Gaining a foothold in Europe: The keys to success
The time has come for your company to expand globally and get a footprint in Europe. But how do you succeed? What are the pitfalls, the steps that are easily overlooked and the main success factors? Four Luxembourg-based experts with decades of experience share their insights on how to make the ride to Europe as smooth, speedy and successful as possible.
What type of questions do international companies have when they start the process of coming to Europe?
Brice Lecoustey, Consulting Partner at EY Luxembourg: The very first question is generally whether their products or services fit the European market. This is not a given, even for products that have been proven in markets elsewhere in the world. The mismatch can be due to different working habits, technical systems or behaviour, for example, so adaptations to the European context might be necessary.
James Monnat, CEO at Foundry Europe: As an economy, the EU is on par with the US, so it is definitely a region to consider for strategic growth. However, it is not as homogenous and presents many different culture and market combinations. This may seem daunting, but it also means that it is almost always possible that there is an opportunity or niche where your product will fit. The challenge is to find out where.
Are there any hurdles or difficulties that international companies often encounter?
Leesa Soulodre, General Partner at R3i Ventures: Often, early stage companies have not yet achieved product/market fit in their home market, or raised capital prior to landing in Europe. While Luxembourg is the ideal landing pad for regional European headquarters, securing a strong legal and administrative footprint takes time and capital. European investors, particularly Luxembourg ones, require demonstrated market traction and proof of substance in markets in order to invest.
David Foy, Head of International Business Development – Digital Economy at Luxinnovation: Some companies overlook technical and legal hurdles and forget to do their due diligence on local regulations. A first point that comes to mind is the General Data Protection Regulation (GDPR), the EU law on data protection and privacy that impacts any company using personal data.
James Monnat: Companies that do not wish to relocate to Europe tend to focus on finding a partner such as a distributor that will do the work for them, but in my experience, this often does not work out. They hand control of their market launch to an agent that might not always act in their best interest, and they may find it difficult to expand beyond that partner’s geographic scope.
What do you see as the main success factors?
David Foy: People need to have thought out their strategy for coming to Europe and have a valid business reason for coming here. Having a full overview of regulations and certifications needed is also essential – if you miss one, it can bring the whole pack of cards down.
Leesa Soulodre: Our experience is that the number one success factor is having a growth mindset and playing global, not local. In any new venture, things do not often go perfectly to plan, so being able to adapt, demonstrate resilience and be agile to attract the market opportunities is critical for a successful business.
David Foy: Connecting with the right people is also one of the key success factors, in particular here in Luxembourg. Make sure that you get involved with the local community by attending networking events, conferences and so on. There are so many decision centres in Luxembourg, and people who are directly connected to decision centres elsewhere in Europe, but they need to know who you are.
What do you recommend companies to keep in mind when they choose their specific location in Europe?
Leesa Soulodre: To us, Luxembourg is very much like Singapore: a proof of concept laboratory, ideally curated as a testbed ecosystem for the regional or even global market. Luxembourg is also one of the largest foundations in Europe, and indeed the world, for family offices and private equity, so it can be an interesting location for companies looking to diversify their investor base and raise smart capital. It is also the new home of the European Innovation Council (EIC) fund, so we have a €10-billion fund in our backyard to support game-changing innovations.
David Foy: I recommend going where you find an active ecosystem of peers and support. It is often very complicated to find and get access to key decision makers when you come to a new country. International companies frequently point out to me how easy this is in Luxembourg – in particular when we are there to open the doors.
The experts’ top tips
1. Start by conducting a market study and a feasibility study
A business plan that works perfectly in Asia or the US does not always suit the European market. Thorough preparation of the launch phase can avoid many disappointments and setbacks later on.
2. Choose a location where you can easily do business
Assess the administrative and business languages used, the availability of local support services and the responsiveness and efficiency of public institutions. If you are impacted by EU regulations, choose a location where it is easy to obtain all the necessary information.
3. Understand European consumer behaviour and retail structures
Consumer behaviour, public spending and the industrial landscape vary significantly in different parts of Europe. The retail structure also differs from country to country.
4. Don’t underestimate the time needed for administrative and
practical procedures
Administrative procedures such as visa requirements, opening bank accounts and achieving legal compliance may take more time than you initially expect.
5. Set up a team that really understands the local context
The EU market is quite heterogeneous with different languages, cultures and regulatory differences in some fields. Building a team that fully understands the European marketplace and has the right networks is indispensable.
6. Sometimes it is better to start in a smaller market that you can use
as a testbed
Sometimes, rather than setting up your first office in a large EU country, it can be a better option to start in a smaller market where you can test and adapt your offering to European requirements.
7. Ask for help – it is available.
Finding the right way forward and getting access to key decision makers is often very complicated when you come to a new country. Do ask for help – it is there, so there is no reason to do it all alone.
For more information on Luxembourg and a tailor-made support, please contact the Luxembourg Trade & Investment Office in Israel.
Article produced by CDA>>
