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Letter no. 59.01
Going Global 3
Tapping foreign markets
An enterprise intending and able to export (see "Fit für den Export" [Fit to export] at www.osec.ch) is often faced with the problem of evaluating the market potential for its products in the desired target markets, selecting a strategy which promises success and finally implementing this strategy at the local level. Secondary research (or desk research) may help at the onset in identifying as many sources as possible for furnishing the company with market-relevant data, however a point is finally reached where enquiries (primary research) must be conducted locally in the foreign country. And therein lies the actual problem: Who can one turn to for help? More often than not, personal contacts (suppliers, clients, business associates, associations of industries, export
organizations) can help the company proceed further. With Fargate AG, there is now also a company that can provide similar services.
Fargate
In 1996, Heinz Zürcher and Daniel Isler founded the pilot enterprise Tozai Group AG, in order to support export initiatives from Switzerland to Japan. In 1998 this enterprise evolved into Fargate AG which functioned as a kind of export bridge for Swiss SMEs in foreign markets. Seven permanent employees and seven project leaders work for Fargate, apart from the 100 local partners in around 35 countries across the globe. These "satellites" have a network of personal contacts in their own markets and are well-versed with the local customs and practices. They are in a position to establish local business contacts for their clients, whereby actual business is transacted personally between the concerned partners. Fargate studies the market potential of the client's products in the desired country of export, works out a strategy and translates this into action with the help of its local satellites. All this normally takes between 6 to 9 months till the time of actual entry into the market. However, this co-operation does not end with entry into the target market: Fargate continues to assist its partners and guarantees personal contacts at the local level. Of course, it also has a personal stake in this: Fargate's payment is contingent on success. This offer is directed to Swiss enterprises with products which could yield a minimum annual turnover of one million Swiss Francs per target market within a stipulated period of time.
Example 1: Mammut tec AG
Mammut tec AG, a company with over 80 employees, is one of the leading and largest manufacturers of narrow fabric for technical applications such as high-performance tapes, harnesses, round slings, cords and ropes. After in-depth preliminary discussions, the management of Mammut tec AG decided to enter the English market with the help of Fargate. The English Fargate-satellite, MRE, took up the Mammut tec project. They acted speedily in working out concrete measures aimed towards fulfilling this objective. Barely two weeks after the contract had been awarded, a three-day marathon meeting took place in Seon. After conclusion of this rather intensive workshop, Mammut tec, Fargate, as also the English Fargate-satellite, MRE, were equipped with the requisite information with regard to the aim and purpose of the market development measures being planned, had developed mutual trust for one another and also had a clear idea of the intended plan of action.
The English Fargate-satellite had also found out that there was no supplier in their domestic market offering a comprehensive range of products in the area of narrow fabric for technical applications. In just a few weeks after the contract was awarded, the Fargate-satellite could transmit the first definite results to Mammut tec AG which are now being processed further.
Example 2: Fritz Nauer AG
Fritz Nauer AG, Wolfhausen, a leading Swiss company with a worldwide presence in the field of foam technology is keen on exploring new sales markets outside Europe for its new product line called INTEGRA. For this, the company would require not only consultancy services but more importantly, active support at the local level for implementing the project since good products and a powerful export
organization in Switzerland alone are no guarantee for a successful run in Asian markets. Knowledge of the foreign language coupled with an understanding of the mentality and culture of the country under consideration play a far more significant role in this context. The local satellite engaged by Fargate acts an important interpreter and teacher of the foreign culture. In Japan, for example, it took about a year from commencement of the project to reach the point where business transactions started yielding results. In Taiwan, on the other hand, it took barely two months to get a taste of success. Fargate currently has five more projects under process.
Concluding remarks:
Any enterprise interested in selling its products in foreign markets should be able to do this at the lowest possible cost with the highest possible returns. Three tips for attaining this objective:
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1.
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Training: The cost of "learning by doing" is very high in foreign markets. It makes sense to invest in basic training and/or experienced employees.
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2.
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Cost of procuring information: Information should be procured from reliable sources. False (and maybe even free) information could lead to higher expenses in the long run and/or may even turn out to be misleading.
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3.
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Contact person: The cost involved (in terms of time spent) in conducting your own secondary research should not be underestimated. It is very important to find the right contact person (with requisite experience and knowledge of the particular industry and location) at the earliest possible opportunity. Many questions can be speedily answered in this manner.
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Source: W. Niehoff and G. Rietz: Going Global, Strategien, Methoden und Techniken des Auslandsgeschäfts, Springer Verlag, Berlin etc., 2001.
Urs Zgraggen, Economic Secretary of the Aargau Chamber of Commerce and Industry
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Original version (German)
