Andrew Deeks and Frank Wood

Whilst the BRIC (Brazil, Russia, India and China) economies are on their way to becoming world giants, Western Europe is and will remain a huge, prosperous market for high-quality products and services from high-quality US companies. Typical per capita incomes are around €38,000 per year (USA €44,000) compared with the present Chinese level of around €1,700.

Because the European markets are highly competitive, US companies need a quality offering and persistence to succeed. As long as your company complies with the necessary regulations for any new company entering the market, however, you are unlikely to suffer from unfair competition such as local companies copying your products and evading patent law.

A powerful brand can, to some extent, break down barriers, but in general, US companies should always avoid thinking of Western Europe as a uniform bloc for marketing purposes. Attitudes, lifestyles and living standards vary hugely, for instance between the Nordic countries and Mediterranean Europe. There is some movement towards homogeneity, but it is slow and Europe is never likely to match the US model.

There is also, of course, the added complication of five main languages and many minor ones. Although English is increasingly the business language of Europe, it is dangerous to enter the market in a new country without having somebody with local language ability and knowledge.

Among the European economies, the UK is one of the more dynamic and has obvious special attractions for US companies, notably:

• (Almost) common language
• Similar business culture
• Positive attitude and affinity to the US

Where a US company is already present to some extent in Western Europe, it should periodically assess its position, in particular answering two questions:

• Is our company’s present performance satisfactory in the countries where it is established? If not, how can it be improved?
• Particularly with US companies with a UK base, should we expand into mainland Europe, and if yes, into which countries? How shall we do this?

US companies new to Western European markets need to adopt a step-by-step questioning approach:

1. Is there an attractive market for our company’s products/services? If yes, in which regions of the UK/mainland Europe?
2. Who are the main competitors? How do they operate? How competitive are we, both technically and on price?
3. What special steps do we need to take (for example, gaining EU technical/quality certification; sales literature in the local language) before we can enter the market?
4. What is our best approach to the market? (for example, starting in which country; through agents; sales office; local production.)
5. How do we successfully handle all the detailed problems of entering a new market? (for example, acquiring offices; recruitment; employment terms; local company law; taxes.)

Ideally, companies should create a critical-path analysis for this programme and a cost estimate for each stage. At the worst, you can drop out after stage 1 or 2 and know you have tested the market without spending silly money.
However, looking positively, if you are a strong company with excellent products, you will maximise your chances of success by following every step and not lose money or time by having to solve problems at the last minute that you should have allowed for long before.

Local knowledge and expertise is invaluable to help companies identify and develop their full potential in these markets. It is a relatively low-cost way of assessing markets without costly commitments at an early stage. Using a dedicated resource to undertake this work also means that the time taken is minimised at each stage.
It might be helpful to talk to other US companies which have successfully entered the Western European market. They will most likely repeat our message – you don’t need to have any fear of the unknown, but if you simply charge in without the necessary preparation you may still succeed, but you will waste money and time.

Good luck, have fun and make good profits!
For more information, contact:
Frank Wood or Andrew Deeks at
Ross Wood Associates
Tel: +44 7860 648769 or +44 1789 400300
E-mail: ross.wood@btinternet.com