Hungary - Case Studies

The Lerner brothers invented the process of machine-assisted bagging whereby an operator puts products into bags with the aid of a machine.

In the States they are in the happy situation of the product name being synonymous with the bagging process where it is known as “Auto bagging” (think “Hoovering” the carpet).

The UK office in Malvern was founded 25yrs ago and is the company’s European Head office. The associated manufacturing plant at Malvern runs 24 x 7 and outputs over 60 million bags a month which go out across the whole of Europe.

APS also have offices in France, Germany and Belgium together with distributors in many other countries to the eastern edge of Europe.

Clive Pearson is the UK Marketing Communications Director and looks after marketing in the UK and Germany (he speaks fluent German) and his colleague Kat looks after the French and Spanish speaking countries.

Of the countries that Central European Link features, APS have distributors in the Czech Republic and Hungary and more recently have started trading in Bulgaria.
Clive emphasised how difficult it is to find good distributors and that thorough research is required to find the right partner companies to act as distributors.
The process of finding distributors in the Czech Republic and Hungary started with a joint project with the Hereford & Worcester Chamber of Commerce’s International Trade team who went out to the target countries and used their network of contacts to find suitable companies. Their work then produced a list of potential distributors that APS could use as a starting point for their own selection process.

Clive points out that potential distributors tend to tell a company what it wants to hear through a natural desire to grow their businesses. This could obviously lead to future problems so they have to combine all the various sources of information at their disposal to sort through potential distributors to find the right company.

Once APS have got their shortlist down to the last few potential distributors Clive feels out that there is no alternative to actually getting your feet on the ground and meeting the distributors before making a final decision.

Clive explained that the choice of countries to trade in also depends on the local labour rates. When they first meet a potential customer who has staff bagging their products by hand, APS can offer a productivity improvement of between 400% and 600%. If the local labour rate in a country is low enough then the incentive to buy APS’s bagging machines is not there hence the company concentrating on markets on the Western side of Europe. That said, Clive is confident that as the countries on the eastern side of Europe develop, and their labour rates improve, then the market for APS products will continue to grow and spread eastwards.

Being a fluent German speaker Clive feels it is very important to have some foreign language skills amongst the company staff to aid the process of expanding into new markets not least as mark of respect to the people you are dealing with but he acknowledges that English is the business language and says that most East European companies they deal with generally have an English speaker on hand as they know that will help them get the business!

Finding quality information sources when researching a potential market is critical for a company like APS and Clive says their first port of call is generally the Chamber of Commerce International Trade desk, and through the Chamber the UK Embassy in the relevant country. The fact that the International Trade team at the Hereford & Worcester Chamber of Commerce go out on a regular basis to the Eastern Europe countries that APS were looking for distributors in, means that the local intelligence they provided to APS was of a quality that a first time visitor could not get.  Also, relevant trade associations in the target country and in the UK provide APS with useful intelligence on a target market and the companies already trading there.

Russia does not play a large role for APS at present though Clive acknowledges that the UK office can see some potential there. Being a USA owned company means that there is a different perception of Russia back in the head office in Ohio and that perception means there is a reticence to do business within Russia. So for now Clive says they are monitoring the market in Russia with a view to doing more business there in the future.

A target country’s membership of the EU is also a help says Clive in terms of confidence building and it being a statement of intent to do business in a certain way but is not really a massive factor in choosing a country to have a distributor in for they products. He does acknowledge that UK still has a certain status with East European countries and that means they will get sales enquiries from Poland directly to the UK office (rather than their French or German offices) because that customer (or potential customer) wants to deal with the UK rather than any other European country.

Clive’s final “words of wisdom” for companies planning to expand outside the UK and specifically into the central/eastern Europe markets is not to be afraid to ask for advice!

From your local Chamber of Commerce (www.britishchambers.org.uk), UK Trade & Investment (www.ukti.gov.uk/export.html) and the foreign embassies in whichever country you are looking at www.fco.gov.uk/en/travel-and-living-abroad/find-an-embassy/europe/) there is a wealth of help and advice available and Clive says comp

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