// global opportunities // european success // business insight // trade tactics //
ISSUE 01 / SPRING 2014
Traderadar
European edition
COUNTRY GUIDES:
Top tips for key
global markets
TRADE RADAR AUDIT:
International business
challenges answered
CASE STUDIES:
European businesses
expand overseas
foreword
global ambitions
Welcome to this first European edition of Trade Radar,
where we share knowledge on key markets, hear from
companies operating overseas, and provide insight into the
technicalities of international business.
W
ith the Eurozone continuing to
present a challenging trading
environment the real
opportunities for growth are increasingly
lying further afield.
In his overview of the latest HSBC
Trade Forecast, Steve Box, HSBC’s Head
of Global Trade and Receivables Finance,
Europe highlights the significant
infrastructure needs of developing
markets and the likely rapid expansion of
trade corridors between Europe and the
emerging economies.
One company benefiting from growing
consumer demand in China is Turkey’s
Efe Dış Ticaret, an exporter of marble and
travertine. We hear from Ali Hesapcıoğlu
on how trading in RMB is helping the
company expand its business in China.
Also in this issue, Jean-Sébastien
Cruz, founder of French mobile solutions
provider Netco, explains how the
decision to expand beyond the domestic
market three years has driven strong
growth.
Armenian stone exporter Manana
Grain has been building its business with
customers throughout Europe and is
now turning its attention to China where
demand for its products is potentially
very high.
While the strongest opportunities for
growth often lie overseas so can the
biggest challenges. By answering
questions posed by companies trading
overseas in this and future editions, we
aim to tackle issues such as taking your
brand into new markets and protecting
your valuable intellectual property.
We’re keen to talk to you about your
international business ambitions. Please
enjoy reading this issue and do let us
know how we can better support your
business. previous page
Next page
overview
High-tech
challenge
for
European
exporters
Growth may be recovering close to home,
but emerging markets still hold the greatest
long-term potential for European exporters,
according to HSBC’s Trade Forecast.
Steve Box,
Head of Global Trade
and Receivables Finance,
Europe, HSBC
back to start
F
or many European businesses the
most important export markets are
still near at hand. 80% of Polish
exports and 60% of French exports go to
other countries in Europe. With the
Eurozone expected to grow 0.8% in 2014
after several years of weak performance,
European exporters have grown more
confident about their prospects over the
past six months.
Despite the difficult market conditions
in early 2014, economies in Asia, Latin
America and the Middle East are still
expected to account for the majority of
global trade growth in the years to 2030.
This represents a significant opportunity.
European exporters who can provide
the industrial machinery needed to build
new cities and industries and the
consumer goods demanded by a rapidly
expanding middle class stand to benefit.
Our analysis suggests that trade corridors
between Europe and emerging nations
will expand rapidly. By 2030, we forecast
that China will have become the second
most important export market for French
manufacturers.
While access to new markets
represents an opportunity for European
businesses, the rapid advance of
emerging economies also poses a
challenge. Many European exporters >>
previous page
Next page
‘‘
overview (continued)
For China this
shift is well
under way. It
has drawn level with
Germany, which ranks
third globally in the
number of international
patent applications it
files each year.”
China now invests
the equivalent of
1.8%
of its GDP in research
>> derive competitive advantage from the
sophistication of their products, drawing
on advanced scientific and technical skills.
Emerging economies are keen to catch
up. Countries such as China and Malaysia
are boosting their investment in research
and development. China now invests the
equivalent of 1.8% of its GDP in research,
a near doubling of its expenditure 20
years ago. Translating investment into
back to start
innovative goods and services will enable
emerging economies to develop highervalue and more sophisticated goods.
For China this shift is well under way.
It has drawn level with Germany, which
ranks third globally in the number of
international patent applications it files
each year.
In many European countries
investment in research has stagnated.
Europe’s share of world patent
applications has almost halved in the past
decade . Increasing it will be important to
enable European businesses to compete
for high-quality jobs and growth. Some
countries also face specific policy
challenges. In France, public sector
investment is strong, but private sector
investment is relatively weak. The UK has
world-class universities, but a relatively
low level of patent applications suggests
it would benefit from strengthening the
relationship between academic
institutions and businesses.
With the growth in trade of hightechnology goods likely to outpace
growth in overall trade, getting the right
policies could be an important factor in
determining export prospects.
The European recovery is welcome
news for international businesses, but in
the long term it pays to remain alert to
new opportunities and new competition
from emerging economies. previous page
Next page
case study: Efe Dış Ticaret
Top of the list for many companies wavering on the brink of
trading overseas is the fear of not getting paid . Even if getting
the money is assured, deferred payment methods can leave a
hole in a company’s finances. Ali Hesapcıoğlu, of Turkish stone
exporter Efe Dış Ticaret, has found a solution.
Renminbi service E
sets stone
exporter apart
fe Dış Ticaret was set up in 2011 to
export marble and travertine to
China. These materials are among a
very few products that China imports
from Turkey, so it was a natural choice.
“One of the main challenges we face
is that the exports to China in our
sector are made through
deferred payment methods,”
says Ali Hesapcıoğlu. “There’s
high, and growing, demand
for our products and we need
working capital to develop our
business. Transactions are
realised by deferred payment
letters of credit with a 90-day
payment period.”
In the gap between shipping
and payment, the company
has set up financial solutions
to support cashflow and set
themselves apart from
competitors by offering Chinese
back to start
customers transactions in their own
currency.
“HSBC’s global network, vast
experience in international trade and
ability and flexibility to discount export
letter of credits by the group’s extensive
bank network in Asia help us to
increase our working capital and
speed up our export sales,”
says Hesapcıoğlu.
And speed is what they
need given a constant demand
from the Chinese market and a
flood of new clients every year.
As tight import regulations for
marble and natural stones in India
and Bangladesh begin to relax,
the company also foresees
new demands and clients
from these countries too.
Within three years, they
expect to double their export
volume.
>>
previous page
Next page
Traderadar
While exporting brings strong
growth opportunities, it can also
pose some unique challenges.
Industry experts tackle some
issues faced by companies
engaged in international business.
case study:
Efe Dış Ticaret (continued)
>>
Audit
In February, Efe Dış Ticaret
completed their first letter of credit
transaction in renminbi (RMB).
“We believe we’ll realise more
transactions, such as open account
payments and letters of credit, for the
forthcoming periods,” says
Hesapcıoğlu. “When we informed our
customers about RMB transactions
with HSBC, they reacted positively.
Before, the letters of credit were in
USD, but all their local costs, including
wages and taxes, were in RMB, so
they had an extra arbitrage cost.
“We didn’t know about the
opportunities for RMB transactions
until HSBC informed us, and now
we’ve passed on the good news to all
our Chinese customers at the Xiamen
Stone Fair.
“We believe that offering a new
and differentiated service to our
customers is a really positive step
towards expanding our business even
further.” How do you strike the right
balance between local and
central decision-making when
it comes to brand?
‘‘
We didn’t know
about the
opportunities
for RMB transactions
until HSBC informed
us, and now we’ve
passed on the good
news to all our
Chinese customers at
the Xiamen Stone Fair.”
Decide what’s up for negotiation
Taking your brand overseas requires
local adaptation but the phrase ‘things
are different in my market’ is over-used.
There are significant differences from
country to country and you will have to
make concessions but that should be
an adaptation of the business not the
brand. While you need to trust your
partner to advise you on what might or
might not work in the market
remember that he/she is only the
custodian of the brand and does not
own it. This clear demarcation between
brand and business is important
because you need to be driving the
brand and your partner taking care of
the business in the market. Tony Keen of brand strategy consultancy
AMK Solutions answering Paul Lindley’s
question on how much his firm Ella’s
Kitchen should allow its brand to be
modified in new territories.
Ali Hesapcıoğlu
back to start
previous page
Next page
case study: netco
Netco Sports
scores goal
forglobal growth
Having an innovative product and working 15 hours
a day are no guarantee of global growth. That,
says Netco founder Jean-Sébastien Cruz, comes
from knowing your overseas market inside-out and
making sure that what you offer fits perfectly.
F
rance-Netco Sports is a state-of-theart mobile solutions provider for the
world of sport with more than
1,200 applications. The company works
with more than 80 clients in France, and
has a growing international presence in
Argentina, Germany, Saudi Arabia, the
UAE, England and the US.
The company is known for its
expertise in ‘second screen’ technology,
creating landmark solutions, including
UEFA as part of Euro 2012, the Canal+
football and rugby apps, and the FIFA
World Cup 2014 app for broadcasters.
Netco’s smartphone sports
community, TheFanClub, brings together
back to start
more than half a million fans in a social
media network tailored to their favourite
sports or clubs. Their Game Connect app
lets fans in the stadium interact live
while the action is happening on the
pitch.
The decision to move beyond France
was taken three years ago, when Netco
saw opportunities to grow in
international markets. Their experience
with French brands, leagues and clubs
gave them the confidence to bring smart
solutions to the US cycling team,
Brazilian and Saudi Arabian mobile
operators, British TV and football clubs
around the world.
>>
Jean-Sébastien Cruz
previous page
Next page
case study: netco (continued)
>>
‘‘
Hard work and mobile knowhow
are key but not enough, We open
our doors to international talent
to ensure we have an international
flavour within the company.”
back to start
They forge local partnerships or hire
local people when working overseas. In
Brazil, for example, they hired a half
Brazilian half French citizen to help them
understand the market.
“We’ve specialized in sports and
mobile apps since 2009 and have deep
experience in these fields as well as
highly skilled people,” says JeanSébastien. “This is quite unique in this
industry and it’s the reason we’ve been
able to work with so many prestigious
clients around the world.”
The challenges for Netco have been
very practical ones – negotiating around
a six to nine hour time difference and
getting to grips with a wide range of
cultures.
“Hard work and mobile knowhow are
key but not enough,” says JeanSébastien. “We open our doors to
international talent to ensure we have an
international flavour within the company.”
Netco is hoping to expand further and
is in advanced discussions with new
clients in Singapore, Australia, Mexico
and Egypt.
“We tend to have an opportunistic
approach and finalise agreements with
sports-oriented clients wherever they are,
but we are specifically targeting Asia and
North America,” he adds. “We’re looking
forward to opening an office in the US
this year and potentially Asia in 2015.
“Whatever your products, however
good you know they are, the key is to
get to know perfectly the market you are
targeting,” advises Jean-Sébastien.
“Fine-tune your products to make sure
you bring significant added value to
every new market.” previous page
Next page
case study: manana
New markets
for stone that built the Coliseum
Quality counts when you want to win the trust of international
customers. Armenian stone exporter Manana Grain collaborates
across borders to prepare their production for growing demand.
O
Gurgen
Nikoghosyan
back to start
riginally set up in 1997 as a grain
milling company, Manana
diversified into natural stone
processing ten years later.
Today, the company’s factory deals in
travertine, basalt, tuff and granite
products, ranging from tiles to large
slabs. The firm’s strength lies in the
quality of processing – creating
specialised finishes for construction
clients, and for wholesale workshops.
The construction market in Armenia is
comparatively small and saturated, so
the factory was designed with exports in
mind.
“We knew there was a ready market
because Armenia is very rich in
travertines – one of very few regions in
the world – and these, as well as other
natural stones, are highly sought after
worldwide,” says Director Gurgen
Nikoghosyan.
“You could say that travertine has
been a brand since the ancient Romans.
We’re taking full advantage of the
stone’s history and quality.”
Manana trades with other countries in
the Commonwealth of Independent
States (CIS, where customs privileges
mean importers only have VAT to pay,
and also with several countries in the
Middle East and the Americas).
Europe is also a developing market for
the company. Here, Manana has been
quick to recognise the trend for grey
stone.
“We’ve noticed great interest in
Europe for tuff, an exotic stone used for
making decorative tables as well as
building fascia,” says Gurgen
Nikoghosyan. “Europe is starting to
appreciate the quality of Armenian
travertine, and we’ve now organised
stock of our materials through a Spanish
>>
partner.”
previous page
Next page
Traderadar
case study: manana (continued)
‘‘
We use
international
exhibitions to
build the company
brand, And we have been
very active in setting
up a network of dealers
and representatives
in key markets.”
back to start
>> Gurgen Nikoghosyan. believes the
wide market and the company’s high
quality production and customer-centric
approach give them a competitive edge.
Their biggest challenge has been
handling such a rapidly growing demand.
Manana invited consultants and
specialists from Italy to share their
knowledge and extraction and
processing techniques so that the
company could increase productivity
within as short a time as possible.
Managers from the factory also visited
stone producers in Spain, China and
Italy to see processes in action.
“We use international exhibitions to
build the company brand,” adds
Nikoghosyan. “And we have been very
active in setting up a network of
dealers and representatives in key
markets.”
China is next on the radar for
Manana’s expansion strategy because
demand for raw blocks and slabs is
high and the volumes required
significant.
“To achieve the target, the factory
needed to prepare a large stock of the
material in raw block to be able to
guarantee a constant supply to the
buyers. Enlarging the quarrying area
was the first step, now we’re at the
second: accumulating stock.”
Gurgen Nikoghosyan’s advice for any
company is to study the competition
and the potential market niches very
carefully.
“A sound marketing strategy is vital
too, but you also need to remember all
the day-to-day operational details, not
least the practices and standards for
export packing, International
Commercial Terms (Incoterms) and risk
coverage.” Audit
While exporting brings strong
growth opportunities, it can also
pose some unique challenges.
Industry experts tackle some
issues faced by companies
engaged in international business.
How do we fight fakes?
Prevention is better than cure
The most important
thing to address is
that IP protection
needs to begin
long before you
consider trading
overseas.
Companies often
don’t know or
understand the true
value of their IP assets until it is too
late. Relying on the courts or legal
systems can be costly, time consuming
and frustrating wherever you operate.
Know the value of your assets, how
best to protect them and where to find
advice and support should things still
go wrong. Neil Feinson, International Policy Director
at the Intellectual Property Office answering
Mark Cobham’s question on fighting the
fake products that rip-off of the intellectual
property of his firm, outdoor specialist
Lifemarque
previous page
Next page
hong kong
country guides top tips
F
rom Asia to Latin America, there
are both emerging and established
markets that offer excellent
opportunities for European businesses.
In this series, the Heads of Global
Trade & Receivables Finance in key
international markets provide some top
tips for doing business in their country.
Brazil
china
Desmond Wee
• Working with local partners
Brazilians are open, flexible and friendly. Face-toface meetings are always preferred to email.
• Understand the economic environment
Brazilian importers have to work with high costs
of importation. Taxes on imports can vary from
30% to 120% so you will need to understand
your importers´ total import costs to determine
your price point.
• The right product for the right market
Brazil is a big country; you can actually market
winter-related products to the South of Brazil. In
addition, states such as São Paulo (33%), Rio de
Janeiro (11%) and Minas Gerais (9 %) are
responsible for more than 50% of Brazilian GDP.
• The right financial conditions
Offering generous credit terms will gain you
competitive advantage. The local cost of
financing is generally high and can range from
15%-20%. Savings for the importers in financing
costs can translate into a sale for you.
back to start
Bruce Alter
• Know the regulations
Despite the recent easing and simplification of
regulations, China is a highly regulated country.
Visit the related regulatory bodies’ external
websites for the latest updates.
• Follow the 5-year plan
China’s five-year plan sets the nation’s course for
the next five years and identifies priority
industries for investment. The plan allows you to
keep a close eye on the strategic industry focus
of the Chinese government as well as
geographical developments.
• Know your business partner
Research your potential business partners
thoroughly and get to know them to avoid
potential disputes and litigation.
• Financial limits
Understand the limits that Chinese partners may
have to finance themselves as well as potential
barriers to import finance mechanisms eg there
are tight USD quotas and RMB costs tend to go
up for longer tenor trade financing.
Terence Chiu
• Access Asia
Hong Kong is located in the heart of Asia, making
it a strong strategic base to penetrate the
Chinese Mainland and South-East Asian markets.
Hong Kong’s unique relationship with China
means it is an ideal base to enter the Chinese
market.
• Leverage free resources
There are numerous supporting programs to help
overseas SMEs to establish/expand their
business in Hong Kong. ‘InvestHK’ supports
companies from planning through to launch and
business expansion. The Hong Kong Trade
Development Council helps with global customer
search and identifying potential business
partners.
• Do not underestimate potential differences
It is common to think of Hong Kong as a
dynamic, open market that will accept foreign
brands easily. However, a European product will
often need to be adapted to the local market
given the wide divergence in lifestyle and
cultures. Careful market research to remains the
key to success in Hong Kong.
• Target priority sectors
In China’s 12th 5-Year Plan a chapter was
dedicated to Hong Kong/Macau stating that the
central government would support Hong Kong to
nurture its six priority industries.
For further Country Guides visit:
https://globalconnections.hsbc.com/global/
en/tools-data/country-guides
previous page
Next page
Traderadar
put your business on the trade radar
when you’re scanning the landscape
for business opportunities our expertise
can help you get into the right market
with the right plan.
contact your relationship manager
today
Issued by HSBC Bank plc. We are a principal member of the
HSBC Group, one of the world’s largest banking and financial services
organisations with around 7,200 offices in over 80 countries and territories.
back to start
previous page
CLOSE