Preparing for 2017Export Challenges

International Business NewsJanuary 2017

In this issue:• SAS-Automation and Kent Displays• 5 Exporting Tips for 2017 • Czech Republic country overview

Kent Displays

SAS-Automationof Xenia, Ohio

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2 Held & Associates

3 Publisher’s Letter

4-5 Preparing for Exporting: SAS-Automation

6 Preparing for Exporting: Kent Displays

7 Kent Displays, cont’d / Transimpex

8 5 Exporting Tips for 2017/ Marks Nelson

9 Country Profile: Czech Republic

10 Czech Republic, cont’d

11 District Export Council / About IBN

12 CzechInvest

Dr. Albert M. Green is CEO of Ohio’s Kent Displays - originators of the Boogie Board

IBNewsmag TM: cover photo

IBNewsmagTel 816.616.7779 Fax: 816.472.0959fbaehner@intermark3.com

6655 Troost Ave., Kansas City, MO 64131, USA

In God we trust!PUBLISHER/EDITOR:Frederick Baehner

DESIGN & PRODUCTION:Tom Gilland www.GillandGraphx.com

ADVISORY BOARD:James Malouff, Doris Ganser, Paul Mastilak

Saddle up for 2017It’s all about astute business intelligence for manufacturing your products assigned to export markets this year.

Some naysayers are forecasting a very challenging year for Heartland and American exporters in general. They are the ones who claim that the strength of the dollar against foreign currencies is an insurmountable wall.

Sure, the dollar’s strength is one barrier, but spotty global uncertainties and an inevitable collapse of some trade agreements have caused Heartland exporters to consider other strategies to help increase exports and sales.

Two Ohio manufacturers shared their outlook with IBNewsmag in this edition. SAS-Automation supplies the industrial robotics industry with specialized end components such as gripper and vacuum systems. (See SAS-Automation on page 4). Kent Displays is the maker of the popular Boogie Board which it exports to 40 countries. (See Kent Displays on page 6)

Both companies look to refine and adjust their manufacturing and exporting processes based more and more on solid information going forward in 2017.

We have compiled some of these export strategies for you on page 8 so that you have additional strategies for your manufactured goods and services going forward in this unpredictable year of exporting.

Publisher’s Letter

page 3January 2017

Industrial robotics is a vital and rapidly growing manufacturing industry both here and abroad.

Within this growing industry, End-of-Arm Tooling (EOAT) is crucial for many manufacturing operations. The versatility offered by the use of quick-change EOAT industrial robotics opens up large cost-saving opportunities for end-user manufacturers. EOAT allows for the consolidation of simultaneous or progressive tasks through the interchangeability of specialized end components including: gripper systems, vacuum systems and others.

According to a recent MarketsandMarkets report, “The use of industrial robots is expected to grow exponentially in the future as their use leads to cost reduction, improved quality, increased production, and improved workplace health and safety. The global industrial robotics market is expected to reach USD 79.58 billion by 2022, growing at of 11.92% between 2016 and 2022.”

This is where SAS-Automation of Xenia, Ohio, fits in. SAS produces EOAT components for manufacturers of products in a variety of industries - from plastics molding in the automotive industry to de-panning muffins in the food industry to bag grippers that quickly palletize large orders for shipping.

SAS has been engaged in robotics interface for 20 years, primarily servicing injection molding operations. With some 1500 different parts numbers, SAS manufactures both stock and customized components to diversify sales opportunities.

SAS General Manager, Rob Dalton reports that robotic bag grippers are one of its primary export products. “We sell bag grippers and other tools and components throughout many European and South American countries, as well as to Mexico and China.”

Preparing for 2017, SAS is looking to supplier and manufacturing cost reductions, larger inventories with volume purchases and other strategies in order to help mitigate the strong dollar. “It’s the primary way we can compete in the international marketplace,” said Mr. Dalton.

“In the Americas, our Made in the USA value proposition is an important selling strategy,” he continued. “But in Europe, buyers often prefer European manufacturers, especially German and Italian suppliers. These are the regions where being cost competitive is paramount.”

SAS-Automation embraces cost-savingsin overcoming a strong dollar and serving the industrialrobotics industry

SAS Bag Gripper Combo

IBNewsmagTM

January 2017page 4

SAS has a sales office in Germany, which is both the heart of the industrial robotic market and the hotbed of competition. In other countries it primarily employs distributors. Looking more to 2017, it expects to increase the number of distributors for key markets.

“In South America, we sell to integrators, which have been successful with our EOAT products,” noted Mr. Dalton. “We export to Colombia, Peru and Chile for the most part. Here too, our bag grippers along with off-the-shelf components are our biggest sellers.”

With some 20 percent of sales globally, Europe is its strongest market, followed by Mexico and Canada. Here in the US, sales of components often become indirect exports for direct manufacturing exports.

SAS also has a sales office in Shanghai, with the bulk of its sales in components. “We are dealing more frequently with Chinese knock-offs now, which is a major roadblock to market expansion there,” said Mr. Dalton. Most SAS components are not patented, given the vast number of its SKUs, so intellectual property (IP) issues are a barrier to greater sales. “We rely on strong partners in countries like China,” he admitted, “to help mitigate IP issues.”

Looking ahead, SAS intends to continue its growth in Eastern European countries including the Czech and Slovak Republics, Hungary and others through a larger network of distributors and with additional cost savings to help overcome the strong dollar.

“As we look further into 2017, we realize the strength of the dollar will remain, if not increase,” Mr. Dalton said. “So we are maximizing any and all ways of cutting costs and improving productivity.”

You can see more of SAS-Automation products at its website, www.SAS-Automation.com

Sprue Grippers used in plastic injection molding

The Fork Tool can pick bagged cartons from conveyor and pack onto pallet

page 5January 2017

Best known for its consumer electronics smash hit, the Boogie Board eWriter, Ohio’s Kent Displays, Inc. (KDI) manufactures and sells Boogie Board eWriters to some 40 countries around the world.

The Boogie Board eWriter, an LCD (“liquid crystal display”) eWriter tablet that is thin and easy to carry, is the market leader in the category of eWriters. In fact, it essentially has become the product category name.

Based on the principle of anisotropic* flow of liquid crystals in which crystals flow at different rates, eWriters depend on the direction of pressure being applied. And, KDI is the global leader of unique eWriter display technology.

*Anisotropic is defined as having a physical property that has a different value when measured in different directions. A simple example is wood which is stronger along the grain than across it.

Due to its expertise in research, development, roll-to-roll manufacturing, along with proven consumer packaged goods design and assembly, KDI continues to revise export sales and distribution strategies to help offset the strength of the dollar. In addition, KDI recently launched a new business unit to focus on identifying needs and delivering value for the Healthcare, Business, and Education sectors in the US and abroad.

Although KDI protects the Boogie Board eWriter technology with patents, KDI finds that several companies in different countries have worked to knock off the technology. While KDI assertively and proactively protects its Intellectual Property (IP), as a small company, and winner of the 2016 US Small Business Administration (SBA) Ohio Exporter the Year award, KDI faces challenges in efforts to litigate these knock-offs in countries like China.

The company continues to develop improved technologies and manufacturing processes to stay ahead of knock-offs.

Due to cost and availability issues, Boogie Board cases and several other inputs are sourced from other countries, but the heart of the product, KDI’s proprietary eWriter LCD film, is made in its Kent, Ohio facility.

“We would love to claim on our marketing materials that Boogie Board eWriters are “Made in the USA,” said Dr. Albert M. Green, CEO. “Our principal component is the eWriter LCD film technology - that we invented and manufacture in the US – and is our core product IP

. Unfortunately, issuing authorities do not consider this in allowing the Made in America claim.”

KDI either sells direct to consumer outlets, or, in most cases, uses manufacturers’ representatives (sales reps) to penetrate foreign markets. “We originally used distributors in several countries,” noted Dr. Green, “but have increasingly turned to sales reps which are more typically used for consumer electronics.”

Outside of the US, KDI’s Japanese market is one of its largest. “In Japan we have been using a single

The Boogie Board by Kent Displays

Kent Displays looks to expand distribution options in exporting its famed Boogie Board eWriters

IBNewsmagTM

January 2017page 6

distributor, King Jim, the largest in the Japanese stationery and paper products industry.” Dr. Green said. “Our strategy is to consider distribution market-by-market to remain competitive this year and going forward.”

The European market has been a challenge for KDI, mainly because of the fragmentation of consumer chains. “Europe is different country-by-country and sometimes store-by-store within a market,” Dr. Green pointed out. Unlike a Walmart buying for all of its stores at one time in the US, selling to buyers in European countries requires too much separate attention. “We often use smaller distributors in Europe and in certain markets such as Taiwan and Dubai (United Arab Emirates), which focus on smaller groups of retail outlets.”

The primary non-tariff barriers are in countries where writing is not as prevalent as it is in Japan and South Korea. “Where they don’t rely as much on writing, we face a different set of circumstances,” Dr. Green said. This translates to a much greater emphasis on market education, which takes time and costs money.

For information about Boogie Board eWriter products and KDI, visit www.kentdisplays.com and www.myboogieboard.com.

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International Business News

page 7January 2017

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FiveExporting Tipsfor 2017Here are some practical tips for manufactured exports as you plan to deal with the dollar’s strength. These are based on IBNewsmag interviews with manufacturers and other trade specialists. You may have other considerations as well.

1. Do your homework about the designated country so you have an understanding of the market and the competition. So many small to medium sized companies/enterprises (SMEs) go in with blindfolds.

2. Identify an in-country champion to help work through procedures – especially in countries where importing is a challenge. If working with a local sales rep then plan to visit end-user customers.

3. Contract with legal counsel with country expertise in IP issues and regulations for possible changes that may affect your business.

4. Re-examine your sales and distribution network. Are you getting the maximum performance from your current network?

5. Can you claim “Made in the USA” for your exports? If the majority of your product is made here, with only a “negligible” portion sourced from overseas, you can qualify. This qualification helps position your product perception as high quality in the eyes of your buyer and perhaps help benefit you relative to duty rates and other taxes.

January 2017page 8

A Few Practical Tips for Doing Business in the Czech Republic:Now known as Czechia

• Generally, decision-making is done by the head of the company• Punctuality is very important• Initial meetings are to become acquainted and build trust• Business people are generally non-confrontational• Czechs are generally humble and polite• Avoid high pressure sales pitches• Unlike many other Europeans, there is no hugging and kissing in a business environment• Czechs respect a firm handshake and direct eye contact

Czech Republic Overview• Slightly smaller than South Carolina• Separated from Slovakia in 1993• Population: 10.6 million• Two Provinces: Bohemia, Moravia and Silesia• Language: Czech• Population is 73% urban• Population Growth- 0.14%• Government: Parliamentary Republic• Literacy Rate: 99%• Capital City is Prague-1.3 million people

National Holidays• October 28 (Founding Day)• January 1 (Restoration Day)• Good Friday• Easter Monday• May 1 (Labor Day)• May 8 (Liberation Day)• July 5 (St Cyril and Methodius Day)• July 6 (Jan Hus Day)• September 28 (St. Wenceslas Day)• October 28 (Foundation of Czechoslovak State)• November 17 (Struggle for Freedom and Democracy Day)• December 24 (Christmas Eve)• December 25 (Christmas Day)

Economy• Part of European Union (EU)• GDP-$315 Billion• Unemployment Rate: 6.5%

PROFILE: CZECH REPUBLIC

Map by Millenium187

page 9January 2017

• Inflation Rate: 0.05%• Exchange Rate: Koruna Per US Dollar-24.6• Labor Force Makeup: Services-60%, Manufactur-ing-37.4%, Agriculture-2.6%• Major Manufacturing Industries: Motor vehicles and parts (largest), Metals, Machinery & Equipment, Glass and Armaments • Membership in the European Union is very important to their overall economy

International Trade • Major Exports: vehicles, machinery, electronic equip-ment, iron and steel products, plastics • Total Exports (2015)- $158.2B • Major Imports: Machinery, electronic equipment, vehicles, oil, plastics• Total Imports (2015)- $152B• Major Export Partners: Germany-51.1B, Slovakia-14.2B, Poland- 9.2B, France-8.0B, UK-8.3B, Austria-6.5B• Major Import Partners: Germany-41.9B, Poland-12.5B, China-11.1B, Slovakia-9.2B, Netherlands-7B• In 2015, for the first time in its history, the Czech Re-public sold more to the US than to Russia.

Czech Business News Websites • Prague Daily Monitor- www.praguemonitor.com • BusinessInfo.cz- www.businessinfo.cz• Czech Republic- www.czech.cz

Sampling of Czech Companies • Skoda Auto- automobile manufacturing (owned by VW)- www.skoda-auto.com • AGROFERT a.s.- large multi-industry conglomerate- www.agrofert.cz

• CKD Blansko Engineering- upgrades of hydroelectric power plants and other hydraulic equipment- www.cbe.eu • Plzensky Prazdroj Group- largest Czech brewery- www.prazdroj.cz/en • EFKO- toys- www.efko.cz • Ceska Zbrojovka a.s.- firearms- www.czub.cz/en • Aero Vodochody- aircraft- www.aero.cz/en • Petrof- pianos- www.petrof.com • Meopta Optika- optical equipment-www.meopta.com/en • Merci Co. Ltd.- laboratory equipment- www.mercishop.cz • ERA- surveillance and flight tracking systems- www.era.cz • *Six Guys Labs- pet tracking applications andequipment- www.sixguyslabs.com • *PIXBUF- planning, distribution and analyzing of photographs- www.pixbuf.com • Prusa Research- 3d Printers- www.prusa3d.com • Moser a.s.- Bohemian crystal glass- www.moser-glass.com • Tatra Trucks a.s.- trucks- www.tatratrucks.com • Zetos Tractors a.s.- tractors and components- www.zetor.com • Rudolf Kampf- porcelain- www.rudolfkampf.com • Linet – medical equipment - www.linet.com/en• Lasvit – Bohemian glass lighting www.lasvit.com

*Exhibited at Consumer Electronic Show, Las Vegas, January 5-8, 2017

For more information about compelling business and investment opportunities in Czechia, contact Miroslav Tenkl, CzechIn-vest Director of West Coast Operations: miroslav.tenkl@czechinvest.org

January 2017page 10

District Export Councils Advocate for Exporters in this RegionAs reported last week, President Trump on Monday formally withdrew the United States as a signatory to the Trans Pacific Partnership (TPP) by Executive Order.

It appears that the Administration may begin separate bilateral trade negotiations, not only with the former 11 TPP partner countries, but also with other countries as well. The District Export Councils (DEC) stand ready to do their part by working with the new Administration and its trade advisors in crafting new trade agreements that will open foreign markets and level the playing field for American goods and services.

“Exports here in the Kansas-Western Missouri region constitute a critical foundation of our economy,” said Robert Rebori, MADEC Chairman and CEO of Bio-Microbics in Shawnee, KS. “We have an experienced volunteer board of 26 members who are export professionals able to assist export-minded small to medium-sized companies/enterprises (SMEs) in our region.”

MADEC is part of the National District Export Council, which is an organization that represents 1300 companies in the 60 District Export Councils throughout the United States, and administered by the US Commercial Service.

It seeks to support the interests of American exporters by advocating for those governmental policies that will result in the increase of global competitiveness for American manufacturers, resulting in jobs, economic development and rising wages in the U.S. In the current climate of economic uncertainty, US exports can and should lead the way to increased prosperity for the American worker and American manufacturers as a whole.

For a listing of the DEC nearest you, go to www.districtexportcouncil.org/members-list

The voice of small business international trade Now in our 13th year of continuous publishing

IBNewsmag is an independent on-line magazine for smallto medium-sized enterprises/businesses (SMEs) publishedmonthly by InterMark3, Inc.

In each and every issue, and on our website – www.ibnewsmag.com - we bring you practical, proven information and current international business news to help you grow your global business..InterMark3, Inc., is an international business development firm based in Kansas City, Missouri USA, established to assist SMEs with practical business intelligence and other services with a view to build client company and organization international revenue. www.intermark3.comFor questions and comments, email Fred Baehner – fbaehner@intermark3.com

page 11January 2017

Your Gateway to Success in the CzechRepublic

We are the Investment and Business Development agency of the Czech Republic. Our mission is to encourage and support foreign direct investment and to help increase competitiveness of domestic companies.

www.czechinvest.org

Our Services

Information and business intelligence

Access to broad spectrum of �nancial support

Identi�cation of business properties or suitable sites

Identi�cation of potential business partners,

suppliers or acquisition prospects

Tailor made visits to the Czech Republic

Aftercare

About the Czech Republic

One of the fastest growing EU economies in 2016

Prague is the favorite European city for expats

The largest proportion of people employed

in the manufacturing industry in the EU (35%)

Home of Avast, AVG, Škoda, among other

major �rms

www.czechinvest.org

San FranciscoPhone: + 1 (831) 313 6295E-mail: california@czechinvest.org

New YorkPhone: + 1 (347) 789 0570E-mail: newyork@czechinvest.org