Polyglot Group has been doing business with international & multicultural companies based in more than 50 countries all around the world for over 20 years.
In celebration of these partnerships, we will be promoting bilateral trades by interviewing some of the key players.
Keen to know more about the current challenges faced by the countries we are representing such as Latin America, Europe, Asia & the US, we are thrilled to share with you our interview with Kris Put, Trade Commissioner/Commercial Consul of Flanders Investment & Trade (FIT).
Could you please introduce your organisation?
Flanders’ Investment and Trade is an export promotion agency. It has two main responsibilities: promoting the export from Flanders to Australia, and promoting Australian investment in Flanders. Since 1994, these two responsibilities have been regionalised in Belgium, so both aspects now operate under Belgium’s regional governments. This regionalisation means that some countries may be under the umbrella of three economic representatives: one for Wallonia, one for Brussels and one for Flanders.
In terms of my role, I am the Economic Attaché for Australia. I’m also responsible for New Zealand and some of the Pacific Islands.
What type of services can you offer Belgian companies looking for new business opportunities in Australia?
Flanders Investment and Trade offers a multitude of services, many of which are eligible to receive subsidies. This is useful for Belgian companies who are considering a prospection trip to Australia, or thinking about participating in a trade fair, as majority of the involved costs will be covered by the subsidy. The majority of the requests we receive are for our networking services – usually the company seeks importers, distributors or agents from a certain field.
When a company branches out to Australia, we help them to arrange appointments with interesting contacts. In terms of trade fair participations, we provide practical arrangements such as the aspect-oriented programming (AOP). This assists the company in establishing a trade booth, as we take responsibility for both building the booth, and sub-branding to the companies. Although we are not a substitute for a lawyer, we do also provide assistance with legal aspects, such as customs regulations, food safety regulations, and so on.
Are you subsidised by Belgium, or is your organisation membership based?
Flanders Investment and Trade is financed by the Flanders Government, 100%. We do not receive any other income sources.
How many companies from Flanders are operating in Australia at the present time?
Approximately 30 companies have their own structural set-up in Australia. We export approximately 1.4 billion Euros to Australia per year, which is quite considerable, especially when compared export rates to some parts of Europe. This figure accounts for exports alone – investments are additional to this. On average, we grow about 5% per year.
Our main sectors include chemicals, machines (including mechanical parts), and interestingly, agricultural and pharmaceutical products. These are the primary sectors due to Australia’s developed economy (all developed economies share these main sectors).
One industry quite unique and characteristic to Australia is the automotive industry: we still ship quite a lot of cars to Australia. The Audis and Volvos are not only made in Belgium, but also shipped to Australia from Belgium its self. This is significant as some brands manufacture the cars in Belgium, but they leave via Hamburg or leave via Calais, meaning they are not counted in the Belgium to Australia export figures.
What are the main accomplishments of the organisation since you took office?
One of our primary accomplishments was when our largest conference (held in 2012) generated fantastic results in regard to our economic mission. Over 100 companies attended this conference. This large-scale conference generated ongoing results, as the attendees became our primary clients.
The conference’s success is demonstrated by our analysis of results – we surveyed the participants at regular intervals; specifically, immediately after they left the conference, 6 months after the conference, and again after 12 months. Our meticulous study revealed that half of the companies (who were not originally exporting to Australia), did begin exporting to Australia by the end of the 12-month period – that 50% success rate is very high, and certainly one of our greatest achievements. I believe this success rate demonstrates the advantage of exporting to Australia: these kinds of results are almost unheard of when exporting to other regions (such as China). Overall, our accomplishments show that (with perseverance and patience), Australia carries an opportunistic market.
How do you perceive the Australasian region in general regarding its regulations, market trends as well as geography of business for Belgian companies?
There is a common misconception that the Australasian region is geographically “too far away”. This misconception is the primary reason why companies do not pay a fair amount of consideration to the Australasian market. However, we like to point out that this distance is not any greater than that to other markets, such as the Malaysian region. I often mention that if you can send a container to Singapore, you can easily send it to Australia as well.
Once the company is established, Australia bears many benefits. Australia’s business systems are highly competent, so doing business here is generally quite easy: the legal system is efficient, and although Australians tend to negotiate on price, there is a good and honest payment culture. In addition, the business culture is slightly more relaxed and open when compared to that of Belgium’s.
After working in China for years, I often wonder why companies make the decision to expand to China, and not to Australia – China bears a lot of risks, whereas Australia offers a safer opportunity. When compared to the Chinese market, Australia presents a higher profit margin where business can maximise their sales, without undergoing the risk of their idea being copied. So, overall, I believe the Australian market is full of underestimated potential.
In which industries/sectors of Australia do you see opportunities for Belgian companies?
I mentioned the typical ones: chemicals, technology and pharmaceuticals – these will always be the primary industries in Australia. The food industry still has enormous global potential, however, one must carefully consider the district import regulations for products. I believe there is emerging promise in the service industry, specifically in software. In terms of this service industry, I believe that Belgium has quite a lot of knowledge on offer, which isn’t already available in Australia, so this presents promising opportunities.
From your experience, what are the typical steps that Belgian companies undertake when expanding to Australia?
The crucial first step is carefully considering the prospective market, and thoroughly assessing the likely levels of product demand. This is important, as often a great market may appear apparent when it actually does not exist. An example of this is the construction sector – the Australian boom in construction (especially in apartment blocks) suggests a demand for quality construction products. This is misleading, as Australia has lower building standards, so developers are not required (and often won’t choose) to use the premium products.
After assessing the market, a company may choose to expand to Australia in a number of different ways (each bearing their own challenges). Working with a distributor can present a complicated relationship. However, if the business project isn’t overly complicated, working with one of Australia’s large distributors can be a promising option.
If a company decides to set-up independently, they must not underestimate the value of actually being present in Australia. Attempting to become established in only 3 or 4 Australian visits per year is highly inefficient – companies need to remember the value of developing business relationships in Australia and becoming accustomed to the unique business culture.
Expanding to Australia is certainly challenging, especially due to the involved costs, which is a primary reason why many companies feel reluctant towards this market. However, once set-up, a vast majority of the businesses do acquire great success.
When establishing here, do you recommend recruiting locally, or to send employees from the Head Quarters to Australia?
The more technical the product is, the more I would recommend to send someone from the Head Quarters, especially for the first three or four years. After these initial years, the company may consider transferring the role somebody local. If the product is fast moving consumer goods, employing a local would probably be the best option.
In terms of Flanders Investment and Trade, at what time do you intervene in this cycle?
Definitely in the beginning of this cycle, as the majority of our services are dedicated to the initial processes. We offer assistance such as providing background information about distributors, setting up initial meetings, and recommending companies such as Polyglot for additional services. Our focus is on this initiation stage (rather than based around the commercial conduction of business), so we help in the first stages of the business cycle.
What are the main challenges for Belgian companies entering Australia in 2016? What are the common mistakes that you might have noticed for companies that want to do business in Australia?
A common misconception is that the circumstances in Australia are an exact copy of those in Europe’s: they’re not. There are very specific trends and characteristics in Australia, and if you don’t realise they exist, you could make major mistakes. The subtle little differences often become extremely important. I will return to my example of the construction industry: Belgium has brilliant water insulation products, but as long as there’s not an Australian standard, there is not a market for these high-quality products. One water insulation company is now based in government assignments, as these kind of assignment do require a high-quality product. However, this water insulation company endured approximately 10 to 15 years of searching, before they could uncover a market and find a solution.
I believe this demonstrates the value of having a distributor who possesses this essential industry knowledge, or at least contact in the industry who is up to date with these kinds of issues and market trends.
What do you think about the proposed Free Trade Agreements between Europe and Australia?
I see the proposed FTA as something very promising, and I’m glad it is being carefully considered. As this agreement involves the whole of Europe, I believe that our role is to seek input and opinions from Belgian companies.
Despite recent criticism, I see Free Trade Agreements as the way forward; something that generates positive outcomes for both sides. A FTA between Europe and Australia is likely to assist with the processing of goods entering the EU. Although once reluctant, I believe Europe and Australia is certainly working towards developing this Free Trade Agreement, which I view very positively.
Have you seen companies establishing themselves in New Zealand, or do they usually use Australia as a platform for New Zealand?
The vast majority are based in Australia, with an extension to New Zealand. There are a few exceptions, but in these cases, the businesses are usually directly linked to an independent New Zealand-based sector. As I mentioned, these cases are rare, as most companies do use Australia as a platform before we take them to the New Zealand market.
Thank you to Kris for his insight and for taking the time to speak to us. If you are interested in knowing more on what the Flanders Investment & Trade provides and how the organisation can help you, head over to their website to find out more.