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Marcus Pakiser opens his first e-mail of the day. "What's the optimal temperature for drinking sake?" a man in Tennessee wants to know. "In Japan," Mr. Pakiser types in response, "there is an old saying: Warm sake should be the same temperature as your lover's skin." Next: an e-mail from someone in Kansas inquiring how to make a sake margarita. Mr. Pakiser writes down the recipe, clicks a button, and sends it off. So it goes for Mr. Pakiser, the sales manager for Hakushika Sake U.S.A. He estimates that each month he receives more than 700 e-mail queries about the Japanese drink from people all over the U.S.-indeed, all over the world. And the number is growing rapidly. Hakushika is part of a wave of foreign companies that are washing up on American shores, riding the momentum of information technology. Some, like Hakushika, are finding that they can reach strong customer prospects electronically even if they might not have been able to find those prospects using traditional marketing approaches. Other foreign companies are finding that technology makes them more competitive by letting them manage more efficiently from afar and can help them greatly improve customer service. Andrew Szamosszegi, senior research associate at the Economic Strategy Institute, a Washington think tank, says the use of technology to invade the U.S. market is happening across all industries, from manufacturing to services to the media. Monty Graham, senior fellow at the Institute for International Economics, another Washington think tank, says: "Information technology is causing industries you never thought of as being international to be so more than before." The Commerce Department says that foreign direct investment in the U.S. has risen steadily from $551 billion in 1993 to $729 billion in 1996, measured in today's dollars. Mr. Graham thinks the availability of better and better technology lies behind that one-third increase because it helps foreign firms compete more aggressively in the U.S. market. So, while U.S. companies often assume they use information technology better than foreign companies and conclude that globalization brings them opportunities, the spread of information may bring competitive threats, too. Fernando Batista, managing director of What's Up America, a German-owned systems integrator for Lotus Notes, says that an increasing percentage of his clientele is foreign companies seeking to penetrate the U.S. market. "The heads of companies in the future will have to be technologists, or at least understand technology and where to point it," he says. "Companies that don't understand technology are simply not going to succeed." A prime example of an industry transformed by information technology is the garment industry. Twenty years ago, any clothing that was subject to the whims of fashion had to be made by a U.S. company if it was intended for the U.S. market. Anything produced overseas risked being out of style by the time it was ordered, made, and shipped to retail stores. Today, "I/T and relatively low-cost air transportation have changed all that," says Mr. Graham, the economist. So, foreign companies have won a huge percentage of the garment business. A high-fashion retailer can use networked computers to find where any garment can be produced most cheaply in the world, then have it made there in jig time. The retailer can buy fabric in China, have it cut and sewn in Bangladesh in the latest style, then fly the garment to New York in a matter of days, rather than weeks-hitting the market with the garment at its fashion peak. Technology is having similarly revolutionary effects on other industries. But the technological edge doesn't even have to come from a fancy or wildly expensive computer system. It can come from something as simple as a Web site. At Hakushika (www.sakeweb.com), the site is helping convince consumers that sake is broadly appealing as a light drink, not just something to be drunk in Japanese restaurants. And why not? Salsa outsells ketchup these days, so couldn't sake at least move past wine coolers in the rankings of American beverage tastes? Consider sake margaritas. "They're lower in calories and lower in alcohol than regular margaritas," Mr. Pakiser says. "Just 15% alcohol content-about the same as sherry." Or cold sake to accompany a big, juicy steak. "It's delicious," the Hakushika executive contends. Or sake screwdrivers, sake Martinis-even adding sake to warm cider as a hot toddy. Hakushika's Web site tells those who visited about all of these possibilities, then invites interested parties to come to their brewery and see how the fermented rice drink is made. Hakushika's factory, in Golden, Colo., has become quite a tourist attraction, and is producing lots of sake: 650,000 liters last year. Hakushika also uses technology to keep its costs down. Unlike low-tech Coors across the street, whose brewery employs about 300 people, Hakushika uses software to run its plant and has only nine employees. LSG Lufthansa Service/SKY Chefs, which is 75% owned by Canada's Onex and 25% owned by Germany's Lufthansa Airlines, has come to dominate both the U.S. and world markets for airline food by using technology both to be very efficient and to be innovative. Tim Beary, director of operations and marketing services at LSG/Sky Chefs' Arlington, Texas, headquarters, says that computers are obviously crucial to managing the details of the catering business. LSG/Sky Chefs has to deal with 6,000 flights a day on American Airlines alone. It has to coordinate purchasing, preparation, and delivery at 128 kitchens in 24 countries. And it has to make sure that every bag lunch has a tomato with its tuna sandwich. LSG/Sky Chefs goes a step further and has computers generate galley-packing diagrams, showing its customers the optimal way to pack the food on whatever airplane is being used. Mr. Beary says American, for instance, saves about $100,000 a year by having LSG/Sky Chefs do the diagrams rather than doing them internally. LSG/Sky Chefs also uses technology as an innovative design and marketing tool. When making a presentation to a customer, LSG/Sky Chefs uses a computer that shows how a proposed meal will look and that can change the meal's parts instantly. "If the airline executives like a meal color that is more green than red-say, a cucumber sitting alongside a sandwich instead of a tomato- we can do that instantly with this digital image process, much like creating a photo right before their eyes," Mr. Beary explains. In the past, the airline caterer had to physically assemble 10 or 20 meals so the clients could sample them-a time-consuming process. Now, LSG/Sky Chefs can cut the list to a few final selections that it prepares for tasting. Largely because it has been smart about technology, LSG/SKY Chefs has a 50% share of the airline catering market in the U.S., up from 20% in 1986. The company has soared past domestic competitors, such as Dobbs International Services of Memphis, which cur- rently has about 37% of the U.S. market. It's not necessary to be a giant like LSG/Sky Chefs or Hakushika to benefit from technology, either. New technology is also helping entrepreneurs like Paris-born Jacques-Gabriel Mariotti. He found the French business climate stifling-"when you hire an employee, it's like adopting a child; they're impossible to get rid of," he says. So he decided to move to the U.S.-but use technology to bring a bit of France with him. Mr. Mariotti's MediaNet (www.francelink.com) broadcasts French radio stations over the Internet. It also offers courses from the Sorbonne, the prestigious Parisian university. Mr. Mariotti finds a steady stream of customers among American francophiles, universities, and libraries. Why take French at Berlitz when you can study at the Sorbonne for $4.95 a month? Over time, Mr. Mariotti plans to add TV shows, commentaries, and other French broadcasts on his budding network. Other French companies are making similar inroads in the U.S. through technology. Sophie Menard, director of research at the French Embassy in New York, says hundreds of French companies are investigating how to use the Web to market in the U.S. Those that she knows of run the gamut from Lingerie de France, a maker of upscale lingerie; to Caviar Asouline, a caviar company; to Moet-Chandon, the champagne producer; to Lifestand, which makes wheelchairs enabling paralyzed people to stand upright. "The Internet was extremely important for Lifestand," Ms. Menard says. "Handicapped people could see the product on their Web site, as well as how to use the wheelchair. It's often difficult for a handicapped person to physically go out and see the wheelchair in a shop, so the Internet site really facilitated exposure to the product." Some foreign companies would have entered the U.S. market in any case, but have found that information technology is the key to having their business really catch fire. London-based Primary Image, which creates virtual reality simulation and training systems and sells closed-circuit TV cameras for corporate security management, had been exporting its products to the U.S. for seven years, but its business never really took off. The downfall: customer service. The problem wasn't that the service was bad. It was just that customers refused to contact Primary Image if they had problems with its equipment. "The reality is that American businesses are fairly reluctant to phone overseas," explains Alan Davenport, managing director. Partly, Americans were intimidated by making the international call. There was also a problem with the five-hour time difference between London and New York. But Primary Image hit on a solution: It opened an American office, in Orlando, Fla., and got an American phone number, answered by an American operator. Any customer queries are e-mailed to the London parent office, which works on the queries overnight. The result: "We get answers back to you the next day," Mr. Davenport says. Currently, 30% to 40% of the firm's $5 million in annual revenues are derived from the American market, and he expects that to grow to more than 70% in the next two to three years. In the realm of virtual reality, Mr. Davenport is very excited about Primary Image's new product-called Piranha-which simulates the experience of driving a car. He envisions that it can be used in the U.S. to train people to drive a car, thus replacing traditional automotive driving schools. He plans to take the company public in the U.S. Information technology also makes it far easier for foreign companies to hook up with U.S. partners and at least participate in the U.S. market in ways that weren't possible before the Internet and other advances in communication. For instance, a group of Hungarian programmers set up a leasing company for corporate jets with an American, Trevor Cornwell. He did the marketing, while they produced the scheduling system and other software-a good division of labor given that U.S. programmers can start at $60,000 a year right out of college while good, experienced programmers in Hungary would be happy with $12,000 a year. The partners figure they used e-mail to do 90% of the work of setting up Skyjet (www.skyjet.com). All the employees work from home. His partners and a whole generation of foreign companies wouldn't have been serious competitors in the U.S. market before information technology began to transform the world of business. But the world has changed, and they're competitive now.
Mary Gotschall is a free-lance writer based near Washington, D.C. She is reachable at gotschallm@aol.com. |