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Top executive explains Rich's world

Icing on the cake opens doors to succeeding in business globally

By Samantha Maziarz Christmann
News Business Reporter

 In 1988, William Gisel filled a freezer bag with Rich Products Co. cake icing and began knocking on the doors of Chinese bakeries looking for new customers. A little more than 20 years later, the company does business in 73 countries, with $600 million of its $2.8 billion in annual sales overseas.

Gisel, president and chief executive officer of Rich Products, credited that "shoe leather strategy" with much of the company's success Thursday in a speech to a full crowd as part of the World Trade Center Buffalo Niagara's 2009 Speaker Series.

"Our international business may have grown slower than some other companies', but our rate of success has been better," he said. "We've made money every year internationally. We have made money every year. And that comes from recognizing that it's their market, not ours."

Gisel stressed the importance of knowing markets from the ground level, saying he has seen many international venture partnerships turn into "one disaster after another" when people "show up, sign deals, shake hands and go home."

That key realization came early for Gisel. In the beginning of the company's international expansion, a Hong Kong baker held up a bowl of frosting, complaining about its poor quality.

Gisel thought he had solved the problem by pointing out that it needed to be whipped at medium — not high — speed. But the busy baker didn't have time to whip his icing more slowly. So Rich Products spent three years perfecting a better-quality product that could be whipped at high speeds.

"We had to design a product adapted to the way they wanted to use it," he said. "That was a key step in moving forward."

As the company forged ahead, it looked for locales that met two criteria — access and appeal. Did the region's infrastructure, rates and duties make doing business there reasonable? And could Rich Products offer something the region didn't already have?

A large part of the strategy focused on active exporting.

"Instead of waiting for business to come to us, we put a stake in the ground to show the market what we have to sell and aggressively sell it," he said. "It's not rocket science."

Also important was identifying and developing local, regional sourcing. Over the years, Rich's has gained entry into most of the world's markets, building 11 plants outside the United States and employing 2,600 associates.

Rich's international business has been growing at a rate of 12 percent annually. Gisel expects most of its growth will come from the Asian Pacific region, where the company currently has a Korean processing plant in the works.

Though Rich Products more than doubled its revenues under Gisel's watch, it was not without some difficulty. The company faced serious difficulties during the Chinese melamine milk scandal when bans were imposed on shipments from some Chinese plants it had used to supply such places as Taiwan and Vietnam. It faced corruption when trying to form partnerships in the former Soviet Union.

It also acquired a Mexican company only to watch the peso lose half its value soon there after. But Robert Rich Jr., now the company's chairman, reminded Gisel that they had invested in the Mexican company for good reasons.

"[At the time,] Americans were bailing out of Mexico left and right. We hung in there, and we've seen wonderful success," he said.

Thursday's event, held in the Albright-Knox Art Gallery, was sponsored by the World Trade Center Buffalo Niagara, HSBC Bank, and the University at Buffalo School of Management's HSBC Center for Global Business Leadership.

e-mail: schristmann@buffnews.com