Why is exporting to Europe seen as a pinnacle of export success in Australia?
There are clearly several reasons starting with Australia’s European heritage, entry into a rich and prosperous market, sales at a higher profit margin than elsewhere and although not often discussed implied ‘’product acceptance’’ from a leading market. This underlines the export actions of many firms seeking credibility and market acceptance elsewhere.in the world.
Europe is not an easy market to enter and an even more difficult market in which to maintain one’s ‘long term’ presence. So why invest in trying to establish a market or route to market in the farthest market form Australia?
Simply put Europe provides many benefits to an exporter that it cant be ignored. Let’s look at the benefits of having a route to market in one of the worlds leading trading groups.
- A large market with a high average income level and expanding GDP
- High value competitive products with higher than average selling margins
- An excellent base form which to cover over 35 markets with 350m people
- An area where joint ventures are commonplace and can be established safely
- Government and Trade standards are known and recognised.
- Routes to market are clear and understood
- The accounting systems are relatively uniform and common
And finally, Product Acceptance and Recognition, means a long term presence and market position.
Brexit provides an opportunity rather than a difficulty for companies seeking the replace products currently supplied to the EU from the UK. Australian exporters should not underestimate the disruption that will occur when the UK leaves the EU.
Despite government assurances there will be a smooth transition, the UK Department of Trade and the Tax Office have been advising UK firms on a regular basis to appoint Import Agents and Export Agents to handle documentation and the payment of duties that must be introduced. It all adds up to an opportunity for Australian exporters.
What then hinders Australian companies from seeking new markets in the EU? Why are Australian companies reluctant to expand into one of the worlds richest markets?
There are many factors detailed in numerous surveys but the common themes are these:
- Language – Australian companies should recognise that English has become the language of business within the EU. English is the most commonly spoken language in the business world and often in daily life. Many major companies now insist on all internal AND external correspondence being written in English.
- Business Methods – ‘’A sale is a sale’’ in any language and if you offer a good product, good product support and a fair price sale will follow. The negotiation process may vary by length, intensity and by style but if the product serves a genuine sales need are possible.
- Cultural differences – Cultural differences do exist but deep misunderstandings in a sales situation are rare and as in all selling situations one has to persist. Australian companies often exhibit a ‘cultural cringe’ in the face of what they perceive as European sophistication or even arrogant disinterest. A steady and quiet approach during discussions will reaps rewards.
- Route to market- The European market is multi layered are often many more layered with multiple distributor levels and market restrictions on distributors and agents. Acceptance that things are not the same as in Australia or Asia or even North America is important.
- Competition – Australian firms must expect competition, recognize their market advantages and seek openings to gain market access. The EU is well served by suppliers but opportunities exist for the company willing to serve the market.
Europe is often the last market that Australian companies will look at entering, even if they have success in more regional export markets. The reasons are many but the opportunity to sell to a sophisticated and developed market remains alluring.
Planning an Export campaign in the EU requires:
- A clear AIM and then a costed plan
- Market knowledge obtained from ‘desk work’ before any market travel
- The development of an initial market listing of potential clients and potential competitors
- Exchange of correspondence with potential clients before any travel plans are agreed
- THEN travel and meeting. Export requires ‘face to face’ meeting just as in any sales relationship
- Quality literature and presentation. First impressions do matter and the business card and letterhead are important
- IMMEDIATE RESPONSE and Follow up. After any contact or exchange an immediate response attracts attention.
Failure to have an Export Market Plan is most often the reason for any failure to obtain distributors or licensees. Planning and ‘desk work’ essential to any success!
Isowall Consulting can assist companies with strategic and market planning to avoid the issues that will hinder their export expansion in Europe – and elsewhere.
Michael Young is Principal of Isowall Consulting, experts in global trade