The Exporters' Toolkit: Your Preliminary Analysis

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This article looks into the first steps you can readily take in formulating a strategy to target Francophone markets.

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The Exporters' Toolkit: Your Preliminary Analysis

  1. 1. SCA Conseils France| Your Partner for Export Tenders | © 2011 For Non-Commercial Use Only The Exporters Toolkit: Your Preliminary Analysis June 2010As highlighted in a recent article published in the Wall Street Journal Online(http://online.wsj.com/ad/france) , it would appear that France is faring better than itsEuropean peers in emerging from the recession. For most industries France has attractiveexport prospects, but before you take the leap there are a number of questions you shouldask yourself.It comes as little surprise that an increasing number of ambitious and successful firms arelooking to France to export their business. The clients we encounter tend to fall into twobroad categories; those that intend to set up an in-country base either by hiring one or twolocal representatives, or by tapping into a local distributor; and those that wish to transactdirectly from their country of origin. The former can require a large investment and up toa year to set up from start to finish; the latter is more cost efficient but can lead toinsensitivity to the local market, both in terms of the attractiveness of your proposals andin your reaction time when in project delivery.Experience would suggest that the right formula of either can be commercially viable,however the choice depends upon a variety of factors ranging from your home sector andindustry, to your capital structure through to your scope of operations. Having read thisarticle, I hope you will have a clearer idea firstly of whether the French export market isfor you, and secondly how you may go about instigating entry.At this stage I stress that the questions that follow in themselves may be obvious, but arejustified on two grounds. Firstly it is useful to have an exhaustive checklist. Secondly if thequestions are obvious, the answers may be harder to come by.Why are you targeting the French market?It is surprising how many companies I have come across that wish to target France as anexport market as part of an all-encompassing export strategy for Europe or further afield. SCA Conseils France is registered in the UK. All Rights Reserved. www.scaconseils.fr
  2. 2. SCA Conseils France| Your Partner for Export Tenders | © 2011 For Non-Commercial Use OnlyWhile this makes sense for a select few industries, for the majority of would-be exporters itis imperative to gauge the attractiveness of your operating market, principally in terms ofsize, growth, barriers to entry, and competition. Industry regulation is also a key trend towatch as France is beginning to emerge from an operating environment that hastraditionally been tightly regulated; we need look no further than the opportunitiesgenerated by the deregulation of energy and telecommunications markets, or for a morerecent example the legalisation of online betting in June 2010.Does your product exist in the same form in France and does it follow the same route to market?You need to understand whether the market for your product exists in the same form inFrance, and whether the routes to market are the same. Essential commodities such asclothing and apparel tend to be fairly standardised across the globe for example, whereasfast evolving industries such as software may experience a certain lag with regard todemand in export markets, and even if present may not be procured in the same way. Asimple example from the construction industry follows,A manufacturer of rooftop photovoltaic kits exists and is looking to export into France.The category of rooftop power generation is a large, growing market in France fuelled bystate subsidies and elevated feed-in tariffs.However the target buyer in France is a PV installer who – owing to their existingcommitments , procures panels, cables and inverters as individual items from individualsuppliers. The manufacturer could physically provide just panels, but it doesnt make anysense for them to do so since their operation is configured to supply all three items as a kit.At this stage we tend to reach an impasse and if the manufacturer hasnt thought thisquestion through beforehand, it could well waste money needlessly finding this out.Do you know who the target buyers are?Finding answers to the previous question will dovetail into this question. Target buyersmeans two things; firstly who are the major industry players? In high-end fashion wewould immediately think of Printemps or Galéries Lafayette and we could subsequentlyenquire after their market position. But we need also to understand the route by whichthey procure. Taking the software example once more, in a lot of cases the end-user will gothrough a prescribing intermediary rather than going direct to the software manufacturer.Does this mean that approaches are skewed towards the end-user IT department, or moretowards the prescribing entity? Fortunately we do not need an exact answer to this in thepreliminary stage and the name and tier position of target companies are sufficient at thisstage. SCA Conseils France is registered in the UK. All Rights Reserved. www.scaconseils.fr
  3. 3. SCA Conseils France| Your Partner for Export Tenders | © 2011 For Non-Commercial Use OnlyDo you know exactly why you have not received any enquiries to date?A lot of online businesses are necessarily open to enquiries from all over the world; Googlewill sort by country relevance however there are a sufficient number of international tradewebsites to warrant a minimum of traffic from overseas. With this in mind, you shouldlook to determine whether there are any metrics you can extract from your website forexample that indicate the number of hits or enquiries originating from overseas. If this isgreater than zero can this be used as a proxy for market potential as a percentage of totalhits on your website? If this is a big zero, you should examine your communicationsstrategy to understand why you are not getting the exposure you need.A recurring theme can be the lack of a webpage in French. Personal experience wouldsuggest that any stereotype regarding a lack of ability to speak and understand English byFrench natives is overdone. What can make a difference however is having a contactsection relevant to France, with a dedicated email address and if possible a Frenchtelephone number.Could the target buyer already be aware of your brand?In a number of industries, the buying dynamic is such that buyers as an industry grouprely on one another for remaining up to date on the principle players in the market.Computer virus protection is a good example where a lot of us would be able to namemost of the principle players in the market.If you do not think that your target buyer could be aware of your brand, then it is themoment to survey how your category of buyer goes about information gathering.LinkedIn Q&A and polls are great ways of examining questions like this. Once you havean idea of how your buyer accesses new information on industry developments, this mustbecome part of your communciation channels in anticipation of your market entry.Who are the incumbent players in the market?It pays to know who ones competition is in any market and to know each competitor well.One of the advantages of looking at the domestic competition in France is to gain someidea as to what buyers are looking for, and to what scope of product and service they areaccustomed. Credit reports are also a valuable source of information on your competitorsas to their financial strength and their profitabily over the past few years.It is important to acknowledge and respect your competitors but never to be discouragedby them. Once more from experience, there are few completely closed markets in Franceand always remember that the buyers elixir is competition. All too often a buyer may be SCA Conseils France is registered in the UK. All Rights Reserved. www.scaconseils.fr
  4. 4. SCA Conseils France| Your Partner for Export Tenders | © 2011 For Non-Commercial Use Onlydealing with a supplier base weary of tender consultations without contract award, whichas a result bears fewer and fewer offers with each tender. This is a classic example ofwhere an ambitious exporter could make a disruptive entry into the market.What would it take to convince the buyer to buy from you instead of their incumbent supplier?I must highlight at this stage that one of the roles in buying is risk minimisation. I choosemy words exactly as we are not mitigating risk, it is being minimised. This translates moreoften than not to a tendency to buy from the local supplier base rather than from the otherside of the world. Why? To eliminate the supply risk associated with transport, customsand lead time.This is not to say that no-one ever undertakes to import into France. What it does mean isthat there is a risk premium - psychological or real (depending on your track record!), tobe paid to the buyer if they are to buy from you. Essentially this will mean some form ofdiscount vis-à-vis the local competition, which in 99% of cases is accomplished by defaultas you are already more competitive than the local supplier base. To get to this stagehowever, it is essential that you give the impression of a seamless logistics operation to thepoint where, on paper, you are directly comparable to a local supplier save perhaps for thelead time.If you feel you have convincing answers after reading this article you should probably talkto us. Please click here to connect.SCA Conseils France is a tender consultancy specialised in the French market. We are here to provide timelyand astute advice from the moment you receive an enquiry relating to an export project in French-speakingmarkets. For more information on how we can help, please click here. SCA Conseils France is registered in the UK. All Rights Reserved. www.scaconseils.fr

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