First part of a series of two posts about doing business in Europe written by Jan Jonckheere, one of our consultants, also Professor of International Business in Business Schools and Universities in Spain, Belgium and the Netherlands
As an Export and Internationalization Consultant, I am sometimes confronted with companies, mostly non-Europeans, exclaiming their frustration with how to do business in Europe. Mostly they claim that they first thought it would be very easy to enter Europe, as Europe is a kind of “Single Market” to find out later that Europe is more like a patchwork of fragmented regions and/or countries, in which nothing seems to be the same.
Europe and the European Union are indeed on the list of companies of most countries worldwide when they consider expanding their business. Europe is after all, with all its ups and downs and internal differences, a rather wealthy group of nations. Let it be clear, Europe is not important because there are many people in Europe (Europe represents only 5% of the worldwide population) or because they own a lot of territory (the European part’s land area represents less than 7% of the world’s land area), but because there live quite some people with a rather big wealth on a small territory, for which their GDP/Capita is quite big, making them an attractive target to whom to sell your products and services.
However, one can indeed not consider Europe, or not even the European Union, as one market.
Yes, it is true, there is the Single market for the European Union (EU), and the EU certainly has the merit to have converted Doing Business in Europe in a much more attractive venture over the last decennia. But, although the Single Market offers big advantages to companies wanting to operate in Europe, its effects are mainly limited to operational issues, customs, internal transport within the EU. In a nutshell, the Single Market means that once you have imported your goods in one country of the EU (and thus taken care of your legal obligations, as paying import and possible other taxes, and VAT) you can move the goods freely between the countries of the EU – for more information, look at: (https://ec.europa.eu/growth/single-market_en).
But there are some simple but straightforward examples:
- The EU still has 24 official languages and if you want to sell your goods in any of the countries of the EU you may have to translate all your labels, manuals, warranty certificates etc. in these local languages. So, how do you put 24 languages on a tiny pot of Marmalade? Yes, the correct answer is that you will have to make various language versions. Which may affect your economies of scale (and maybe the main reason you were looking to expand to Europe was exactly in order to improve your economies of scale?).
- Cultural differences between the countries of the EU are strong, meaning that something that people like in the North of Europe (f.i. Scandinavian countries) is not necessarily appreciated in the South of Europe. Butter f.i. is still very much used in the North and Center of Europe, whereas the South relies on Olive Oil. Many years of promotion of the Mediterranean Diet have not been able to eliminate the use of butter!
- Did you ever try an Expresso in Italy? And what about a coffee in Finland? The difference is tremendous (and so is the taste).
And here is another less straightforward example: I recently planned to export “healthy” smacks to Germany: it turned out that I cannot put “healthy” on the packaging, as this word is reserved for fresh fruits and vegetables only!
These differences are likely to be more important for B2C goods as Fast Moving Consumer Goods (FCMG), Fashion etc. and less for B2B goods: if you sell industrial machinery, apart from having to translate your manuals to the local language, and make sure the electrical current and plugs are adapted to the local country, you will not be confronted with major differences between the various European countries.
¡Read the rest of these series in our blog if you want to learn more about doing business in Europe! And contact us for any advise or questions on this topic or if you want some help so that your new adventure doing business is as successful as it can be.