Having established a solid presence in the United Kingdom, many New Zealand exporters see that Europe is an attractive and logical market to then move into. But given the considerable size of the market, going it alone can be a difficult proposition.
Gaining a foothold in Europe can be made much easier by leaning on the expertise, resources, networks and operating systems of a partner.
Partnerships can take many different forms, such as distributor contracts, mergers or acquisitions, but the model that usually works best in Europe for New Zealand companies is the joint venture.
The current state of the European economy is a common concern for business owners who wonder whether now is, in fact, a good time to approach this new market. Perhaps, instead, they should be holding back and waiting until things improve. The answer is that, regardless of how much the market has contracted, there are still significant opportunities to be had in Europe. What’s more, in a state of crisis, people are much more open to changing their suppliers and partnerships than when everything is going well.
My experience working with New Zealand companies is that Kiwis are very passionate people. They’re passionate about where they come from and what they have to offer. But the flipside of this passion is impatience. New Zealand exporters simply can’t wait to get their offering out to the world. As a result, any partnership model they set up has to happen tomorrow. But it means they don’t always take the time to fully express what their expectations are of a partner, which can lead to disappointment in the longer term.
Trust and equality are important elements in making a partnership work. Like any relationship, you need to manage expectations and ensure you spend enough time on your partnership model to prevent that trust being unexpectedly eroded.
Distributing through a partnership
The first question companies usually ask is: how should I start and set up my distribution model in the European market? It’s not an easy question to answer, and it depends a lot on the outcomes they want to achieve.
The matter is complicated by the fact that many New Zealand companies are used to, and insist on, controlling their own entities, managing every detail of the day-to-day business. They want a European entity where they have that same mechanism for controlling everything around the marketing and sales of their products. It’s clear that this model simply will not work because it’s very costly and very time consuming, and it’s just a step too far for many New Zealand companies.
So, while an exporter may ultimately want to establish their own distribution company as an entity in Europe, they still need to transition through the different stages to get to that point – in the vast majority of cases, it’s simply too costly to do it in one hit.
Partnership models are often a way to get into a market much faster, at a lot less cost, and achieving significantly more than just setting up a distributorship or starting on your own.
Obviously, partnering with companies in English-speaking countries or in countries where English is widely spoken is much easier for New Zealand businesses. Speaking your native tongue with potential customers facilitates business transactions; but it’s important to remember that those you’re looking to partner with may not be native English speakers, and they will consequently bear the burden of trying to do business in a foreign language.
Leveraging Brand NZ
Most New Zealanders completely underestimate the degree to which New Zealand is loved by the rest of the world. It’s one of the great advantages the country has. New Zealanders are perceived as honest, straight-up and easy people to deal with. New Zealand is a sustainable, green country that has everything a great nation needs. It’s a country that is not controversial in any part of the world; subsequently Kiwi businesses can go into Europe, Russia, America, anywhere, and the doors will be open for them.
Another great benefit for New Zealand exporters is the support they can receive from New Zealand Trade and Enterprise. There are a number of NZTE offices in Europe with the capability to help New Zealand companies as they embark on the path to build their joint venture. NZTE can help them find the right partners and contracts, and manage and nurture these relationships so that they will be profitable.
Erik Dijkstra is a European Beachheads Advisor for NZTE. He set up the distributorship for Gallagher Products in Europe, which has now grown into a multi-million Euro operation. He is also a consultant, shareholder and board member for several international start-ups.
NZTE is the Government’s international business development agency. Find more international insights at www.nzte.govt.nz/news and twitter.com/NZTEnews.