How to export?
So you want to export agriculture products? Here is a step-by-step guide for identifying, negotiating and winning European buyers.
Matching products and the product range: Based on the product specifications as required by his trade partner in the EU, the exporter is able to determine the extent to which the specifications of his products match the requirements.
In order to be attractive to potential trade partners in the EU, the exporter should consider not only to sell one product variety in one type of packing, but also to have a product range available matching the import requirements from EU partners.
A company can export a wide product range. In the above-mentioned example, this is the case when the company exports different types of fruit; each fruit in different varieties and in different packing sizes.
Different production processes (dried, purée, frozen) might also be possible.
When the company concentrates on one product (strawberries), but exports this product in many varieties, in different forms and in an extensive range of packaging, the product range in depth applies.
Building up a relationship with a suitable trading partner A profound knowledge of the prevailing business culture in the country of the trading partner is one of the main keys to a durable relationship. In spite of all modern communication tools, the personal relationship with a trading partner often decides a durable cooperation.
The first meeting with a trading partner in the EU is the most crucial, as the initial impression a trading partners gets during this encounter is usually decisive for future cooperation. In order to assist the exporter in the preparations for his first meeting with a EU trading partner, the business culture of the six EU countries mentioned in this survey is described below:
United Kingdom : * Polite, direct with an understated use of language your counterpart assigns you a seat * Extremely task-oriented – ‘hello, nice to meet you’ and then straight to the point – this may confuse exporters, who think the trading partner is relationship-building. However, questions are purely ritual and over very quickly. * A British trading partner will give the exporter the opportunity to sell himself, his company and his products.
* He will be interested in the track record/achievements of your company and your products * When convinced, he will be prepared to give it a try on the basis of a trial shipment. They get slightly irritated by small talk and formalities and like to get down to business; do not talk about politics, religion and private/family matters. * They expect that their counterparts have their own opinion and voice it, even when they do not agree to it * They expect counterparts to take initiative and expect assertive communication
• The Netherlands : * They are rather informal and are quick to use first names
* They treat their counterparts as equal and are friendly in their communication * Direct in their approach and they do not like to beat around the bush * Often they do not have a secretary to bring coffee; instead they ask you to accompany them to the coffee machine somewhere in the corridor; coffee is offered throughout the day * Dutch trading partners expect you to take the initiative in the conversation: what do you have to show or tell me? They like to ask questions and take a pro-active attitude * Dutch counterparts are empowered by their organisation to make decisions, there is no need to refer to their bosses; responsibilities are delegated to purchasers * They are very task-oriented and do not like extensive social talk; they like to come straight to the point; being very price conscious, Dutch importers will be quick to ask the price * Showing off is frowned upon; Dutch people do not like a display of wealth (Rolex watch, expensive car, tailor made Saville Row suits, etc.).
‘Act normal’ is their way of doing business. Therefore expensive and colourful brochures are often counterproductive: Dutch purchasers think that eventually they pay for all this * Dutch purchasers like to work with strict deadlines: ‘when can you get your proposal to me?’ and they expect you to stick to the agreed date
•France : * French are formal, polite and not very direct. They like shaking hands, both at the beginning and the end of a meeting
* French companies are very hierarchical; your counterpart is probably not empowered to make any decisions * Instead they want to gather as much information as possible about your company and your products, so they can report back to their superiors * French are rather chauvinistic; they prefer you to conduct the conversation in French and that you are familiar with French culture. French buyers can be rather arrogant and can treat you as though they regard you as having a much lower in status than themselves * Do not expect to come to business during the first meeting; the building of a relationship between you and your French counterpart is essential before any business can be done
* Patience is an important virtue in dealing with the French; it takes a rather long time to commence business; however, when the relationship is established they are rather loyal customers * Dress correctly and conservatively; no flashy and contrasting colours * French remain formal to their business partners; first names are not used
•Germany : * Germans are formal and never use first names * They like to be addressed by Herr (Mr.), Frau (Mrs) or Fraulein (Ms) and their last names; it is also important to check beforehand whether your counterpart has a title: in this case titles should be used also: Herr Doktor Schmidt or Frau Ingenieurin Albrecht * German purchasers like to come quickly to the point and are well prepared for the meeting; as they want to eliminate uncertainties as much as possible they will ask a lot of details
* Particularly offer your German counterpart ‘certainties’: assurances, guarantees, references to check you and your company out; company background, expertise and track record are very important elements for Germans in his search for certainties
* Dress correctly and formally; avoid flashy and contrasting colours and expensive watches, rings, bracelets, etc. * Come strictly on time; German purchasers usually have very tight schedules and many meetings on one day; they usually inform you how long the meeting will last and the points they want to cover * They require detailed planning and concrete arrangements and expect you to adhere to them; prepare yourself in detail for this meeting: mistakes or inability to reply to questions will not be tolerated and will mean the end of a possible business relationship
* Try to get friendly with the secretaries; they have a lot of influence in scheduling the appointments for their bosses; here again, never address them by their first names
•Belgium : * Be aware of the bi-lingual and bi-cultural situation in Belgium. In the Flemishpart of Belgium, Flemish (similar to the Dutch language) is spoken. In the Walloon part, French is spoken. Brussels is bi-lingual.
* The Flemish are polite and easy to communicate with. They are quite formal;
first names are never used. English is widely spoken in the Flemish part of Belgium.
* Walloon trade partners are similar to the French in their business dealings. The use of the French language is very much appreciated and often necessary.
Although there are large cultural differences in dealing with trade partners in different EU countries, when building up a good relationship trade partners in all the EU countries place particular value on the following aspects:
[hidepost] • Open and prompt communication. When asked questions or in case of enquiries, an answer within 24 hours is highly appreciated • Timely information in case of problems. For example, if shipments are going to be delayed, please inform your trade partner in time. He will be able to take the necessary measures on his side. Even when you only expect possible problems, advise your trade partner
• Reliability is a key issue for building up a durable relationship. As the supply chains are becoming more integrated and chain partners are becoming more interdependent,
reliability forms an important pillar under the integrated chain.
Building up a relationship with a trading partner in the new EU countries
Due to the different cultural, social and economic background of the new EU countries in Central and Eastern Europe, please observe the following points when contacting trading partners: * Communication is generally less direct and subtler.
The essence of a message is often hidden between the lines and can easily lead to miscommunication. * Direct criticism should be avoided as this is often taken personally. * In most countries hierarchy plays an important role. It is important to discuss matters with the boss, as his subordinates have no authority to make decisions. ‘Top-down’ communication is very common. * A formal tone of communication is advisable. Apart from the content, the form, choice of words and the way one speaks is important. Much time should be allowed for explanations. * Written communication is complicated, as many less relevant sentences are used.
* English and German are the most used foreign languages. However, the level of proficiency is sometimes low. It is important to create an atmosphere in which your trade partner feels comfortable to indicate when he has not understood a subject. * Although telephone and e-mail are important communication tools, trading partners in Central and Eastern Europe are more tuned to personal contact. This forms thebasis of any business relationship. * There is a difference in dealing with new, Western managed companies andmultinationals and with older state companies, government departments and smaller (family) firms.
Drawing up an offer
After establishing contacts with potential trade partners in the EU, the exporter might be requested to make an offer to an importer or directly to a food processor. The preparation of an offer should be carried out with caution. An offer which has been accepted by an EU trading partner and does not contain any escape clauses for the exporter is a legally binding document requiring the exporter to deliver, even when the trading conditions are unfavourable to him. Before making an offer, the exporter should verify the following items:
• Reputation of trade partner
Important to check whether the trade partner requesting an offer is well established and has a good reputation. Sources to check are: * Branch organisations in the EU and accession countries(see appendix 3.4) * Trade registers in the country of the trade partner, for example the Chamber of Commerce
* Commercial organisations, which can supply company profiles, like Dun & Bradstreet, Cofaz and Graydon. The information provided is generally extensive, so reports from these organisations can be quite expensive.
• Rules, regulations and quality standards
It is important to verify whether the exporter can comply with EU and national regulations on products and packaging and the specifications requested by the trade partner. When making an offer, the following elements should be included: •Date of quotation and reference number. This number can at a later stage be used on contracts, payment and shipping documents as easy reference to the consignment in question. •Full names and addresses of both parties • Product and product specifications • Packaging specifications
• Quantity in kgs, litres • Price per kg/litre, currency and total amount • Delivery terms (Incoterms 2000) • Delivery period
• Payment terms • Validity of the quotation. The period of validity depends very much on the volatility of market prices. In very volatile markets, the validity of the quotation might only be 24 hours. • Waiver. A very important element of the quotation. The waiver gives the exporter an escape clause not to honour the quotation, even when accepted by the EU trade partner. A waiver in the offer is quite customary and can be worded as follows:
* This quote is subject to our confirmation
* This offer is without any obligations * This offer is subject to confirmation by means of a sales contract. An offer made without waiver and accepted by the buyer obliges the exporter to deliver the goods according to the quotation
• Referral to the general sales conditions of the exporter. General sales conditions apply to all offers and contracts and stipulate items like: * Retention of title of the goods (in case of non-payment) * Product liability * Force majeur (when an exporter cannot supply due to circumstances beyond his control like strikes, fires, political unrest, perils of the sea) * Resolution of disputes * Delayed payment, late/non delivery * Inspection procedures * Exclusion of Value Added Taxes (VAT) in price quotations.
Please remember that the general sales conditions of an exporter might conflict with the general purchasing conditions of an importer.
Sales promotion : To promote the exports of his products to markets in the EU, an exporter in the preserved fruit and vegetable sector can apply the following tools: •Participation in trade fairs in the EU
This is by far the most effective promotion tool, as the exporter has the opportunity to present his products to importers, agents and food processors from all EU countries. The most important trade fairs in the EU are Food Ingredients Europe, Health Ingredients Europe, and Biofach (organic food ingredients). Please check contact details in appendix 3.5 of this survey. Further reference is made to CBI’s Your image Builder.
•Company brochures and product specifications
A company brochure should be factual, in order to inform potential trade partners on relevantinformation of the company. Lengthy stories about the founding family and historic reviews should be omitted, as these are of little interest to trade partners in the EU. Instead information should be given about production capacities, certification, tracking and tracing systems, processing equipment, organisation, markets (both domestic and export), turnover and personnel. This way, a potential trade partner will be able to form an image of your company.
Be careful not to exaggerate and to ‘walk your talk’ (deliver what you promise).
•Visits to potential trade partners in the EU
As personal contacts always work best in any sector, the exporter should invest time and money to visit EU trade partners. It is advisable to allow additional weeks after a trade fair to follow up on contacts and to make appointments with the most promising trade partners.
In order to build the right image for your company, make sure that the layout, colours and texts of your letterheads, invoices, business cards and envelopes is consistent and that good quality paper is used. Company stationery is an important ambassador for your company as it is sent/given to EU trade partners.
This applies to the use of e-mail and website. A website forms an easy reference for any EU partner to obtain information about your company. In designing a website for your company, the same rules apply as for company brochures: factual and to-the-point information is all a trade partner wants to see. Time is at a premium for trade partners in the preserved fruit and vegetable business and they do not want to spend any of it in reading information not relevant to their business.
Samples are a very important tool for promoting your products. The first thing interested trade partners in the EU will ask for is samples of your products. Often, they will inform you about their product specifications and request you to send samples according to these specifications.
In sending samples (often by airmail), attention should be given to the packaging. Rough handling, and resulting damage, during transport is common; good packing ensures that yoursample reaches your contact in the EU in top condition.