ON A MISSION
If you’re planning to win in overseas markets, tailor your approach to each country you’re targeting – and be prepared to sleep on a boat, writes Douglas Friedli.
It’s November in central Düsseldorf, and a group of Welsh executives are preparing to bed down on a fleet of boats bobbing on the Rhine. No, it’s not a stag trip, or an attempt to get to Euro 2016. The medical business types are here for the Medica show as part of a Welsh trade mission, and the boats provide their accommodation.
Winning international orders needs a bit of flexibility, whether it’s sleeping on the Rhine, using an agent or distributor, or getting your head around different cultures. For shows like Medica, you’ll also need to get your head around 17 vast halls at a convention venue so big it has its own internal bus service.
The experience is “knackering,” says Dominic Griffiths, managing director of Cardiff based Alesi Surgical, exhibiting at Medica at the Welsh Government stand. But the effort is worth it: “We’re here to talk to people we know, meet people, sniff out what’s going on, look at new technology and see manufacturers. You can have 20 to 30 meetings with existing and future business partners. To do that another way would take six months.”
Anthony Giles, managing director of Blackwood Embedded Solutions, is on his second visit to Medica. He set a target of gaining 20 sales leads; when Insider calls round he’s already beaten that. “It provides huge access to potential clients. It’s a fantastic way to network, even with UK and Welsh companies.”
Planning is essential if you’re to get the most out of shows like Medica, says Jarred Evans, commercial director of Cardiff Metropolitan University’s PDR product design and research centre. “It’s so big that you have to do all your work before you get here. You have to have an objective in mind.”
Düsseldorf, at the heart of the economically powerful Ruhr-Rhine region, is among the easier destinations to get to from Wales. Many of the Welsh contingent at Medica fl ew there direct from Cardiff. Others are aiming to win business further afield.
JoJo Maman Bébé, the maternity and children’s clothing retailer, sells products in Germany, supplied from its distribution centre in Newport. It shipped products to the US for three years before opening a distribution centre in New Jersey. Understanding the market is important to managing director Laura Tenison. She says: “I wouldn’t like to trust another to build the business entirely, although a local distributor or agents can work well. We prefer to work directly with Germany, but due to the US being so big, we have a team of local agents. However, direct sales have grown at a far faster rate.” Her company uses trade fairs to work with businesses, and online marketing to sell to consumers.
Exporters should see distributors “almost as employees of your business”, says Steve Young, director of coaching business Winning Pitch. “Make clear what’s expected of them. Some of them may have competing products to sell, other things to do.”
Markes International, based in Llantrisant, makes equipment that detects compounds, which it sells to more than 60 countries. The US has growth potential, and China accounts for 20 per cent of sales. “China contains a lot of specific challenges,” says finance and operations director Tim Hawkins. “Notwithstanding the language differences, the political and regulatory environment is developing rapidly.
Markes uses a mix of local presence, distributors, agents, manufacturers’ reps and selling from Wales, depending on the market. It started by selling smaller items directly, and building a trusted distribution network, before winning a big contract. Now it operates from hubs in Germany, the UK, east and west US. Investment in Asia is “a hot topic”. “With products like ours, that require high levels of expertise, the direct model, if implemented successfully, really pays off,” says Hawkins. “But for a smaller business it is not practical to chase a direct model in every location with growth opportunities.”
Selling comes down to relationships with the customers and end users, understanding their objectives and seeking to fulfi l them. “It helps to understand cultural differences or at least respect them, and be nice too,” he says.
When dealing with new customers, Markes uses letters of credit, or customers pay in advance to remove the risk of non-payment. “Once we develop a deeper relationship and a trading history we extend credit terms,” says Hawkins. “We have a monitoring service through our credit checking agency so, in theory, we try to get a heads up if a customer starts to decline in rating and we can amend payment or credit terms accordingly.” Hawkins reckons letters of credit are very important, especially when dealing with far away customers and “risky” areas, and suggests using trusted banks, rather than local banks, “which might be a risk in themselves.” The company also does business with government agencies, for which credit risk is less of a problem. Hawkins sees clear rules in distribution agreements as essential. “Make sure intellectual property is protected, warranty issues are covered, prices, commissions and payment terms are clear.”
JoJo Maman Bébé usually insures its business customer debts. Tenison says: “Sometimes we will trade without getting insurance, but will limit our liability. For smaller clients we tend to sell via our agents, who have an added incentive to get paid on time since their commission in only paid once funds have been received.”
The biggest task an exporter faces is integrating its export plans with its growth strategy, says Young at Winning Pitch, which advises businesses on exports through the Welsh Government’s Accelerated Growth Programme: “The export strategy has to be fully committed to, fully budgeted and fully resourced. A small business might choose to target a large market such as India or China. But look at the time that takes. Some countries are easier than others – it may be best to look fi rst at Ireland or the Netherlands.”
He advocates cutting out wasteful or speculative activities. He gives an example of a company that racked up huge bills by transporting machinery to overseas trade shows and taking people to dinner. “The idea is that the business doesn’t just export, but exports profi tably.” But he’s not advocating cutting out trips altogether: “Ultimately, you have to go out there and build the relationship. You can’t do it by email or by phone.”
Two mistakes made by companies on trade missions are not preparing meetings in advance, and failing to build on the contacts they made, says Young: “The six weeks before and after a trade mission are as important as the mission itself.”