Pacific InterTrade Expedites Exports : Trade: The Westlake Village firm helps American manufacturers sell everything from TV picture tubes to lawn trimmers abroad.

Robert Lees, president of Pacific InterTrade Corp. in Westlake Village, was on a plane flying to China recently, when he struck up a conversation with someone who hoped to sell packaged health food in China.

Lees told the businessman his trip was a waste of time. “The Chinese are not going to waste their precious money on this,” he said.

“We’re not going to sell raisins to China,” Lees said. China’s importing tastes run more to products that will help it build power plants, rail lines and telecommunications systems, he said.

Lees ought to know, because he has helped manufacturers sell refrigerator parts, electronic components and TV picture tubes to the Chinese. He has also helped identify and develop business opportunities in about 15 other countries.

Since founding Pacific InterTrade in 1986 with his partner, Maarten Fleurke, Lees has helped concerns like Corning Glass sell TV picture tubes in China, Goodyear Tire & Rubber sell tires in Ethiopia and the U.S. subsidiary of the Swedish company Electrolux sell lawn trimmers in Japan.

Lees and Fleurke have built Pacific InterTrade into a company with an expected $25 million in revenues this year, compared to about $1 million during its first year of operation. They say the company will post an operating profit (not including interest expenses) of about $2 million.

Their 17 employees, mostly foreign trade specialists, speak a total of 15 languages and have traveled to more than 100 countries. The Dutch-born Fleurke said he easily logs 200,000 miles in air travel each year.

Pacific InterTrade is something like a middleman, and for its expertise in identifying customers, wading through bureaucratic mazes and re-gearing products to suit foreign tastes, the company earns both flat fees and commissions of as much as 10% of gross sales.

The company also lines up foreign buyers for American goods, purchases the products with borrowed money and resells them at a markup. It doesn’t hold any inventory, however, since it arranges for the buyer to receive the shipment directly from the manufacturer or distributor.

There are about 1,500 to 2,000 companies in the United States that, like Pacific InterTrade, act as intermediaries in international trade, according to the Commerce Department. Although a few are owned by large banks or corporations, most are independent operations that specialize in one or two industries or countries and have fewer than six employees.

Demand for these intermediaries is growing, said Stanley Epstein, president of American Export Trading Co. in North Hollywood, because of increasing pressure on American companies to sell their products abroad. But foreign trade can be “complex to the point of being intimidating” for manufacturers, he said, so they often turn to specialists like Pacific InterTrade to help smooth the way.

Lees cites Pacific InterTrade’s cracking of the Japanese consumer products market for the Paramount division of WCI, the U.S. subsidiary of the Swedish concern Electrolux, as one of its success stories. Pacific InterTrade found that the Japanese were hungry for the kind of lawn trimmers and blowers that Paramount makes. It helped set up distribution, translated all the marketing materials and even convinced Paramount to shorten the handles by a few inches to make them a better fit for the smaller-statured Japanese.

“It’s a good market for American consumer goods,” said Pradeep Roy, Paramount’s director of international sales. Thanks to Pacific InterTrade, Roy said, the Japanese market now accounts for “a significant portion of our international sales.”

Just last year, however, Pacific InterTrade narrowly escaped disaster. It had focused almost exclusively on trade in China, which had thrown its doors wide open to foreign goods. But several months before the Tian An Men Square massacre last year, Lees noticed the doors beginning to close as the Chinese government began curbing imports to try to stall growing inflation.

Products like the TV tubes and other electronic components that Pacific InterTrade helped import to China, as well as machinery and parts used for refrigerators and videocassette recorders, suddenly were subject to a more lengthy and stringent permitting process. And in order to get the permits at all, importers had to prove the products would be used to make finished products that China could export.

Within a matter of months, Pacific InterTrade’s roughly $20 million in annual business in China was cut in half.

But Pacific InterTrade turned its sights on other countries, such as the Soviet Union, Japan, Poland and Brazil, to make up for the slowdown in China.

For example, Pacific InterTrade set up a deal with Poland in which it earned fees on the same goods coming and going out of the country. Corning Glass, which had shut down its Brazilian TV tube-making plant, and a small Ohio company, agreed to sell equipment and parts with the purchases backed by letters of credit from Poland’s central bank. Poland assembled the glass TV tubes, and Pacific InterTrade turned around and sold the tubes in several other countries, splitting the profits with the Polish government.

These “counter-trades” are increasingly common in international trade, because many countries don’t want to spend hard currency. But these deals can also be logistic nightmares.

For instance, Fleurke has been trying to sell American-made computer monitor parts to the Soviet Union. Because Soviet rubles aren’t convertible, and dollars are scarce, the plan calls for the Soviets to assemble the parts, then Pacific InterTrade will take the finished monitors and sell them in China--which has again begun to loosen its importing requirements--and split the profits with the Soviets. The deal has been ready to go for some time, Fleurke said, but he’s still waiting for approval from the three Soviet ministries that must give the go-ahead.

“You have to be patient . . . and have the right connections at the various levels in the foreign trade office or in a ministry, or things won’t move along,” Fleurke said.

But even knowing the right contacts doesn’t remove all the risk. Fleurke cited the example of a large U.S. concern that contracted to sell color television technology to a Lithuanian company, and obtained the necessary financial guarantees from the central bank in Moscow. But that was before Lithuania announced its independence from the Soviet Union.

Now the central bank says it will no longer guarantee the purchases made by the Lithuanian company. In a lucky twist for the Americans, the Soviets have decided to buy the technology anyway for a factory in the Russian republic.

Lees said reducing the risk of international trade also means being picky: Pacific InterTrade turns down nine out of 10 proposals.

“We’ve had requests from people who wanted to buy and sell to China full-sized, double-door GE refrigerators with lighted water dispensers and ice makers,” he said. It’s another example of misunderstanding the Chinese market, he said, because most Chinese citizens can’t afford deluxe refrigerators. “Those kind of things we don’t touch.”

Lees, 41, is a former Corning Glass international marketing executive who was recruited by Security Pacific after a federal law was passed in 1983 encouraging banks to set up international trading units. But like many other banks that had rushed into the business after the law was passed, Security Pacific never made any money on the venture and shut down the trading operations in 1986.

Lees blamed the losses partly on the emphasis on large projects such as geothermal plants, which take several years to build and produce a return on investment.

Nonetheless, he and Fleurke, 35, also a former Security Pacific trading executive, decided they could make the concept work and, with about $50,000 of their own money, took over the business and started Pacific InterTrade. A third partner, Los Angeles attorney Tim C. Bruinsma, maintains his law practice and works part time with Pacific InterTrade. The company still has close ties to Security Pacific, which oftens provides referrals.

Although Pacific InterTrade is managing to grow at a steady clip, Lees admitted that the company still lacks enough cash to buy equity stakes in some of the ventures Pacific InterTrade helps set up, hire experts in real estate and other specialties, form alliances with fund companies that invest in foreign countries and help finance small businesses’ foreign ventures.

To expand in those areas, Lees said, Pacific InterTrade will probably have to take in a deep-pocketed partner, such as a bank, financial services company, or venture capital firm. But Lees said he’s in no hurry and would take his time making the right deal. “We’d look real hard and long at any potential partner,” he said.