This summer, the Antwerp fashion house had a unique opportunity to set up in London. The challenge: setting up a British unit in just a couple of days.
Essentiel's colourful, jazzy creations have been part of the Belgian fashion landscape for many years. The brand is also becoming popular in other countries, including France, Spain and the Netherlands and, more recently, in Great Britain, thanks to the intervention of Trade Development. An interview with Erik Vercauteren, CFO at Essentiel.
Why did you decide to enter the UK market?
Erik Vercauteren (EV): "Some years ago we had a presence in the UK through an agent, but we eventually decided to withdraw from that arrangement due to falling sales figures. But a return to the market was never ruled out entirely, provided that the circumstances were right.
Rather paradoxically, our new UK venture began in France. Last year, we opened an outlet in the 1st arrondissement in Paris, in the heart of the fashion district. As our result, our brand had a high profile with fashion lovers and professionals, and also with importers and department store buyers. Harvey Nichols soon approached us with an offer to sell Essentiel through their shop in London."
And that was an opportunity not to be missed?
EV: "Indeed. Harvey Nichols is a multi-brand concern that works on concession: in exchange for a certain percentage of the revenue, we have a counter in their store staffed by our own people and with our own reporting, visual merchandising, etc. That means we can display our wares in Knightsbridge, a prestigious location with a high footfall. To get in on this attractive system, we just had to set up a unit in the UK. We didn't have much time to reflect, because counters at Harvey Nichols are snapped up."
How did you get in contact with Trade Development?
EV: "That was on the advice of our relationship manager at BNP Paribas Fortis. We had already had a close relationship with the bank for many years and we were in regular contact to discuss our strategic plans, potential financing or other matters. The proposal from Harvey Nichols came up at one of our discussions and our relationship manager immediately suggested getting Trade Development involved."
How did it work in practice?
EV: "Our main concern was to set up an entity in the UK as soon as possible, and to opt for the most appropriate legal form. Trade Development's role in that was primarily that of 'matchmaker', putting us in contact with a local partner, Frenger International. They advised us to set up a limited company with start-up capital of 10,000 pounds; this is rather more than the legally-required minimum, a clear signal that Essentiel was serious about entering the UK market. We agreed to this proposal. Once the decision had been made, things moved very quickly: the limited company was set up in a matter of days.
Although contact is now direct with Frenger – which is also responsible for VAT, accounting and tax matters – Trade Development is on stand-by to assist if problems should arise."
What was the advantage for you?
EV: "First and foremost, we saved time in finding a partner, opting for a legal form and getting things off the ground. We also had easy access to local contacts with a very good knowledge of local rules and regulations. Our experience on other markets had taught us that this local knowledge is essential, both with payment norms and business practice."
Is Essentiel doing well in London?
EV: "Our counter has been operating since mid-August and the initial results are very promising. If that continues, there is certainly the possibility of working with Harvey Nichols in other UK stores."
Trade Development saves you from teething problems in foreign markets
Rob Van Veen, Trade Development Manager at BNP Paribas Fortis, explains how his department can help you tap foreign markets.
Why a separate department?
Rob Van Veen (RV): "Trade Development was set up as part of the Global Trade Solutions Competence Centre in Brussels in response to a two-fold customer requirement. Firstly, medium-sized enterprises tend to assign their business development to staff who are also responsible for a number of other tasks. As a result, it is difficult for them to find time to consider a foreign growth strategy or to prospect for new customers. Secondly, they don't have local contacts or the requisite knowledge or resources to capitalise fully on an opportunity abroad."
So they need something that goes beyond standard banking services?
RV: "Indeed. A bank can provide businesses with practical assistance with their plans for expansion by opening accounts, providing guarantees and offering payment services, but customers need much more than that. They want their bank to consider their strategy and help them establish a prudent and efficient market approach. And that's where we come in."
What precisely is the service you provide?
RV: "In a nutshell, we put customers in contact with people who can assist them with their foreign projects from beginning to end. Initially we focus on listening to their requirements, sounding out their plans and examining the various possibilities.
Then we provide the customer with a report containing all the relevant information – including a clear estimate of the costs and projected results – to enable them to make a considered decision that fits with their strategy. This makes the decision-making considerably easier and quicker, because the company doesn't have to do research or establish contacts itself. And if the project gets the go-ahead, we provide the logistical support necessary for bringing it to fruition."
How does that work in practice?
RV: "It all depends on the project, the country concerned and the customer's actual requirements. Our own staff or co-workers in foreign branches provide a number of services. As a matter of fact, Trade Development services were recently set up in France and Italy to that effect. We can also call upon partners on the spot for matters that require specific local knowledge. This might be market research, recruitment, administration, audit services and legal, tax or operating advice.
This approach gives the company the assurance that they have the right people on board. We work with a network of permanent, reliable contacts who are assessed by the customer after every project. In this way we are able to guarantee quality service. However, the main advantage is that our contacts are very familiar with the local rules and practices and are used to working within that framework."
Does that mean you focus mainly on ‘exotic’ countries?
RV: "Absolutely not. Many customers call on us to tap into European markets, often the neighbouring countries. For instance, we are currently working on many cases that involve Germany, which is an attractive growth market for a variety of sectors, but it is very difficult for 'outsiders' to get established there.
And sometimes a company will initially look too far afield. Management may have ascertained an opening in their market coverage or heard from another company in the sector that market X or Y is 'hot', so they want to enter that market as quickly as possible. But they need to consider whether the market concerned does in fact fit with their business strategy. And they also need to be aware of the market's specific characteristics and rules – prime examples are the unique market circumstances in India and China or the high import duties in Brazil."
Is there a fee for the service?
RV: "Yes, customers do pay a fee, but this should be viewed primarily as an investment. And a very attractive investment at that, because it can save a lot of time and a number of other costs that in many cases prove to be pointless.
We need only think of a scenario where a business person prospecting somewhere in South America spends thousands of euros on their flight and accommodation and then has to set about working in an unknown environment, often without the requisite contacts or a clear idea of the potential costs and income. There is every chance that the trip will turn out to be a damp squib.
We can't, of course, give our customers a guarantee of success, but we do ensure that everything is in place to give their projects the best chance of succeeding. And there is also the advantage of continuity: once we have worked with a company and know its strategy, we can act very quickly if it comes to any future projects or projects involving other markets."
Ideal Felt: potential in Poland
With a concrete strategy, specific offering and – more importantly – the right contacts, the Belgian felt manufacturer established a foothold in Poland.
Ideal Felt is a Belgian supplier of technical felt for a variety of industrial uses and coloured felt for decorative purposes. They also manufacture made-to-measure filter sleeves, heat-resisting seals and protective components for industrial use.
The company operates mainly in the Benelux countries, France and Germany at present. Since Ideal Felt has virtually exhausted the potential for growth in these markets, it is now looking further east. We asked Henry Symons, Director of Ideal Felt, how Trade Development helped him approach the Polish market.
Why exactly did you choose Poland?
Henry Symons (HS): "The decision was dictated by our market approach: Ideal Felt is a niche operator with a highly specialised product range. We work with an extensive portfolio of customers in various industrial sectors and they place small orders from time to time.
As the name implies, a niche market is limited: in recent years we thoroughly tapped the market in the Benelux countries, Germany and France and don't expect to turn up many more potential customers. We can therefore assume that companies that want to work with us in those countries are already doing so, or at least know us. As a result, it will be difficult to achieve any further significant growth in those countries. We therefore sought out new outlets, preferably in countries with a lot of heavy industry. Poland came out on top of our list."
Did you go prospecting yourselves?
HS: "We did go to Poland a while ago, but returned empty-handed. That was primarily due to the fact that it was extremely difficult to find the right contacts. Because of our specific range, we rarely – if ever – negotiate with a central buying department, but rather with technicians and specialists on the shop floor. And in many cases those persons were not familiar to the company's general contact, let alone at reception. And when we did get to meet someone, we still had to contend with the language barrier."
So what prompted you to try again?
HS: "During a meeting with our relationship manager at BNP Paribas Fortis, our plans to expand came up again. He immediately advised us to contact the Trade Development department. They in turn put us in contact with Valians International, their partner for Eastern Europe."
Can you describe the actual process involved?
HS: "We worked in stages. Initially we provided the people at Valians with comprehensive information on our company, activities and products. This gave them a better idea of the market, so that they could focus on seeking appropriate prospects and contacts.
Together we then clearly demarcated the target market. It couldn't be too small, otherwise the profitability of potential business with Poland would be compromised, due to the transport costs. We were therefore looking for companies in potentially interesting sectors that could order significant volumes.
We drew up a very specific questionnaire to help Valians identify suitable companies. Based on that, and taking account of the profile of our 'ideal customer', Valians then drew up a shortlist. We whittled the list down further, and eventually we had ten or so 'must see' companies plus a few other 'possibles'."
And then you visited those?
HS: "That's right. There were three of us: our contact at Valians, who acted as interpreter when necessary, our commercial representative for the Benelux countries and myself. We were able to make seven site visits during our week in the country. Because we had selected various sectors and industry in Poland is very geographically spread, too much time was wasted in travelling to manage any more.
Nevertheless, the difference from our first visit was enormous. The major advantage was that the prospects were expecting us, so they took the time required to talk to us and show us their company. One of the company tours actually gave us some ideas for a new application for our products. And this time language was not a problem."
Can you already gauge the results?
HS: "Most of the companies we visited have asked us to provide test material and draw up a tender. It was drafted in Polish, again thanks to intervention by Valians, which is also responsible for the follow-up. So far that has generated one order, and other negotiations are under way.
Establishing a lasting business relationship is not easy, especially for a Belgian niche operator in Poland. Our potential customers had for years been working with cheaper local suppliers, most of them offering lesser quality products. So it will take a long time to convince them that our products are well worth the extra cost.
I remain optimistic, especially since our contact at Valians is now totally familiar with Ideal Felt's offering and can recommend it to other potential customers in Poland. Working together was also a very informative experience that provided us with a wealth of knowledge that will be useful in investigating other markets. As business people, we are constantly on the look-out for sustainable, profitable growth."
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.