Russia - Case Studies

Company: David Austin Roses Ltd
Interviewee: Bob McLintock
Website: www.davidaustinroses.com

Which of the target markets do you trade in?
Bulgaria, Czech Republic, Hungary, Poland, Romania & Russia

Which is the most important market to you? Russia

What year did you start trading in the market selected in Russia? 2006

What is the most challenging aspect of trading in this market?
HIGH NUMBER OF “ILLEGAL” SUPPLIERS IN A COUNTRY WHERE BRAND COUNTERFEITING IS PERCEIVED AS OK.

What have you found to be the most useful sources of information on this market?
“LOCAL” KNOWLEDGE FROM EXISTING AUTHORISED DISTRIBUTORS.

If you were to give one piece of advice to another UK Company planning to start trading in this market what would it be?
DO NOT EXPECT RAPID RESULTS FROM SIMPLY EXHIBITTING IN MOSCOW, IN SUCH A VAST COUNTRY, REGULAR FACT FINDING TRIPS ELSEWHERE ARE VITAL TO UNDERSTAND THE MAIN PLAYERS, INFLUENCERS AND OPINION- FORMERS.

Company:  Joy Mining
Interviewee: Stephen Flook

Joy Mining is an American mining equipment manufacturer with its UK headquarters in Worcester UK.

The main cutting equipment is manufactured in the USA and  the company has three manufacturing centres of excellence outside of the USA. In the UK they make roof supports, in South Africa they make shuttle cars (for underground use) and in Australia they make bolting equipment.

Stephen Flook is the UK Sales and Marketing Director and has been at Joy Mining for 25 years. Stephen talked to us about the process of doing business in Central & Eastern Europe and specifically with Poland and Russia.

Joy has wholly owned entities in both Poland and Russia. They manufacture mining equipment in Poland and have service centres for customers in both Russia and Poland. Of the CEL countries of interest (Bulgaria, Czech Republic, Hungary, Poland, Romania & Russia) Poland and Russia are the only two with a large enough, and developed enough, mining industry to be of interest to Joy.

Traditionally the UK HQ has always looked after the European export markets for Joy and as these markets have developed they set up distributors in these countries and then finally set up permanent offices in Poland & Russia to enable them to support the customer base fully as well as developing the market for Joy products further.

Stephen says that working in Russia has been very positive experience. Post 1990, Russia’s mining industry has been re-organised and privatised and this has lead to it being much easier to deal with compared to its state-owned days.  Decision making is effective and they know what they want and once quality and price is agreed then decisions are made quickly.

One notable difference Stephen finds in doing business with Russia is that their finance markets are under-developed in comparison to Western European markets. This can lead to it being difficult for Russian companies to get the finance needed to purchase new mining equipment. Joy is now working with the ECGD (UK Export Credit Guarantee Department www.ecgd.gov.uk) to help deliver finance where appropriate and this should help the company in selling into the Russian market.

Poland’s mining is still almost exclusively state-owned and as such presents its own set of challenges to work with. Their procurement laws are very stringent and Stephen points out they are can be designed to protect the local industries. These local mining equipment companies have coalesced over the last few years to just 2 large companies which Joy compete with but he says that sometimes the terms  and conditions in procurement contracts contain unlimited liability clauses that no Western company would sign up to whereas local companies will do.

Joy has a wholly owned subsidiary in Poland so technically when competing for contracts they are a “local” company but in reality they do still tend to be perceived as a USA/UK company.

Stephen points out there is no alternative to manufacturing within Poland when competing in that market both in terms of the cost base and also being close to the customer.

When looking at finding new countries to market their products to Joy will typically start with contacting the main potential customers (mining operators) in that market as well as attending local exhibitions. Next they will make use of their trade association (The Association of British Mining Equipment Companies (ABMEC) www.abmec.org.uk) who organise exhibitions both in the UK and abroad and trade missions (outward and inward). Trade missions organised by the UKTI (UK Trade & Investment) and the local Chamber of Commerce International trade team can be of use but Stephen says that the trade association’s missions and exhibitions are more useful as they are completely focussed on the mining industry.

When it comes to researching new markets Stephen is not a fan of the mindset that says that all necessary information can be found just by sitting in front of a PC and “Googling”!

He says that he is often be offered “in depth reports” on various mining markets around the world which often are just re-hashes of publically available information. Instead, he says that you cannot sell successfully into an area without getting your feet on the ground and developing local contacts and relationships and the further away from your home market the more that is the case.

For companies just starting out trying to export into one of the new Central/Eastern European markets Stephen says that the first port of call for business intelligence should be the British Consulate or Embassy in that country. They can provide good information to get you started with information on the local market, companies and potential competitors. After that he says you should look to the Chamber of Commerce (both UK and in the target country) for help as well as any relevant trade association if such exists. Most important of all he says you should get your feet on the ground!

More information about Joy Mining can be found on their website at www.joy.com.

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