“You will have a far greater impact by focusing on two to three potential markets or regions where your business is needed than by trying to cast a net over an entire country,” says Victor Notaro, a group manager of Global Treasury Management for The PNC Financial Services Group in Pittsburgh. And although countries with growing economies likes India and China may look like ideal targets, “oftentimes the most prudent first country for a small business to consider exporting to is Canada, thanks in part to the extensive bilateral trade between Canada and the U.S., and to the cultural and legal similarities,” he says.
Six Ways to Ease Exporting

Diana Ransom, Entrepreneur.com

“We call it the Check 21 lockbox, or the fully integrated lockbox,” said Victor Notaro, the senior vice president of PNC Bank’s strategic partners group and U.S. domestic correspondent banking. “This is very different from the traditional outsourced lockbox product.”

The Check Clearing for the 21st Century Act is widely viewed as a critical driver of imaging technology and the use of image exchange networks to clear and settle payments electronically.

Mr. Notaro said the outsourced product lets regional banks serve corporate customers that have a national reach without having to build their own lockbox networks. In effect, client banks are outsourcing the mundane tasks of opening envelopes and converting checks into images, while retaining the actual check processing business and its fee income.

The product lets banks “compete effectively, even more effectively, against those top five banks,” he said. “As the bank of first deposit, … [PNC’s client banks would] get all the additional revenue. More important, they capture and control all that customer data.”

The Pittsburgh banking company began planning the product in January 2004 and started a pilot test at its Chicago site with one client bank Oct. 28, the day Check 21 took effect, Mr. Notaro said. “We jumped right into it.”

That bank remains PNC’s only customer for this product. He would not name the bank, except to say it was a top 10, but not a top five, bank. Nor would he discuss the volume of business under the new arrangement.

PNC has discussed the image lockbox product with several top 15 banks, and “they have looked at this with immense interest,” Mr. Notaro said.

“It’s the large banks that do the most business” in corporate banking, he said. “They have very strong customer relationships. They have to have a seamless solution.”

The Tech Scene: PNC Recasts Lockbox Role Via Imaging

Steve Bills, American Banker

It may bruise the national ego that the Canadian loonie has pulled even with the U.S. dollar and the euro is trouncing the greenback, but there is a silver lining: America’s relatively cheap exports are booming and have played a critical role keeping the U.S. economy out of recession. In the second quarter of 2008, the nation’s GDP rose 1.9 percent thanks in large part to a 9.2-percent jump in exports.

In response, more and more small-business owners are looking to tap overseas markets. They realize exports are their biggest growth opportunity, and some banks are beginning to realize that opportunity includes them. “If they learn how to gain access to foreign markets, they’re basically getting in front of more customers and they’re going to be successful because they are very, very good [at what they do]; and if they keep growing, then we grow with them and we all benefit,” says Victor Notaro, an svp at Pittsburgh-based PNC Bank.

In September, PNC planned to conduct seminars in four cities-Cincinnati, Philadelphia, Pittsburgh and East Brunswick, NJ-on how small businesses can best break into the Indian, South Korean and Vietnamese markets. The conferences will be in conjunction with the U.S. Commercial Services department, which is the trade promotion arm of the International Trade Administration, and global-shipping provider FedEx.

This is the second year that PNC has conducted such seminars. Last year more than 1,000 companies and 1,400 participants participated in a seminar on trade with China. “As [PNC’s small business clients] grew and needed to do more things overseas, they didn’t automatically think of PNC as a place to do that,” says Notaro. “Sometimes you think of American banks as just being focused on the U.S. The reality was that we were able to meet all the international services needs of our corporate clients. So part of this was to educate them on all the things that we could do to meet all their goals and the second thing was that it was very good business for PNC.”

There are 50,000 small- and medium-sized exporters in PNC’s footprint, and 11,000 of those are clients of PNC, Notaro says. But even those non-client banks are proving a source of revenue. The $108-billion-asset bank offers its exporting products, services and solutions on a white label basis to other banks for their small business customers. Notaro says 40 banks use it services, 12 of which are major banks. “Many of the medium-sized and small banks in the United States that we do business with, our correspondent banks if you will, are really, really growing quickly with our global products,” he says.

Export Opportunities Beckon Smaller Firms

Anthony Malakian, American Banker

U.S. businesses already have an advantage, according to Victor Notaro, a senior vice president of PNC Bank of Pittsburgh.

“If they are operating in the U.S. they have already proved they can operate in the most competitive market,” Notaro said. “This is the ‘A’ game. If you can make it in the United States you can make it anywhere.”

Partnership seeks to shed light on foreign opportunities

Athena D. Merrit, Philadelphia Business Journal

A growing number of treasurers and CFOs are facing these challenges. In 1990, the value of goods and services exported and imported by U.S. companies equaled $552 billion and $630 billion, respectively, reports the U.S. Department of Commerce. Those numbers had risen to $1.175 trillion and $1.782 trillion by 2004. “It’s strategically critical for companies to access the global market,” says Victor Notaro, senior vice president and group manager for PNC global treasury management in Pittsburgh.

Structuring Global Banking Relationships

Karen M. Kroll , Business Finance Magazine

People & Awards: Executive Level

Pittsburgh Business Times

Starting Up: 'Made in the USA" Is Back in Style for Businesses

Diana Ransom, SmartMoney.com

PNC and U.S. Commercial Services will host an educational seminar in six PNC markets to help small and mid-size businesses learn how to tap into new markets in China and to manage the risks of international trade. The one-day seminar will feature experts from the U.S. Department of Commerce and the American Chamber of Commerce who currently live and work in China with the common goal of assisting U.S. companies to enter or expand in China.

Featured speakers include:
Barry Friedman
U.S. Department of Commerce
Minister Counselor for Commercial Affairs at the U.S. Embassy

James Zimmerman
American Chamber of Commerce
Chairman & Chief Representative

Other topics that will be addressed by a panel of industry experts include the state of China’s commercial landscape, most promising emerging markets, intellectual property protection, supply chain considerations, trade finance and hard learned lessons told by local businesses with China success stories to share.

Just last year, China purchased $55 billion worth of U.S. goods. And, U.S. exports to China are growing at double-digit rates. The Chinese government has set aside $1.2 trillion in foreign currency reserves for future purchases from foreign suppliers.

“While the ‘made in China’ label may be prevalent throughout the U.S., there is no reason why U.S. companies should not reciprocate by shipping ‘made in America’ goods to the Chinese consumers,” said Victor Notaro, senior vice president of global treasury management at PNC. “There are resources in every community to help businesses find customers for their products within China’s borders that will be highlighted in the seminars.”

The PNC China Smart seminars will be held:

  • Maryland/Greater D.C. September 18
  • Philadelphia, Penn. September 19
  • Pittsburgh, Penn. September 21
  • Edison, N.J. October 9
  • Louisville, Ky. October 10
  • Cincinnati, Ohio October 11

In addition, a nationwide webinar will be held on Sept. 20 from 10-11 AM EST for those unable to attend a seminar in person.

Online information and registration is available at PNC China Smart Seminars.

The PNC Financial Services Group, Inc., (http://www.pnc.com)] is one of the nation’s largest diversified financial services organizations providing consumer and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management; asset management and global fund services.


PNC Seminar Teaches Tricks of Trade With China

Press Release

With two-thirds of companies indicating that improving global trade management is among their three most important initiatives, (Aberdeen Group report: “The CFO’s Agenda for Global Trade”), middle market companies can no longer afford to have their business remain exclusively within U.S. borders.

Smart Business talked with Victor Notaro of PNC’s International Services Group to discuss the importance of doing business overseas, particularly some strategies for success in the global economy.

What should a company that is thinking about expanding internationally take into consideration?
Doing your homework and understanding the market is critical. Carefully think through your market entry strategy and plan for language, cultural and regulatory differences.

Regulations vary from country to country, including marking and labeling requirements. There are many different regulatory bodies with various levels of certification, depending on the industry type.

Also, you need to know who the local players are: competitors, distributors and customers. Knowing the nuances of how to do business with local players can make or break your business as you look to global markets.

In addition, understanding selling terms and documentation are critical to smooth transactions and ensuring you get paid.

What might be a typical strategy for market entry for a product or service?
Many companies first choose to work with a sales agent or distributor who provides local knowledge and guidance as the company tests the new market. If your product or service has a large demand, if you serve a specialized niche, or if buyers come directly to you (e.g., through trades shows), direct sales may be another option. A company may next look to set up a sales office or form a joint venture where an offshore firm can provide the local market expertise. A final phase of expanding internationally could involve building a plant or acquiring a local company once you are firmly established in that market.

What are some of the risks involved in doing business internationally?
Political instability increases financial risk. If governments are overthrown or violence breaks out, plan ahead to assure payment for your goods or services. Working with a financial institution that has relationships with offshore banks and using back-up documents such as letters of credit can mitigate payment risks.

Identify translation exposure and discuss hedging alternatives to reduce or eliminate foreign currency risk resulting from currency fluctuations. When currency values fluctuate, unrealized gains or losses may occur for the business. Likewise, if interest rates in one country change, an imbalance can occur in the currency markets. It is important for companies to work to hedge foreign exchange risk.

How can a middle market company protect itself and/or manage the risk of doing business internationally?
If cash payment in advance is not an option, one of the best tools available to reduce payment risk is a letter of credit where your bank works with the bank of the offshore company. The correspondent bank determines the customer is creditworthy, and your bank validates the correspondent bank. While this option covers the most risk, there is an associated cost.

As you build relationships with offshore buyers, a documentary collection is another vehicle used to ensure the title documents of the sale are secured until payment has been made or drafts have been accepted. It is less costly than a letter of credit.

Finally, you might establish an open account settlement with credit terms directly between you and your foreign buyer. It carries the most risk, and in true risk-reward fashion is the least expensive.

Again, companies should develop a hedging strategy to protect against currency exposure. It’s important to deal with a trusted financial adviser who understands currency fluctuations, economic risk, and how to ensure payment.

What other strategies can a company employ to improve its business globally?
Identify a trusted adviser who is a specialist in international services and who understands your business and the global markets you seek. A financial institution maintaining key relationships with foreign banks and alliances with important partners such as the U.S. Department of Commerce and Export-Import Bank will have the experience and expertise to help you navigate smoothly through international waters.

This was prepared for general information purposes only and is not intended as specific advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk. PNC is a registered trademark of The PNC Financial Services Group, Inc.

VICTOR NORTARO is senior vice president and group manager of PNC’s International Services Group. Reach him at (412) 768-3066.

Interested in learning more about global strategies? Join PNC for an informative Web seminar “Insights into Global Strategies” on Nov. 16 from 10 to 11 a.m. (EST). To register: http://livemeeting.viewcentral.com/reg/pncbank/1116061116sb or send an e-mail to advisoryseries@pnc.com.

Navigating international waters

Smart Business

Amid the economic gloom and doom of the past two years, a potential bright spot may have been overlooked. In spite of the impression that U.S. exports are not competitive, are shrinking or are hamstrung by protectionism, the U.S. remains a major player with enormous untapped potential.

Victor Notaro, the senior vice president of PNC Global Treasury Management, believes that the U.S. is doing very well as an exporter, but could be doing better.

“While we certainly import more than we export, we remain the third largest exporter of goods in the world,” says Notaro. “And when you add in services, the picture gets even better. In spite of this historic success, however, too many companies are reluctant to explore the international market, even though 95 percent of the world’s consumers are beyond our borders.”

Smart Business spoke with Notaro about what’s holding companies back and how winning companies have learned to grow internationally.

What proportion of U.S. companies export?

According to the U.S. Department of Commerce, only 1 percent of U.S. companies export. On the other hand, the U.S. has about 30 million companies, so even 1 percent of that total is a large number. That small percentage has been able to keep the U.S. in the top tier of all exporters worldwide. When you include high-value services such as professional and technical services, insurance and financial services, the U.S., at $1.5 trillion, tops every other country. And, contrary to popular impression, exports are growing. U.S. goods and services exports in the first two months of 2010 are up 14.8 percent, according to the U.S. Department of Commerce.

Why does such a small percentage of companies export?

First, U.S. companies have enjoyed such a rich home market that they have not needed to export in order to grow. Second is the risk you take on whenever you venture into the unknown. Companies may not be comfortable navigating within other cultures and they are concerned about managing risk, getting timely information, even getting paid.

Is protectionism a problem?

Certainly, we hear that undervalued currencies in China and other countries make U.S. exports more expensive. And foreign governments often provide low-interest loans and subsidies that put the U.S. at a disadvantage.

But there is so much room for growth and hunger for the innovative products and services that the U.S. creates that companies should not let these issues discourage them.

What is the profile of a typical exporter?

Companies of any size can enter the world market successfully. However, we see more of an export concentration by larger companies. So of total exports, 60 percent is accounted for by the top 500 U.S. companies.

Although large companies dominate, smaller companies — those with fewer than 500 workers — are getting into the game in increasing numbers. Our domestic market is very competitive, robust and innovative. If a company is doing well here, it has what it takes to outpace foreign competitors.

If a company is interested in exporting, how does it get started?

First, gather information on the markets you are considering. This doesn’t require a large investment. Trade shows, informal discussions with vendors and even competitors can help you understand how your products might compete abroad.

Second, get as many people as possible involved in the effort. It is particularly important that senior management and key people understand the foreign market.

Third, take advantage of agencies such as the U.S. Commercial Service, a bureau of the Commerce Department that has offices all over the world. Many states have a presence or commercial support in other countries, as well. Industry associations offer different levels of support, but many provide useful information such as changes in the regulatory environment in key countries.

Enlist the support of a financial firm that has a global advisory service that can provide intelligence and advice based on first hand experience. And if you are importing or sourcing abroad, leverage the relationships you have already developed. Many companies are moving from sourcing to selling successfully. Most important, talk to everyone you can — customers, suppliers, even competitors. By asking about their experience, you can pick up a lot of sector-specific information.

What kind of support should companies expect from their bank?

At the very least, you want a bank that understands the full range of financing and settlement options that are available — letters of credit, ExIm Bank facilities, cash management, treasury management for multiple currencies and cross-border transactions. Other important capabilities are foreign exchange and risk mitigation solutions.

On top of that, your bank should be able to provide guidance on local business customs and advice on the creditworthiness of potential trading partners.

Then, look for help in meeting general business challenges in emerging markets. Advisers who have first-person experience in a target country can provide invaluable support as you explore your options.

How to assess your export options to begin doing business overseas

Smart Business

Asia is a significant force in the global economy. In fact, the Export-Import Bank, the official credit agency of the U.S. government, designated India a “key market” for export financing in 2009. Unlike the United States, however, Asia is not homogenous. Each country has its own culture, business environment and trade regulations, and companies that want to penetrate Asian markets need to develop a unique distribution strategy in order to be successful.

Victor Notaro, a senior vice president and manager in PNC’s global treasury management group, sat down with Smart Business to talk about potential opportunities and barriers to doing business in the promising emerging markets of India, Vietnam and South Korea.

Why should U.S. companies consider tapping into the markets in India, Vietnam and South Korea?

Recent U.S. Trade Representative statistics show that 97 percent of all direct exporters are small businesses and approximately 65 percent have less than 20 employees. India, South Korea and Vietnam present tremendous opportunities for U.S.
companies, regardless of their size, because of a combination of rapidly expanding population growth and increasing gross domestic product.

India is the fastest-growing democracy, projected to be the third-largest economy in the world by 2050. Perhaps more importantly, it is a consumer-driven economy with 250 million to 300 million of its 1.2 billion people considered middle class. U.S. exports to India grew by 75 percent in 2007. South Korea is a trillion-dollar economy and an affluent, tech-savvy nation. The country’s GDP has grown from $100 per capita to $22,000 in just 40 years. Vietnam is following a pattern similar to China’s growth. Its GDP per capita is $956, which has doubled in the last six years. Governments in these countries have made a concerted effort to simplify business start-up to attract foreign entrepreneurs. Vietnam, for example, recently strengthened investor protections through a new enterprise law, and other countries have implemented border cooperation agreements, eased access to credit and simplified the construction permit process.

What are some of the risks to doing business in these markets?

Collecting full payment in a timely manner is the primary risk. Payment systems and sophistication levels vary greatly and checks are still the most common form of payment, which increases both bank fees and fraud risk. Moreover, there are not many regulations in place to standardize payments in the banking industry. Geopolitical factors like political instability and currency devaluation may also complicate trade, but this should not discourage companies from considering expansion in Asia. With the appropriate research and planning and sound legal and financial guidance, the rewards of entering these markets can outweigh the risks.

How can U.S. companies prepare to enter these markets for the first time?

Most middle-market companies do not have staff dedicated to exporting research, so they should try to work with a bank that has trade finance and capital markets expertise as well as experience in helping businesses expand in Asia. A bank that has a relationship with the U.S. Commercial Service — the U.S. government’s primary trade promotion agency — may be beneficial and can help you to:

Determine if there is demand for your goods or services in a target market. Gathering and analyzing information about the markets you are considering — current business climate, trends, demographics — may influence your decision to sell in a certain region. Find and vet potential business partners with matching services, such as The Gold Key, which identifies prospective trade partners in your industry and connects you with them.

Navigate the legal and cultural issues specific to each country.

Mitigate and manage your risks so that you get paid on a timely basis.

Asia Smart: How To Do Business in Emerging Asian Markets

Smart Business

Victor Notaro

senior vice president, commercial banking division at Fifth Third Bank Pittsburgh

Notaro focuses on corporate middle market businesses throughout western Pennsylvania.

People On the Move

Pittsburgh Business Times

So let’s get started with today’s topic. I’d like to introduce Victor Notaro, Senior Vice President, Global Treasury Management at PNC. Victor will be providing us with some background information on Latin America and introducing all of our speakers. So let me turn it over to Victor and he’ll take us from here. And, again, many thanks for joining us this afternoon. Victor?

“Many of you on the line today are very aware of how committed PNC is in helping our clients export and do business internationally. The reason for this is quite straightforward. It represents one of the best opportunities for U.S. companies to grow their business. It would also be easy to get a different impression, however, if people got their information from the media where this impression might be mostly negative.

We at PNC take a very different view.

The U.S. ranks first in total exports worldwide. What that means by total exports is merchandise plus services and the U.S. in 2009 did $1.5 trillion, followed by Germany at $1.3 trillion and China at $1.2 trillion. When you look at merchandise export leaders, which is the manufacturing side, China ranks first at $1.2 trillion, Germany at $1.16 trillion, and the U.S. at $1.046 trillion.

It appears the U.S. is still making quite a bit of stuff on the manufacturing side. Now that’s twice Japan’s at $0.5 trillion. Now, where is the opportunity? This is what is fascinating to me is that this is all done with less than 1% of all U.S. companies exporting.

We have a lot of U.S. companies, there are 30 million in total, but only 1% accounts for our number one position. And 58% of those exporters are only to one country. And so, why so few, so far? We think the reason has much more to do with pragmatism. The U.S. companies have enjoyed such a rich home market and we’ve been able to grow very well from that perspective.

The U.S.’s share of world GDP from 1969 to 2009 has steadily averaged between 26% and 28% of world GDP. So we’re fortunate from that perspective, but, on the other hand, we don’t have the impetus to grow internationally. Asia has certainly grown, growing in the same time period from 15% to 24%, but it hasn’t come at the expense of the U.S. position. It’s actually come at the expense of Europe. The EU 15 has declined from 37% to 26% during that same time period. Our exports now account for 12% of our total GDP.

So putting it in perspective, for every dollar an American earns, 12 cents comes from exports in some form or fashion. That compares with 40% for China and 33% for Germany. Now American companies will adapt and do well, as different parts of the world are growing rather rapidly and we want to take advantage of that. And part of that is sharing the intellectual capital that makes it possible for us to make that leap and get over the risk of the unknown. And that’s why PNC is so happy to have the partnership that we do with the U.S. Commercial Service, which allows us to learn more about these different opportunities.

Today we’ll explore opportunities in Brazil, Chile and Argentina. We have three terrific experts.

For Brazil we have Miguel Hernandez, who is part of the Foreign Service, currently the Regional Standards Officer for South America, based at the U.S. 2 Consulate in Sao Palo, Brazil. He specializes in helping U.S. firms resolve market access issues.

For Argentina we have Christopher Becker, who is a Commercial Officer with the U.S. Commercial Service assigned to the U.S. Embassy in Buenos Aires, Argentina. He has had extensive experience in international business, including working for John Deere Brazil as a business development manager.

And for Chile we have Matthew Hilgendorf, who is a Commercial Officer with the U.S. Commercial Service based in the U.S. Embassy in Santiago and he has a long history of providing export counseling and support to U.S. companies.

Let’s focus, first, on Brazil. Miguel, please take it from here. Miguel?”



PNC Presentation