BPCC Trade Top 10 Tips for Service Exporters
Britain doesn’t manufacture any more, everyone knows that, don’t they? Not entirely, we’re still just about the 7th largest manufacturing economy in the world. But it’s the factory of ideas in which the UK is really excelling and in this blog Paddy Ney, Director of BPCC Trade, sets out 10 top tips for service companies looking to export to Poland.
In the global economic race, the UK still punches well above its weight. And that’s never more true of services, which every year are more and more important to global growth. In fact as of 2014 according to the Office of National Statistics the services sector accounts for 79% of the UK economy. No surprises for guessing which element of services is the UK’s strongest export performer. Financial services – despite the 2008 crisis – accounts for more than 7% of UK GDP. That strength is reflected here in Poland where Aviva, HSBC, RBS, Provident and Prudential all have a major presence.
Services also have a major impact on manufacturing performance and the OECD have been doing a lot of work in recent years to measure Trade in Added Value – the real picture behind goods and services exports. The OECD research suggests that in the UK economy services have a major impact on manufacturing exports. Services also happen to be the most British thing we make, too. The OECD tells us that they have the lowest percentage of foreign involvement than any other sector (about 5% compared to 30% in the chemicals sector).
There’s no emoticon for expressing the feeling ‘enough statistics already!’ so I will save you the trouble: Top line, service exports are increasingly important to the global economy, and we’re one of the world’s best. That’s something to be proud of.
But critically, UK service companies often prefer to operate in English speaking environments or in Commonwealth companies, more so even than manufacturers. Poland’s our 20th most important goods partner but only our 30th most important services destination. So driving services exporters is something of a passion for me, my team and our colleagues.
Which is why over the course of the past 2 decades UK Trade & Investment Poland and the British Polish Chamber of Commerce have been doing a huge amount to promote British capacity across the services sector and to do more to help British companies. UKTI actively works with major UK companies across six key strategic sectors in partnership with the Chamber’s 11 policy groups comprising of major British, Polish and international businesses.
BPCC Trade, the team set up by the BPCC to deliver support for British small and medium exporters, has built over the course of the past 2 years a real expertise in services support for innovative British companies. Whether your company is in training, qualifications, education, management consultancy, information technology, legal, shared service centres and business process outsourcing, manufacturing, transport, travel, construction, insurance, pensions or tourism – these top 10 tips could be helpful for your business growth in this market.
Oh, just one last thing. Every single one of these tips is both true and not true. Why? Because there are no absolute truths in business and as every company, its history, people and products are so very unique, we try to avoid forming any assumptions about how they are going to succeed in market.
No 1 – Going global? Take it Local
Most services involve working with people. Localising in every sense of the world is absolutely crucial to your success as despite high levels of English in many sectors, most Polish people will prefer to learn, discuss and share in their native language. I know of at least one British lean manufacturing company that won business in Poland working in a UK company’s new factory but that’s the exception to the rule. Standing with a translator next to you trying to build an effective working relationship with a factory technician in a short space of time is more than tricky and the company never returned to Poland to do any more work. Shame, as Poland is a major manufacturing hub and has a large part of the Germany supply chain and there are really no more than 20 serious lean management players in the market.
That said every sector is different, and we work with some British companies providing leadership and skills training to Polish C-level decision makers taking their companies international for the first time in English. That’s why we help to make you to understand exactly what going local needs to mean – and then help you adjust your branding, marketing, sales strategies and products to match.
No 2 – Know The Market
The Polish services market is very different to the UK’s, which has had 70 years of post-war capitalist growth to fuel it, but there are still an estimated 15,000 Polish services companies, with the usual Big 4 and major players, a smaller mid-size market and a large micro and small business segment.
Poland’s economy, teteering on the brink of disaster after the fall of Communism from almost 50 years of communist command and control industrial economics, has seen an extraordinary turn around with uninterrupted economic growth since the ‘90s. That means that many elements of the services sector are nascent, but not all. Understanding the market profile with the right kind of initial analysis is crucial.
For example, significant EU structural funding has driven an explosion in the number of education, learning and skills building Polish companies and the sector definitely ‘red water’ territory. A British language school in the 90s stood a real chance of carving out a market share, but by now the sector is hugely competitive. Not impossible, but difficult. Your USP is what will make you stand out (More on that in a bit).
FICA statistics show us that the total value of the mangament consultancy sector in Poland is worth approximately 300mn EUR, whilst Germany’s is 30 billion. Whether your view that as an opportunity or a barrier is entirely down to your company and its approach to entering ‘blue water’ territory.
What’s absolutely crucial is understanding the operating environment you’re entering, going beyond surface statistics and really spending time getting to know the business culture. One company we supported in 2013 made a set of assumptions about its potential partner strategy based on its success in Western European markets. Naturally, repeating successful strategies makes sense.
But Poland, whilst it is undoubtedly the biggest economy in the Central and Eastern Europe region and Europe’s 6th largest economy, is most definitely not a typical Western services market. We came to the conclusion that the company’s products were more suited to a major international management consultancy partner than a Polish mid-sized business, mostly based on price but also on the fact that they were very innovative and needed the support of a better known brand. Still a work in progress on that project.
No 3 – Selling direct? You’ve got to be there to sell there
No, we don’t necessarily mean you’ve got to set up an office and take on loads of staff and overheads! But without a genuine presence and your brand’s boots on the ground, it’s going to be difficult to form the relationships and grow your business effectively. Not impossible, but difficult. This is much less true of goods where securing the right distributor in market can take much of the weight off the shoulders of the exporter. Major British consultancy AMEC, supported by the excellent Energy team in the British Embassy in Warsaw, spent years building effective relationships with decision makers and its potential Polish supply chain before winning a major contract to deliver the Owner’s Engineer project for Poland’s nuclear development programme.
Since so much of what great services are about is human interaction, being physically present is absolutely vital.
No 4 – Selling indirect? Your partner will make or break your business
Finding the right partner to license or deliver your services in market can often be a great way to build your business and takes advantage of your USP whilst leveraging your local partner’s network and experience. We recommend looking for reciprocal partnership deals where the Polish company, if they’ve got the right risk attitude and growth strategy, will be able to work with you. We’re currently helping an IT software company specialising in the insurance sector and one of the entry potentials is via an existing Polish IT company operating in the sector but with a non competitive product range. This is an common model for the legal sector as well.
No 5 – Quality is nice but price is king
Poland is a price sensitive market, no matter what sector you work in. From public procurement to paper towels, adapting the right pricing for your products and services is crucial. In a market where the average worker earns £700 and decades of under investment and communist mismanagement have robbed generations of businesses of accumulated capital and aspiration, businesses are looking for great value in everything they do. The perception is that UK companies are excellent but expensive so analysing competitors and thinking about price points well in advance of initial entry will really help you understand whether this market is right for you.
And let’s be honest, not every company is able to offer the right reduction on its margins. We understand that, but we’d rather you find that out before you invest time and money in looking at building a presence here.
No 6 – Hire a local!
One of the major benefits of the significant people movement between the UK and Poland and the surrounding region is the transfer of skills, knowledge and relationships. Leverage that by asking a native speaker working in your company to lead your business development into the region. They know you and your company inside out and their local market better than you ever will. Plus it’s a great development opportunity for them as individuals.
No 7 – Make your USP Stick
The first question we ask services companies is always: what’s your USP? A British IT company is going to find it hard to compete with the Polish IT sector, which is both extraordinarily skilled, superb value for money and high quality as well. Standing out from the crowd with innovation makes your business hugely attractive and should be at the centre of your market entry strategy.
No 8 – Leverage Brand UK
British service companies are known for being world leading. You can see that reflected in the huge interest in UK technical qualifications and professional bodies present already in Poland (Such as the Association of Chartered Certified Accountants, Institute of Chartered Accountants of England & Wales, Chartered Insitute of Management Accountants, Chartered Institute of Marketing, Royal Institute of Chartered Surveyors, Chartered Institute of Procurement and Supply, Institute of Mechanical Engineers…. I could go on!)
It’s why many Polish investors choose the UK as a base from which to go global, something UKTI is actively driving with its excellent Inward Investment team. Leverage the UK’s international brand and English language to drive your business in this hungry, go-getting and dynamic economy by adjusting your marketing to suit. The Germans do this brilliantly on the Polish market and we are just as keen to fly the flag for UK Plc with Great British companies.
No 9 – Be Long Term
Poland is a member of the EU and although it has a very different legal culture to the UK, it is not a market with high cultural or business barriers to entry. On average it takes our clients between 1 and 3 years before they start seeing a return on their investment and hard work. And we realise that’s a real challenge for any small and medium business. Writing this, I’m reminded of this passage in the Chinese book the I Ching.
No going not followed by a return
No plain not followed by a hill
He who remains perservering
In the face of danger
Is without blame.
Do not complain about this truth
Enjoy the good fortune you possess
Exporting is hard and not for the short-termist.
Top 10 – Speak to Experts!
There’s a huge amount of expertise and knowledge for you to tap into when you make contact with the Chamber of Commerce, its 400+ members, UK Trade & Investment and the British Embassy in Warsaw and our collective strategic partner network. One client was keen to make contact with a Polish C-level decision maker in a UK company here in Poland. What do you know? Their CEO sits on our board and I was getting our client access to the top people within the week. Even if you don’t work with us, do your best to speak to as many people as you can to build up a strong market understanding.
I hope these Top 10 Tips made sense to you and your business. Can you help us add a few? Drop me a comment and I’ll happily reply.
At BPCC Trade we’re delighted to have helped over 90 services companies since April 2014 and we’ve learnt a lot along the way. If the you’ve got the product, strategy, budget and team in place to enter this market and these top 10 tips hit home with your business culture, then have a chat with a BPCC Trade services specialist by contacting me on Twitter @paddyney or @BPCC_Trade or emailing firstname.lastname@example.org.