European market entryPosted: September 17, 2007
Patrick Mathieu has written a great article about US market entry via Canada. The same concept applies for Europe.
European politicians like to give the impression that EU has leveled the playing field for businesses across the EU zone, but that is not a reality. Monetary union helps with unification of pricing models and the free movement within EU makes expansion slightly easier, but having a unified legal infrastructure is still a dream. One of the most glaring examples is employment law. As long as unions are country specific and do not drive for pan-European policy we will see wide fluctuations in the definition of an employees status in relation to the employer.
TELLUS has it’s roots in Finland, which is no accident. The Global Competitiveness Report has ranked Finland in the top three of the most competitive economic environments in the world consecutively for the past three years. Finland is an incubator for innovation in multiple areas of technology: electronics, software, ship building, alternate fuel power generation, bio technology, etc. The Finnish public education and health care sectors serve as examples for rest of the world.
Most Europeans dream of opening an office in the Silicon Valley. Alternately many US CEOs see the UK market as a friendly port to make a landing. As with the Valley the UK market is the most expensive market to start operations in. It is also the most competitive. Our British friends are yet to join the monetary union, which works to highlight the point that they are actually not connected to the mainland. The major markets in central Europe are an interesting target, but in these markets language concerns are highlighted. In attacking these markets local market representation is a must. The smaller EU countries mostly operate in English as nobody will bother to learn a language that is spoken by less than ten million people around the world.
Finland is superbly situated at the gateway to the east. Finland has long lasting relations with our Russian neighbor, but can offer a mature and functional western economic base to work from. Helsinki is also the northern most EU international airport and as such is a popular connection point to the far east. Vice versa the Helsinki international airport offers direct flights to virtually all European hubs.
TELLUS sees Finland as a transparent micro version of the macro EU market. The competitive landscape is comparable to the larger central European markets, but the cost of securing those initial case studies and validating your European value proposition is substantially lower. As I pointed out earlier Finland is seen as a trend setter for many industries, which highlights the pan-European value of case studies in these industry vertices. Finnish business runs on English more so than any of the other Nordic economies making it easier to assimilate to.
Once the approach has been perfected in the Finnish test market we are ready to cookie cutter the approach across the larger central European markets. For US market entrants the only feasible option is using direct sales to gain initial momentum. In the EU, due to language issues and geographic market segmentation, we often enter the channel building phase earlier. In the EU most VARs are specialized and serve a much smaller geographic footprint that their US counterparts. A vendor will need a partner for each market that they are looking to open. This places a strain on channel management and channel program structures.