Newsletter – November 2, 2018

In early October we conducted a productive trade mission to Shanghai and Beijing, which we have highlighted in the Market Focus section of this newsletter. Now we are looking forward to the Utah Global Forum, which takes place Nov. 8 at the Grand America Hotel. There are still a few seats left and we encourage you to register for this high-value event. It is going to be a fantastic program featuring Governor Gary Herbert, Ben Stein, all FIVE of Utah’s female university presidents and breakout sessions on the most important topics facing Utah today. Most importantly, we are focused on articulating our international strategy to increase foreign investments into Utah and increase Utah’s exports to the world. 

No state international development strategy will be effective without recognizing that global trade has evolved over the last 70 years. Improvements in transportation, shipping, telecommunications and other technologies have accelerated trade and made global solutions available for even the smallest companies. It’s not uncommon now for a small Utah company to source material from Asia, assemble in China or Mexico, process again in Utah, and sell to a manufacturer in Europe, who integrates Utah products into its own offerings. Larger companies utilize more complicated supply chains involving product shipments back and forth across borders before reaching an end consumer.

International trade is no longer about a product crossing a border, or a seller in one country finding a buyer in another. Trade surpluses and deficits are no longer an effective way to judge trade success because they don’t provide the whole picture. This means that, for us, fostering international trade is about developing relationships and supply chains; it’s about building support networks that connect our partners, suppliers and subject matter experts with Utah businesses; it’s about focusing high-impact programming towards opportunities to leverage Utah’s competitive advantages.

And what are those advantages? Utah is home to exciting, growing industry clusters such as aerospace & defense, life sciences technology & biomedical devices, IT & software development and outdoor products. Utah’s businesses in these and other industries are world-class, and operate in the best state for doing business. Utah provides substantial support for exporters in the form of high-impact programming, including providing funding through grants, bringing Utah companies to international trade shows and organizing trade missions around the world. Aligning these activities with Utah’s competitive industries will deliver the greatest return on investment.

To take advantage of these opportunities, companies need to be prepared to act in the global marketplace, which means our trade services need to help Utah businesses prepare to participate in international trade events, help them follow up on opportunities and build relationships with key contacts. Trade Services will have to narrow its focus, taking on core clients and coordinating better with trade partners. Utah’s Small Business Development Centers, the U.S. Commercial Service, freight forwarders, legal experts and other resources will all be contributors to this effort.

Our strategy encapsulates the expansion of “Team Utah” so that we increase our coordination and deliver the greatest value to Utah. To that end, we are coordinating with industry experts to achieve more targeted support for Utah companies. These experts know which Utah companies are best prepared for success, and are often aware of the most impactful opportunities abroad.

As an example of how this works, WTC Utah has begun organizing working groups to leverage the participation, wisdom and knowledge of Utah business and community leaders to organize trade missions, identify companies and consider what larger objectives the state can pursue. As the trade mission or show nears, the Team Utah Working Group will invite leaders from the participating companies and organizations to join the working group and take part in the programming. These groups will help identify key objectives for the state, including taking advantage of investment opportunities, and for participating companies to achieve during and after the event.

This is where WTC Utah’s export promotion and foreign investment efforts collide. Utah’s engagement abroad should not only take Utah companies to the world, but should bring the world back to Utah. When WTC Utah connects a Utah manufacturer with a large foreign OEM, that OEM should also be brought back to experience Utah and discover the strategic investment opportunities in our state. As an example, during our recent trade mission to Shanghai and Beijing, WTC Utah met with senior commercial, diplomatic, and business leaders, including the Chairman of the Port of Shanghai, the largest port operation in the world. This contact was not only valuable because it provides an ally contact for Utah companies shipping through that port, but also because we are bringing delegates from China back to Utah as a result of the visit. This is a scalable model for international development in Utah, demonstrating that we can best improve Utah’s international position by plugging into global value chains and building international relationships that will truly elevate Utah as the crossroads of the world.  Come to the Utah Global Forum on November 8 to learn more about how you can participate in this exciting effort! Learn more and register now:

Market Highlight: China

Washington may be engaged in a trade dispute with China, but Utah leaders are more interested in expanding the state’s strong cultural and economic ties with China. That’s why WTC Utah led a trade mission to Shanghai and Beijing in October. The mission focused on broadening and strengthening the Utah-China relationship by finding logical solutions to the challenges and disputes, especially in the areas of innovation, education, art, culture and trade.

Through positive engagement, Utah’s leaders look to build trust, enhance relationships and foster an environment to find mutually-beneficial solutions to complex issues. For example, the Utah delegation joined forces with globally-renowned Utah artist Susan Swartz, pianist Mary Anne Huntsman and other prominent leaders from the arts and philanthropies at the grand opening of Susan Swartz’s art exhibition, titled Personal Path, at the Central Academy of Fine Arts, China’s most prestigious art institution. During the art show opening, Brad Herbert read a proclamation from Gov. Gary R. Herbert declaring October 11th as Utah-China Cultural Friendship Day.

The trade mission caught the attention of the largest press outlets in China, including People’s Daily (daily circulation of 200 million), Xinhua News (China’s largest online media platform) and Global Times (the largest English media outlet in the country). Each publication highlighted Utah and the delegation’s efforts to broaden the Utah-China relationship in the areas of art, education, innovation, trade and investment.

Economically, China is one of Utah’s most important markets and is the state’s third largest trading partner. In 2017, Utah exported approximately $740 million in goods to China. Top Utah exports to China include computer and electronic products, chemicals, machinery and agricultural products.

WTC Utah and members of the Utah delegation are clear-eyed about the challenges of doing business with China and the need for improved market access, intellectual property protection and reciprocal terms of trade. While looking to national governments to forge a trade deal that addresses these areas of concern, WTC Utah believes that nurturing a broad and vibrant Utah-China relationship through positive engagement and frank discussions will create additional trade and investment opportunities for Utah businesses while also providing new, mutually-beneficial avenues for cooperation in education, innovation and the arts.

During the trade delegation’s visit to Shanghai, the chairman of the Shanghai International Port Group (SIPG), the world’s largest port operation, hosted the delegation for dinner with senior SIPG leaders. SIPG is a global leader in automation and efficiency and is known for its innovation. The group discussed challenges Utah companies face when exporting goods to China as well as Utah’s rapid economic growth and development, including Utah’s inland port.

Also in Shanghai, the Utah delegation met with one of the largest suppliers of China’s immense public health system to discuss opportunities to partner with Utah life sciences companies and visited the Youth Innovation Center — a joint project between the State of Utah and the Jiading District in China — to learn about the important education and innovation ties between Utah and China. All the companies on the trade mission pledged to support joint Utah-China efforts to develop increased collaboration among Utah and Chinese students on science, technology, engineering and math projects. Twenty percent of all Mandarin taught in the United States occurs in Utah, positioning Utah’s students to be leaders in driving increased collaboration between China and the United States in the decades to come.

On the second leg of the trade mission in Beijing, the Utah delegates held meetings with senior Chinese officials involved with trade, commerce and foreign affairs to discuss challenges and opportunities in expanding Utah-China trade ties, including the potential establishment of a Utah-China joint committee on trade and commerce. What’s more, U.S. Ambassador to China Terry Branstad convened a meeting with the Utah delegation and leading executives from some of China’s largest tech companies and investment funds. The group discussed ways to increase foreign investment from China to Utah and opportunities for Utah companies to expand their operations in China.

The Utah trade delegation consisted of Scott Anderson, President & CEO of Zions Bank and Chair of WTC Utah; Greg Hughes, Speaker of the House for the Utah House of Representatives; Miles Hansen, President & CEO of WTC Utah; Gary Porter, Senior Vice President of Deseret Management Corporation; Rich Hartvigsen, Vice President of NuSkin International; Darin Parker, President and Managing Director of PMI Foods; Brad Herbert, Senior Vice President & Group Marketing Manager of Zions Bank; Dan Stephenson, Executive Director of Economic Bridge International; Greg Hartley, Chief of Staff of the Utah House of Representatives; and Meg Garfield, Trade Mission Manager for WTC Utah.

Going Global: Beehive Distilling

Beehive Distilling was founded in 2013 on the concept that gin shouldn’t taste like a citrus drink, nor like a cleaning fluid. Five years later, the popular distiller of Jack Rabbit Gin and Barrel Aged Gin has outgrown its small warehouse location and now occupies a 10,000-square-foot production facility at 2245 S. West Temple, where it showcases its new 450-gallon still and is preparing to open a restaurant.

The new location and equipment have allowed Beehive Distilling to expand its products to include spirits such as whiskey, rum and brandy, says co-owner and head distiller Chris Barlow. In 2017, Beehive Distillery sold more than 2,800 cases of gin and organic vodka, mostly in Utah, but also in Wyoming, Idaho, Oregon and California. It’s primary sales sources include retailers, distributors and liquor stores.

Barlow, with co-owners Matt Aller and Erik Ostling, began their labor of love in a Salt Lake City industrial park, distilling their first gin product in a small, 80-gallon still that now sits beside their state-of-the-art 450-gallon still. After graduating from the Goldman Sachs 10,000 Small Businesses program, the business received an invitation to apply for a State Trade Expansion Program (STEP) Grant, which is administered by WTC Utah to help small Utah businesses grow and expand in dynamic global markets.

The STEP program is funded in part through a grant with the U.S. Small Business Administration (SBA). The program aims to increase the number of small businesses exporting in Utah, increase revenues and sales of Utah-made goods and services, and increase Utah’s gross domestic product through international trade.

Beehive Distillery jumped at the chance to apply for the grant and used the matching funds to participate in the recent Governor-led trade mission to Taiwan and South Korea. Barlow says that experience was eye-opening. “We have always wanted to sell our products in other countries, but never really knew how to get started in exporting,” he explains. “The trade mission was a powerful experience and helped us establish some key contacts with distributors in Taiwan and South Korea.”

The company is now working on enhancing relationships with the contacts it made on the trade mission while also working on its international strategy. Barlow and his partners hope the unique qualities that have made Beehive Distilling’s gin products popular domestically will lead to loyal customers abroad.

“We work in a niche market,” says Barlow, “but we are finding foreign niche markets, as well.”

For more information about Beehive Distilling visit

Toolbox: Tip #10 Part 1 – Financial Risk and Reward

This article outlines three types of financial risk and how to minimize them.

International Financial Risk

The international landscape is more varied and dynamic than doing business domestically. There is no common currency, and credit reporting can be slower or unreliable. One of the largest sources of risk comes from incomplete data in international markets. Infrastructure varies from country to country, affecting reporting timelines for financial data. Even once data is collected, it may be difficult to compare. Additionally, the financial strength of foreign markets can quickly change in unpredictable ways. Currency devaluations, governmental policies and hyperinflation can dramatically affect a foreign buyer’s ability to pay.

Procedural errors can introduce risk. All international transactions inherently deal with at least two different legal systems, two different governments and two different cultures. There are more balls in the air than with domestic business deals.

International Transactions: Three Risks

Risk in international transactions can be separated into three categories: commercial risk, political risk and foreign exchange risk.

  • Commercial risk (or credit risk) – your buyer’s ability or inability to pay in full and on time.
  • Political risk (or country risk) – the inability of your buyer to pay in full and on time due to governmental action. This factor relates to the political stability of a nation and that nation’s outlook on business.  
  • Foreign exchange risk – the risk associated with a change in the price in the time between when the price was established and when payment is made.

Transaction risk is a subset of foreign exchange risk. Whether transaction risk falls on the buyer or seller depends on the currency used. If the price is set in U.S. dollars, transaction risk transfers to the foreign buyer and vice versa if the price is set in local foreign currency.

Economic risk occurs when the U.S. dollar appreciates compared to a buyer’s currency. For example, consider if a U.S. seller and a Canadian seller are both doing business in France. If the U.S. dollar appreciates compared to the Euro, and the Canadian dollar remains the same, it is now more expensive for the French buyer to get products from the U.S. seller. This type of risk negatively affects a seller’s competitiveness.

Minimizing International Financial Risk

The simplest way to minimize commercial risk is to pass it on to foreign buyers. This is done by enacting more secure forms of payment such as prepayment or letters of credit. That being said, these payment methods may not be the best fit for your company. It is important to balance your company’s interest in terms of minimizing risk and creating payment terms that are competitive and attractive to buyers. For companies just starting out in exporting, more secure payment methods may be preferable. The pros and cons of various payment methods will be highlighted in an upcoming newsletter article.

Political risk can be minimized by researching the government and political environment in the market you hope to enter. Again, as risk increases, it may be prudent to utilize more secure payment methods. Export credit insurance is another option to consider. The Export-Import Bank (ExIm) offers a program that extends credit to foreign buyers with more protection.

To minimize foreign exchange risk, you must determine how much risk you are willing to endure. There are many financial tools to manage foreign exchange risk. To determine which tools best fit your need, consult with your banking partner. These tools include netting, forward contracts and future contracts.

For more information, or for other help with your international expansion efforts, please contact the WTC Utah Trade Services Manager Jim Porter at

Upcoming Events

Nov. 8 Utah Global Forum

News Headlines

Jay Evenson: Why Utah’s leaders made a trip to China despite trade war

Utah State delegation seeks bonds with China despite trade disputes on federal level

Guest Opinion: What is Utah’s role in a Global Economy?

ABC 4 Utah interview with Miles Hansen and Ben Kolendar

Tariffs having major impact on Utah Small Business, congressman says

Southern Utah delegates complete successful trade mission to Taiwan, South Korea

Utah Global Forum announces keynote speaker Ben Stein