BREXIT Aftermath: Starter Kit for SMEs
The dust has started to settle after the recent and surprising BREXIT vote in the UK and many Canadian exporters are still wondering how this will affect their exporting efforts aimed at the European market. Small-and-medium-enterprises with exporting experience to the US who have been thinking about exporting to Europe, are now wondering what their next steps should be.
Canadian exporters are entitled to their concern about a possible domino factor, where other European countries may plan to copy the UK and leave the EU. This could conceivably affect Canada’s forecast access to an even larger market than the US: a European market of 500 million potential clients.
And yet the reality is that the EU has never been one market – in spite of a single currency, one passport and a large bureaucracy trying to keep it all together, Europe has always been made up of a series of very different markets, each needing to be handled independently. There has always been a need to approach each one by adjusting to its individual culture, language, geography and history.
As a result, from a Canadian exporter’s viewpoint, nothing changed after the BREXIT vote because each of the remaining 27 countries in the EU is still a separate and different market to the others. For example, appointing a Manufacturer’s Agent in Germany or Italy will still require two Agents (north and south); the French market will always need one for Paris and others for northern and southern France and even tiny Belgium requires a Flemish and a Walloon representative to really succeed.
The great advantage to experienced Canadian exporters who have never done business in Europe is their expertise in doing business throughout the various regions of the American market. While the EU and the US are obviously very different markets, both are made up of regions that differ in attitudes, history, geography and in ways of doing business. Both markets are full of local linguistic expressions, varying cultures and even body language.
Canadians exporting to the US usually deal with these differences by dividing the American market into several regions in order to have Agents or Distributors in various locations. While MANA (the US Manufacturers and Agents National Association* recommends covering the US market in 28 regions, seasoned Canadian exporters often break it down to only six major areas: Northeast, North-Central, Rocky-Mountain, Pacific, Southwest and Southeast*.
Taking a similar multi-market approach to entering the EU, new exporters to Europe can rely on their US experience and approach the EU’s individual countries using the same philosophy.
(1) The first step should be to break the European market down into very broad geographic regions:
– Northern (Scandinavia),
– Central French (France, Benelux and Switzerland),
– Central Germanic (Germany and Austria),
– Eastern European (Poland, Hungary, Czech Republic, Romania, Bulgaria),
– Iberian Peninsula (Spain and Portugal) and
– Southern European (Italy and Greece)
While not ideal given the many marked differences between all those markets, this breakdown will provide an unsure neophyte SME-exporter with the first step of a broad plan which can become more focused as time moves forward.
(2) The second step should be to research each of the 27 European countries to ascertain if they already produce similar products locally, and/or if they import such products from elsewhere. Many SMEs will flinch at this suggestion because of the potential amount of wok this could entail. Fortunately today’s SMEs can quickly and easily evaluate the various potential markets by accessing the Canadian Government’s site “Global Affairs Canada – Country Insights”, as well as the US Government’s “CIA World Fact Book”. These sources and others will provide useful details on the potential of each target market’s imports from elsewhere and its own local production.
(3) The third step would require the SME to pick and focus on one market at a time, concentrating on that market’s needs and/or discovering what other countries are exporting to them, and then planning to replace those imports with competitive Canadian exports.
Exporters must think about “one-stop-exporting” instead of wanting to sell to geographic blocks. Companies must re-learn to do business on a market-by-market basis and not wait for market blocks to “settle down”. SMEs need to target specific markets for their products and services and remember the concept of always moving forward – if you stop for any reason, the competition will still be moving forward around you and you will effectively be going backwards. This is not a time to stop to wait to see what happens next – it is time to move forward.
Conclusion: BE BOLD!
Well-known management consultant Peter Drucker once said* that “marketing and innovation” are vital in business. Therefore, rather than watching and waiting to see if BREXIT is the beginning of a series of other EU departures, SME exporters should be sharpening their marketing wits and finding ways to penetrate their chosen individual target markets by (a) visiting the market, (b) walking a local trade show in the appropriate product sector, (c) getting to know the Canadian Trade Commissioners on site, (d) learning the local language, (e) finding local agents, (f) researching the target market’s needs and (g) establishing contacts now, in order to build long-range relationships.
Future Canadian exports cannot be based on short-term, panicked Brexit-related guesswork, nor on inaccurate conjecture about the future. The only way to succeed in exporting to Europe today is to be bold: as Goethe said: “Whatever you can do or dream you can, begin it….. boldness has genius, power and magic in it”.
Ennio Vita-Finzi was appointed as Ontario’s Trade Commissioner in Europe, Latin America and the U.S., was President of the Canadian Council for the Americas during NAFTA negotiations and then qualified as a Certified International Trade Professional (CITP). He is now a College lecturer and keynote speaker in Montreal.