This year, 15 Estonian companies, who have the opportunity to either enter the German market or expand their activities in this high-potential country, are participating in Enterprise Estonia's “Mission Germany” programme. Representatives of four companies talk about their past experience in Germany and what benefits they would like to receive from a strategic plan devised together with advisers.
IT company FOB Solutions is an example of a company for whom the German market has always been important. After FOB Solutions had been established 2012, the entire turnover of their early years originated from Germany. They have worked with various companies, but the number of customers in Germany has not increased since the beginning.
“That is what we have not been able to do. We have not made an effort ourselves in order to succeed. It all boils down to a lack of time,” says Karl Koost, the company’s Head of Business Development.
Thermoarena OÜ, a manufacturer of terrace and cladding boards, has also looked towards Germany in the past. They used Enterprise Estonia’s assistance for two years, as well as called and e-mailed larger buyers. Without results. According to the company's head, Vahur Pindma, the company has sold in both Austria and the Netherlands, but in Germany they have not managed to find customers.
“Our customers are wholesalers. In the past, these were smaller family-owned German companies, but today they are increasingly bigger. As an Estonian company, it is becoming increasingly difficult because you are becoming smaller in their eyes. You need to grow to be a significant partner,” explains Pindma.
This is the second attempt of Matek AS, a wooden house manufacturer, for whom Germany was the main export market in the 1990s; after that, however, they focused on the Scandinavian countries. This year, Germany is back in focus.
“Personally, I have lived in Germany for a year and exported wooden houses to Germany at my previous job. Life and culture there are familiar to me,” says Kaarel Väer, Sales Director of AS Matek.
TNC Components is a furniture manufacturer who is also no stranger to the German market. They tried about 15 years ago, but failed. Recently they targeted the market again and started to attend trade fairs. Quotes have been given, but the problem was that the product itself was non-existent a year ago. However, negotiations with a few companies are ongoing.
Testing the market with a new product
“We have taken it into account that we need time. Fortunately, volume will not be a problem for us. In Germany, the first thing they say is, ah, you are from Estonia, how much can you do at once?” laughs Janner Eskor, the Sales Manager of the company. He adds that the primary purpose of TNC Components is to altogether understand whether Germany is their market. They have realised that there is no point in offering simple furniture in Germany. Their desire is to introduce their new product to the country, that means click-furniture, which is a completely new phenomenon there.
“We have the first production line in Europe altogether. Our adviser has already introduced it in Germany and there is interest,” says Eksor about the promising start.
First contract already underway
This round of “Mission Germany” has just begun, but Vahur Pindma, the Head of Thermoarena, can already talk about his first win. First of all, he says it is very difficult to sell to Germany without prior knowledge. Competition is high and everyone goes to offer themselves the same way. Therefore, he says it is positive that due to Enterprise Estonia they can now plan their journey with a local adviser.
“People in large countries want you to talk to them in their own language, while it is even better if you are from their cultural space. The adviser helps us to figure out where and what to sell and how to present it. We are one of the few in this selected group (15 companies) to start quickly,” says Pindma. It turns out that they have already attended the Cologne trade fair, accompanied also by the adviser. They established various contacts.
“Today we can say that we already have the documents of the first order. Business is not done by companies, but by people, after all. We did enough groundwork and met the local person on site. It was easier to establish a connection,” says Pindma, satisfied.
First steps together with an adviser
This year, Enterprise Estonia has chosen a very comprehensive approach. Estonian companies have been brought together with experts from the German consulting firm Steinbeis. The companies believe this is the right way to go.
FOB Solutions has actually been involved in the “Mission Germany” programme for two years, but now a clear strategy has been put in place with the adviser. They chose a direction, niche, and are focusing one hundred percent. While in the past their problem was not having time to introduce themselves in Germany, then now there is a specific person in charge, Karl Koost himself.
“The pace is fast. We are already planning the first event to introduce ourselves. It will take place on 25 February. Much of our future strategy depends on how the first event goes,” says Koost.
TNC Components has established an approach with an adviser, contacts have already been found, and samples are being made. Janner Eskor will soon be flying to Germany to negotiate with the first interested parties. They have also found an agent, which is very important for their product. They wish to shortly draw up a strategic plan together with the adviser. It is important to determine to whom and what product they are going to offer. They also realised together that there is no point in offering a conventional kitchen frame in Germany.
“If we were to find one or two customers in Germany a year, then it would be already great. After all, we are talking about buying goods in containers, about large buyers. At the same time, we are also looking for a furniture manufacturer or an online store as a partner,” explains Eskor.
Matek wants to market wood-framed apartment buildings in Germany. The adviser has helped them with their preparatory work and they have worked through a long list of potential partners. Contacts that may be suitable for Matek and to whom they could be useful partners have been selected. First meetings are being arranged.
“In addition to organising meetings, Enterprise Estonia has put together a commendable training programme, which will come in handy when we familiarise ourselves with the local circumstances,” praises Väer.
While the other three are ideally looking to attract some clients in the first year, which could mean a significant increase in sales, then Vahur Pindma, Head of Thermoarena, dares to say that they have a clear financial goal as well. They hope that the turnover in 2020 will be between 500,000 and 1,000,000 euros. According to Pindma, the strategy established for and approach taken in regard to Germany can be transferred to other larger markets as well.
“We are learning a lot throughout the process. Together with the adviser, we are creating a sales strategy and we can use this model in other countries as well,” he says.
In 2020, Matek wants to find at least three long-term partners from the country with whom to actually cooperate. Both FOB Solutions and TNC Components are primarily testing the market and want to know how their service and product will be received. It will be an important piece of knowledge if it turns out that something completely different has to be done in Germany, or it is impossible to continue there.
“We have not yet projected a positive budget for 2020. Click-furniture is simply too new in the market. It is also more expensive than usual. We hope to see positive turnover in 2021,” says Eskor hopefully.
Four companies believe that this time, Enterprise Estonia has chosen the right path, and it seems that working with local advisers and actually meeting potential clients can be successful. 2020 promises to be exciting for all four companies.