Export for a Ukrainian company is the same standard daily work as building sales within a country. Delo.UA has collected tips for entrepreneurs, who want to enter the EU market, from experts and consultants.
It is difficult for Ukrainian companies to build regular sales in the European market – it is difficult to find partners, negotiate and sell. This was discussed at a conference for entrepreneurs in Kharkiv “Business Together: How to Enter the European Market”.
Delo.UA collected tips from experts and consultants in matters of international trade, from what Ukrainian entrepreneurs should start their entry into the European market.
What has appeared earlier: planning or sales?
Many Ukrainian companies are trying to enter the European market intuitively.
The logic of entrepreneurs often sounds as follows: “everyone goes, so I need to go there too”.
“But many entrepreneurs cannot answer the question about their plan for tomorrow. They have no strategy and long-term planning,” says Dmytro Shvets, Start Global CEO. “This is an obvious thing, but no one plans anyway. When you go hiking, you draw up a route before it and put all the necessary things in a backpack. It should be the same with exports.”
According to the expert, the most important question for an entrepreneur is the question “why?”. A company should first understand, whether it wants to increase the turnover, expand the geography of sales or attract foreign currency.
In practice, exports look a little different, based on own experience, says Valerii Yakovenko, co-founder of DroneUA, which produces and exports technologies using drones.
“There is no universal instruction on how to enter the European market, how to find partners there, how to start selling,” says Yakovenko. “You can, of course, wait for the perfect moment, study the market and get ready. But I think that you just need to decide and do it. I am a salesman a little inside me, and I always started with the sale.”
Thus, the entrepreneur advises to learn how to sell your product immediately.
“You need to be proactive. Selling is the most important thing. Everything else can be done in parallel,” the co-founder of DroneUA is confident.
How to analyze the market
When assessing the market, it is worth to combine the so-called “desk” research that an entrepreneur can conduct with the help of online resources, with field research in other countries, advises Olena Zhuravlova, Head of the Export Consulting Department of the Export Promotion Office.
An entrepreneur should analyze the market volume, its dynamics, the country’s trade balance, the volume of production and the volume of import.
You need to know what tariff and non-tariff (product certification requirements) barriers are in place. It is worth looking at who your competitors are, who are the customers and what they want.
There are a number of free online resources to help an entrepreneur: Trade Map platform, Eurostat, national statistical services, OECD statistics, globalEdge portal, CIA World Factbook, World Bank statistics, NationMaster service and MarketFinder tool. In addition, the Export Promotion Office is also preparing market overviews of different countries from all around the world. Now the website has already available detailed information on the markets of Austria, Poland, Belgium, Germany, Sweden and the UK.
After studying the information, Olena Zhuravlova advises to go directly to the country where the company wants to export, for example, to an exhibition or a trade mission.
Finding a partner is a simple task
“The issue of finding business partners is of primary concern, but in reality this is not the most difficult task”, says Dmytro Shvets. After all, there are plenty of open sources to find partners.
For example, through the website of the Export Promotion Office you can connect to the Enterprise Europe Network (EEN). Geography is not limited to the European Union, more than 50 thousand companies from 65 countries are registered here. With the help of EEN, you can find not only a company that buys Ukrainian products, but also a partner for production or joint research.
In addition, the Office constantly publishes requests of foreign companies searching for suppliers from Ukraine.
“Previously, this information was worth its weight in gold, now it is available free of charge on the Internet. You need to take it and use it,” says Dmytro Shvets.
“Another good tool for finding partners is chambers of commerce and industry and business associations,” says Taras Danko, Team Europe Project Expert. “Who said that a Ukrainian company cannot join, for example, a Polish association? And they will disclose all the necessary information to you in the association.”
“Not only a business structure can be a partner in another market, but also a state, a non-governmental organization, another local organization”, says Valerii Yakovenko, co-founder of DroneUA.
“Look for partners even among your competitors,” advises the entrepreneur. “After all, you are not competitors in foreign markets. You should unite, work in new markets together. After all, you alone, for example, cannot satisfy the demand that has been found.”
In Kharkiv, for example, they founded an association of agricultural and food companies – Agrofoodcluster. It helps member companies participate in trade fairs abroad, find counterparties there, enter into contracts and make joint deliveries of goods.
“Ukrainian business still often perceives negotiations as follows: if you did not “defeat” a partner, you failed the negotiations,” says Dmytro Shvets.
According to him, it is important to use win-win tactics during negotiations, meaning that both parties must win in the end.
“You have to understand that the person with whom you have spoken may return in 5 years, and you will build a business together,” the expert says.
Programs for attracting the money and business consultants
Ukrainian businesses willing to enter the European market will have to invest a lot in their development. Financial resources and consultants will be needed to develop strategies, visit other countries, adapt their product to a new market and modernize production.
In autumn of the current year, companies from the city of Kharkiv will have access to the program of concessional lending from the German-Ukrainian Fund (GUF) and the initiative of the European Union EU4Business.
“The German-Ukrainian Fund lends Ukrainian banks, and they, in turn, issue concessional loans to businesses. You can get a loan to finance working capital or investment loans of up to EUR 250 thousand in UAH equivalent,” says Nataliia Onufryichuk, German-Ukrainian Fund Expert.
According to her, GUF also signed an agreement with the Kharkiv City Administration. And in autumn, the council will decide on the amount to be allocated from the Kharkiv city budget to support small and medium-sized enterprises.
“Under the program, the city budget will compensate for half the interest rate on loans to businesses,” says Onufriichuk. “If the interest rate is 15%, then the city budget will compensate for half of it, and the entrepreneur will be able to get a loan at 7.5%.”
In addition, there are a number of programs from the European Bank for Reconstruction and Development (EBRD). It compensates entrepreneurs from half to 90% of the cost of a consulting project.
The amount of the grant payment to businesses is limited to the following: for one of the EBRD programs, it is EUR 10 thousand, and for the other, it can reach up to EUR 60 thousand.
“We support different projects,” says Tymur Khalilov, Head of the EBRD Office in Kharkiv. “Projects for the development of strategies, introduction of IT systems, development of communication campaigns, market positioning, branding and product rebranding, market research, preparation of products for certification and building a system for monitoring food safety.”
Thus, the European Union supports many programs that help Ukrainian small and medium-sized enterprises to develop. Entrepreneurs, however, do not always know about it. But the joint project of Delo.UA and the Delegation of the European Union to Ukraine “Business Together” helps business to figure it out.
According to the materials of the conference “Business Together: How to Enter the European Market” in Kharkiv.
The article was originally published on Delo.ua