Corporate Training Magazine

Diary of an Exporter
Vol 2 Issue 5 - Sept 2006

By Dennis and Sandy Jones

Diary of an Exporter chronicles the export journey of Dr. Harrison Ofiyai, founder of Clinotech Diagnostics and Pharmaceuticals, a producer and distributor of medical diagnostic products. Dr. Ofiyai shares his experiences with us - both the failures and triumphs in his export odyssey.

Clinotech's story is a notable example of how vision, tenacity, systematic planning and entrepreneurship can lead to export success even in the most competitive overseas markets - without extensive financial and marketing support, and even without prior exporting experience.

Starting from scratch
During Clinotech's start-up period, Dr. Ofiyai and his wife paid the company's way out of their own pockets - no lenders became involved until much later, when the business was firmly established. Turkey was chosen as the first target market because Dr. Ofiyai had been posted there as a member of Doctors Without Borders, and had experience and contacts in the Turkish medical system. Building on this foundation, and acting as his own one-man, on-the-ground marketing team, he visited the country five times during Clinotech's first year of business and soon established a viable customer base.

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October 1997
I keep thinking about my business idea. The research and clinical work at the university keeps me occupied, but I feel I should consider other options - like starting my own company. After all, I've seen a need everywhere for one-step medical diagnostic devices, and I'm familiar with a lot of them - diagnostics for blood chemistry, urinalysis, HIV, hepatitis, tumour markers, fertility, just to start with. A business in diagnostic kits would fit with the experimental and investigative medicine I'm interested in, and it would go well with my clinical background.

I've never been a businessperson, though, and finding the right market might be difficult. But when I was doing field work for Doctors Without Borders, I saw how badly the developing countries need better diagnostic services. A Canadian business exporting these kits could help them. I've already thought of a name - Clinotech Diagnostics and Pharmaceuticals.

One big requirement: I'd want to sell under the Clinotech brand, so I'd need a manufacturer who won't insist on putting its name on the kit. It may take some looking, but I'm prepared to hold out till I find the right company.

November 1997
Still thinking. As well as my overseas fieldwork, I've got another important advantage if I try exporting - my experience at the university hospital in Turkey. I had a lot of colleagues in the medical profession there, and I got to know some business people, too. They might help me find Turkish distributors for the diagnostic kits. That's a key factor, because the hospitals' purchasing directors all have relationships with the Turkish medical distributors, and they wouldn't want to deal directly with a foreign supplier. So Clinotech would have to work through distributors. But I'd have to make sure that the ones we pick have plenty of sub-distributors across the country.

It's not something I could do by phone, though. I'd have to go there, find reputable people, talk to them, see if there's a workable opportunity . . . I'm looking at a lot of travel expenses.

Early February 1998
Well, I've taken the plunge. Clinotech is a reality and is starting operations. My first market is in Turkey, a strategy that Senay agrees is the right one to follow.

I began by approaching some Turkish distributors and sending sample kits to them. They did some extensive evaluation with the hospitals, and then one of the distributors contacted me. He told me the hospitals had said the products were very good and that they wanted to try them, so now the distributor's interested in doing business with Clinotech. This means I can go ahead and order the kits from the Canadian manufacturer - with Clinotech's brand on them!

Also, I've decided that Clinotech will be self-financing - we won't work on a deferred-payment or open-account basis. In other words, we won't ship to a distributor until we've been paid for the shipment. That way we won't need bank loans to finance our kit production. I know that not offering credit will probably cost us some business and we won't grow as fast. But that doesn't matter. We're going to be very gradual, very systematic, very careful.

Another decision: we're not going to give exclusive distribution rights to any one distributor, not at this time anyway. That might change later, but just now I want to be free to contract with two or three companies if I need to.

Late February 1998
I'm already really busy and we've hardly started. It's becoming obvious that Clinotech is going to demand most of my time, so I'm taking the biggest step so far: I'm taking an unpaid leave of absence from the university. I have some misgivings, but it's the only way to stay on top of things.

April 1998
I'm winding up my first business trip to Turkey, and what a whirlwind! I've covered Ankara, Izmir and Istanbul since I got here, looking for distributors. Speaking to people on the phone is very different from actually visiting the target market. I've been meeting business people, giving seminars, talking with hospital colleagues and end users.

And checking out the competition, too. Pricing Clinotech's products is tricky because many of the products we're up against come from the Far East, and their prices are very competitive. So I've tried to make it clear to the distributors that I believe in Clinotech's services and products, and that they can too - that we'll provide the best kits at very cost-effective prices, and that they'll always have our after-sales support as well as our clinical and technical support. I tell them they can always reach us, and that we won't just dump the kits on them and walk away. It also helps that Canadian-manufactured medical supplies are high in quality and very reliable.

One other thing - I never talk about dominating the market. Some of the distributors I've spoken with think we should try to do that, but I know that we'd only overextend ourselves and end up with a bad reputation. There's a market for every product, I believe, and Clinotech can be happy to share part of the cake.

My approach seems to be working, too. I think I'll eventually be able to sign up two or three distributors here. I hope so, because this overseas travel is expensive.

August 1998
It's going very well, to my relief. Clinotech now has three distributors in Turkey: one in Ankara, one in Izmir and one in the biggest Turkish market, Istanbul. All have sub-distributors across the country, so our kits are spreading quickly into the state and private hospitals.

I've already been back twice, to give the distributors the after-market support they need. I'll probably go to Turkey at least three more times this year. I want to make sure we're solidly established.

November 1998
The last few months have been hectic. I've been to Turkey about every month and a half, training the distributors' sales staff in the specifics of Clinotech products and how to answer the questions the medical people will have. The after-market support has taken a lot of time, but it's really paying off because the distributors now know we're solidly behind them and that we'll support them when they're selling to the hospitals and the doctors. Just as important, it also lets the hospitals know that Clinotech stands behind the products they're purchasing.

I can't believe it's only a year since I decided to start Clinotech. Not only are we succeeding, we're self-financing. And in a few weeks, we'll be in 1999. I wonder what the new year will bring. . .

December 1998
We're shipping Clinotech products to distributors in Turkey! Not samples or evaluation kits, but actual exports! I was worried about product delivery earlier this year, but the solution was to have our distributors use their own Turkish freight forwarders, who have shipping associates in Vancouver. Between them, the forwarders and shippers handle everything from our loading dock onward. We don't have to get involved at all, which is exactly how I want it. I want to focus on the business and let the experts handle the logistics of shipping.

On the marketing side, I learned that some Turkish hospitals needed products my Canadian manufacturer doesn't make. I had to scramble around a bit but I found two US companies who can supply the products with the price and quality Clinotech demands. Now I have three suppliers, which gives me a margin of security if we run into any problems.

Everything looks good for 1999 - I've been looking at expanding into new markets for some time now. Jordan's my first target and my second is Iran because of the strong business links to other Middle Eastern markets. I'll have to find reliable distributors before I can go ahead, but fortunately I know people in both countries and can use them as contacts.

Early 1999
My approach to finding distributors is working well. I've used it in Jordan and Iran and am now using it in Greece, Cyprus, Bulgaria, Azerbaijan and Syria. I ask my contacts to identify the medical suppliers for the local hospitals, then use that information to get a company profile of the supplier. If the profile checks out, I send them a list of Clinotech's products and ask for a business plan showing how they'd handle distribution - who the competitors are, how they'd set prices, what volumes they'd need, etc. After that, I send sample kits for evaluation, get feedback and take it from there.

I owe a lot to my doctor friends in this part of the world. Without that network, building my business would be much more difficult, if not impossible.

Summer 1999
We've been making shipments to Jordan, Syria and Iran for a few months now. We're so busy that I can't be everywhere and do everything myself, so I'm looking for some local representatives. I need business people with a solid scientific background who are willing to work part-time.

One of their first jobs will be to find more distributors because I don't want to be tied to one distributor in any one market. They can confirm that the distributors have the resources they say they do and attend medical trade shows on Clinotech's behalf. I'll ask my network for recommendations.

Late 1999
I've hired some excellent local representatives in Jordan, Iran, Syria and Azerbaijan. I also went to the medical trade fair in Turkey to support my distributors. That worked well, because other international companies often leave it all up to their distributors. I think it's important to be there to represent Clinotech so that I can talk to the doctors, buying agents and to the market's opinion leaders. I made sure I answered all their technical questions, which was valuable to them and to me. In this part of the world where relationships are so important, being there in person is essential. It shows your distri-butors that they have your support and your customers that servicing them is of paramount importance to you.

On the logistics side, I've been lucky that I've had no trouble with permits and customs in any of the countries where I'm doing business. That's because I've made sure the distributors had health ministry approvals and the proper certificates for our goods before they placed their orders. It's this kind of attention to detail that pays off.

Early 2000
We're really busy. We now have representatives and distributors in Saudi Arabia and Kuwait. People obviously think well of Clinotech, because a few distributors we've never even worked with are trying to place orders with us. We've told them that they first need to do product evaluations to establish market acceptance before we'll let them distribute Clinotech kits. That's part of building the reputation I want for the company - consistent, reliable service, with excellent after-sales support and built on a solid scientific background.

We also got our web site up and running. We've kept it simple and added elements such as giving potential distributors a Customer Profile Information section where they can tell us about themselves. This will help us evaluate their status and also identify any weaknesses, so that we can work them out as we build our business relationship.

Spring 2000
I couldn't attend the International Medical Care Exhibition in Dubai in late January, but we had a Clinotech representative there. I'm sure we'll get some business out of it.

I'm still thinking about Clinotech's production side. I can see the day when I'll want to build my own factory and produce the kits in-house. Now that I know there's a broad market for Clinotech products, that's not such a far-fetched idea.

Summer 2000
We now have two Canadian staff members to deal with invoices, shipping, freight forwarders and other non-technical customer service. Senay is overseeing them to make sure things are coordinated. She's also dealing with our contract manufacturers to help them meet the rigorous technical specifications we insist on.

I'm still overseas a lot. In this business - or in any export business, I guess - you have to constantly be there. That's important, because there are new companies and suppliers appearing every year, and you have to make sure your distributors and customers know you're behind them. Otherwise, they could start talking to someone else. Even in Turkey, where we're well established, I keep reminding people about Clinotech - I keep the advertisements going, I make sure our distributors attend both the local trade shows and the international trade shows, and I always make sure they have the latest company information.

Fall 2000
Two years in business now, and Clinotech is still growing. I'm looking at even more markets, and the company's being approached by a lot of potential distributors. The upward trend is clear and I'm pretty convinced that manufacturing our own products will have to be part of Clinotech's future, especially now that sales volumes are starting to justify in-house production. That may not happen for a year or two, but it's certainly on the horizon!

Spring 2001
When the year started, I felt that our markets in Turkey and the Middle East were solid, especially since we'd picked up new distributors in Saudi Arabia and the United Arab Emirates. So I decided it was time to work on the other two markets I'd been thinking about - Africa and Latin America.

When I looked at Africa, though, I realized that the region lacked effective communication networks, and that I'd be wise to put the African markets on hold until cell phone and Internet services improved. So I went after Latin America, and it's worked out well. I contacted friends and colleagues to find distributors and the network came through for me again - Clinotech is now operating in Guatemala, Bolivia, Paraguay, Uruguay and Chile!

The only two places I didn't manage to crack were Mexico and Brazil. Mexican distributors are very close to their US suppliers and aren't in a hurry to find new ones, so I decided to bypass that market. In Brazil, the problem was the time we'd need to get our products approved - it would take six to 12 months for a distributor to complete product evaluations and set up distribution, so I put Brazil on hold as well. But the other Latin American markets have more than made up for it.

Summer 2001
We're still expanding in Latin America, adding Peru, Colombia and Venezuela to the places where Clinotech does business. Venezuela was an especially quick breakthrough - we got two distributors there almost immediately.

Participating in medical trade shows every year has been key because it always leads to more contacts. But the main reason we're doing so well, I'm sure, is because of our loyal distributors and the quality of our product.

I think we're ready for the next big step: setting up our own factory so that we can buy our basic raw materials, like antigens and purified monoclonal antibodies, and manufacture our own diagnostic kits from scratch. We now have the sales volume to justify this, and at this point I don't think we can afford not to do it. Already we've had to turn down some tenders because our contract manufacturers couldn't promise to fill the orders in time - not that it's their fault - they have their own distributors and programs to take care of, and priorities sometimes conflict.

Before we even think of opening a factory, I have to talk to the bank about financing the start-up costs. If the bank agrees to support us, I'll have to find a suitable building to lease. Then we need to buy production equipment and make sure there are reliable sources for our raw materials. The devil is in the details, as they say.

Fall 2001
I've put the factory financing in place through Mr. Rakesh Vig, our Relationship Manager at the BMO Bank of Montreal's main office in Richmond, B.C. He's arranged a line of credit through the bank, along with a loan under the government's Canada Small Business Financing Program. The loan is for equipment only, while the line of credit will help us get our manufacturing operations underway.

Now that the financing's set up, I've been able to look for a building to lease. We've found a good prospect, about 1,800 square metres of high-tech space. It also has good humidity control in the production area, which is essential. The kind of business lease I'm after usually runs for five years, but I'm going to ask for two years. I want us to stay flexible, since we're aiming to move into our own facility, perhaps in two years if everything works out.

I'm also hiring staff. I need managers of business development, quality control, production and marketing. Senay, my wife and partner, is taking a training program so she can coordinate production, quality control, staff training and business development.

Winter 2002
We started production in our new factory this January. I've been travelling less since then, so I can concentrate on production, quality assurance and all the other details that come from being a manufacturer.

Having our own factory is definitely paying off. We've got a lot more operational flexibility, we're independent and can be more committed to customer service. Before, we sometimes had to refuse orders because we couldn't guarantee the delivery date. But now we can run extra shifts and longer hours whenever we need to. It's improving our business opportunities.

Spring 2002
The transition to operating our own factory is pretty well complete. The companies who were supplying Clinotech before we went into production for ourselves helped by giving me all kinds of support and encouragement during the past few months. This made the transition a lot smoother than it might have been.

In fact, this has turned into another opportunity for Clinotech. Some of these manufacturers don't produce some of the items their customers need; Clinotech can now do it for them.

Summer 2002
Our in-house operations have progressed quickly since the beginning of the year. Most of our business development - looking for new market opportunities, trade shows and potential customers - is being handled by our business development team. The marketing department is dealing with the distributors in our established markets, including invoicing and shipping arrangements as well as customer service. I've now reached the point where I'm mainly overseeing our operations, coordinating production, keeping on top of quality control and supervising business development and marketing. It's all going smoothly.

Fall 2002
It's a good thing I'm energetic and like to keep things moving. Visiting my target markets is one of the things I enjoy most - it's business travel, naturally, but it's also a great pleasure to see different parts of the world and meet all kinds of people. So, in spite of the long hours, the travelling is a bit like a holiday, too.

And it pays off. We're expanding into the North Pacific Rim by our usual tactics: making ourselves available at medical trade shows, talking to potential distributors, working through my medical colleagues and using the Internet. So far, we've found distributors or possible distributors in Indonesia, Malaysia, Vietnam, the Philippines, Thailand and Singapore.

December 2002
We've been receiving a lot of orders and production is going at full speed. One major event: I went to Germany in November for MEDICA, the world's largest medical trade show. Being there was especially gratifying for me, because it was the first time we'd participated in the show as a full-fledged manufacturer.

Now I have to follow up on all the new leads from the show. Some of the European and US exhibitors at MEDICA have asked if we might be capable of doing contract work for them on some specific products we manufacture, which they don't have. That means lots of meetings to evaluate their capacities and to tell them about our technical specifications for those products, so I'm going to be very busy in that area as well.

When I look back, I can hardly believe what we've accomplished during the past two years. We have more than 30 distributors in 30 different countries, from the Middle East to Latin America. And we have our own factory. And there's lots more to come!

Early 2003
I'm happy to say the year is off to a good start. I've followed up on the leads we got at the MEDICA trade show in Germany last November, about doing contract manufacturing for medical supply companies in the United States and Europe. I zeroed in on the ones that are a good fit with our product line and that can provide us with the profit margins we need, and as a result we'll soon be manufacturing products for two US companies and an Italian firm.

Even better, we still have plenty of production capacity, enough to meet our contract manufacturing commitments and supply our current distributors as well. So I won't have to say no to new orders, just as long as we can meet the client's delivery and technical expectations. This also means I can keep looking for new distributors. We have more than 30 of them now, in 30 countries, but that's no reason to stop!

Spring 2003
I've been keeping busy, not just with looking for new markets, but also with our quality management team, our business development group and our marketing group. Senay, my wife and business partner, has been working directly with the production group and is also involved in quality control and assurance, along with overseeing the purchasing of raw materials.

Despite being busy, though, I've been keeping an eye on our older markets. I like to pay close attention to our distributors there, not just because they've been working with us for years and know our products, but because I can keep track of whether they're meeting our expectations. That's really important if we've given them an exclusive distributorship. If we find out they're not performing, and we can't resolve the problem, we can make them non-exclusive distributors and then find other distributors in that market.

We've also discovered that when we go into a new market, we're often asked for exclusivity. When we were starting up, I avoided agreeing to that kind of arrangement. But nowadays, if I can be satisfied that a distributor can do everything we need in a particular market, it can work well. But I always ask for at least a three-year business proposal based on minimum sales volumes. If that passes review, we can let the company act as our sole distributor in that market - as long as they meet expectations!

June 2003
Our lease on this building ends in December, and I've decided it's time we bought our own factory. I can't see us building a new place from the foundation up, so I'm going to find an existing one that we can adapt to our needs. Next step: start looking into costs and financing.

November 2003
Well, I've completed the purchase of our first factory building, and we'll be moving in at the beginning of 2004. Getting financing was no trouble at all - the BMO Bank of Montreal said that Clinotech's sales and growth justified buying a building, so we should go ahead, and we did. Better yet, the new place is twice as big as the old one, so we'll have plenty of expansion room.

Winter 2004
We're in our factory now and the production line is humming along. Now that the move's complete, I've had some time to look at a new market area: Africa. Communications have improved there during the past few years, which makes it a much better prospect than it was, so I'm working with my contacts to find some possible distributors. We'll see what happens.

I was talking a while ago to Rakesh Vig, our Relationship Manager at the BMO Bank of Montreal, about Clinotech's progress. He suggested we could offer more purchasing options to our distributors if we used the services of EDC - deferred payment options, for example. It's something I'll definitely have to look into when I can find the time. I'm even busier than usual at the moment.

Spring 2004
EDC in Ottawa recently sent me an information package, which has reminded me of the conversation I had last winter with Mr. Vig. I think Clinotech could use EDC's services, so I've completed the forms and sent them back. I've also asked if I could deal with the local Vancouver office, which would be more convenient from my point of view.

Summer 2004
I've now been in touch with the EDC Business Development Manager in the Vancouver office, Bryan Hughes. We had a long discussion and I'm convinced that EDC could be useful to Clinotech, especially its Pre-shipment Financing. If we qualify for it, we can let our distributors defer their payments until their shipments arrive, and that would make them very happy. They could also increase the size of their orders, which would obviously be good for Clinotech. It would work out well for everybody. I'm definitely going to pursue this.

November 2004
We're now working with EDC! We've set up our first pre-shipment financing arrangement, which is certain to bring us new customers, and I'm sure a lot of our clients will increase the size of their accounts as well. We also qualify for Accounts Receivable Insurance, and that will keep us out of trouble if one of our distributors gets into financial difficulties. All this means that Clinotech can grow even faster than I'd hoped. And that's important, because we've got distributors in Africa now and we're expanding into Southeast Asia, too.

Early 2005
Our new markets in Vietnam, Cambodia, Indonesia and Sri Lanka have been picking up very rapidly. As well as attending to those, I'm increasingly involved in refining our quality management system so we can get the updated versions of ISO 13485 and CE certification for In-Vitro Diagnostics (IVD) Medical Devices this year. That's keeping us all busy, including Senay, because the ISO standards affect everything we do - who we use to supply raw materials, how our production line works, how we market, even how we pack our products for shipping. But we're making excellent progress.

Summer 2005
I thought I'd take a moment and look back at what's happened since I first imagined having my own business. What a difference eight years makes - it was just an idea then, but now we have a real factory I can walk around in, and we have customers all over the world. I guess we've succeeded!

So where do we go now? The export market is so competitive that we can't simply rest on our current success. But there are lots of possibilities. Some of our major markets are moving toward local manufacturing, and we should be ready to arrange joint ventures or other kinds of co-operation with them. And we've reached a stage now where I believe we can approach organizations like the Canadian International Development Agency and the International Development Research Centre.

All in all, it's been an amazing eight years. Surprises along the way, some headaches, a lot of great moments, and a sense of real accomplishment. So I'm glad I took the plunge back in 1997. It was a risk, but we pulled it off, and I've never regretted it for a moment.

Here's to the future!

Diary of an Exporter originally appeared in ExportWise, published by Economic Development Canada.