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September 29, 2022

Liisa Koivisto

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Challenges and Opportunities of International and Cross-Border Market Growth

On 24 May 2022, the DigiProcess project organized a Matchmaking for Cross-Border Sales event, and this article tries to gather the information and talks of the day into one article to give you ideas and inspiration for your company’s cross-border sales.

Accessing to a foreign market can be tough for SME and it can take long to get in and succeed in a new market. The path can be smoothed and the process accelerated by acquiring a partner who already knows the the market and already has networks there. At best, you can take advantage of each other’s relationships and offer both of your services on both sides of the border. Combining forces can improve the chances of SMEs to cooperate especially with large-scale industry companies.

The Matchmaking event was an opportunity to hear other companies ’experiences, get valuable tips, and create new networks. The day consisted of short company presentations, group discussions on international business and 15-minute meetings between SMEs. SMEs of all sizes were welcomed, starting with one-person businesses and also both international veterans and first-timers, as there is hardly ever too much networking. DigiProcess learning materials for the SMEs were also presented and keynote speaker spoke about why collaboration is important.

Roundtable talks: Opportunities

SME’s who participated in the roundtable discussion saw a huge business potential in large factories starting in the North. More than hundred billion euros have been and will be invested in northern Sweden and Finland in the next few years, so there is a need for a wide range of products and services. The growing process industry needs services from companies in many different industries.

Finland and Sweden are similar markets and the neighbour country is the logical step to go to a new market. When co-operating, you can share each others resources to get a bigger or more talented team. Finding talents is hard for everyone in both countries.

On both sides of the border, the challenge is labor shortages, but working together can give both sides wider shoulders and deals that would not be available alone. In a good partnership, everyone wins.

What new problems of the customer you can solve with partners together? What new value can you offer to the customer with a partner? You can create shared offerings and shared contacts with partners. One plus one is not two but more. Customer buys the solutions, they don’t have to know all the companies who deliver it together. For example digital transformation is so complicated that no one can offer that alone.

The conclusion of the opportunities discussion was that SMEs need to work together and work in ecosystems to solve customers challenges together. Collaboration can start in pilot projects and go further from there.

Roundtable talks: Challenges

The participants were talking about language barriers and weighing whether English as a common language is enough for co-operation. They were not sure about if that is enough. Having a native person from the other country in a team helps.

It was also mentioned, that we may underestimate cultural differences between Finland and Sweden. We easily think we are alike on the both sides of the border, but we are not. Someone reminded, that one should also keep in mind that people are also different in different areas of the country.

Passiveness and modesty are a challenge for both Swedish and Finnish companies.

-Nordics can be a bit passive and a bit too modest to boost their company. They should learn from international companies, said one entrepreneur.

One challenge the participants raised into discussion was patriotism, buying from one’s homeland. Collaboration with a local partner can help with this and you can get a deal which you would not get without the crossborder partner.

-We want everything to happen fast, time is money. So how can we help to build a fast line to make it faster to find co-operation partners? Negotitations, getting to know the market and creating trust takes time, even years, and resources, said one participant.

- Small companies don’t have so much time or money or other resources. It’s hard to make long connections and create trust without any agreements. It’s frustating and it’s good to understand it takes time for a new company to create contacts and customer relations, said another.

In the end of round table talks, the participants were asked how future projects could help SME’s in internationalization and co-operation between Finland and Sweden. The conclusion was that by providing possibilities, opening doors and giving ideas the projects can help a lot. Projects can provide easier access to events and support building up partnerships. In the matchmaking events SME’s can meet up and start talking about the co-operation and maybe later go and visit a large industry customer together.

Keynote: Why collaboration is important

The keynote speaker of the event was Erik Hagenrud from EKN and he talked about why collaboration is important. Simply put, collaboration is important because you need knowledge about the market, access to the customers and support and presence on the market. And hey, because working together is fun!

-Profitability takes time and money - more than you hope, stated Erik. -Rapid growth is rare, so you need to have money for growth. You also have to have contacts via somenbody or build them your own. If a company already has suppliers, how can you be better than them and replace them?

Erik introduced us some examples of some companies’ challenges in export development. Here are some lessons companies have learned and what they have said afterwards:

We should have...

…done our homework better.

…analyzed the regulations of the country better.

…been more present on the market.

…make stricter demands on our partner.

…visited our partner more frequently.

…not underestimated the time it itook to establish the product in the country.

…had a better organization or support at home.

Erik emphasized, that you need to make your partner feel that you really are interested in collaboration. If you are not active enough, they may think you are not as interested as they thought you would be. This is why you need to be active and show up for them.

-Swedish people are not always so professional: sometimes they act like in tennis match and wait the other partner to hit to ball back. We can be a bit passive and it looks like we are not that interested, but we are waiting to see if you hit the ball back, says Erik smiling.

Choose partners with care

Erik states that partners are vital when you succeed or not succeed. He pointed out some things to consider:

Don’t pick the first one - Get a clear picture who they are, like an employment interview. You are building a long time relationship.
Define your demands - Put some demands on your partner and agree what they should do and what you should do.
Will your product make a difference?
Take references - is this a good company to work with?
Visits, again and again
Create trust
Personal chemistry - Can you work with these people?
Ask for a development plan
Who is your counterpart? - Is your contact the right person who can sign the agreement or just sales people? You might get the idea that he is the right person but he might not be able to sign.
Exclusiveness or more than one - If you are gonna work exclusively with one, you lock the market if it doesn’t work. Exclusive agreement is a risk.

Lessons learned by Erik

-In the beginning of collaboration it is important to organize lots of visits, preferable four visits in a year, says Erik. He suggests that on each visit it is beneficial to stay there a long time, even 2-3 weeks.

He thinks a proper product training is important so you can make sure they can sell your product and service. -They are your mouth and ears in the other country, he reminds.

In his opinion it’s a good idea to make joint visits together with your partner to the customer and also market together with them.

– But the most important thing of all is that both partners make money, Erik highlights.

Erik sees that opportunities of crossborder sales are obvious – larger market means potentially more sales. To make sales on several markets increases the value of the company in the eyes of investors, because they value that the company is able to access other markets.

-Obvious challenge is that coming in as new company means you need to kick out existing suppliers and you need to be better, quicker and maybe cheaper than the old one. It is not enough to be as good as the old one. That’s why it’s necessary to know what you are up against, empasizes Erik.