This trend spells big business opportunities for savvy systems integrators. The key is learning how to effectively compete and operate on a global scene.
Quick: Name the world's hottest market for high-end AV technology. Then count how many places popped into your head before Dubai. Many AV pros in close touch with international markets cite Dubai as one of the world's true hot spots. The explosion of AV business in the Persian Gulf state also illustrates the paradox of doing business overseas for American companies: The business is out there — and it can be substantial — but cashing in on such opportunities is easier said than done.
“One of the hottest markets in the world today is Dubai,” says George Douglas, senior vice president of Columbia, MD-based AV systems integrator SPL Integrated Solutions. However, he adds, “Everything about the way you do business is different from here.”
Dubai, part of the United Arab Emirates, “actually has a 10- to 20-year buildout plan,” Douglas says, adding that 50 of the top U.S. corporations already have a presence in Dubai. In fact, the nation is in the midst of building a major theme park to go with a growing number of business parks and IT centers.
Michael Blackman, managing director of the exhibition Integrated Systems Europe (ISE), says hotels and residential applications top the list of hot niches in Dubai. High-end hotels, in particular, “want to be the biggest, best, and most modern — and they don't care what it costs,” Blackman says.
Chuck Wilson, executive director of the National Systems Contractors Association (NSCA), a Cedar Rapids, IA-based commercial electronic systems industry organization, also characterizes the Dubai area as a hot market for AV. “A lot of American companies are doing work there, but labor can be a problem,” he maintains.
For example, many U.S. firms with big jobs in Dubai have to bring people from home to direct these projects, says Wilson — and “that's a big cost and a hardship.”
Fairfax, VA-based professional AV and communications industry association InfoComm International, NSCA, and others aren't sure how many U.S. AV integrators and consultants are active in markets outside of North America. Yet with so much growth and investment going on in so many regions, the attractiveness of these markets is surely growing.
Randal A. Lemke, executive director of InfoComm International, says his association's research indicates that the North American AV market, worth about $19 billion annually, accounts for only about 40 percent of the global total, with Europe at 30 percent and Asia at 25 percent.
Lemke believes many overseas opportunities for U.S. companies arise from the activities of multinational corporate clients, who want all of their offices and systems to be consistent in equipment and operations. Leading integrators also report that overseas markets first open up as a result of strong relations with clients here at home.
Douglas says SPL does several major international projects each year. So far, they've almost all been driven by domestic business relationships. “The bulk of our projects overseas have been tied to our corporate customers,” he says. “It's a matter of keeping our customers happy.”
Jeff Singer, public relations manager of Rockleigh, NJ-based control and automation systems maker Crestron, says the picture looks similar from a manufacturer's viewpoint. “We find that AV is global, but not because dealers have an international presence,” he says. “It would be very rare that they do.”
Instead, he says, global AV product sales grow in response to demands of the business environment.
“When our dealers sell to a client in New York, they don't just want one boardroom controlled or automated, they want 1,000 boardrooms controlled and networked together so they have access to resources wherever they are globally,” Singer says.
Lemke points out another phenomenon. When a multinational company, working with its own systems integrator from “home,” opens or upgrades its facilities in a region, other, more local clients often want to match the multinational's resources.
Manufacturers, for instance, “may go in and serve the multinational client, and then around that grows a local business as well, with local companies imitating the multinationals,” Lemke says. “Now we're starting to see the development of local systems integrators and consultants.”
SPL doesn't have its own offices overseas yet, although Douglas says the company is looking into the possibility.
One company with locations around the world is Minneapolis-based AV systems integrator Electrosonic, which recently opened an office in Shanghai and has sites in London, Hong Kong, and elsewhere. The company's international project portfolio includes museums, universities, theme parks, control rooms, and high-end corporate installations.
Company CEO Robert Simpson says opening an office in any foreign market is a big jump. “There's quite a lot of up-front commitment,” he says. “You can't realistically do it without about a half dozen people, perhaps $1.5 million per location.”
Costs include rent, utilities, sales expenses, and salaries. “It's even more expensive if you use expats,” Simpson says, referring to “expatriots,” or home-office employees relocated overseas. “Then you have to house them as well as pay their salaries.”
Simpson admits the model Douglas cites, of using existing relationships and contracts to open overseas markets, is ideal. “But the ideal circumstance doesn't always come off,” he cautions.