O.C. Companies Look to European Market in 1990 : Trade: An Anaheim firm has done what others are now gearing up to do--get a foothold abroad for a share of a united Euromarket by 1993. Potential markets in the Eastern Bloc will be the icing.

By GREGORY CROUCH

Dec. 27, 1989 12 AM PT

TIMES STAFF WRITER

Dyna Five Corp. hardly seems like an international trend-setter.

The tiny Anaheim company has only about $4 million in sales annually and employs 25 people. The firm’s brochures of computer components aren’t exactly razzle-dazzle either.

Yet, local international trade experts point to Dyna Five as a front-runner in what is shaping up as a mad dash to enter the European business community before the end of 1992. The reason Dyna Five finds itself in vogue is a subsidiary in England it opened five years ago.

Europe will become a single marketplace by the start of 1993, thereby eliminating all of the rules and regulations that have prevented the free movement of people, goods and services throughout the 12 countries that make up the European Community. The changes are commonly referred to as EC 1992.

Dyna Five’s Peterborough division in the United Kingdom already has about 20 employees and does close to $2.4 million in sales.

“The idea for starting the plant was to take advantage of the European market as it was in 1985,” said Dyna Five President R.J. Thielen. “Of course, now with the EC pulling together in 1992 it’s even more advantageous.”

To say the least. The buzzword in business as we head into the 1990s is globalization and the key focus is likely to be Europe rather than the Pacific Rim, which was the hot spot in the 1980s. The reason is self-evident--the EC encompasses 323 million relatively affluent consumers, 30% more than the population of the United States.

The region’s combined gross domestic product was $4.5 trillion last year.

The sweeping changes in Eastern Europe and the potential new markets those countries represent are the icing.

“If companies aren’t operating in all three markets--Japan, the United States and Europe--then they will probably be owned by companies that are,” said John Graham, professor of international business at UCI. “I’m completely serious about that.”

Orange County companies already export more product to Europe than any other region in the world. The county’s Office of Protocol found in a 1987 survey of local businesses that 80% of respondents did business in Europe versus 77% in the Far East. Orange County last year exported roughly $4 billion worth of goods--everything from windsurfers to military plane parts--to the European Community, according to the World Trade Center Assn. of Orange County.

Doing business in Europe isn’t easy. For instance, a manufacturer of television sets must make 12 different models if it wants to penetrate every market because product requirements vary from country to country. Household electrical systems for instance differ between the nations.

And that’s not all. Exporters to the EC must deal with myriad tariffs and 12 currencies.

EC 1992 promises to do away with all of the complications, thereby ensuring a standardized marketplace.

No one stands to benefit more from the changes than companies that already have operations in EC countries. U.S. trade experts fear that EC 1992 will erect all kinds of barriers to limit the entry of non-European firms into the region, a phenomenon now tagged “Fortress Europe.”

“We find many customers there asking if this product is made in the EC,” said Thielen. “There is definitely a new attitude.”

So consultants are advising companies to get into the European market now, before it’s too late.

“Orange County management needs to understand the implications of Europe in 1992. There is a definite lack of sense of urgency,” said Henry Finn, an international trade consultant in Irvine. “American companies must position themselves now to be part of the unification of Europe or be left behind.”

Finn has a step-by-step program he advises small companies to follow if they are interested in doing business in EC 1992.

“You need a long-term commitment,” he said. “You cannot manage markets in Europe with remote control.”

The first thing any businessperson must do is market research to ensure that the product the person is selling is something Europeans would want to buy. If so, find a distributor and do some test marketing. Down the road, think about setting up a subsidiary.

“Companies are looking to establish an office or subsidiary there,” said Susan Lentz, executive director of the World Trade Center Assn. Santa Ana. “They want their goods stamped ‘made in Europe’ so that by 1992, they will be tagged as a European company rather than an American company.”

Everybody from conglomerates such as Fluor Corp. to companies the size of Dyna Five are looking to expand in the EC.

Newcomers are expected to flock to England or Ireland, traditional trading partners for the United States. But consultants suggest Orange County companies check into Spain, too.

“Wage rates are going to be lower in Spain than in the U.K. so the cost of doing business there will be lower,” Graham said. “And one edge many Southern California companies have is managers and employees who speak Spanish. It’s a real competitive advantage.”

Small companies interested in going international can seek help from a variety of sources, including the Department of Commerce--which is running a program called “Europe Now”--as well as the World Trade Center Assn.

If there is any doubt that EC 1992 is the wave of the future, look no farther than Japan. Fifteen percent of Japan’s foreign investments are going into European projects and numerous companies such as Hitachi, Toshiba and Fujitsu are studying plans to build plants there.

“The Japanese are investing in Europe, spending a lot of money building plants and establishing relationships making sure they are in the market by 1992,” Graham said. “The window has been open for a while and it’s shutting.”

ORANGE COUNTY’S EXPORTS TO EUROPE

LEADING EXPORT COMMODITIES:

1. Office machine parts

2. Aircraft and spacecraft parts

3. TV and radio parts

4. Integrated circuits

5. Measuring and control devices

6. Edible nuts and oils

Estimated exports to European Common Market countries from Orange County companies in 1988:

United Kingdom: $1.1 billion

W. Germany: $960 million

France: $600 million