Run for the Border Domestics too costly? Look into foreign manufacturing.

Inventors are often unable to get their products to marketbecause they can't produce them at a low enough cost. As aresult, they face three unappealing choices: Sell the product forno profit, price it above what the market will bear, or abandon theidea.

If you're thinking there must be a better way, there is-findsomeone to manufacture your product for less money. Sometimesinventors try to set up deals with U.S. manufacturers to make theproduct for the least amount possible. But when that avenue fails,take heart: It just might pay to set your sights overseas-and hirea foreign manufacturer instead.

On the Home Front

That's exactly what Brian Donnelly did when U.S.manufacturers wanted to charge way too much to make his product: aspecial chair designed to be easy to get out of. "I extendedthe arms forward on the chair, so people had something to hold onto when getting into or out of the chair," explains Donnelly."I also extended the legs outward so the chair wouldn'ttip over when someone stood up."

Donnelly, 48, first started developing his LifeSpan Furnishingsproduct line back in 1992, when he was an industrial designprofessor at San Francisco State University. By 1996, havingperfected the Easy Up design, he set out to either license theproduct or hire a U.S. manufacturer to make it. Because he hadalready won many awards for the innovation-including a gold awardin a competition from the American Society of Aging-Donnelly wassure it wouldn't be too difficult.

Because his first version of the chair was made of metal, hestarted researching that market: He looked at ads and publicityreleases in trade magazines (listed in Gale's Source ofPublications and Broadcast Media, available at largerlibraries) and browsed through local stores for similar furnitureproducts. He also searched state industrial directories (alsoavailable at the library) to find manufacturers that made similarproducts.

Eventually, Donnelly located three U.S. manufacturers andpresented his product to them. But his negotiations for a licensehit a dead end, as the manufacturers asked for too much money tomake the product. Having exhausted his domestic leads, Donnellydecided it was time to find a manufacturer overseas.

Foreign Relations

Again Donnelly perused stores, looking for metal furniture madesimilarly to his. He ran across some patio furniture made in Chinathat seemed ideal. The products were distributed by Iem, a companyin Riverside, California, with factories in China. "What Iliked about Iem was that they didn't just sell what thefactories made," he says. "They asked [them to make] whatthey thought would sell." Donnelly approached Iem,demonstrating the need for his product among seniors and a sizableand growing initial target market made up of nursing homes,assisted-living centers and home health-care stores.

Iem not only was willing to arrange for production, but was alsointerested in investing in Donnelly's product. When Donnellydecided to expand his product line to include woodenfurniture-which Iem doesn't make-the company helped him findmanufacturing partners in China for that, too.

In late 1998, when Donnelly was finally ready to launch the EasyUp, he decided to first approach larger potential customers so hecould build up a distribution network. So Donnelly started out bycompiling a database. "I attended the American Association forHome and Services for the Aging and the American Society of Agingshows in 1999," he explains. "I sold to a number of majorassisted-living and independent-living homes and had a solid listof leads for the future."

One thing Donnelly has always been careful about is keeping Iemposted on his marketing plans as well as his projected sales.Whether you're working with a U.S. or overseas manufacturer,you need to be careful not to get its expectations too high. Themanufacturer will understand that you need to ramp up slowly andwill be happy to keep working with you. If you end up promisingmore than you can deliver, though, the manufacturer might dropyou.

Donnelly has since found another way of locating an overseasmanufacturer. "In 1999, I attended the International FurnitureFair in High Point, North Carolina," he says. "At theshow, there [were] many booths from Asian country trade councilslooking to find customers for their manufacturers back home. Theshows also had booths from many distributors of Asian-manufacturedproducts similar to Iem."

That's because major industry trade shows are attended byglobal representatives on the hunt for U.S. companies that wanttheir products manufactured overseas. To find a trade show, log onto www.tsnn.com or www.expoguide.com. If you can't attend ashow, call the show sponsor and ask for a show directory. Inside,you'll find contact names and phone numbers for the exhibitorsand trade councils in attendance.

Donnelly's successful partnership with Iem has resulted in afast start for his LifeSpan Furnishings-sales totaled just under $1million in 2001, after only two years in the market. And businesslooks even brisker for 2002.

Now that he's acquired a secure base in the senior market,Donnelly has started approaching mainstream retailers such as Searswith the hope of entering the mass market by the end of this year.According to Donnelly, "None of my success would have beenpossible without the lower costs and continued support fromIem." If you find yourself in the same predicament Donnellyfaced-with manufacturing costs squeezing your margins-hiring anoverseas manufacturer could help you turn the corner tosuccess.

Safety First

One of the big risks in dealing with an overseas manufacturer isyou have to provide an irrevocable letter of credit to themanufacturer. The letter lets your bank transfer money to themanufacturer when the product ships.

But what happens if the product ships too early, ships too lateor ships before you have a chance to approve the production run?The letter of credit may transfer your money anyway. One way tominimize this risk is to arrange for shipment through aninternational freight forwarder. The forwarder can contact you forauthorization when the product is ready, and you can refusedelivery if the order isn't correct. Forwarders also help youwith a letter of credit, customs and delivery information. To finda freight forwarder, check the Yellow Pages of large cities.

Far and Away

If you can't find an importer or U.S. distributor to helpyou out, contact your state's Commerce Department, whichshould have a department that offers import/export assistance.

You can also use a sourcing agent or work with a manufacturerdirectly. Sourcing agents will not only find an overseasmanufacturer to make your product, but they usually have overseasoffices to give you easy access to the foreign manufacturer.Regardless of whether you work with a sourcing agent or amanufacturer, make sure you inspect the first few models offthe assembly line to ensure they're up to snuff.

For more information, try the following websites:

Sourcing agents:

• www.awtoc.com
• www.the-china-manufacturer.com
• www.buy-thai.com

Direct sourcing:

• www.bizeurope.com/asia.htm
• http://china-hong-kong-taiwan-manufacturers-exporters-suppliers.com
• www.taiwantrade.com
• http://asian-manufacturers.com

Don Debelak is a new-business marketing consultant and authorof Think Big: Make Millions From Your Ideas.