Learning from Champions
Because of the risks involved, many smaller companies often shy away from entering the export business. There are strategies in place to make the leap across the border a success.
Gabriele Greiner knows how smaller companies that are entering a foreign market for the first time can start: “They should see how their competitors are doing. Learning from export champions – this strategy is the mantra of the Managing Director of the German Centre for Industry and Trade.
The subsidiary of Landesbank Baden-Württemberg helps German companies to enter local markets in Singapore, Beijing, Mexico and Moscow. In Singapore, for example, 150 companies and consultants together with the German Chamber of Commerce Abroad are tenants under one roof. “Thanks to the proximity, young and small companies benefit from renowned and large companies that have been in the country for some time,” explains Greiner.
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Trade fairs and congresses such as those organised by the German Center in Singapore for German companies in the field of medical technology also contribute to this. The foreign expert advises companies that want to venture abroad to talk to local competitors. In a foreign country, they can also talk more openly about problems. “You don’t have to repeat a mistake made by a “predecessor,” says Greiner. Another tip from her especially for Southeast Asian newcomers: “Don’t use difficult German company names like GmbH & Co. KG and product names that are too long”. This makes it unnecessarily difficult to make a name for oneself in Asian markets.
Globalisation is part of the DNA of the German economy. Over 50 percent of all companies between the North Sea and the Alps export their products and services. Business with foreign countries is the best component of the business model, especially for corporate groups and large medium-sized companies. Many smaller companies, on the other hand, often concentrate on their core products and the domestic market. At any rate, this picture emerges from a study of small and medium-sized enterprises prepared by Commerzbank at the beginning of this year and published a few weeks ago. The “current geopolitical turbulence” has made it difficult for companies to pursue export strategies in the medium and long term, Commerzbank says.
There are also opportunities for small companies to benefit from the international experience of the large companies. For example, through freelance managers who work as temporary managers. “Many of these experts and managers have years of corporate careers and several months of project jobs in large companies behind me,” explains Erdwig Holste, Managing Director of Management Angels. “When they are called into a medium-sized company, they have in their backpacks their knowledge of the tools, processes and contacts needed and the key figures to look at. And they can break down corporate know-how into the needs and opportunities of smaller companies.
Holste compares this with a picture of tankers and speedboats: “You bring the right engine and fuel with you on the small ship, but not the ballast. Management Angels is a founding partner of the WIL Group, a global provider association through which companies have access to a pool of 38,500 interim managers in 37 countries, “including many export experts,” reports Holste.
Interim managers usually have the ability to adapt services and products to new markets. The key word here is “downsizing”. The household appliance manufacturer Stiebel Eltron, whose exports account for around 50 percent of sales, has been practicing this for 30 years – even without external help. The Holzminden-based company’s strategy is to enter a new target market with its premium products, but to undermine them technically when a broader group of buyers becomes aware of the quality product “made in Germany”. “Proceeding top down strengthens the profile of the brand,” says Stiebel-Eltron Managing Director Kai Schiefelbein. “The subsequent adaptation to the respective needs and purchasing power in the region is then tailor-made work”. Stiebel Eltron is currently implementing this strategy in Australia, China and Thailand, where Lower Saxony now also manufactures locally. German know-how is supplemented by local managers. So far with success: Stiebel Eltron has become the market leader in Australia and Thailand.
Being present on platforms
Many Excellencies use the opportunities of the platform economy for their export business. The digital marketplaces in which disruptive changes are taking place offer largely untapped potential. However, according to a Bitkom survey, one in two companies with more than 20 employees has so far abandoned this path. Foreign expert Greiner encourages small and medium-sized companies in this respect. They should try to dock on the platforms of large companies. Digital cooperation is the be-all and end-all.
Nils Annen, Minister of State at the Federal Foreign Office, agrees: “Digitisation opens borders and horizons, isolation and nationalism are wrong ways. Automobile manufacturer BMW is setting the pace in the big picture. The Bavarians are open to cooperation with other original equipment manufacturers on topics such as electrification and autonomous driving. Together with the consulting company DXC Technology, BMW has created an IT platform. Lone fighters belong to the past according to conviction of DXC boss Dirk Schürmann: Instead of pulling against other enterprises into the competition, companies must open themselves and cooperate. In addition, export champions today almost acted like start-ups: “The way is the goal. The creative process often opens up new perspectives that have to be seen at all costs. What companies like BMW demonstrate can be taken over by medium-sized companies: “Bundling cross-company competencies makes it easier to survive in global competition”.
Jürgen Hoffmann, Hamburg