Top 10 tips for exporting to Europe
By Marina Donohoe
Europe covers 51 different countries – including five that cross into Asia – with over 740 million people and 12 of the top 25 richest countries globally. The European Union is the wealthiest consumer market in the world, and when you include Switzerland, Norway, Turkey and the CIS; the argument for exporting to our nearest neighbours gets even more compelling.
As one of Europe’s most developed economies with global leaders in Agri, health, construction and Cleantech; the potential for Irish exporters to exploit the opportunity to further penetrate this market is unquestionable.
1. EU & BEYOND: While Europe is too big and diverse to treat as a single market, it is possible to use one country as a base to target near neighbours. For instance, while the EU offers barrier-free access to 27 countries, the European Free Trade Association brings Iceland, Liechtenstein, Norway and Switzerland into the Single market.
Beyond the European Union, differing currencies, diplomatic relations and levels of economic development mean that exporters would be well advised to consider developing European export markets on a country-by-country basis. But it is worth bearing in mind that a presence in one country can act as a springboard to neighbours or countries with historic links. For instance, CRH opened its new business service centre in Hungary from which it manages its operations in Austria, Hungary and Slovakia
2. MARKET CHOICE & VALIDATION: Enterprise Ireland encourages clients to research individual markets in detail before deciding upon a market. But with so many countries to choose from offering widely different sectoral opportunities, consider market attractiveness in terms of headline economic figures such as GDP, growth projections, national and household debt, household income, demographics, etc. In parallel, explore the level of competition and the barriers to entry.
Research the political situation. Is the country stable, is there corruption, are there protected sectors? What is the situation for setting up an office and are there laws that require local partnering for foreign businesses? It is also important to research culture and tradition – from a broad perspective and from a business point of view. This will give you an idea of the receptiveness and viability of a market as well as suggesting how long it could take before you can start selling. It will also tell you whether you should – or are permitted – to sell directly or use a distributor or sales agent without setting up an office.
This is particularly important for less well-publicised countries such as those outside the EU, where there can be substantial variation. Enterprise Ireland have offices throughout Europe that can advise on the nuances of each market and help you validate, enter and grow in them.
3. FIT: Always consider how your company might make a particularly good fit in a particular business culture. For example, the Nordic markets are often early adopters of new technologies and comfortable partnering with early-stage companies and may therefore be suitable for a company at start-up stage.
4. COMMITMENT TO MARKET: A local presence is always advisable. While markets might be geographically close, scale cannot be achieved through regular visits. Establishing an in-country office with local staff or a strong partnership is advised. Your senior management team also need to be fully committed to your market and present as a much as possible.
5. LOCALISATION: Have a plan for marketing your product taking into account the need for localisation of marketing collateral, website, social media channels etc. Although English is widely spoken in Europe, having your marketing and communications in the language relevant to your market will help you reach the widest possible market.
6. SCALE FROM WITHIN: Take into account geographic size. Large countries like Russia are best approached by developing a regional market to begin with and then rolling out further as you become more established.
7. CROSS-BORDER APPROACH: Conversely, you may have the capacity to manage two new markets simultaneously. It is not uncommon for exporters to enter Benelux countries in whole or in part simultaneously – sometimes in conjunction with, or directed from, France or Germany.
8. FINANCIAL STRATEGY: Remember exchange rate affects your bottom line. The UK is not the only country susceptible to significant fluctuations in the value of their currency. Get advice on hedging, think hard about your pricing strategy and consider contractual arrangements with your in-market customers in which they share in any major adverse change to the euro value of your payment.
9. PATIENCE: When entering a new market, ensure you have budgeted to absorb the cost of establishing your presence, allowing for the length of time it could take to make a profit.. This can take some time, depending on the market. For example, Germany has slower decision-making times, while Switzerland, the Nordics or Benelux tend to conduct business more expeditiously.
10. EXPERT ADVICE: Get legal advice. Whether in the EU or otherwise, every country has different legislation governing employment, company registration, tax liability, transport, contracts (sales, rental, buyer agreements etc.) Levies and duties may apply for countries outside the EU which usually entails additional documentation.
Marina Donohoe is Enterprise Ireland Director for the UK and Northern Europe
This article was originally published in the Sunday Business Post: www.businesspost.ie/new-frontiers-top-ten-tips-for-exporting-to-our-nearest-neighbours/