The Israeli economy is suffering right now, but the challenges of exporting Israeli goods to the United States don’t all stem from the intifada. So says Chuck Klein, an Israel-based management consultant and author of “Marketing to America: How Non-U.S. Companies Can Profit by Selling in the USA.”
Certainly, bad press about Israel hasn’t helped matters, Klein said during a recent interview while on business in Silicon Valley. Many potential U.S. customers say it’s too risky to rely on an Israeli supplier, Klein points out, and “I’m not talking about people who are anti-Israel or anti-Semitic. I’m talking about someone who’s parve [ neutral toward Israel].”
Though Israeli companies could overcome this obstacle, they are often reluctant to do what it takes. “The greater your presence in the U.S., the greater your chances to sell more product,” said Klein. His firm, Amcon Marketing Strategy International, specializes in helping Israeli companies do business with U.S. concerns. Amcon has an office in Chicago, and provides marketing information on its Web site, www.amconmarketing.com (Klein’s book can be purchased through the Web site as well.)
“In the U.S., if you’re local you exist, and if you’re not local you don’t exist,” Klein often tells his clients. “Americans want to buy from local companies.”
But setting up a U.S. manufacturing plant or a sales office is expensive, and Israeli companies are often afraid to make that kind of investment. Klein estimates that establishing a U.S. sales office with even just one employee costs “a good $300,000 a year minimum, and that’s perceived as risky if you’re not doing much business with the U.S.”
Klein, a native of Chicago who made aliyah in 1985, has a feel for both American and Israeli approaches to business. “Sometimes I think Israeli companies are lacking corporate self-confidence, meaning they don’t have the confidence that their investment will pay off,” he said. “They’re always looking for the shortcut. If I had five bucks every time somebody said to me in Hebrew, ‘I’m looking for a shortcut,’ I’d be a rich man.”
Nowhere is the Israeli wish for an abbreviated route more evident than in Israelis’ unwillingness to put money into marketing, Klein suggested. “So many Israeli companies are willing to invest in research and development, but they’re not willing to invest in marketing.”
That unwillingness goes beyond a fear of setting up a sales office, but extends to such marketing activities as research and communications. In Klein’s opinion, “Israeli R&D is Ph.D.-level, while their marketing is kindergarten-level.” It’s typical for an Israeli executive to say there’s no need for market research, for example, in the belief that he already understands the market perfectly. But when Klein then
asks the executive for a chart comparing the Israeli product with those of its American competitors, “he can’t even begin to give me such a chart,” said Klein.
“If you have a new product, you have to know who’s out there, and they don’t have a clue.”
But understanding the U.S. market is key to success in selling here, insists Klein. Israeli companies must understand their competitive advantage, if any, and decide on the best sales channel. “The U.S. is so big, you have to focus on a channel.” For example, with a medical product, the market may include selling to hospitals, home health care and drugstores. “The head of a small company doesn’t want to choose just one channel — he doesn’t want to cut off his opportunities. But in the U.S., it’s a completely different set of customers, trade shows and publications, so focus is psychologically difficult but critical to success in the U.S. market.”
For all his criticisms of the Israeli approach to business in the United States, Klein’s view of Israeli attitudes is nuanced and respectful. “We’ve actually done some research on cultural differences between Israeli and American businesspeople,” he said. “Israelis pride themselves on being out-of-the-box thinkers, creative, resourceful.
“Many Israelis see American businesspeople as square, so to speak — non-creative, play-by-the-book kind of people. They respect that,” because American companies have done well. “And yet they make fun of that all at one time.”
Israelis give Klein hope, though. “There are a lot of good successes” among Israeli firms, “but I think there could be better success if Israeli companies were to commit to marketing the way they commit to R&D.”