Clanbeat team with the Japanese tech investor Taizo Son and his team
Although the year 2020 has been extremely difficult for many businesses and has drastically hampered international business activity, Estonia is increasing its export volumes to Asia. Clearly, the rapid recovery of Asian markets from the crisis and their return to regular operation has provided opportunities, which have been seized and used by Estonian companies quickly adapting to the changed circumstances.
According to Kai Kreos-Nemčok, head of the Estonia-Asia Trade Agency, Estonia's exports to Asia show strong resilience: “Despite the ongoing crisis, we can already say that our exporters have had one of their most successful year in Asian markets – exports to China have gone up by 47%, to India by 44% and to South-Korea by 66%. Estonian businesses have managed to react fast in this crisis, found new opportunities and adapted to the changed circumstances."
As Kreos-Nemčok pointed out, adaptation is the key to success. “In 2020, we witnessed great changes in consumer habits and rapid development in the field of technology. Many Asian countries show a growing interest in our e-solutions as well as various educational and medical technologies developed by Estonian companies. In addition, consumers in Asia are very keen on e-commerce, which has shown a massive growth this year and is one of the best ways for Estonian companies to reach these distant markets."
An online event will take place already this Thursday on December 17th, where potential business opportunities in Asia are introduced. The export advisers of the Estonia-Asia Trade Agency (EAS) will join the event from Asia and seven Estonian entrepreneurs will take the stage to share their experience. Among others, the jewellery designer Tanel Veenre, who has opened his own e-shop on the Chinese market, and Kadri Tuisk, who introduced the Estonian ed-tech startup Clanbeat to the market of South-East Asia, will share their experience live at the event.
From a random shopping wave to an online shop in the world's largest shopping platform
Tanel Veenre's handcrafted jewellery is already well known in Estonia, but relying on the market of a small country with a population of only 1.3 million provides no boost for an ambitious entrepreneur. Five years ago Veenre participated in the export programme for creative industries organised by EAS (Enterprise Estonia), which prompted him to think about conquering the European market. However, a seemingly random shopping wave from China that hit Veenre's online shop two years ago focused his ambitions on the enormous Chinese market, which by now has become the main export destination for Tanel Veenre Jewellery. “Two of our trainees from China discovered an item of information on the Chinese internet – a highly influential Chinese fashion icon was wearing pieces from my collection. We managed to turn that immense interest to our benefit and instead of having one agent we soon had a number of distributors," Veenre recollects.
Tanel Veenre is his own studio
But this was just the beginning. Veenre points out that what China is experiencing right now in e-commerce, may arrive to Europe and America in a few years. “China seems to be from another planet – the models and solutions we are accustomed to do not work there, considering, for example, administrative complexity and commercial opportunities,” notes Veenre. As an example, he mentions thorough preparations needed for the integration of Alipay payment platform, for which a bank account linked to the Ali payment system was required. However, no Estonian bank had that opportunity at that time.
Matters related to patent and trademark protection are also fraught with pitfalls. “It seems impossible to obtain a full design protection in China. You can register a trademark, but by using sneaky tricks, someone may still outfox you. So I take copying my work as a compliment and instead of court disputes, I focus on innovation to be some steps ahead of any competitors or duplicators," he says.
E-commerce in China holds great potential
Along with risks, the Chinese market promises profits that by far exceed the revenue the fragmented European market can ever offer. This, however, requires a full understanding of local rules and a crucial mindset shift, especially if you build up an online shop. “The main lessons I learned were related to building up my online shop, and I have developed five of them since I started my business.” Tanel Veenre Jewellery opened its last online shop, this time on the Chinese shopping platform Taobao, only a few weeks ago, but its economic effect is undeniable already after a few weeks..
According to Tanel, the online shops in Europe, usually very static, would never work in China, pointing out that “The entire content of an online shop must be dynamic, almost on the level of a modern TV shop, and include videos, articles, live-sessions, chatbots, etc.” At the same time, one of the key elements in creating a successful online store and achieving higher sales, is continuous marketing. In order to promote his collections, Tanel Veenre has successfully worked with also Chinese social media influencers (KOLs) who have created content helping to create more brand recognition.
Chinese style icon Wanwan Lei wearing Tanel Veenre’s jewellery
The second key component is customer feedback. Unlike the European, the Chinese consumer are very willing to give feedback. “Up to 95% of Chinese customers give feedback, which is why the quality of products and the whole shopping experience is under intense pressure – a single case of negative feedback may jeopardise several years of hard work. If customers’ ratings are good there will be recurrent orders, which is certainly the most satisfactory reward for the effort done.”
Finally, the Chinese consumers expects to receive the ordered goods immediately or at least the next day, and here, Veenre stresses the importance of seeing the entire supply chain. “Delivery from Estonia by courier service is not an option, for two reasons, the cost of sending the parcel on the one hand would make of half of the cost of item; on the other hand, the consumer would not wait for weeks to receive the goods. Because of that we have enough stock in China to guarantee the shopping experience the Chinese consumer expects."
As a final piece of advice, Veenre adds that standalone brand shops in China would not function and sooner or later all brands reach be big conglomerates like Alibaba or Tencent. “If you wish to attract the customers' attention, you have to be present on the platforms like Taobao or T-Mall or JD.com and use Weibo or any other social media platform facilitating the consumers to visit your online shop,” adds Veenre.
Estonian startup tuned its global business model towards South-East Asia
Estonian ed-tech startup Clanbeat has achieved its functionality after a long and difficult journey, in which EAS and South-East Asia played a crucial role. Kadri Tuisk, the founder of Clanbeat, recalls the time a few year ago when the focus of their product started shifting towards educational technology. “We had started cooperation with schools when we met the delegation of the Ministry of Education of Singapore in Tallinn. Only a couple of weeks after this meeting, a quick visit to South-East Asia to agree on the cooperation with the government of Singapore took place. We were supported by the representative of EAS in Singapore, who helped to find consultants and open the right doors," Tuisk remembers with gratitude.
Clanbeat, an ever-evolving enterprise, defines its product as a tool that ensures personal growth and well-being. “Our product focuses on the well-being of pupils and our grateful customer base includes the heads of international schools of South-East Asia,” says Tuisk. South-East Asia, along with the Middle East, Australia and New-Zealand are now becoming the main markets for Clanbeat. Due to the increasing pressure for innovation and the fast emergence of international schools, Asia is seen as a rapidly developing market in the field of education. Everything that comes from Europe is deemed a quality benchmark - says Tuisk, but, when it comes to education, Estonia excels, even enjoying a perception surplus, holding the highest quality label. “We are well-known and recognised, our excellent educational system, the superb results in the international PISA test and the innovative digital state.”
Clanbeat founder Kadri Tuisk
Different countries, different strategies
Tanel Veenre has gained a firm foothold in large sales platforms and consequently reduced the need for physical contacts and face-to-face meetings. “Our contact is cold and technological – face-to-face meetings are necessary when we have to make crucial decisions, but any other communication is electronic,” Veenre explains. Kadri Tuisk from Clanbeat, however, believes that building trust from distance is complicated in Asia, which is why being present is important, too. Both agree that the Asian business culture requires involving local people to achieve success. “Sending e-messages from Estonia simply does not work because the trust is earned through recommendations and personal contacts,” stresses Tuisk, who also admits that at first, Clanbeat had difficulties in Singapore, too, even though they were supported by the local Ministry of Education.
When attempting to enter some Asian market, sales strategies deserve close attention – you have to know how to address the clients and how to open necessary doors. “We realised that the door-to-door sales do not function there, especially if you cannot be physically present all the time. Every sector has its own networks and platforms and it is paramount to be there, providing high-quality content and good products. Finding the challenges specific to schools and providing relevant solutions is at the root of our success," underlines Tuisk and adds that the best marketing channel is word-of-mouth information exchanged between school heads.
Tuisk also refers to a significant misconception about operating on Asian markets. “There is not a unique Asian market, each Asian country has its own specific features.”
State support is invaluable when entering new markets
Next goal in line for Clanbeat, a crucial one, is entering the Indian market for which preparations have been launched in cooperation with EAS and the Ministry of Foreign Affairs. “We have been provided with a special adviser who works with us towards our goal. The adviser's task is to find certain partners for us, help to set a focus and prepare our strategy. The support from the state and EAS helps a lot and serves as a kind of distinctive quality label. For example, the e-Estonia Briefing Centre prepared highly professional promotion materials about Estonia, which we have shared with our customers. This increases the reputation of Estonia as a reliable partner and thereby also the customers' confidence in our company,” summarises Tuisk.
Entering remote markets is risky and may be expensive for small businesses or at an initial stage. Veenre appreciates the discussions with EAS that helped to map possible risks and develop risk management strategies. The most successful Estonian designer of jewellery concludes
“The trainings organised by EAS have given excellent basic knowledge for operating in China, but of course I have acquired additional specific expertise by myself. When attending training sessions, you always encounter some aspects opening new ideas in your mind. Export experience within Europe cannot be applied in Asia, therefore, you have to keep an open mind and be ready for thorough testing and a long preparatory process. Our next greater challenge is marketing, which means we need to find an answer to a question which seems to belong to the field of alchemy: "How to make yourself seem sexy without massive resources?"
If you wish to learn more about the opportunities opening up on the markets in Asia, hear the success stories of other Estonian enterprises and find out how EAS and the Ministry of Foreign Affairs can help you on Asian markets, join us on 17 December and participate in the online event organised by the EAS Estonia-Asia Trade Centre. Register here
The online event is funded by the European Regional Development Fund.