Reprinted with permission from Accounting Today
The words Detroit and success are rarely mentioned in the same sentence these days. The Motor City has been hammered by the recession and the media has held a microscope to the city’s shrinking size and business reversals. But Clayton & McKervey has proven an impressive exception to the rule.
It was by chance that this 60 person CPA firm happened upon the international marketplace. But it is by design that it is on the way to becoming a serious international player.
How has Clayton & McKervey held its own despite economically depressed conditions in its home city? What is its formula for penetrating a global niche? I got focused (that’s a clue!) answers from Shareholder In-Charge of International Services Kevin McKervey.
Under a different name, Clayton & McKervey was founded in 1953 and offered traditional accounting services. In the 1980s one of the firm’s clients was sold to a French company. An astute partner saw in that transaction a possible entrée to a new world of international opportunity.
Around that time, the global auto industry was coming into its own and the firm’s Detroit location would prove to be especially strategic. Spurred on by this French connection, Clayton & McKervey began plotting a global growth strategy – nurturing channels of distribution, including economic developers, bankers and attorneys in order to attract an inbound client base. Eventually the firm added outbound as well, with the overall goal of specializing in entrepreneurs pursuing international business.
By focusing intently and uniquely on this niche, C&McK distinguished itself from other firms, a key factor in its success in the international marketplace.
Choosing a Market and a Marketer
With firmly established global aspirations, and increasing international skills and knowledge, the next step was to focus on other promising overseas markets. By the 1990s European and Japanese automakers had begun sourcing parts in Michigan. Japan was not a good fit because at that time the firm lacked language and cultural skills.
So the firm set its sights on Europe, where English is a common second language in business. As they were reaching out to German, French and British companies, firm leaders learned that Ford Motor Company was planning to source $2 billion in parts out of China.
“We concluded that domestic suppliers would need to expand their Chinese operations, and Chinese suppliers would be looking for U.S. connections,” recalls McKervey.
Focused on China, the firm assigned a shareholder to champion the team effort and found and hired a Chinese-born accounting professional, identified through the global networking organization PKF International. McKervey had become active in the group’s international committee and held leadership positions.
“Someone who knew the language and business protocols, and who had experience with the Chinese, was key,” said McKervey. “This individual is also a good communicator with a great sense of business development. Those skills have proven to be a valuable asset for us.” Along with the right leadership and specialized knowledge base, the firm added further depth to the China team by hiring other Chinese born staff. As a result the firm could move much more quickly to market, and has developed an impressive Chinese client base. McKervey says understanding how a particular country works on the granular level is like being on the right voltage – without it you lack the power to get the job done.
Another strategic direction the firm took was to get involved in trade mission trips sponsored by state and local governmental entities, and the Detroit Regional Chamber of Commerce. These trade missions, whose purpose is to win opportunities in foreign countries for local businesses, proved an excellent way for C&McK principals to reach Chinese entrepreneurs.
As well, the firm became an active supporter of Chinese interests beyond Detroit. This has enabled the firm to grow their Chinese niche nationally. Any company with interests in both the U.S. and China, regardless of where in the U.S. they are located, is a potential client. Channels of distribution reach beyond Detroit as well. The Chicago Chinese Consulate and The Bank of China in Manhattan are examples. Removing artificial geographic borders from their thinking (example: we only work with prospects in Detroit), has been a key strategic breakthrough.
Focused Growth Plan
Having forged a highly productive specialty in both inbound and outbound commerce with entrepreneurs doing business in China, Clayton & McKervey is poised to grab lucrative international market territory. Their approach has given them a jump on the market, and put them way ahead of most firms.
McKervey says the firm is pursuing a focused plan to double in size over the next five years while holding fast to its China-centric mission. As the firm expands, its leaders are in no rush to sell. But they acknowledge that a firm with a successful international focus will become an increasingly attractive acquisition target.
Like all global businesses, the firm is finding that virtual tools and capabilities greatly facilitate working across time zones and vast distances. “The existence of ‘the cloud’ means we don’t have to build brick and mortar offices in order to expand,” he explains. An individual can oversee development of a market from anywhere, hiring local and far-flung expertise as needed. And employees can access client data from Detroit or wherever they sit.
It’s a Small World After All
For Clayton & McKervey, a focused, global vision has been the ticket to success. McKervey advises other firms with overseas aspirations to go for it, first identifying the country or countries of interest, and the appropriate industries or other buyer groups. “The world is getting smaller and technology has made everything portable – personnel, clients and information,” he says.
McKervey’s advice is to read and learn all you can, then look for that first opportunity – like the French acquisition that launched C&McK. Be ready to run with it.
“Clients are increasingly going international,” McKervey concludes. “Whether they go with you or without you is the question.” As the interview came to a close, I could hardly contain my enthusiasm. As firms duke it out in the super-competitive and commoditized domestic market, international is wide-open virgin territory. I say, go where your competitors are not! C&McK gives us a peek into what the exciting future will look like for global-thinking CPA firms.