International Business Picking Up in Washington Region

Potomac Tech Wire
March 6, 2002

George C. Newstrom, Virginia's new Secretary of Technology, is wasting little time in promoting international trade as a vital tool in expanding the Commonwealth's economy. Newstrom, who was sworn in earlier this week in Richmond, has a background in international business; he was president of Asia Pacific Information Solutions for EDS, based in Hong Kong.

This week, Newstrom told a Northern Virginia Technology Council "Titans of Technology" breakfast at the McLean Hilton that he will focus on international opportunities for Virginia-based companies, and for ways to lure foreign companies to set up operations in the Commonwealth. "One of the imperatives that Governor (Mark) Warner has impressed on me is that we must continue the viability and visibility of Virginia in the global economic marketplace," Newstrom says.

International business is critical to the health of the region's economy. A study last year by the Greater Washington Initiative revealed that the total impact of international business on the region is nearly $34 billion annually. International business activity represents 14 percent of the gross regional product, provides some 330,000 jobs and a total of $12.3 billion in wages. Thomas Morr, Managing Partner of GWI, says those figures are still valid, and he adds: "The impact of international business on jobs in this region - particularly technology jobs - is significant."

Business Slows After September 11

There's a flurry of international business activity around the region, a sign that the pronounced slowdown that followed the events of September 11 is over. "Things have picked up, but only to a certain extent," says Zuzana Steen, Assistant Director of Workforce Development and International Relations for NVTC. "Two years ago, things were pretty hot," Steen says. "But the failure of the dot-com sector, the weakness in telecommunications and the Internet, the recession that began last March, and the September 11 terrorist attacks reduced the number of companies going abroad. Companies were watching the bottom line, and were concerned about security."

But Steen sees an increase in interest in international business. NVTC is hosting a "Human Genome Party," an international biotechnology networking event, at the Ronald Reagan Building in Washington on April 4. Steen says the party will give the region's biotech community the opportunity to meet the Science & Technology and Commercial Counselors from embassies of countries that have major biotech industries. The following day, these foreign representatives will visit a number of biotech companies in Northern Virginia and Suburban Maryland.

Heidjer Staecker of Deloitte & Touche and Chair of NVTC's International Committee, points out that senior technology leaders from Canada's largest and most economically robust region - the Province of Ontario, will be visiting the Washington area March 19-21. "This is the first time in many years such a senior level delegation has visited this region. They are here to not only learn about this region's vibrancy as a technology cluster but also to begin to develop mutually beneficial relationships with NVTC members with the objective of exploring reciprocal business opportunities," Staecker says. About the same time, Staecker says, executives representing about 1,500 Turkish companies will be visiting the Washington area, looking for business opportunities.

Shelby Scarbrough, director of the Greater Washington Board of Trade's International Gateway - located in the Reagan Building - shares Steen's assessment of the international business environment. "Things slowed down considerably after September 11," says Scarbrough. "A number of trade missions here were cancelled or postponed. But these trade missions are being rescheduled, and we believe the number of missions visiting Washington will increase during the year."

"World Bank Wednesday"

The International Gateway runs a regular series called "World Bank Wednesday," where experts share their views of the business opportunities in various parts of the world. Next Wednesday, March 13, for example, the focus will be on opportunities in North Africa.

Scarbrough says the Washington area is a prime destination for overseas business executives. "Our business community includes experts on every aspects of federal law and policy affecting business in the United States. We have a wealth of real estate, finance, insurance, staffing and recruitment, public relations and other corporate service professionals. With the State Department, 174 foreign embassies, the World Bank, the International Monetary Fund and major international companies located here, the Washington area is a magnet for professional with international experience and expertise."

At GWI, Thomas Morr manages trade missions made up of Washington area business executives; he also directs efforts to lure foreign businesses to the region. Tim Priest, Director of Business Development at GWI, says half of the companies he's trying to attract to the Washington area are foreign. "We have initiatives underway with the United Kingdom, Germany and Ireland," Priest says.

GWI's Morr says foreign companies are showing an interest in selling network security, physical security, airport security and screening and optical recognition to government and commercial customers in the United States. "We've seen a real increase in the number of foreign companies looking to do business with the federal government. We're encouraging companies from elsewhere to do business here. We're sensing a renewal of vigor in the economy. After September 11, the number of foreign delegations visiting the Washington area dropped off sharply. But since the first of the year, that seems to be turning around. Not at pace and level of activity of Q3 and Q4 2000, but it's obvious to me that things are improving."

Unique "Virtual Trade Missions"

Steen, Scarbrough, Morr all point to an upcoming series of unique "Virtual Trade Missions" as evidence that interest in international trade is increasing. "We are constantly looking at new vehicles for promoting international business," says Scarbrough. "Virtual Trade Missions offer a new and innovative way for facilitating international business. They may represent the blossoming of an entirely new industry.

The Board of Trade, International Gateway and the Washington, DC Technology Council are hosting a U.S.-Israel "Virtual Trade Mission," focusing on security, from April 22 to May 22. One hundred security firms from Israel and the Washington area are expected to participate. This online trade mission will be powered by Washington-based Tradebuilders Inc. Tradebuilders and its partners plan three more Virtual Trade Missions later this year, with Germany, the United Kingdom and China.

According to Charlotte Hayes, president of the DC Technology Council, "The Virtual Trade Mission will give security companies in our region an opportunity to partner with world-class Israeli technology providers to meet both private sector and government procurement needs. The regional market for security products and service is valued in the billions of dollars."

Elizabeth Vazquez, president of Tradebuilders, says: "Six months after the tragedy of September 11, and with the economy showing clear signs of recovery, companies in the Washington area are coming out of their hibernation, regrouping and better preparing themselves to build solid trade relationships in strategic markets overseas. Now, more than ever, local technology companies should take advantage of the wealth of regional resources that can help them go global.

Area Tech Councils Provide Help

"Washington-area companies have a unique opportunity to attract the attention of potential overseas partners that have been hit hard by the decline in trade with the U.S. since September 11. One way for companies to access global markets is by actively participating in groups like the DC, Maryland and Northern Virginia Technology Councils that help members enter foreign markets. Another way is to participate in trade missions (face-to-face and/or virtual) that help to build trust and sustainable momentum for success. Clearly, local technology businesses that develop strong relationships with foreign partners now will be well-positioned to grow as the global economy recovers this year," Vazquez says.

Currently, there are about 650 foreign-owned firms with operations in the Washington area. These firms generate more than $11.6 billion in economy activity and employ more than 100,000 workers. The efforts by the Northern Virginia Technology Council, the DC and Maryland Tech Councils, the Greater Washington Initiative, the International Gateway, and firms like Tradebuilders to attract more foreign firms to this area and to build international business for Washington-area firms will have a significant impact on the growth of the region's economy and its workforce, and deserve the strong support of the region's business community.

Paul Villella is president of HireStrategy, a Reston-based executive recruiting and staffing firm serving technology and government procurement businesses and professionals.

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