Growing by Going Global

5 success stories prove that small, local companies can flourish nationally and internationally

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     The 2008 Xterra West Championship started at Vail Lake, Calif.
     Photo Courtesy: XTERRA

Conquering the world was not part of the original plans for many Hawaii businesses that have succeeded in global markets. For some, it was a years-long process of gradual growth and careful planning, while others found their way quickly with inspiration, instinct and good timing.

Either way, exports help inoculate local companies against economic swings at home by diversifying their products and markets. And thanks to the Internet, free-trade agreements and easier transportation, there are more opportunities than ever for potential exporters, says John Holman, of the Hawaii Export Assistance Center, part of the U.S. Commercial Service, which can help businesses make connections overseas.

Holman says owners of small companies may be too busy to recognize their export potential, or they may be intimidated by global competition. But plenty of local businesses have already shown the way: More than 660 Hawaii companies exported goods in 2007, and 90 percent of those have fewer than 500 employees, according to the export center.

In 2009, Hawaii companies exported $562 million in manufactured goods, and local companies export over $2 billion in services each year, largely related to tourism and education. “Hawaii has a strong brand around the world and lends itself to any product,” Holman says.

Here are the stories of five Hawaii businesses that started small and used national and global markets to expand.

Televising outdoor adventures to the world

The global Xterra off-road multisport phenomenon was born from a TV-ready event created by a Honolulu marketing firm to promote Waikiki.

That event – the International Ocean Challenge, a competition featuring lifeguards from Australia, New Zealand, California and Hawaii – was picked up by the ESPN cable sports network in 1990 and led to more than 200 events and 250 TV shows produced by Tom Kiely’s Team Unlimited.

Seizing on the new popularity of off-road sports and the need to fill hours of expanded TV sports programming, Team Unlimited dreamed up an entirely new event in 1996 to promote Maui’s Wailea Resort as more than a golf destination. That first 21-mile combination of ocean-swim, off-road- bike and trail-running race, now known as Xterra, attracted 123 competitors and, soon, a global following.

“We didn’t have a grand plan when we started. Our original intent was to do a couple of races and television shows,” said Kiely, who held marketing positions with major hotel chains before starting his own firm in 1988. “In Hawaii, we found they were very popular and other people wanted the races in other locations around the country and in other countries. We realized we were on to something and we shut down our other businesses and marketing consulting firm.”

In 2000, Xterra began licensing its brand and launched a world tour with races in England, Japan and Canada. Today, there are more than 175 events in 14 countries. Team Unlimited produces all the major U.S. championships and the World Championship on Maui. Other events are licensed to contractors, and Xterra has licensing agreements with companies in 16 countries.

His firm also produces eight to 10 new “Xterra Adventures” shows a year for ESPN, and the Xterra name is stamped on numerous products, including wetsuits, footwear, cycling accessories and fitness equipment.

“We were lucky on the timing. You have to look at what’s happening in the marketplace and find something to attach yourself to. It’s hard to make your own wave,” says Kiely.

Despite its worldwide reach, Team Unlimited remains a small business, with only 15 full-time employees.

“It happened over 15 years, little by little. If you just bite off little pieces in life, you can get it done,” Kiely says. “We were a small company and we knew it was going to take a long time, but we kept hammering away at it. ... Sometimes businesses in Hawaii think too small, they think they can’t do it.” // 521-4322


The world will pay for top quality

     French Gourmet, led by CEO Patrick Novak, makes frozen
     dough in Kalihi and exports as far away as Singapore
     and Dubai.
     Photo: David Croxford

French Gourmet, founded in 1984, was in business 10 years, providing frozen dough to high-end hotels, cruise lines and restaurants in Hawaii, when CEO Patrick Novak realized he had gone as far in the local market as he was willing to go.

“The market is very small here in Hawaii. All you do is spin your wheels after awhile,” he says. “Spending a lot of time and money and energy for the next incremental growth is not worth it when you can do the same thing and capture a huge share of the market in Asia or on the U.S. continent.”

Novak, a former executive chef who received culinary training in his native France, first began shipping Honolulu-made French Gourmet Artisan Frozen Dough to Guam, Hong Kong and Singapore, where the food-service market “is more keen” for quality products and willing to pay a premium for them, he says.

The company’s first challenge was overcoming the perception that a frozen product was inferior. “It’s not baked; it’s raw dough that is still baked fresh,” he says.

Novak visited hotel after hotel, conducting baking demonstrations using on-site ovens. “The product speaks for itself,” he says.

As the first foreign frozen dough maker to export to Hong Kong and Singapore, “Asia started to open up for us in a very big way,” Novak recalls. A half-dozen competitors quickly followed, but French Gourmet only worked harder to improve its line of croissants, Danish and puff pastries, breads and muffins.

“Ultimately, it’s the quality, and nobody could beat us. The price may be cheaper, but we stood our ground. Quality is paramount in Asia,” he says.

To increase manufacturing capacity, French Gourmet moved in 1996 to its current Kuwili Street location, nearly four times the size of its original plant. Novak says banks were not interested in loaning him money for the expansion, so he arranged financing with the leasing firm and now owns the property outright.

French Gourmet employs 80 workers and also has a warehouse in Los Angeles. Exports comprise approximately 70 percent of sales. Novak sells his frozen dough to a network of 63 food-service distributors on the U.S. mainland and in Guam, Hong Kong, Singapore, South Korea, Canada and Dubai, and the company hopes to expand soon to Malaysia, Indonesia, Taiwan and the Middle East.

Novak says his company succeeded even though it “is held hostage” by the shipping industry, which he says charges twice as much to transport ingredients and products between California and Hawaii than it costs to transport the same goods between California and Asia.

Nonetheless, overseas markets have been crucial to the survival of French Gourmet, he says, especially as doing business in Hawaii has become costlier over the years. If French Gourmet didn’t expand outside Hawaii, “I would be working much harder, making less income and supporting a lot fewer local employees.” // 524-4000

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