transportation and logistics for foreign companies worldwide that do business in Mexico. Grupo FH is the distribution center for Boston Scientific.

Trade Missions from a Business Perspective

While they have many individual goals, companies join trade missions mainly for one reason: They want to make money in the target market and they want to get a clear picture of the best way to do it.

They want access to information, market intelligence and expertise. They want to assess the opportunities firsthand. They want to know the obstacles, barriers and pitfalls. They want to size up the competition. They want to understand the regulations that might affect them and product modifications they might have to make. They want to meet potential buyers, agents and distributors. They want to weigh the risks against the potential rewards.

Trade missions help companies accomplish these aims by:

• Arranging meetings and briefings with senior-level government officials and leaders in targeted industries
• Providing market briefings from local experts including law, finance, operations, and sales strategies. Market briefings may be followed by site visits to key projects or to gain an understanding of how to do business in the market
• Introducing participants to other executives in their industries who are already doing business in the target market
• Coordinating matchmaking events and one-on-one meetings with potential buyers, distributors, agents and brokers
• Holding receptions and other events that create opportunities for company executive to network and develop relationships with high-level decision makers

Companies at different stages of export readiness or market involvement want different things from a trade mission. For instance, companies that are new to exporting or new to market may be interested in market intelligence, while companies that are experienced exporters in other markets and have made the decision to enter a new market may be most interested in meeting potential customers, distributors and partners.

Because they try to accommodate so many expectations and goals, each day of a trade mission kicks off early and continues late into the evening, with lots of different events in between.

Measuring Success

Minnesota’s exports of manufactured goods, agricultural commodities, and services were valued at about $33 billion last year. Those foreign sales have grown dramatically since 2001, when the state’s total exports were estimated at $17 billion.

Since just about that time (1999) there have been 18 governor-led trade missions to foreign markets and many others led by the Minnesota Trade Office, the state’s official export promotion office.

Can we say that there is any correlation between those trips and the state’s export gains? Of course not. So much happens without any assistance or involvement from state government agencies – especially with so many Fortune 500 and private multinational companies with headquarters and major operations in Minnesota.

But a trade mission’s success is measured one small or midsized company at a time. And the yardstick is whether those companies accomplished their business goals as part of a mission delegation.

In surveys conducted after the events, company executives participating in Minnesota’s official trade missions (governor-led and others) have reported that the missions have:

• Given them valuable market intelligence and insights that they could not have gotten on their own
• Helped them prepare for and enter the market successfully
• Opened doors for them that were previously closed and helped build business relationships that will be profitable now and in the future
• Led to significant increases in foreign sales

Those are real successes, not to mention smart investments by the companies, which pay their own way to travel as part of the trade mission delegation.

Sometimes, however, a trade mission’s greatest success comes when a Minnesota company decides not to enter the target market after all.

At first blush, company executives may have thought the market was a natural fit and were prepared to dive in head first – until they learned during a trade mission that demand for their product was too weak, or the competition was too strong, or their products would require too many modifications, or there were too many barriers for profitable entry, or … the list goes on.

In other words, they were destined to fail. And the trade mission saved them from making a disastrous entry into an unsuitable market.

Now, that’s a trade mission success story that will never be reflected in the state’s growing export stats.

For more about this week’s trade mission, visit our blog, and read the Why Mexico overview.