A dynamic company needs to be constantly attentive to new market opportunities, especially overseas. In this sense, public procurement or international calls for tender represent potential too often untapped by Belgian companies. To this end, the Trade4U app can prove very useful!
Make the most of untapped opportunities
A huge number of public authorities, both in Belgium and overseas, call on companies for the provision of services, the supply of products, etc. In 2016 alone, the UN (with one of the largest public procurement programmes) launched calls for tender for over 17,000 million dollars (split approximately between the provision of services and the supply of products). A volume which is steadily growing - although Belgium is one of the top suppliers as regards UN contracts (mainly with UNICEF, thanks to the pharmaceutical sector which accounts for over 85%), Belgian companies, in particular SMEs, are still not making the most of this financial godsend.
The importance of being successful first time round
For a company, whatever its size, these public procurement contracts, in particular international contracts, can offer several advantages. Logically, this means new contracts and therefore obtaining revenues. But being successful first time round overseas also constitutes a unique opportunity to "make a mark" in a specific geographic region. This access is crucial in order to guarantee new openings in the long term...
Let's take an example: a Belgian start-up which is successful in a call for tender to provide its innovative technology to an important work site in Dubai is undeniably opening new doors for itself in the Middle East. A virtual circle which can also be applied within the company, because by making this leap, the SME is developing in-house skills in order to respond to specifications. Expertise which will turn into a comparative advantage.
Limited access and administrative workload
And this is often where the problem actually lies: the complexity of public procurement. Particularly when it involves responding to a call for tenders in Brazil or China. If SMEs are still not taking much interest in these market opportunities, it is because there are objective reasons. The significant administrative workload involved in putting a tender together, the lack of human and financial resources internally, contracts with scopes which are too large for the size of the company, not to mention the obstacles associated with the international dimension (language barrier, lack of knowledge of the local reality), but also the lack of visibility of these proposals and so on. In fact, information is key!
Efforts and solutions: Trade4U
Public authorities, particularly in Belgium but also internationally through regional development banks, are endeavouring to make these public calls (for bidders) more accessible to SMEs. Simplification of procedures, shortening of deadlines, division of contracts into smaller lots, etc. In Belgium, both regional export agencies* as well as the Belgian Foreign Trade Agency are working on raising the awareness of Belgian companies and providing them with information. And with this objective in mind, the Trade4U platform was created.
Soon to celebrate its second anniversary, this mobile app (available on smartphone and tablet) centralises business opportunities - several hundreds of websites are sifted through -, international projects and calls for tender all over the world. The functionalities offered to its subscribers (subscription costs EUR 150 per year) include the option of carrying out targeted searches (by country, sector, product, service, etc.), expressing interest in a contract, setting up a consortium (to respond to large-scale contracts), receiving alerts and reminders of deadlines for filing applications, assessing the success of calls for tender (number of clicks) and receiving "public procurement" procedure guides along with foreign trade news and statistics.
* The three regional actors in the foreign trade sector are:
Not words, but actions: how can you realise your internationl project?
Gaining a foothold in a foreign country is no easy task, and some good advice alone will not suffice. Trade Development at BNP Paribas Fortis is the perfect partner to turn theory into practice!
Many companies want to try their luck outside our borders and gain a foothold in new markets. This is necessary not only to be able to continue to grow, but also to remain competitive. But if you don't know where to start, it's hard to put your money where your mouth is. How do you find the right market? How do you find prospects? How do you prepare the whole operation in all its aspects? What risks do you need to cover? And which partner can you trust? All important questions that can make or break your project. And this is how international ambitions are sometimes left on ice....
"We want to help companies achieve their international ambitions", says Rob van Veen, Head of Trade Development at BNP Paribas Fortis.
"We look at the local market into which the company wants to launch and make sure the underlying potential is sufficient." And so, the first step towards success is taken.
WHEN GOOD ADVICE IS NOT ENOUGH...
There's a deep gap between theory and practice that managers do not always dare to cross. It's essential to collect a lot of data and information, but this is certainly not enough. Talk must then be followed by action. Your growth project's first stone must be laid... preferably with the greatest possible chance of success and as few risks as possible. In such an adventure, (good) guidance is not a superfluous luxury. Even more reason to call on the support of Trade Development: a partner who can assist you with a wide range of solutions and help you establish a long-term strategic vision. In Belgium and beyond.
"In their project's first phase, companies often find a lot of information and support from the Belgian export promotion agencies", says Rob van Veen. "But they don't get all the practical answers they need to roll out their activities in a given country."
Given that growth prospects in Belgium are rather limited, companies must therefore look for international growth. But where? This is where the Trade Development team comes in. Your choice of target market is certainly crucial. A vague, poorly thought-out decision can have dramatic consequences: examples of failure abound – partly because companies don't understand the local 'culture'. Companies sometimes gravitate towards exotic markets because others have gone before them. But every international project is unique: does the market fit into your overall strategy? Are you aware of all the challenges that lie ahead (regulatory, commercial, etc.)?
"Let's take the example of a company that wants to set up in Brazil. Our first question is then: what activities have you already been carrying on in Europe? Might there be new, undiscovered opportunities there? For example, it's much easier for a company to set up in Poland than in Brazil, where taxes on imports are extremely high" , continues Rob van Veen.
HIGHLY NECESSARY 'LOCAL' CONTACT PERSONS
Your project has taken shape and you've determined your target market. The time has then come for Trade Development to roll out one of its greatest assets: access to a global network of competent and reliable partners.
"We introduce the client to local specialists who can support their project abroad from start to finish. One deals with the roll-out of activities, another specialises in legal and tax issues, and a third takes care of the administrative side of things. We prefer to work with small, local agencies, most of whom are long-term BNPPF network partners", says Rob van Veen.
These contact persons have a perfect knowledge of the national rules and customs and know how to adhere to that specific framework. The company therefore has the great advantage that it can benefit from such a skilled team: a win-win situation. "In addition, our permanent contact persons are evaluated by the client after each project. This way, we can guarantee the quality of our services!"
BUILDING RELATIONSHIPS: Save TIME AND gain EFFICIENCY
Are you looking for an effective distributor or a reliable representative? An ideal on-site supplier? Do you want to determine these contacts' actual potential or get to know possible new partners? Not easy for a company…
"Most of them are looking for a white knight. Our trade developers draw up realistic selection criteria in consultation with the client. They carry out a financial analysis of the commercial partners and check their technical baggage and their reputation", explains Rob van Veen.
First, a list of four or five serious and interested candidates is drawn up, and then the contact phase follows. "Our local contact introduces the candidates to the Belgian company to ensure that both parties are interested in a partnership. Once all these issues are clarified, the relationships can be rapidly explored in depth."
SUCCESS IN THE FIELD
Every target market has its problems and risks: from the language to cultural and commercial differences. Very specific problems that are often difficult to solve from Belgium, especially in the post-COVID-19 era. Hence the importance of being surrounded by specialists who know the country like the back of their hand. Need an example? "To be able to supply retailers in the UK, you often need to be able to invoice at a local level", explains Rob van Veen. "Our trade developer can then act and take care of the local invoicing and accounting on the company's behalf at a fixed and transparent rate for each transaction. This is a simple initial structure that does not require major investments but is very interesting professionally." The client can naturally then seek its own local partner. "That too is a task they can leave to our contact person, who has the necessary experience to do so." Need another example? Russia, where everything takes a huge amount of time... Trade Development's network of experts can also speed things up considerably here and solve problems more quickly.
Who is the key partner in your international growth?
Your bank! In particular, the network of experts at BNP Paribas Fortis' Trade Development department. The missing link between your foreign ambitions and your growth project's success.
Conquering foreign markets raises new expectations within companies. Needs that go way beyond a bank's 'traditional' services... We at BNP Paribas Fortis have understood that well, and that's precisely why we established the Trade Development department. This department advises clients and provides them with a full range of support in their international ambitions. "A bank can provide practical assistance to companies' expansion projects abroad: it can open accounts, provide guarantees, underwrite cash flows, and more", says Rob van Veen, Head of Trade Development at BNP Paribas Fortis. "But that's not all clients need: they also expect their bank to think about strategy and to help them approach the market in an intelligent and efficient manner. And that's exactly what we do." What does that mean? The service provides unique and highly essential support – especially now against the backdrop of the COVID-19 crisis – for expansion beyond our national borders, reassuring business owners and connecting them to a global network of local experts or providing long-term follow-up.
KNOWN TERRAIN... EVEN ABROAD
A good example of this successful partnership between a company with international ambitions and the bank is the Besins Healthcare group, founded in 1885 by Abel Besins, and which has been expanding globally since the 1980s. Great ambitions, which the company fully embraces with BNP Paribas Fortis' sustainable support. "Once we've got new plans abroad, we first discuss them with our contact person at BNP Paribas Fortis", says Leslie Grunfeld, CEO of Besins Healthcare, which is currently active in over a hundred different markets, and has local branches in several of them. "Our treasurer will check whether the bank is present in the country in question or whether it has partnership links with local institutions." This approach means that the group never goes into a blind adventure, as it has a similar range of services throughout the world. "That's great! Especially when you consider that the local problems you have to solve can vary greatly from one country to another."
ACCESS TO A KNOWN AND RELIABLE NETWORK
One of the Trade Development team's biggest advantages is that it can provide companies with a real network of local specialists. Professionals for whom the target market holds no secrets. They know the reality of the country in question like the back of their hand and provide the company with support through all the local steps: from exploring business opportunities to bureaucratic formalities.
"Even in countries where BNP Paribas Fortis doesn't have branches, we were able to benefit from the bank's network, which made the establishment of local branches particularly smooth. We didn't have to start from scratch every time we went abroad: we had immediate access to a structured network and reliable banking partners. And that means huge time savings", Besins Healthcare's CEO emphasises.
THE HUMAN FACTOR
Personal contacts with preferred partners are of great importance in an international growth project. Not only to have reliable and proactive contacts, but also to gain access to useful information and to unlock new local opportunities. These 'local' contacts are usually long-term partners of the bank... a guarantee of reliability for the company that should not be underestimated. They are specialists with various skills and profiles – legal, business or administrative – who assist the company in question from start to finish. This includes assisting with setting up local establishments, starting up a new activity, recruiting staff (management, local contracts, etc.), setting up a new legal structure, seeking suitable suppliers and other partners (e.g. banks), responding to clients' needs (cash credit, leasing, fleet management, currency hedging, etc.) and offering them tailor-made solutions. And what happens when the company is 'launched'? Trade Development then remains on standby to continue the banking relationship and to closely monitor the client's evolution. For the long term!
A bank like BNP Paribas Fortis – through its Trade Development teams – is therefore the key partner for companies' international growth. And that goes way beyond simply offering financial services. It also provides:
- exploration of new markets and partners for the company. In this capacity, it can collaborate in determining the strategy at the source and opening the range of possible relationships on the ground as widely as possible;
- risk mitigation: the bank analyses and assists with the preparation of a realistic profile of the future partner (finances, real interest, reliability, reputation, etc.) and with reducing the margin of error;
- creation of ready-to-use solutions. In this regard, the bank is always available to listen to the client, anticipate their expectations and offer solutions adapted to their specific situation;
- acceleration of the foreign process to establish themselves in a market or gain a foothold there, thanks to local contacts with useful local knowledge and experience;
- facilitation of the whole process, making its extensive network available to rapidly put the company in question in contact with local partners, but also to manage or advance all kinds of situations;
- long-term support – Trade Development's experts closely monitor the company's international journey, on-site or remotely, and oversee the project's success.
Export plans? Make sure you talk to our experts first
To prepare your international adventure properly, ask yourself the right questions and talk to people who have done it all before: partners, customers, fellow exporters and experts.
BNP Paribas Fortis listens to the questions asked by international entrepreneurs and offers reliable advice. "A lot of exporting companies ask for our help when it's too late", Frank Haak, Head of Sales Global Trade Solutions, says.
Entrepreneurs with little export experience are often unaware of the bigger financial picture. So what do they need to take into account when they set up a budget for their export plans?
Frank Haak: "Budgeting and pricing are affected by a lot of crucial factors: working capital, currency exchange risks and currency interest, prefinancing, profit margins, insurance, import duties and other local taxes, competitor pricing and so on. We always advise customers or prospects to start from a worst-case scenario. Quite a few companies are insufficiently prepared for their first international adventure: they see an opportunity and they grab it, but quite often disappointment and a financial hangover are not far away.
Our experts have years of export experience and the BNP Paribas Group has teams around the world. This means that we can give both general and country-specific tips. Let's say a machine builder wants to design and manufacture a custom-made machine. We recommend including the machine's reuse value in the budget: can this machine still be sold if the foreign customer suddenly no longer wishes to purchase it or if export to that country becomes impossible due to a trade embargo or emergency situation?"
What type of companies can contact BNP Paribas Fortis for advice?
Frank Haak: "All types! Entrepreneurs are often hesitant to ask for advice. Sometimes they are afraid that it will cost them money. However, the right advice can save them a lot of money in the long run. For example, we recommend a letter of credit or documentary credit to anyone exporting goods to a foreign buyer for the first time. This product is combined with a confirmation by BNP Paribas Fortis to offer the exporter the certainty that it will receive payment when it presents the right documents and to assure the buyer that its goods or services will be delivered correctly."
The consequences of not seeking advice: what can an exporter do in case of non-payment without documentary credit?
Frank Haak: "If you are not receiving payment for your invoices, the counterparty's bank can be contacted in the hope that it advances the payment on the customer's behalf. However, we shouldn't be too optimistic in that respect: the chances of resolving the issue without financial losses are very slim. Once you have left your goods with customs, you usually lose all control over them. Hence the importance of good preparation: listen to and follow the advice of your bank and organisations such as Flanders Investment and Trade (FIT). It will protect you against a whole host of export risks."
BNP Paribas Fortis
- is the number one bank for imports (approx. 40% market share) and exports (approx. 25% market share) in Belgium (according to the statistics of the National Bank of Belgium): it offers advice/financing and can help you to discover new export markets through trade development;
- is proud that Belgium is one of the world's 15 largest export regions and is pleased to give exporters a leg up, for example by sponsoring the Flemish initiative ‘Leeuw van de Export’.
Source: Wereldwijs Magazine
E-commerce: the 3 steps to success
Which stages should a company that is venturing into e-commerce go through? And how do you avoid customers and employees getting stressed and frustrated in the process?
Phase 1: managing the channel conflict
When a manufacturer, distributor or importer starts selling the products they previously only sold to shops online themselves, the shops may experience that as a channel conflict. Their supplier has now become a direct competitor benefiting from low start-up costs as well as more customer convenience. But does the supplier have a choice? If the supplier does not sell online, some customers will go to a seller who does. The solution? Benny Sintobin, Manager of e-commerce specialist Frucon²:
"The channel conflict is a perception debate that is more emotional than rational. E-commerce is unavoidable, so you had better adjust. The roughest edges of the channel conflict can be smoothed out by being a ‘friendly’ online store. With that I mean that you have to approach it correctly, with empathy for the party that may be at a disadvantage. You have to be bold enough to tell the customers of your distribution channel in advance what you are planning and which rules you are going to follow. If you start up everything on the quiet, you will cause frustration and negative emotions."
And these are totally unnecessary, because the new situation can be favourable to the distributor or shop as well. The distributor's online sales channel can also refer to his customer's website or shop, for example. Benny Sintobin:
"Take a bicycle manufacturer offering bicycles to customers online, for example. The website could allow consumers to combine certain materials and colours online in order to create a personalised model. The bicycle can be sent by courier, but can also be delivered to a retailer near the customer for the customer's collection. In that case the retailer will have to be satisfied with a smaller margin and the fact that he has gained a new customer, who will come back later to buy a helmet or a bicycle bag or to have his bicycle serviced. The other members of his family will follow his example for their bicycles and accessories. That way everyone wins."
Downward price spiral
When you say channel conflict, people almost automatically think about a price war between shops competing with online sales channels offering the same products at a lower price. According to Benny Sintobin it is therefore important to put a fair, correct price on the products:
"When manufacturers engage in e-commerce themselves, they set the product's retail price. The price is there online in black and white. In that case shops can rarely afford to charge a higher price. That is why the pricing must be correct, so that shops can still earn a living.
In practice a channel conflict often causes the reverse phenomenon: it is usually not the manufacturer, but the shops starting the downward price spiral. That is in fact the biggest threat to e-commerce: the shop trying to hurt the supplier. Major players striving towards market dominance can afford to destroy their profit margins. However, smaller manufacturers and brands cannot compete in such a price war. This proves once again the importance of making good e-commerce arrangements."
Phase 2: geographical expansion
Once the channel conflict has been well and truly digested, it is time for the next phase: tapping into new markets. For larger SMEs e-commerce is often a perfect way to gain more of a market share. For example, take a Belgian brand that achieved a nice market share in Belgium by selling in retail points as well as through its own online sales channel. Perhaps the brand has developed some brand awareness abroad through a couple of shops in the capital, for example. Benny Sintobin:
"In that case it is entirely possible that some consumers abroad know the brand already, but are unable to get to the shop because of the distance. It would be very unfortunate not to take control of that potential channel yourself and to leave it to Amazon, would it not? Online your products are available to all customers. Conclusion: expansion abroad with an e-commerce channel could be the first low-hanging fruit that is therefore easy to pick."
Phase 3: reinventing your business model
The third phase in e-commerce is a leap in the dark. Company thinking is traditionally product-, market- and wholesale-oriented. Take a company manufacturing or importing pots and pans, for example. That product is part of the world of cooking and dining, but still the sales strategy traditionally focuses completely on the product. However, the online activities offer opportunities to change tack and create an entire world around the particular product. You can work with other companies in that respect: a publisher to create content about dining, a candle manufacturer, a herbs specialist, a table linens manufacturer, a supermarket offering home delivery, etc. Benny Sintobin:
"Around Valentine's day or other key moments of the year you can create content and an entire world where those pots and pans belong. In that case what you sell online becomes more of an experience than a product. The effect is further strengthened if each of the partner companies present that experience on their sites as well. That way you enter each other's customer base and target groups. And you also immediately make sure that your social media really start to work for you. Consumers will tend to like a Valentine's experience more than just a set of pots and pans. In other words, you become a "love brand" rather than just an everyday product."
3 damaging e-commerce blunders
- You fail to inform the customers of your distribution channel of your e-commerce plans and you do not agree on clear rules. Clear arrangements make good business partners.
- You fail to gain sufficient support from all your company's employees. Non-believers and sceptics are best convinced with figures and orders. And you should make sure that dreamers keep both feet on the ground: Rome was not built in a day.
- You focus on bonus systems rewarding targets in a single sales channel. Commercial employees getting a little extra for the sales figures in actual shops are not happy with rising online sales figures, even though they benefit the entire company.