Expanding Digital Trade and IP Protection are Crucial for U.S. Small Business Growth

 

Director, Digital & Editorial Content, Strategic Communications

 

The rise of digital trade, e-commerce and an increase in online sales versus traditional retail is benefiting not only large online marketplaces, but Main Street businesses as well. As online shopping grows in popularity, U.S. small businesses are finding unlimited growth potential in international markets.

Opening a small business in the U.S. today often starts not with a brick-and-mortar store, but with launching a website and advertising your product on social media. This digital direct-to-consumer selling model is breaking down the barriers between borders as businesses see demand for their products grow in other countries.

To discuss how digital trade has helped their businesses grow and to examine some of the challenges when it comes to exporting their products internationally, the U.S. Chamber of Commerce sat down with small business owners at Google’s D.C. office ahead of the “Digital Trade: Empowering U.S. Small Businesses to Export” event on Capitol Hill June 12.  

“[Starting a business] is impossible to do without the internet,” says Wei-Shin Lai, co-founder and CEO of SleepPhones, which are soft headphones designed to help customers sleep comfortably. “With a website, you’ve basically reached the entire world.”

Lai got the idea for SleepPhones when she was a practicing doctor. Patients often called her in the middle of the night, and she had trouble falling back asleep. She and her husband wanted to create comfortable headphones to help her fall back asleep. The idea led to an international business. In 2007, they began SleepPhones online. They now sell their product in 80 countries and employ 25 people.

Ryan McFarland, founder & CEO, Strider Sports International, Inc. based in South Dakota, has also seen success with the rise of digital trade and e-commerce.

“You either have digital tools, and you have a business, or you don’t,” he says. “I mean I wouldn’t have even started this business if it weren’t for the ability, through the internet, to reach beyond our rural location.”

McFarland, a bike and motorcycle enthusiast, created balance bikes for children after he found tricycles for his son were too big. He started his company in 2007 and expanded internationally in 2009. He has now sold 2 million bikes in 78 different countries and employs 48 people.

“Asia is our biggest market outside of the United States,” he says. “Japan in particular.”

For Betsy Mikesell and Angie White, co-founders of Beddy’s, one-piece bedding sets that zip-up, international demand for their product came organically through social media and online reviews.

“Outside the U.S., Canada is our biggest market,” White says. They started the company in 2014 and now sell to 32 countries with 12 employees.

Export challenges

But all business owners noted that international growth is not without its challenges.

Costs of shipping, customs requirements, and other countries’ regulations governing how U.S.-made products can be sold all can impede growth for small businesses.

However, one of the most concerning challenges for U.S. small business owners exporting products internationally is intellectual property protection in other countries. Filing for trademarks in other countries is complex and the cost of obtaining them can be unaffordable. Additionally, many trademarks are granted on a “first to file” basis, meaning others can file for a product trademark and essentially hold it hostage for a cost forcing the business to buy it back.

“If you don’t get intellectual property, at some point the competition is going to take your business away from you,” McFarland says. “But as a small business, the way the system currently works, you would go broke trying to secure IP globally.”

Future of digital trade

Congress and the Trump administration have taken steps to modernize trade laws and strengthen IP protection with the potential passage of USMCA, which the U.S. Chamber is hopeful to see pass this year. USMCA modernizes its predecessor NAFTA by creating best-in-class rules to foster U.S. growth in the digital economy for companies of all sizes. The agreement would also secure stronger protections for the full range of patents, copyrights, and trademarks to guard against counterfeiting and to ensure American innovation.

USMCA is a strong step in enabling our U.S. small businesses to flourish and innovate across the globe – strengthening the economy here at home and providing good jobs for American workers. While USMCA addresses digital trade challenges in North America, there is still work to be done in other parts of the world such as Europe and Asia.

“The thing about Americans in particular is that we are innovative. We are creative,” Lai says. “It stifles innovation if our brain trust isn’t protected by our government around the world.”