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Backgroun d document 6: Country Studies of the Seven Key Target Markets
Zoetermeer, 20 July, 2011
EIM Business & Policy Research, www.eim.nl PO Box 7001, 2701 AA Zoetermeer, The Netherlands Phone: + 31 79 3430200 Fax: + 31 79 3430204 Rue Archimède 5, Box 4, 1000 Brussels, Belgium Phone: + 32 2 5100884
In cooperation with: Centre for Strategy & Evaluation Services CSES Westering House, 17 Coombe Road Otford, Kent, TN14 5RJ, United Kingdom http://www.cses.co.uk Phone: +44 1892 544025 and: European Network for Social and Economic Research ENSR Contact: firstname.lastname@example.org
This report was prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant, and do not represent any official view of the Commission.
1.1 1.2 1.3
The study The country studies How to read this Background Document?
7 7 8
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10
Profile of Brazil Trends in trade with and investment from the European Union Opportunities for SMEs Bottlenecks of doing business in Brazil Overcoming bottlenecks Policy support offered to EU SMEs Policy support used by EU SMEs What support is missing? EU role in stimulating SMEs to do more business in Brazil Workshop agenda
11 15 18 20 27 31 33 34 34 37
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11
Profile of China China as a trading partner Trends in trade and investment from the European Union Opportunities for EU SMEs Bottlenecks to doing business between the EU and China Overcoming bottlenecks Policy support for EU SMEs What support is missing? Possible role for the EC to foster EU business in China Workshop agenda Major results from the workshop discussions
43 47 50 52 53 56 57 61 62 65 65
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11
Profile of India India as a trading partner Trends in trade with the European Union Sectors with opportunities for EU enterprises Bottlenecks to doing business between the EU and India Policy support for EU SMEs What support is missing? Advice Possible role for the EC to foster EU business in India Workshop agenda Major results from the workshop discussions
73 76 77 79 79 81 81 81 82 83 83
5.1 5.2 5.3 5.4 5.5 5.6
Profile of Japan Import and export Opportunities for EU SMEs in Japan Bottlenecks of doing business between the EU and Japan Overcoming bottlenecks Policy support offered to EU SMEs
95 99 101 103 105 106
5.7 5.8 5.9 5.10
Policy support used by EU SMEs What support is missing? Which role could the EU play in stimulating EU SMEs to do more business in Japan? Workshop agenda
111 113 115 118
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11
Profile of Russia EU-Russia relations in trade and commerce Opportunities for EU SMEs in Russia Bottlenecks of doing business in Russia, especially for EU SMEs Overcoming bottlenecks Policy support offered to EU SMEs Policy support used by EU SMEs What support is missing? Which role could the EU play in stimulating EU SMEs to do more business in Russia? Workshop agenda Major conclusions
123 127 132 134 137 139 146 147 148 152 153
7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11
Profile of South Korea Trade with and investment from the European Union Opportunities for EU SMEs Bottlenecks and key issues and challenges for European SMEs in South Korea Overcoming bottlenecks Policy support offered to EU SMEs Policy support used by EU SMEs What support is missing? Which role could the EC play in stimulating EU SMEs to do more business in South Korea? Workshop agenda Major results from the workshop discussions
159 163 167 168 170 170 172 173 173 173 174
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11
Profile of Ukraine Orientation of trade with and FDI in Ukraine Opportunities for EU SMEs Bottlenecks of doing business, especially for SMEs How did EU SMEs overcome the bottlenecks? Policy support offered to EU SMEs Policy support used by EU SMEs What support is missing? Which role could the EU play in stimulating EU SMEs to do (more) business in Ukraine? Workshop agenda Major results from the workshop discussions
181 185 187 188 190 191 195 195 196 198 198
Overview of support provided by interviewed organisations in the seven countries
ANNEX I ANNEX II ANNEX III ANNEX IV ANNEX V ANNEX VI ANNEX VII ANNEX VIII ANNEX IX
Support provided by interviewed organisations in Brazil Support provided by interviewed organisations in China Support provided by interviewed organisations in India Support provided by interviewed organisations in Japan Support provided by interviewed organisations in Russia Support provided by interviewed organisations in South Korea Support provided by interviewed organisations in Ukraine National researchers Country coordinators
211 221 231 241 248 259 266 275 277
China. South Korea and Ukraine. people with in-depth knowledge of barriers to enter these market. which was – after approval by the Commission – translated in the languages of the seven key target countries. etc. Member States. To examine options to better connect European SMEs to these markets. The aim of the country studies has been to: − Collect information about market opportunities for EU SMEs in the target countries. 3.1 Introduction 1. what kind of support they are using and what support is missing. European Chambers of Commerce.1 The study The study "Opportunities for the Internationalisation of SMEs" focuses on the opportunities for EU SMEs in markets outside the EU. Japan. − In consultation with the Commission EIM and the local researchers have identified people and organisations to be interviewed in each of the seven countries. trade counsellors of EU Member States. Overall the study has three key objectives: 1. − Identify bottlenecks for EU SMEs to do business in the target countries. importers of EU products. China. To analyse the market potential for SMEs in the 12 third country markets. 1. − Learn from EU SMEs and from third country businesses how the EU SMEs operate in the country. EU SMEs already active in the country. other export (or import) support organisations. managers of support programmes. It looks in particular at support provided to SMEs in relation to seven key target markets: Brazil. Categories to be interviewed include: the Delegation of the EU. − Assess the supply of support by different organisations (EU Commission. The aim has been to speak (on average) to 20 organisations in each country. 2. To that end the following activities have been carried out: − EIM organised cooperation with local researchers in each of the seven target countries. Russia. India. Japan. local consultants and service providers. how they have overcome bottlenecks. chambers.). 7 . − Identify gaps in the support structure in the country and discuss possible improvements. South Korea and Ukraine. India. government officials. national/regional organisations. − EIM developed a 'shopping-list' to be used during the interviews. To evaluate and propose specific measures to facilitate the access of European SMEs to these markets.2 The country studies On of the elements of the study were country studies in the seven key target markets Brazil. Russia.
These country reports are presented in this report as Chapters 2 to 8. − Based on a. the national researchers prepared provisional national reports.html. main goods and main trading partners).o. − a brief narrative on the economy. in China also in Shanghai. − Most interviews were held in the capitals of the countries. − Next the local researchers were asked to prepare an interview programme and make appointments with people and organisations to be interviewed.− EIM provided the local researchers with an overview of existing EU support programmes and support programmes implemented by EU Member States for their country. Most interviewees were very much willing to share their experiences with the team. In India interviews were also held in Pune and Mumbai. and in Russia also (by phone) with people in St. 28-511) 8 . Zelenograd. − The first series of 5-7 face-to-face interviews in each country were undertaken by the local researcher together with the national coordinator from the Core Team. In most countries simultaneous interpretation was available during the workshop. − The local researchers together with the national coordinators prepared the country reports incorporating the conclusions of the workshops. These overviews can be found in Chapter 9. First a general profile is provided based on public sources 1: − some key figures on the country (size in terms of population and in square kilometres) and the economy (GDP and GDP/capita). All people and organisations who had been interviewed were invited to the workshop. − The additional interviews were held by the local researcher.-Petersburg.cia. − Finally the local researchers prepared overviews of support provided by organisations interviewed in the seven target countries. Secondly three graphs present some main findings of the present study based on the trade analysis and the survey among internationalised SMEs in the European Union: − development of exports 2000-2010 from EU27 to the country concerned for SME and non SME sectors compared to similar data for the total export of EU27. Yekaterinburg. main goods and main trading partners). The national coordinator attended (and often chaired) the workshop.3 How to read this Background Document? Each country chapter in this Background Documents starts with a brief pro file of the target market concerned. and Krasnodar. 1 World fact book CIA (//www. which was of course respected.gov/library/publications/the-world-factbook/geos/ks. − Next. the interview results. 1. − some key figures on imports (total volume. − some key figures on imports (total volume. A few interviewees in Russia requested anonymity. the national researchers organised in each country a half-day workshop to discuss all findings.
Chapter 10 presents a su mmary of the support offered in the seven target countries. In addition the local researchers prepared overviews of support provided by organisations interviewed in the seven target countries.g.2. 9 . The national researchers and the country coordinators are listed in Annex I respectively Annex II. again based on information from the interviewed organisations only. i. e. the anticipated effect of possible public support measures for the target market concerned. These overviews can be found in Chapter 9. the percentage of SMEs expecting the instrument to be effective or very effective.1 presents the Profile of Brazil whereas section 2.− the percentage of internationalised EU SMEs that have business activities in the target country concerned.e. for Brazil section 2. − − the major barriers seen by SMEs active in the target market concerned. as described in paragraph 1.3 etc. present the information emerging from the work done in the seven key target markets. 2.2. compared to the other 6 target countries. These brief profiles are presented in each country chapter as the first section.
).1. 3. These figures are calculated on an exchange rate basis.4%. coffee. rank 104 in the world 2. Germany 4.429.000. and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. goods imported and trade partners $ 187.e. boosted by an export recovery. automotive parts. Brazil's economy outweighs that of all other South American countries. as global demand for Brazil's commodity-based exports dwindled and external credit dried up. Total imports1. goods exported and trade partners $199.).700. In 2008.2 Brazil 2.5%. and Brazil is expanding its presence in world markets. rank 5 in the world 8.000 2010 est.cia.gov/library/publications/the-world-factbook/geos/ks.3% (2009) 5. and service sectors.61%. Brazil has steadily improved its macroeconomic stability.html. electrical and transport equipment.. Japan 4. mining. Brazil was one of the first emerging markets to begin a recovery. Argentina 8.). . 2. Consumer and investor confidence revived and GDP growth returned to positive in 2010. the onset of the global financial crisis hit Brazil in September 2008. oil.514.7 billion (2010 est. Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt.gov/library/publications/the-world-factbook/geos/ks. building up foreign reserves.1 Key data 1.05% (2009) Source: World fact book CIA (//www. Brazil experienced two quarters of recession. iron ore. rank 24 Goods: transport equipment.024 trillion (2010 e st. 28-511) 2 11 . Large capi1 Imports: total US dollar amount of merchandise imports. autos Partners: China 12.49%. not in purchasing power parity (PPP) terms. China 12.12%.html. i. Brazil's strong growth and high interest rates make it an attractive destination for foreign investors. World fact book CIA (//www. in 2010 USD) 4.cia. manufacturing. rank 22 in the world Goods: machine ry.1.900 (2010 est. Netherlands 5.1 Profile of Brazil 2.39%. Total exports. However.77%. footwear. 28-5-11) 203.773 (July 2011 est.877 s q k m . Since 2003.65%. electronics Partners: US 16. After record growth in 2007 and 2008.2 Economy 2 Characterized by large and well-developed agricultural. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP. Argentina 8. soybeans. che mical products. US 10. r an k 5 in the world $2. Germany 7.) $10.
1 shows that before the economic crises the development of SME and non SME sectors was almost identical. 2. about 6% have international business activities in Brazil (Figure 2. 3 F i n d i n g s o f t h e t r a d e a n a l y si s Figure 2.4 Findings of the surveys Of all internationally active SMEs in the European Union. In the years thereafter a recovery took place and in 2008-2009 the index 2000=100 was nearly at the same level for all four flows. The recovery after the downturn in 2009 was stronger for Brazil than for total EU export. Figure 2. both for Brazil as for total EU27 export. and fiscal restraint. For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research. EU27’s export to Brazil compared to EU27’s total exports 250 200 2000 = index 100 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to Brazil Non-SME export to Brazil SME total export Non-SME total export Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”. a floating exchange rate.1 Development in exports 2000-2010 (value). 2 . measured over the period 20072009).1. 12 .tal inflows over the past year have contributed to the rapid appreciation of its currency and led the government to raise taxes on some foreign investments. 1 . De nmark. For 4 out of the 7 key target markets the figures are higher. President Dilma ROUSSEFF has pledged to retain the previous administration's commitment to inflation targeting by the Central Bank.2. In the period 2001-2003 the export to Brazil decreased quite a lot.
the barriers reported by SMEs active on the Brazilian market are of course an important issue.Figure 2. Given the objectives of this study. bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% Brazil Average 7 key markets Source: Survey 2009-2010. Opportunities Internationalisation SMEs. Figure 2. N=6649)./serv.3 shows that the lack of qualified personnel is more than two times more important with regard for Brazil than for the average of the 7 key target markets and the single most frequently reported barrier. 13 . Figure 2. Opportunities Internationalisation SMEs. EIM/GDCC (EU27.3 Major barriers for Brazil. percentage of SMEs Conformity of prod. EIM/GDCC (EU27.2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% 2% 4% 6% 8% 10% 12% 14% Brazil Russia China Ukraine Japan India South Korea Source: Survey 2009-2010. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. The difference in business cultures between the EU and the target market is much lower in Brazil than average. N=6649).
4 Anticipated effect of possible public support measures for Brazil. Figure 2.Asked about the effect of support measures to foster the firm’s activities on the Brazilian market or to make the firm start on that market. 14 . Opportunities Internationalisation SMEs. ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% 30% 40% 50% 60% 70% Brazil Average 7 key target markets Source: Survey 2009-2010. EIM/GDCC (EU27.4). Relatively much impact is expected from business or professional advice. the pattern that emerges for Brazil is very much similar to the average for the 7 key target markets (Figure 2. N=6649). percentage of SMEs expecting the instrument to be effective or very effective.
except for 2009 when the effects of the international financial and economic crisis 1 Source: Eurostat.1 and Figure 2.342 24.462 15.5.1 External trade of Brazil with the European Union (27) in million €.035 19.338 14. Luxembourg.582 21.181 29. 20-23. the external trade between Brazil and the EU increased steadily.201 12.655 Exports 16. As can be seen in Table 2. The EU is Brazil's biggest trading partner.588 24.435 31.2 Trends in trade with and investment from the European Union 1 Figure 2. 15 . 2010. Table 2.469 26.132 Brazil ranks 9th & 12th in the world as a trade partner of the EU (respectively for imports from and exports to Brazil) and 4 th & 8th of the countries outside the European continent.044 17. pp. External and intra-EU trade .795 22. since 2003. accounting for 22.312 15.308 17.statistical yearbook: 1958/2009 Data.984 16.826 18.2.5% of its total trade (2009). EUR millions.459 21. 2000-2009 Imports 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 16.082 16.5 External trade of Brazil with the European Union (27).
The annual FDI from EU Member States underwent a fast growth trend in this period. EUR millions. 6 out of the 10 largest direct investors in Brazil are from the European Union and account for about 61% of the aggregate investment of this group.bcb.br/. The EU is the largest foreign direct investor in Brazil with an annual average of about EUR 12. Figure 2.6 Foreign Direct Investments in Brazil.gov. Brazilian trade balance has kept a surplus ranging from 15 to 30% of the EU exports.were felt.4 billion in the last 5 years. After the first years of the millennium. 16 . accessed February 2011. As to individual countries. EU 27 1 1 Source: Banco Central do Brasil. http://www.
2010. EUR millions. 4).Standard International Trade Classification. Brazilian external trade with Europe is still showing a specialisation typical of a relationship between developing and developed economies. 45-52. pp. "External and intra-EU trade . 17 .statistical yearbook: 1958/2009 Data. Luxe mbourg. Rev. Figure 2. 1 1 Source: Eurostat.7 External Trade of Brazil with the EU (27) by product groups.O r i e n t at i o n o f E U e x p o r t s Viewed across products (using the sections of the SITC .
November 2010. lead. Since then. This agreement has been in negotiations since long. 2. however. amended. Its purpose is to promote free trade and the fluid movement of goods. a major investment plan of the government announced in 2007. 2 3 18 . people. In July 2006. and to maintain a stable regulatory environment for European investors and traders. as well as gems. tourmalines. and changed many times since. Some of such opportunities arise in connection with known Brazilian shortcomings (e. issue 7. and another arrang ement with Egypt was signed in 2010. adding to its existing agreements with Chile and Bolivia to establish a commercial base for the newly-launched South American Community of Nations. uranium. 2 billion tonnes of bauxite. It is now a full customs union. Ecuador. "BRAZIL – Fantastic Opportunities…Spectacular Potential". Paraguay and Uruguay. none of the interviewees mentioned the mining industry as a field offering opportunities to European SMEs. PAC or PAC I. It has been updated. and 53 million tonnes of nickel.g. The Address Magazine. aquamarines. Recently (Madrid Summit. Until summer 2004 there was gradual but substantial progress in the negotiation which. reserves of potassium. Brazil's targeted infrastructural investments should eventually total more than USD1 trillion over a 10-year period. phosphate. While Brazil is known to possess rich mineral deposit s (48 billion tonnes of iron ore. regular contacts have taken place both at ministerial and technical level in order to explore ways on how to re-engage the process. amethysts. 208 million tonnes of manganese. May 2010) it was decided to resume negotiations. Mercosul concluded free trade agreements with Colombia.: poor or insufficient infrastructure. With the award to Rio de Janeiro of two of the highest profile sports events in the world. http://www. thorium and other. Brazil. its full membership is pending ratification by the Paraguayan congress. 1 Mercosul (Portuguese) or Mercosur (Spanish) is an economic and political agreement between Argentina. The basis of the EU's bilateral trade relations with Brazil will be a wide-ranging EU-Mercosul 1 Association Agreement which will also result in the creation of a vast free trade area. mainly in the transportation sector) 2. In 2004.2 shows areas where investment opportunities in Brazil are available as indicated by the interviewees3. The Brazilian market is quite protected with an applied customs averaging tariff of 12%.com/2010/10/brazil/. founded in 1991 by the Treaty of Asunción. The Table 2. abundance of natural resources (e.Brazilian surpluses occur in commodities (food and raw materials). Venezuela.: oil and gas industries). Former Brazilian President Lula da Silva announced in March 2010 a USD550 billion long -term infrastructure investment plan called the PAC II (the second instalment of the government's 'a ccelerated growth program'. accessed February 2011.3 Opportunities for SMEs According to interviewees there is a wide range of opportunities in Brazil for European SMEs to invest. and Peru. and currency. cassiterite. such as diamonds. Venezuela officially joined the Mercosul trade bloc. while EU surpluses arise in semi-processed (chemicals) and manufactured goods (machinery and transport equipment).theaddressmagazine. topazes. the needs of the burgeoning middle class of the country and the sheer size of the internal market. graphite. Mercosul is pursuing free trade negotiations with Mexico and Canada. stalled in September 2004. When combined with the USD504 billion in budget allocations outlined by PAC I in 2007. and emeralds). The trade bloc also plans to launch trilateral free trade negotiations with India and South Africa. the 2014 World Cup and the 2016 Summer Olympics. chrome. EU tries to encourage Brazil to reduce tariff and non-tariff barriers. The official languages are Portuguese and Spanish.g. building on partial trade liberalization agreements concluded with these countries in 2004. In 2008 Mercosul concluded a free trade arrangement with Israel. additional opportunities were generated. zirconium. gold.
For instance. It is the largest company in Latin America by market capitalization and revenue. "Petrobras". Investment U Research. and the largest company headquartered in the Southern Hemisphere by market value. http://www. 1 Petrobras is a semi-public Brazilian multinational energy company headquartered in Rio de Janeiro. particularly in the automotive and technology industries. As Petrobras capital expenditures currently accounts for around 2% of Brazilian GDP and its overall supply chain makes up a total of 7-8% of GDP 4. and huge growth in domestic manufacturing. improvement of inner city slum conditions. it remains a significant oil producer. The company also owns oil refineries and oil tankers. including bio fuels − Machinery and equipment − Automotive − Aviation industries − High Tech (biotech. February 3 rd 2011. 2011. The Pre-Salt layer is a geological formation on the continental shelves off the coast of Africa and Brazil. and source most goods and services within Brazil 3.org/wiki/Petrobras.com/2011/February/brazil -petrobras-top-oil-producer. with output of more than 2 mi llion barrels of oil equivalent per day. government insisted that Petrobras 1 should be the sole "pre-salt" oil & gas fields 2 operator in Brazil. Brazil fast economic development benefits of a rapid domestic consumer growth. While the company ceased to be Brazil's legal monopolist in the oil industry in 1997. wealthier middle class. make up at least 30% of any consortium applying to oil exploration or exploitation concessions. nanotech. http://www. This has led to increased employment and to the rise of a new. Petrobras is a world leader in development of advanced technology from deep-water and ultra-deep water oil production.2 Opportunities for EU SMEs Industries (and their supply chain) − Agriculture and agro-industry − Pharmaceutical and health industries − New construction materials − Oil and gas − Renewable energies.wikipedia. "In deep waters: Brazil's offshore oil". 2 3 4 19 .economist. "Brazil is Set to Become a Top Oil Producer". http://en. due to an easing of credit. Tony D'Altorio. accessed February 2011. as well as a major distributor of oil products.) Service industries − Services for the public Works industry − Transport and logistics − Environmental services − ICTs − Real estate & allied services − Industrial design − Fashion and fragrance − Hospitality and leisure − Education and training Many large companies in Brazil are government owned or are de facto controlled by government.com/node/18065645. February 11th . accessed February 2011.html. The Economist. particularly in high technology areas.Table 2.investmentu. this is creating many opportunities for direct investment in the country in all industries and services of the oil and gas supply chain. which increased from 29% in 1980 to 47% of the popul ation in 2010. accessed February 2011. Wikipedia. etc.
"The Global Competitiveness Report 2010–2011".com/2011/01/30/brazil -general-report-022011/. is set to pass the economies of France this year and the United Kingdom in 2013. after following an impressive upward trend for the last couple of years (up 16 positions between 2007 and 2009). "Brazil – General Report – 02/2011".0 percent (Japan). Bureaucracy Excessive bureaucracy is quite pervasive in Brazil. 30 January 2011. The projections foresee an average annual GDP real growth of 4.4 percent (US). Its economy. competitiveness is defined as the set of institutions.3 percent (Germany) and 1.2 in 2009). accessed February 2011 Klaus Schwab. Brazil has a reasonable ranking: 38th .3 vs. and factors that determine the level of productivity of a cou ntry. 2. generally corroborate the assessment of the factors made in the 2010/2011 version of the GCI benchmarking study. The results from the interviewing programme of public and private executives and entrepreneurs in Brazil. 2 20 . Brazil will rank as the fourth-largest economy in the world. 29 million Brazilians got out of poverty.Between 2003 and 2009 only. absorbing effort and time of their specialized staff.4 Bottlenecks of doing business in Brazil Brazil ranks 58th in the ordered list of 139 countries (median rank: 70) participating in the last Global Competitiveness Index 2010/2011 (GCI) 2.: worst than the median) are "Goods market efficiency" (114) and "Labour market efficiency" (99).4. particularly in what concerns the pillars "health & primary education" (87). This trend. according to projections in purchasing power parity terms. it is in first one ("Basic Requirements") that Brazil performs worst. In this benchmarking study. Bureaucracy is present in all govern- 1 By 2050. Latin Ame rica's l argest. 1. According to this benchmarking study. notably from the EU. the traditional Big Three economies will likely grow by 2. is creating many opportunities for investing in local businesses to manufacture consumer products or to provide consumer services.4 percent for Brazil in the 2009-2050 period. Switzerland 2010.e." From the 3 sub-indexes that contribute to the global index. 2. particularly of direct investment projects in productive facilities by foreign SMEs. Other pillars contributing to other sub-indices that are clearly above the median rank (i. In the following sections these results are discussed. with a slight improvement in score (4.1 Major obstructions More than 50% of interviewees concurred in mentioning 4 major obstructions that are impairing the starting up and development of businesses in Brazil. both contributing to the sub-index "Efficiency Enhancers). By comparison. 4. GTSA – Gateway South America. http://www. Alejandro J. del Corro. "institutions" (93) and "macroeconomic environment" (111). "Brazil is fairly stable at 58 th .gatewaytosouthamerica-newsblog. In the last sub-index ("Innovation and sophistication factors"). policies. It will also overtake Germany in 2025 and Japan in 2039. which is expected to go on in the future1. between November 2010 and February 2011. harming significantly the business dealings of private companies with the public administration. World Economic Forum. Geneva.
company law. outdated (approved in 1943) and paternalistic. ibid. actually taxes in disguise). − Labour law is complicated. The Brookings Institution. Trade unions prefer not engaging in collective negotiations at industry level favouring direct negotiations on a company by company basis. and otherwise) companies must have with their stakeholders. making it a lengthy and cumbersome process. p. 21 . and foreign worker permits. such as ANVISA (the Brazilian Agency for Health Protection) or IBAMA (the Brazilian Environmental Protection Agency). external trade rules. must be consulted.brookings.mental layers (federal. EU companies are mentally unprepared to deal with this amount of bureaucracy and many give up trying. state and municipal) and in the public agencies. 2011. the existing inefficient tax system is preferred to a "streamlined and more efficient system" because it is capable of generating high levels of revenue". Several states don't want to collaborate to resolve differences in tax regulations fearing to lose tax receipts. Complexity of regulations As a major contributor to the bureaucratic hurdles of Brazil. − Work permits to foreign individuals can only be issued for specialised jobs that no Brazilian citizen possess. They are sometimes cumulative and difficult to comply with. Some quotes: − More than 50 certificates are needed to establish a company. Quotes: − To start importing goods. − To change the registered office address of a company it is required to make more than a dozen official registries and spend an amount of money in excess of R$ 2. 106. starting-up firms cannot comply with this requirement because they don't have a financial past. 1 2 Klaus Schwab. a firm needs to obtain a document named "Radar". thus undermining the power of the employers. Reportedly. the complexity of existing regulations is quite exuberant and affects all important transactions (informational. as it is always possible to find Brazilians holding practically all specialisations. inter alia in tax codes and regulations. this creates barriers to contracting expatriate staff. industrial licensing. a pre-requisite for issuing such document is the submission of balance sheets and income statements from previous fiscal years of the applying firm. in labour laws. − Huge bureaucracy in Brazil is due to overregulation and an excessive number of organizations overlapping each other. financial.. costing in time and money more than 200% of what was previously and reasonably planned.aspx . − The tax system comprises many different authorities levying taxes and entai ling many and complex procedures which are burdening enterprises 2. − There is a multiplicity of taxes. − Trade unions are too strong and authoritarian: initiatives on the part of the employers are often turned away. it will be impossible to change or eliminate it. then. For instance: once a benefit has been implemented by a firm. Tax Policy in Brazil: The Reform That Never Was.000 (or about EUR 900). http://www. Complexity exists. Carlos Pereira and Marcus Andre Melo. − Bureaucracy is a major drawback especially in areas where regulatory agencies. 2011. accessed February. a bottleneck arises. The GCI ranks "inefficient government bureaucracy" as the 5th of the most problematic factors for doing business in Brazil 1.edu/opinions/2010/0908_tax_policy_pereira. contributions and other mandatory dues (which are. such as compensation programmes based on performance and competence.
contributes with about 25% of the aggregate tax amount in the country. The tax burden (percent of GDP) rose from 25 in 1993 to 37% in 2007. and Spain. when the company doesn't have domestic sales. Some sources blame the Brazilian Constitution to be prodigal in distributing rights and quite modest in indicating which income sources will pay for sustaining these rights.php?id=11242. USA. which compares with an average of 37% for OECD countries 2. Canada. High taxes High level of taxation was the next bottleneck mentioned by the respondents. Brazil has a special component of its tax structure. Marcos Lobo de Freitas Levy. Behind these "massive loans for manufacturing and infrastructure national industries. 106. 17 March 2010. ibid. and foreign currency regulations as 10 th most problematic factors for doing business in Brazil 1. 3 4 5 22 . ibid. It was ranked in second place in this list 4. ibid. Executive View. It also happens that. the "S system" that was created following the Brazilian Constitution of 1988. taxes over taxes. Brazil's tax has been twice the average and it is greater than developed economies. − There are many taxes 3. Switzerland. Some quotes: − High taxes are particularly unfavourable for exporters: under the current VAT (ICMS) system the exporter accumulates huge credits of taxes over exports without a smooth mechanism to quickly compensate these credits. In Latin America. is a mechanism of subsidies from the national treasury that in fact is paying for the difference (about $6 billion a year) between the rates BNDES lends (6 percent) and the yield on the ten-year government bonds of around 12 percent". to repossess such credits takes a long time. which is levied by each state and may be different from state to state.The GCI report ranks tax regulations as the 1st. accessed February 2010. "Pharmaceutical Patents and Access: A Little Transparency Please". p. VAT tax (ICMS). In Brazil there is a high level of taxation. Klaus Schwab. but it is difficult to get refunds of taxes paid to suppliers. most of which are levied on the payroll of all enterprises. labour regulations as the 4 th .. the Brazilian Development Bank. − The exporter is exempt of social contributions (COFINS and PSI). http://www. is providing "relatively easy loans" thus pumping money into the national economy during the financial crisis (see below the par agraph on the Investment Sustaining Programme). Carlos Pereira and Ma rcus Andre Melo.com/knowledge_centre. exerting a financial burden on the company. Some analysts 5 feel that Brazilian industry representative bodies appear to accept with passivity these high taxes. 106.. Their explanation is that BNDES.4% of GDP. Since the mid-1980s there has been a "massive increase in tax revenues". Tax rates were also selected for the list of the most problematic factors for doing business in the GCI report. Ireland.executiveview. among much inefficiency. and a relatively high overall taxation. the fiscal administration is pretty effective in collecting taxes. the overall tax burden is already 36. This system operates at the federal level and encompasses a number of individual taxes. such as Japan. and are earmarked for several organisa- 1 2 Klaus Schwab. p. Carlos Pereira and Marcus Lobo de Freitas. ibid.
or the Investment Sustaining Programme (Programa de Sustentação do Investimento). notably for a foreign firm entering into the Brazilian market. This programme. BNDES. charging interest rates of 3% or more per month dependent upon the type of collateral.g.75%. Quotes: − The interest rates are very high. at reduced interest rates (5. 106. the Brazilian Development Bank is the main development financing agent in Brazil established on 1952 as a government agency. as well as federal agencies such as INCRA (Institute for the Agrarian Reform). ibid.tions. to fight the financial crisis. − Bank financing for SMEs is very difficult to obtain and very expensive.: investment financing for acquiring machinery and equipment of Brazilian origin) are not available for foreign SMEs in the startingup phase. 2 23 . Special financing programmes at lower interest rates (e. BNDES is the second largest development bank in the world. Short term loans cost around 18/20% per year. may buyout an existing Brazilian company and conduct the financing negotiations through that local company. The reference interest rate (SELIC) is currently 10.5 billion) and is now being expanded. such as SEBRAE (the Brazilian small business institute). Industry and Foreign Trade. − Bank financing is difficult and very expensive. wholesale and retail trade (SENAC and SESC). co-operatives (SESCOOP). some suggest that an entrant foreign SME. the Central Bank of Brazil (Banco Central do Brasil). Klaus Schwab. Also the GCI report acknowledges the "access to financing" factor as one of the most problematic for doing business in Brazil.5% to 8. The Brazil banks are more conservative. or autonomous private organisation. To circumvent them. DCP (Federal Directorate of Coast and Ports of the Ministry of Maritime Affairs) and FA . industry (SENAI and SESI). such as agriculture (SENAR). as well 1 These constraints are reportedly made mandatory by the regulator. willing to benefit from some special credit line from a Brazilian development institution. transport (SEST and SENAT). No success stories of such awkward approach were reported during the interviewing programme or the workshop.5% per year). to finance the acquisition of machinery and transport equipment.. ranking it 7th in the listing 2. because typically the financial institutions require that the applying firm shows a financial track record of at least 3 years so they can perform an assessment of the credit risk 1. Subsequently it was converted into a federal public company associated with the Ministry of Development. is dedicated to provide medium/long term loans to Brazilian companies. The credit risk analysis will take into account the past financial performance of the local company. Banks require substantial collaterals and interest rates for short term loans are of 20% or more. In July 2009 BNDES launched PIS. as well as the expected performance of the new project (the former may be entirely irrelevant as the new project may concern an industry that is completely different from the industry of the local company). − Investment financing by bank credit for SMEs is virtually non-existent. p. which started with a budget of R$ 134 billion (Euro 66. High interest rates and difficult access to debt financing Bank financing is very expensive and difficult to obtain. − Bank credit is not available to foreign firms. most of them sectoral employer's organisations. as compared to bank financing in the EU.Fundo Aeroviário (a fund managed by the Ministry of Aeronautics).
(3) burden of corruption. ports. chemical.br/online/brasil/1/378235/governo -deve-prorrogar-programade-sustentacao-do-investimento. of 2 3 May 1997. mainly in the transport sector. which ranked the "inadequate supply of infrastructure" 3rd in the list of the most problematic factors for doing business in Brazil 5. environmental services. accessed February 2011. 33-35. 02 February 2011.. This adjustment was particularly dramatic in Brazil.as tangible assets in general for export or innovation oriented projects1. Quotes: − Inefficient logistics (infrastructure) is an important part of the high "custo Brasil" 4 − Infrastructure: roads and railways. accessed February 2011. (5) bureaucracy while starting up a company and related to export and import activities. http://www. bad functioning of ports. electronic industries.br/noticias/not_7898. Decree no.com.4. mining.2 Other obstructions Poor infrastructure Brazil has an underdeveloped infrastructure. a 36% burden). Paulo.gov. (4) high interest rates and huge bank spreads. Valor on line. O Estado de S.valoronline. accessed February 2011.planalto. 2 3 4 5 6 7 24 . This situation brings on extra costs and unnecessary delays to the operations of enterprises. accessed February 2011. "Custo Brasil. bad roads. http://www. pp. ibid. Typical and widely acknowledge deficiencies are: (1) costs of infrastructure: excessive freights.com. 2010. http://economia. which had increased its current expenditures.gov. Telecom infrastructure has improved in the last years. Marcelo Rehder. all in bad shape and needing urgent rehabilitation or upgrading. lack of storage. telecommunications. which compromises competitiveness and industrial productivity due to typical Brazilian deficiencies. facilities of storage. Imported assets are not supported by the programme. In the 2010/2011 edition of the GCI report. except for a white list of "high national interest" activities: energy generation. Public investment in infrastructure in Latin America fell from 3 percent of GDP in 1988 to 1 percent of GDP in 1998. PSI Programme (Programa BNDES de Sustentação do Investimento . as Brazilian companies "under the control of foreign capital" are not eligible. and therefore needed to make even deeper cuts in long-term investment. After stressing that public investment in infrastructure was the "main victim of the stabilisation programmes implemented in the 1990s" 7 because it was easier 1 Azelma Rodrigues. The programme has a discriminatory provision 2. BNDES Web site. São Paulo. agro-forestry. p.bndes. (2) high fiscal charges and high indirect labour costs. Klaus Schwab. http://www. 2. metallurgical.htm.BNDES PSI). "Custo Brasil" or "Brazil cost" is usually defined as the extra cost of doing busin ess in Brazil. ibid. Klaus Schwab. 106. a special section was dedicated to the infrastructure problems in Latin America with special emphasis on Brazil 6.. March 7. automotive.br/SiteBNDES/bndes/bndes_pt/Institucional/Apoio_Financeiro/Programas_ e_Fundos/Psi/index.estadao. tourist resorts.br/ccivil_03/decreto/1997/D2233. but also in the energy sector. uma sobrecarga de 36%" (Brazil cost. ABIMAQ (the Brazilian Association of the Machinery and Equipment Industries) recently compared production costs in Brazil and Germany and calculated that this extra cost is more than 36% of the total production costs. and the leasing industry 3.html. 2233. President of the Republic. Government may extend the Investment Sustaining Programme ( Governo deve prorrogar Programa de Sustentação do Investimento). ports and transportation systems.htm.
− The poor protection of IP is a manifestation of the fact that Brazil practically does not have international treaties.oecd. pp. This is "particularly relevant for large emerging markets such as Brazil. particularly in high technology areas such as engineering. World Economic Forum and Fundação Dom Cabral. and acknowledging that the idea that the private sector could step in and fill the financing gap did not fully materialise. p.pdf.pisa. with severe implications in terms of economic growth and poverty reduction". This deficiency is directly linked to the quality of the Brazilian educational system at all levels (ranked in the GCI report 106th for primary education and 97 th for the higher education) and to disparities in educational access and attainment. which is an indicator of the relative performance of the educational systems 2.. This is corroborated by the assessment made by the GCI report.to cut this type of investment than current expenditures with public salaries and pensions. Irene Mia et al. In the 2009 test Brazil did not improve significantly (53rd out of 67) 3.. which may be a consequence of their insufficient skills. ibid. The GCI report does not list this weakness of Brazil as a major problematic factor for doing business in the country. OECD. the possibility of making new treaties for IP protection is hindered by the obligation Brazil has to extend all facilities and privileges conceded to EU to the other members of Mercosul.org/dataoecd/54/12/46643496. http://www. "The Brazil Competitiveness Report 2009". 3 25 . "PISA 2009 Results". Some respondents also pointed out that many government officials are not well prepared to deal with their responsibilities. 59-60. which are increasingly playing a key role in the global economy and for which poor infrastructure quality results in higher logistics costs and inefficient patterns of interregional and international trade. which ranks the "inadequately educated workforce" as the 8th most problematic factor for doing business in Br azil 1. Lack of skilled labour Some references were made to the lack of skilled labour. and to the fact that Brazilian workforce has a low qualification. accessed February 2011. and. from a European perspective. 2009. Brazil ranked 52nd out of 57 countries in the 2006 OECD PISA test. 106. Cultural differences This encompasses a set of beliefs." Insufficient protection of IP In Brazil the protection of intellectual and industrial property is weak due to a legislation that does not conform to OECD standards. the report points out that the "infrastructure development in the region has lagged behind that of the East Asian tigers or even China over the last two decades. attitudes and behaviours supposed to be shared by the Brazilian population that are usually mentioned in national and in- 1 2 Klaus Schwab. Some quotes: − Protection of intellectual or industrial property is more difficult than in Europe. Legislation is not adequate and the intervention of INPI (the IP protection office) is not effective.
amid the barriers and challenges impacting international expansion in the Brazilian market. − It is frequent foreign SMEs failing in Brazil because of the lack of reliability of their Brazilian partners. 2010. In the context of the interviewing programme the following citations illustrate some specific factors and traits of the touted Brazilian culture: − The Brazilian culture is more subtle than foreigners think. "REPORT . January 3. The Irish Times. "poor work ethics in national workforce". was ranked 14th and mentioned by only 0. Other negative factors mentioned in this study were already discussed above: difficult to find the right local management and staff (see above 'lack of skilled labour') and state protectionism or trade barriers (sea section 'Orientation of EU exports'). accessed February 2011. 2 3 26 . concurs with this view: during her sworn in address in January 2 last she promised “to combat the growing problem of corruption in the country”. This matter was brought up during the workshop that followed the interviewing programme. Though it was not possible to arrive to an agreement on why re- 1 According to a World Bank research. such as punctuality. In ternational Executive O ffice. but may be difficult to identify in detail.ternational press and other sources. It is required professionalism to deal with it. − It is required patience to deal with Brazilians. the President of Brazil. Finally. They tend to hesitate a lot in making decisions. While the GCI report does not place cultural factors in the top of the most problematic issues impairing the competitiveness of Brazil (the only factor related to cultural idiosyncrasies. after poverty.. − Brazilians are complacent with the prevalence of the informality in the business setting. a recent survey conducted by an international consultant 2 found. − Brazilians have difficulties with foreign languages. especially English.5% of participants in the GCI survey). which includes a large proportion of non-structured non-taxed businesses 1. which she ranked 2nd. it is frequently underestimated leading to unpleasant surprises. Policy Research Working Paper 4375. corruption”. none of the interviewees mentioned corruption as a barrier or challenge affecting foreign SMEs when starting or expanding their operations in Brazil. two concerns that can be associated to cultural factors: poor ethics and lack of trustworthy local partners. Brussels. notably public officials. This was somewhat surprising as both benchmarking studies cited above acknowledge corruption as negative feature of the country 3: the GCI ranks corruption 6th in the most problematic factors in attracting foreign investment and the BDO survey lists corruption next to state protectionism/trade barriers as a major barrier for foreign companies to enter or expand in the Brazilian market. Dilma Rousseff. the high proportion of informality of the labour market (35% in 1980) rose 10 percentage points from 1990 to 2000. October 2007. − There are cultural differences. Belgium. 2011. amongst the development problems of Brazil (“Rousseff pledges war on poverty. BDO. They are afraid of making mistakes and be held accountable for them. The World Bank.BDO Ambition Survey 2010: Global opportunities". Mariano Bosch et al. "The Dete rminants of Rising Informality in Brazil: Evidence from Gross Worker Flows".
In general these are challenges SMEs should take into serious consideration when preparing their dealings in the country to avoid bad consequences when rolling out their business plans. there was a wide consensus that corruption exists and that it is a sizable problem in Brazil1. 2 27 . − Brazil has a huge and diversified market.) that were brought to the Brazilian market by European car manufacturers.7. state and municipal levels). with a score of 3. This may prove fatal. − Considerable differences between the various regions of Brazil. Brazil is placed on the 4 th group. − In some industries foreign SMEs are experiencing difficulties to place their production due to strong competition from Chinese products. 49. there are other difficulties that are industry or situation specific. particularly in what concerns the relations with public departments and agencies. spares. 3 O t h e r c h a l l e ng e s There are other facets that may signify difficulties for EU SMEs to start doing business in Brazil but do not qualify as obstructions or bottlenecks of the country per se. next to Greece and Romania. In a scale from 0 (perceived to be highly corrupt) to 10 (perceived to have low levels of corruption).spondents missed to refer corruption during the interviews. 2010. Any improvement in public bureaucracy and the reduction of the excess and complexity of regulations depends on reforms of the public 1 Transparency International (TI) indices. Berlin. Finally. Frequently SMEs give up their plans in Brazil. − Poorly selected partners and wrong structured partnerships.. Some of such features that were mentioned by the respondents follow: − The size of the country. This is the case of 1st and 2nd tier suppliers of the automotive industry (components. which is unexpected by most EU SMEs. Brazil is the 3 rd world market for cell phones.5 Overcoming bottlenecks Most of the bottlenecks identified in the preceding sections can only be changed by Brazilian authorities. Transparency International. etc. cosmetics. the size of its market 2. p. − The lack of information and preparation of the Europeans SMEs may engender a long learning curve for them to master the competences needed to deal with the local business environment. Annual Report 2009. which rank countries based on public sector corruption risk. 2 . its diversity and continuing evolution. Some are features typical of Brazil. − Sometimes SMEs select inadequate partners. Brazil is ranked 75 th . 4 . the size of the competition. notably the congress and the government (federal.. out of 180 countries. which actually are positive elements such as the large size of the domestic market. − EU SMEs frequently neglect collecting extensive and specifically prepared information to match their particular needs (general information of the standard type "how to do business in . Two examples: − Distribution channels that do not operate as efficiently as in Europe. Germany. 2. or problems that are pegged to the European SMEs themselves. Corruption Perceptions Index 2009." is not enough). and drinks and the 5 th market for personal computers and automobiles. In the last edition. are widely respected and used as a sound basis for identifying high risk countries.
simplify the tax system. and keeping inflation at bay. managing the budget deficit. respondents offered some solutions or ways to better deal with the obstructions and hurdles. the other 2 major bottlenecks. it is not likely that the situation will get better significantly in the short and medium term. When questioned about what should be done to this respect. 28 . Some quotes: − The federal government is making some efforts to better some of the bottlenecks. the international sports events planned to 2014 and 2016 (World Cup and Summer Olympics) offer good opportunities to open the economy internationally. meanwhile. notably through the use of information technologies and internet. increasing the efficiency of public spending at the same pace. to improve the competitive qualification of future generations. its results are insufficient. − Only possible with firm determination of the Government to implement administrative reforms. entail also complex economic governance problems. the Brazilian educational system has a long way to go before it arrives where it needs to be. what can be done is to help EU SMEs to anticipate and be prepared to deal with the bottlenecks and to influence and help Brazilian authorities to take the necessary steps to introduce the reforms needed to change the status quo. These recommendations can be categorised into 2 broader classes. by selecting the most effective suppliers. which. particularly by SMEs. and specifically by the European ones. So far. Resolving deficiencies of public infrastructure calls for complex projects and substantial financial resources. aiming at making the functioning of public services and agencies more friendly to companies and entrepreneurs. − Government should undertake programmes to overcome the bottlenecks. employer's trade associations should be strengthened. high taxes (including import duties) and high interest rates and access to finance (particularly by foreign SMEs). Still plagued by many deficiencies and social and regional disparities. fighting the decline of the manufacturing indu stry's contribution to GDP threaten by cheap China imports. Furthermore. There are some legislation in the Congress geared towards making administrative procedures more flexible and swift. Besides calling for advancements in the qualification of public officials. according to the addressees: SMEs and EU institutions. Furthermore. Depending on many demanding reforms to improve the currently existing hurdles. are main hurdles to economic progress. Some of the interviewees emphasised the obvious recognition of the binding responsibility of the Brazilian authorities in solving most of the existing hurdles that are obstructing foreign investment in Brazil. Thus. together with the underdevelopment of standardisation and certification policies in the country. are also in need of public reforms. minimise start-up requirements.administration. Insufficient protection of industrial and intellectual property. these reforms should reduce the routine administrative burdens. − It will never be resolved without the attention and cooperation of the Brazilian Government. notably reducing domestic protectionism. improve the quality of regulations. and increase the efficiency of the legal system in general.
and FIRJAN. For this reason the large industry federations (e. accountants. Spain. induced some efforts to ease the requirements or to help in overcoming them. are from the following 9 member states: Belgium. recently developed capabilities in the FDI promotion area. etc. France. Some quotes: − Any SME aiming at developing its business dealings in Brazil should get the appropriate local expertise by engaging lawyers. Contact free local supporting bodies The respondents mentioned also the support of existing chambers of commerce. sometimes with the proviso that these bodies are not as well prepared as the private professionals to provide the required support. trade offices and other home country representations in Brazil. federal and state agencies) it was expressed the belief that Brazilian government became recently more aware of difficulties that foreign SMEs face in entering in the market.: FIESP. and Sweden. − Brazilian organizations are all fragmented 2. One of such examples is the federal agency APEX that. which.g.2. consulates. Italy. offering space. Rio) are also developing investment promotion agencies and trying to extend more favourable development loans to SMEs. at Rio) work together with SEBRAE and some CCIs combining efforts to offer more consistent and focused sources of information and networking. − To resort to trustworthy professional support in the country (lawyers. as sources of vital information for EU SMEs prepare their business plans. CIN.). through state economic development financial institutions.1 Recommendations to SMEs The recommendations to SMEs were basically of 3 types. the Association of European CCIs. after starting focused solely in the promotion of exports.5. In some interviews. auditors. combined with the perceived need of attracting foreign investment in specific sectors where domestic technology and experience are more faulty. the federal confederation 1 European CCIs active in Brazil banded in the local branch of Eurochambres. Luxembourg. Some excerpts of the recommendations from interviewees: − With the help of the Chambers of Commerce and Industry1. accountants. facilities and customised advice to SMEs willing to enter the Brazilian market. − Companies should select and engage good lawyers. In some circles (notably.: São Paulo. Get local help from trustworthy professionals This type of advice was put forward by more than a third of the interviewees. This is one of the expressions of Brazilian excessive "federalism". auditors and other Brazilian professionals. and other local professionals. Some states (e. Germany. the Netherlands. local public agencies and/or industry associations were also recommended. Such sources of help were cited with the same frequency as the first one (local professionals). at São Paulo. notably through the informative functions. 2 29 . Portugal. − Consulates and Chambers of Commerce may provide valuable su pport to EU SMEs by promoting direct contacts and investment missions to Brazil. − A platform such as the incubator currently run by the Danish cons ulate in São Paulo should be considered as an ideal measure.g.
− They can open the share capital of their local subsidiary to Brazilian trustwo rthy partners. − European SMEs should collect extensive and specifically prepared information to match their particular needs (standardised general information is not enough). recommended recruiting reliable local partners as a good alternative for easing and shortening the initial learning phase of gaining the competence to conduct business in Brazil. also has an important role in conducting and lining up all employers’ activities referring to internationalisation. SMEs must collect and consider thoroughly the relevant information on the country. − The EU should make available opportunities to train government officials through bilateral co-operation mechanisms. industry rivalry. Additionally they must get mentally prepared to endure difficulties. licensing. together with the information concerning the specific product/market they are aiming at (demand. Do your home work Respondents ascribe most of the reasons that lead many SMEs to make gross mistakes in approaching the Brazilian market to their own unpreparedness and unadjusted mind set. as SEBRAE also has a role in the protection of IP. Some interviewees. and regulations in general) or buy a majority stake in a local company active in the same business area. − What EU SMEs need is a unified approach.5. knowledgeable of the intricacies of the Brazilian systems (tax.of industries. say 2 to 5 years. the transfer of good information and the type of personal coaching SEBRAE is providing to Brazilian micro and small enterprises.2 Recommendations to the EU institutions Two base recommendations emerged: (1) to influence and.). business customs and protocols. − SMEs should also get in touch with SEBRAE (the small business institute) and BNDES (the national development bank) to investigate which support these institutions can provide. delays. Excerpts: − The EU should exert more political influence on the Brazilian government to reform existing legislation and regulations. keeping the old owners in the company during a learning period of. Actually. 2. particularly the consultants that have 'hands-on' experience in following up foreign SMEs investing in Brazil. distribution channels. exert pressure on Brazilian authorities to reduce or remove the bottlenecks and (2) to provide opportunities for professional development of Brazilian public officials and agents and build up the public administration capacity to deal in a more efficient and effective fashion with the regulations and other sources of bureaucracy and administrative burden. their institutional essentials. − They must have the predisposition to take a long time to initiate their businesses in Brazil. it could also help in easing the difficulties in this area. − The financing bottlenecks could be reduced by enhancing the activities of SEBRAE. etc. 30 . and the idiosyncrasies of the Brazilian public sector. Some citations: − Foreign SMEs should obtain and incorporate in their planning process more information on the Brazilian institutional settings and business customs. competition.
There are a few support services funded by EU Member States 3. besides in kind support or subsidised professional services. Some of this financial assistance is also available from other Spanish institutions. − To expand the existing co-operation platform between the European Commission and the Brazilian government dedicated to improve administrative procedures and to reduce governmental red tape and the regulation burden over private businesses. The Enterprise Europe Network is an information and consultancy network aiming at assisting SMEs in developing their innovative potential and to raise awareness for the policies of the Eur opean Commission. human resource management. This is the case of ICEX that offers. such as the ERDF. 2. capitalising in the vast experience Europe has on these matters. the United Kingdom Trade and Investment.6 Policy support offered to EU SMEs There is no programme sponsored by the EU offering support to SMEs specifically targeted to the Brazilian market. During the interviewing programme 3 institutions offering such types of programme were contacted (the incubator of the Consulate General of Denmark. It is a focal point network consisting of 600 organizations . and the Spanish ICEX). It aimed at developing the capabilities and skills of public servants via video courses and distance learning. including financial institutions of the auto nomic regions of Spain. It is the "Euro Brazil 2000" 1 project that seems to be already closed. ethics and public participation. Typically these organisations make available to individual SMEs general market information. such as COFIDES (which also handles export credit insurance) and ICO (Central state owned institution) and other organisations. − The European Commission might also help in developing the national system for protecting intellectual and industrial property. − It was mentioned an institutional co-operation between the Ministry of Planning (Ministério do Planejamento) aiming at helping Brazil dealing with public administration red tape. planning. among other services. 2 3 31 . This approach could be reenacted.− The EU should provide direct support to existing Brazilian companies (which includes local operations and joint ventures of EU SMEs) helping them to deal with the above bottlenecks. export and investment promotion agencies of various European countries. recommend on local professional services. university technology centres. Most visible initiatives concern the promotion of international co-operation in technology areas through the Enterprise Europe Network 2 and in some promotional activities within the context of its general responsibilities of nurturing and enhancing bilateral relations. focused in Brazil and deployed in its territory. where about 3 000 profe ssionals are working in over 40 countries worldwide. a wide range of financial support to Spanish SMEs willing to export or start direct investment projects in Brazil. counselling & guidance. The latter include concessionaire loans and grants. Direct support to EU SMEs provided by the EU Delegation is very limited. They 1 This project provided support to the modernization of the federal public service in Br azil in the areas of training. It was implemented by an international consortium of European public administration organis ations. as well as equity finance by means of venture capital operations.chambers of commerce. regional development agencies. These services are offered exclusively to home country SMEs by consulates. Some of these programmes are co-funded by EU structural funds. signpost to further sources of information. as well as the standardisation and certifications systems.
Minas Gerais. it only means that Apex will not consider such investments suitable to receive its free support services. volume of exports. the Agency also has desks in ten Brazilian states (Amazonas. which are its main theme for seeking foreign investment projects because they are considered to be gaps the Brazilian economy needs to fill. The Spanish ICEX and the British UKTI are also considering launching similar incubator initiatives. besides the mere provision of generic information. Currently about 90% of the agency resources are dedicated to the promotion of exports and the internationalisation. Industry and External Trad e (Ministério do Desenvolvimento. The Consulate General of Denmark is running a 'business centre' or incubator dedicated to provide lodging to a few Danish SMEs (4/5). Paraná. This business centre also makes available other services incubators usually offer to start-ups (secretarial/communication. Rio Grande do Sul. It is attached to the Ministry for Development. The priority industries currently depicted in Apex web site are: tourism. bespoke consultancy and coaching on demand. Goiás. Cuba. supports the internationalisation of Brazilian companies and attracts foreign direct investments into the country. starting their investment projects in Brazil. As already mentioned. At federal level the relevant agency is APEX. Indústria e Comércio Exterior). There are 7 Brazilian institutions listed at the WAIPA – World Association of Investment Promotion Agencies: 32 . The agency was incorporated as a spin-off of SEBRAE (the Brazilian small business institute) to take up the export promotion functions. job creation.are also active in organising trade and investment missions and may collaborate in Brazilian missions to Europe seeking to recruit direct investors. The fact that other industries are not listed in the APEX priority sectors does not mean that there is official opposition to FDI projects in those industries. USA (Miami). Russia (Moscow) and China (Peking). which were assigned to this institute but not structured as an individual organisational unit. irrespective of the investor coming from Brazil or from a foreign country. which promotes exports of Brazilian products and services. etc. Pernambuco.). the investment promotion actions taking up only 10% of the agency staff and activities. information. Dubai. These offices are dealing primarily with Brazilian exports and the internationalization of Brazilian firms. at least the ones that match their priority criteria. notably as regards priority industries. there are state initiatives to attract investment to their territory. Ceará. Santa Catarina and São Paulo) and has external offices in the following places: EU (Brussels and Poland). Headquartered in Brasilia. information technology and private equity/venture capital. These organisations may play a role in supporting EU SMEs. biotechnology. etc. Apex has a list of priority industries. It is expected the latter to be expanded in the future. The agency added a new function concerning investment promotion in mid 2008. Mato Grosso do Sul. electronics. Federal and state organisations are offering support services geared to attract investment to Brazil or to their individual states. oil and gas.
is the 177th best univers ity in the world. it seems that the support most used by European SMEs when starting their business in Brazil are from trade & investment offices. either federal (APEX). this company operates 2 technology parks in the Campinas 1 municipality. after São Paulo and Guarulhos. multi-state. and the 2nd best in Latin America (after the University of São Paulo in 176th place). Investment agencies. a technology incubator. territorial reach (federal. 33 . The Viracopos International Airport connects Campinas with many Brazilian cities and also ope rates some international flights. Campinas is also the administrative centre of the meso-region of the same name.Pernambuco Economic Development Agency (Agência de Desenvolvimento Económico de Pernambuco) − APEX Brazil (Exports and Investment Promotion Agency (Agência de Promoção de Exportações e Investimentos) − Banco do Nordeste − CODIN – Industril Development Corporation of the State of Rio de Janeiro (Companhia de Desenvolvimento Industrial do Estado do Rio de Janeiro) − INDI – Industrial Development Institute of Minas Gerais (Instituto de Desenvolvimento Industrial de Minas Gerais) − SUFRAMA – Manaus Free Trade Zone Authority (Superintendência da Zona Franca de Manaus) − Invest São Paulo.8 million). more culturally familiar to the SMEs and are free of charge in most cases.− AD Diper . The city is home to the State University of Campinas or Unicamp. Majority owned by the Campinas Town Council (99%). thus directing their contacts to larger companies. It is not clear whether these institutions can offer the type of integrated 1 Campinas is a city and municipality located in the interior of the state of São Paulo. This is because such support services are considered more trustworthy. and specialising in NTBFs. incubators from home country organisations seem to be in high demand lately. a few are state investment promotion agencies.7 Policy support used by EU SMEs Despite the fact that the number of interviews does not give a sufficient basis for quantitative inferences. state). according to the Times Higher Education 2007 World University Rankings. consulates. Professional services from local firms and specialised government agencies are seemingly the next sources of support and specialised information. This list includes quite different institutions as regards their statuary purposes (one is a development bank. with 3. one is a federal promotion agency). other are more conservative bureaucratic institutions). One example of other type of public institutions that are seeking FDI is CIATEC. and CCIs of their home country. It has a popul ation of about 1 million (the metropolitan area has some 19 cities and a population of 2. It is the third largest city in the state. 2. tend to look for larger projects than SMEs can assure. which is responsible for around 15% of all Brazilian research and. CIATEC is actively seeking new technology foreign firms (notably in Europe) that may be willing to locate their operations in one of their science and technology parks. dynamics (some have a proactive stance trying to recruit foreign investment and offering special tracks to get financial and fiscal incentives at state and municipal level. In this context.8 million inhabitants. or state owned.
is said to provide to the Brazilian micro and small enterprises. For instance. thinking that they can simply adopt their home country business model to their operations in Brazil." Invest SP. 34 . (1) by not dedicating sufficient time and resources to collect and internalise information on administration practices. ‘Penido Construtora e Pavimentadora’ (a large Brazilian construction and real estate firm that is building an aerospace business centre). France). R&D fields. José Roberto Araújo da Cunha Jr. (Sector de investimentos da agência capta R$ 1. cost overruns and other unpleasant surprises that may ruin the original plans and make the promoter give up its project.7 bi)". Invest SP aims at expanding substantially its activity in third countries: "We want reach mai nly Asian and European countries and USA. the main mistake that EU SMEs make when investing in Brazil is the poor preparation of their investment projects.7 billion (about EUR 790 million) in FDI.8 What support is missing? Assuming that in general the business environment in Brazil stays as it is now. Other common consequence of the poor preparation maybe also financial: as seen.. country peculiarities and other cultural factors and (2) by not approaching the market with an open mentality without pre-conceived mind-sets and stereotypes.7 bn. Japan and Saint-Gobain. This mistake frequently leads to unexpected delays. oil & gas.g. ‘CEBRACE’ (joint-venture of the 2 larger flat glass manufacturers in the world: NSG/Pilkington. and looking at this issue the other way around. 2.: 50:50 partnerships) heading them to expensive and unsolvable deadlocks. 20/01/11. the state investment agency of São Paulo. This investment is composed by greenfield and expansion projects of 5 large firms only: the Chinese Chery International (automaker) and Sany Heavy Industry Co. and ‘Gestamp Automoción’ (a large Spanish manufacturer of components for the automotive industry). Ltd (civil construction machinery and equipment). Often. Invest SP also mentions that it was responsible for "the arrival of the Japanese ‘Toyota’ and the South-Korean ‘Hyundai’ to the state of São Paulo". persisting the main hurdles that were indentified in previous sections of this report. 2. "Investment sector of the agency attracts R$ 1. EU could play a decisive role in helping EU SMEs to increase their operations in Brazil along 2 modes: (1) influencing and 1 According to its ex-president. this same lack of preparation is also responsible for SMEs embarking into partnerships with badly chosen local companies or individuals and/or to engage into inadequately structured joint ventures (e. claims to have attracted in 2010 over R$ 1. among other. financial markets in Brazil are not very friendly to foreign SMEs and the lack of awareness to this vital factor may completely jeopardise the development of an investment project in the country.9 EU role in stimulating SMEs to do more business in Brazil According to the results of the survey. Últimas Notícias. the Brazilian small business institute.approach. which seems to be the most dynamic of the set 1. customised information and personal coaching that foreign SMEs need and SEBRAE. Invest SP. accessed February 2011. attracting companies in the aerospace. business customs.
besides general political influence. possibly. This could be materialised through setting up a special department to handle. reducing the risks and costs of preparing and rolling out business development projects in the country. − To review and assess the results of the "Euro-Brazil 2000" programme and. such as universities and business schools. CENELEC and ETSI). Other respondents worded this recommendation as follows: "To expand the existing co-operation platform between the European Commission and the Brazilian government dedicated to improve administrative procedures and to reduce governmental red tape and the regulation burden over private businesses. In general they are aware that the major obstacle to such possibility is Brazil being a member of Mercosul. provided that such funds would be earmarked to support EU SMEs and subject to independent evaluation. to part-finance their operations. EU could consider the following: − To expand bilateral arrangements in the context of the recently resumed trade negotiations between Brazil and the EU. 35 . the European Standards Organisations (CEN. depending on the results of such assessment.helping Brazilian authorities to reduce or remove the current hurdles that are affecting European investment and trade in Brazil and (2) creating new or strengthening existing mechanisms that encourage projects in these areas. Such initiative should involve and have the support of the appropriate European institutions such as EPO. Some of the respondents offered ideas to operationalise the 2 above roles: a) To help removing current hurdles under direct control of the Brazilian public administration. among other to allow the transfer of their extensive experience of best practices and policies. − To increase the co-operation with APEX and state investment promotion agencies in order to enhance their capabilities to support EU SMEs business in Brazil and. the needs of European SMEs when establishing in Brazil. standardisation and certification matters. which implies that any special facilities would have to be extended to the remaining members of this regional association. the European Patent Office. and Brazilian organizations. re-enact or redefine a new co-operation programme aiming at developing the capabilities and skills of Brazilian public servants. ECQA." − To enter into negotiations with Brazilian authorities to prepare and implement a full fledge programme (or programmes) to reform the existing regulations and institutions in the country dealing with IP. the European Certification and Qualification Association. The problem resides more with Brazil than with the EU. − To promote and part-finance the setting up of a higher education institute or university organised in co-operation between Europeans institutions. on a preferential fashion. such as SEBRAE. thus helping in reducing the national bureaucracy. Some respondents consider that bilateral arrangements (EU – Brazil) are the best way to provide impetus to trade and investment operations between Brazil and Europe (thus favouring EU SMEs) in a way similar to what is happening with Mexico. specialising in re-training public officers and servants in modern administrative techniques.
such as CNI and FIESP. concept with which Brazilians have no experience at all. personal connections) contacting national facilities (consulates. in addition. The opinions were divided. In the first cases. while the ones attached to Brazilian organisations. tended to agree with it. as SMEs from different countries are competitors 3.− To enter into agreements with top enterprise association bodies. − A respondent mentioned a credit facility provided by the EIB to BNDES dedicated to fund medium/long term credit to companies incorporated in Brazil without discriminating on the basis of the nationality of their ownership. having some of them qualified their disagreement as referring to the short/medium term. as the subsidiarity principle suggests. this applies only to the member states that have investment/trade p romotion facilities in Brazil. because they felt that such a possibility would be feasible in the long run. One respondent addressed this matter under a more political and programmatic way: EU approach is better because would allow 1 Though one conceded that "when no such [national] institution exists. the reasons given for disagreeing is that SMEs feel more "at home" (language. 2 3 36 . The possibility of launching a European business centre conceived as a one-stopshop for EU SMEs and including an incubating facility for some types of SMEs newly expanding to Brazil was tested with the interviewees. it seems to be efficient to create a central supporting system. Respondents linked to EU Member States that already have a national facility in Brazil tended to disagree with the need of such possibility 1. either at federal or state levels. They mention. trade offices) and believe that they are more trustworthy than a European central facility 2. The reasons given for agreeing with the Europe-wide approach is that a concentration of resources could be more effective and have more visibility. One respondent expressed that "[A European business centre] would help to create an ‘image of Europe’." The pace at which the European integration is evolving was also mentioned as an important factor in the way the direct support to EU SMEs should be deployed in Brazil. this competition is neither unexpected nor undesirable. they feel more reassured with national organisations when it comes to disclose some of their purposes in a foreign country. This was recalled mostly by the respondents that were disagreeing with the European business centre. aiming at encouraging and facilitating the investment of EU SMEs in Brazil. EIB could consider a credit facility exclusively dedicated to long term financing of small investment projects developed by EU owned SMEs in Brazil. Obviously. CCIs. it happens that co mpetition exists among SMEs within the same member state and this does not preclude national governments to set up their national facilities. Actually. b) To offer direct support to EU SMEs considering developing their business in Brazil. For SMEs. One r espondent was of the opinion that this type of services should be offered by a national organisation so to be rendered as close to the SMEs as possible.
The agenda was as follows: − Trade between the EU and Brazil − Major bottlenecks for EU SMEs to do business in Brazil − How to overcome the bottlenecks? − What support do EU SMEs get in Brazil? − Discussion 37 .10 Workshop agenda The workshop was held on 9 February 2011. exploiting synergy amongst CCIs and consulates and should be accompanied by accelerating the European diplomatic integration (at consulate level) and following a model of regional integration in Latin America. the EU could design an incentive mechanism and a Europe-wide recruitment system. promoting awareness campaigns in their home countries. creating an unified image of Europe. National organisations. among European SMEs in general and the ones not supported by national facilities in Brazil in particular. Other possible initiatives that may help in increasing the presence of EU SMEs in Brazil are: − To promote the delocalisation of small European industries that are facing severe competition pressures in Europe but are sophisticated enough to succeed in the Brazilian market. aiming at selecting retired professionals. such as CCIs and industry associations could play a major role to this respect. On the other hand. executives and businessmen to start their businesses in Brazil or to provide badly needed services as senior consultants in the country. it is quite apparent that there is a need to increase awareness of the Brazilian market. − Bearing in mind that Europe has a strong and qualified 'army' of retired professionals who are idle but many of them would like to continue or resume professional activities.banding together the individual CCIs. 2.
Director Thiago Mendes Lima. Analyst.Annex I Organisation List of interviewees Interviewees Paulo Morais. Investment Manager Yves Jadoul. President São Paulo tion Mercosul Décio Sirbone Júnior. Economic and Commercial Consultant Julio Themes Neto. Consultant CNI Laila Bozza Mendes. General Manager José Roberto de Araújo Cunha Jr. Camilo Pachikoski. Environment General Consulate of Denmark ICEX .National Confederation of Industry European Union Delegation to Brazil FIESP – Federation of the Industries of the São Paulo State FIRJAN . Superintendent Business and Operations Paulo José de Carvalho.DEREX Claudia Teixeira dos Santos. Partner E. Quality and Lean Manufacturing. Project Manager SEBRAE Bruno Solis. Project Manager (economic cooperation) Fabrizio Sardelli Panzini. Consultant International Affairs Gilberto Alvaro Campião. Consultant International Affairs Martin Whalley. Commercial and Administration Manager Gerard van Lieshout. Director. Head of Trade for the State São Paulo 38 . Partner. Superintendent Rose Mary Estácio. Consul General Inés Menéndez de Luarca Bellido. Coordinator of International Negotiations .. Consultant SEBRAE Chamber of Commerce and Industry Brazil Eckart Michael Pohl. Owner (50%) ApexBrazil – Brazilian Trade and Investment Promotion Agency Association of the European Chambers of Commerce and Industry in Brazil BIOTEE British Chamber of Commerce and Industry in Brazil – Germany CIATEC – Campinas Technopole Development Corporation CNI .Federation of the Industries of the State of Rio de Janeiro Rodrigo Alberto Correia da Silva. Mariano. Hinrichsen. Partner Mario R.Economic and Foreign Trade Office of Spain in São Paulo 'Nossa Caixa' São Paulo Development Bank PP&C Renz of Brazil São Paulo State Investment Promotion Agency SEBRAE-SP – Service Center for support to Micro and Small Enterprises in the State of São Paulo UK Trade and Investment Nicolai Prytz. Director of Social Communica- G&E – Strategy and Business Consultants Carlos Matavelli. Foreign Trade José Luiz Pimenta Júnior. Vice-president João A. Superintendent Flavio de Almeida Marques. Director Ricardo Luiz Tortorella. Strategy and Administration Artur Heitzmann. Chile and Venezuela José Mouta. Foreign Trade Analyst CNI Fernando Saboia de Castro. Coordinator for AL-INVEST of Mercosul.
V.Germany Eurochambres 39 . Campeão Jan van Uden José R.Annex II List of workshop participants Representatives Angel Landabaso António Coimbra Artur Heitzmann Carlos Matavelli Organisation EU Delegation to Brazil Tecninvest G&E Consultants ANEFAC – Association Professionals of Finance. Economics and Administration Décio Wertzner Gilberto A. Scharlack Martin Whalley Nicolai Prytz Rafael Murgi Rodolpho Borelli Rose Mary Estácio Tatiana Lemos Yves Jadoul G&E Consultants SEBRAE SP Interconsult Chamber of Commerce and Industry Belgalux General Consulate UK General Consulate Denmark INVESTE SP – Investment Promotion Agency SP Development Bank SEBRAE SP Chamber of Commerce and Industry Brazil .
a federal agency (Agência Nacional de Vigilância Sanitária) Exports and Investment Promotion Agency (Agência de Promoção de Exportações e Investimentos) National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Económico e Social) Chamber of Commerce and Industry European Committee for Standardisation European Committee for Electrotechnical Standardisation Campinas Technopole Development Corporation (Companhia de Desenvolvimento do Polo de Alta Tecnologia de Campinas) Confederation of Brazilian Agriculture. Services and Tourism industries. a federal agency (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis) CNI CNT CODIN COFIDES COFINS DPC ECQA EIB EPO ERDF ETSI EU FDEPM FDI GCI GDP IBAMA 40 . which runs the FDEPM European Certification and Qualification Association European Investment Bank European Patent Office European Regional Development Fund European Telecommunications Standards Institute European Union Fund for the Development of the Maritime Training of DCP (Fundo de Desenvolvimento do Ensino Profissional Marítimo) Foreign Direct Investment Global Competitiveness Index Gross Domestic Product Brazilian Environmental Protection Institute. Serviços e Turismo) Confederation of Brazilian Mining and Manufacturing industries.Annex III List of abbreviations AD Diper ANVISA APEX Brazil BNDES CCI CEN CENELEC CIATEC CNA CNC Pernambuco Economic Development Agency (Agência de Desenvolvimento Económico de Pernambuco) Brazilian Agency for Health Protection. a private employer's organisation (Confederação da Agricultura e Pecuária do Brasil) Confederation of Brazilian Commerce. a private employer's organisation (Confederação Nacional da Indústria) Confederation of Brazilan Transportation industry (Confederação Nacional do Transporte) Industrial Development Corporation of the State of Rio de Janeiro (Companhia de Desenvolvimento Industrial do Estado do Rio de Janeiro) Spanish Corporation for Development Financing (Compañía Española de Financiación del Desarrollo) Social security contribution (Contribuição para o Financiamento da Seguridade Social) Directorate of Ports and Coast of the Brazilian Navy (Diretoria de Portos e Costas). a private employer's organisation (Confederação Nacional do Comércio de Bens.
Overnight lending rate of the Brazilian Central Bank (Banco Central do Brasil) National Service for Commercial Training of CNC (Serviço Nacional de Aprendizagem Comercial) National Service for Industrial Training of CNI (Serviço Nacional de Aprendizagem Industrial) National Service for Agricultural Training of CNA (Serviço Nacional de Aprendizagem Rural) National Service for Transport Training of CNT (Serviço Nacional de Aprendizagem do Transporte) Social Service for Commerce of CNC (Serviço Social do Comércio) National Service for Co-operatives Training of OCB (Serviço Nacional de Aprendizagem do Cooperativismo) Social Service for Industry of CNI (Serviço Social da Indústria) Social Service for Transport of CNT (Serviço Social do Transporte) Small and Medium sized Enterprises Manaus Free Trade Zone Authority (Superintendência da Zona Franca de Manaus) United Kingdom Trade & Investment Value Added Tax World Association of Investment Promotion Agencies 41 . a federal agency (Instituto Nacional de Colonização e Reforma Agrária) Industrial Development Institute of Minas Gerais (Instituto de Desenvolvimento Industrial de Minas Gerais) Brazilian Institute of Industrial Property. a private autonomous institution (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas) Special System of Clearance and Custody (Sistema Especial de Liquidação e Custodia). the currency of Brazil Brazilian Small Business Institute. a federal agency (Instituto Nacional de Propriedade Industrial) Organisation of Brazilian Co-operatives (Organização das Cooperativas Brasileiras) Organisation for Economic Co-operation and Development New Technology Based Firm Growth Acceleration Programme (Programa de Aceleração do Crescimento) Social security tax (Programa de Integração Social) Programme for International Student Assessment (OECD) Purchasing power parity Real.ICEX ICMS ICO INCRA INDI INPI OCB OECD NTBF PAC PIS PISA PPP R$ SEBRAE SELIC SELIC rate SENAC SENAI SENAR SENAT SESC SESCOOP SESI SEST SMEs SUFRAMA UKTI VAT WAIPA Spanish Institute for Foreign Trade (Instituto Español de Comercio Exterior) Services and Merchandise Circulation Tax. a state tax similar to VAT (Imposto de Circulação de Mercadorias e Serviços) Spanish Offcial Credit Institute (Instituto de Crédito Oficial) National Institute for Colonisation and Agrarian Reform.
3. 6.3 China 3. Taiwan 6.32%. optical and medical equipme nt Partners: US 20. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP. Germany 4.gov/library/publications/the-world-factbook/geos/ks.cia.1 Profile of China 3.2 Economy 1 For c ent ur ie s C h ina stood a s a le ad ing civ ilizat io n. rank 3 in the world Goods: ele ctrical and other machinery.03%.400 (2010 est.cia.). 59 6.336.66%. optical and medical equip ment. Goods: ele ctrical and other machinery. metal ore s.84%.06%.04%.745 trillion (note: because China's exchange rate is determine by fiat. plastics.27% (2009) Source: World fact book CIA (//www. South Korea 9. Hong Kong 12.gov/library/publications/the-world-factbook/geos/ks.1 Key data 1.718.307. in 2010 USD) 1.)). organic chemicals Partners: Japan 12.000 2010 est. rank 2 in the world.000. G DP at the official exchange rate sub stantially understates the actual level of China's output vis-à-vis the rest of the world. Hong Kong 10.html. textiles.1. 2..1.) 4. apparel. Total imports and share of EU in total imports $ 1. rathe r than by market forces. m aj o r fam ine s.54% (2009) 5. US 7. Aft er Wor ld W ar I I. Germany 5. out pac ing the re st of the wor ld in t he art s and s c ie nce s. 28-5-11) 3. milit ary defeat s.55%. the official exchange rate measure of G DP is not an accurate measure of China's output.03%.000. the Co m mun ist s un der MAO Ze dong est ab lis hed an aut oc rat ic so c ia lis t s yste m t hat. while e ns ur1 World fact book CIA (//www.html. GDP at purchasing power parity provides the best measure for comparing output across countrie s (2010 est. iron and steel. the co untr y w as be set by c iv il unr est.015 (July 2011 est. includ ing data processing equipment. South Korea 4. $7.27%. 9 61 sq km. an d fo re ign occup at io n. Japan 8. oil and mineral fuels.506 trillion (2010 e st. rank 1 in the world 9. 28-511) 43 .). but in th e 1 9 th and ea r ly 20 th ce nturie s. in China's situation. r an k 4 in th e wor l d $5. Major imports from EU Total exports and share of EU in total exports $1.
(b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force. The Chinese government faces numerous economic challenges. One consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. China sinc e the ear ly 1 9 90 s ha s inc rea sed its g loba l outre ach a nd pa rt ic ip atio n in in terna tio na l org anizat ions (Wor ld Fa ct Book CIA). The Chinese government is seeking to add energy production capacity from sources other than coal and oil. increased autonomy for state enterprises. yet p o litica l co ntr ols re ma in t ig ht. (c) reducing corruption and other economic crimes. the global economic downturn reduced foreign demand for Chinese exports for the first time in many years. development of stock markets. focusing on nuclear and alternative energy development. The dollar values of China's agricultural and industrial output each exceed those of the US.in g China's sov ere ig nty. The economy appears set to remain on a 44 . MAO 's s uc ce ss or DENG X ia op in g and othe r le ader s f oc us ed on ma rket-o r ient ed econ om ic deve lop me nt and by 20 00 outp ut ha d q ua dru ple d. Still.is another long-term problem. soil erosion. in July 2005 China revalued its currency by 2. per capita income is below the world average. China is second to the US in the value of services it produces.notably air pollution. and opening to foreign trade and investment. Reforms began with the phasing out of collectivized agriculture. China has implemented reforms in a gradualist fashion. After keeping its currency tightly linked to the US dollar for years. Since the late 1970s China has moved from a closed. China continues to lose arable land because of erosion and economic development. rapid growth of the private sector. and (d) containing environmental damage and social strife related to the economy's rapid transformation. outperforming all other major economies in 2010 with GDP growth around 10%. China has renewed its support for state-owned enterprises in sectors it considers important to "economic security. Measured on a purchasing power parity (PPP) basis that adjusts for price differences. and expanded to include the gradual liberalization of prices. fiscal decentralization. and the steady fall of the water table." explicitly looking to foster globally competitive national champions. and approximately 200 million rural labourers and their dependents have relocated to urban areas to find work. F or much of t he populat ion. especially in the north . From mid 2005 to late 2008 cumulative appreciation of the Renminbi against the US dollar was more than 20%. centrally planned system to a more market-oriented one that plays a major global role .1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Aft er 1 97 8. Deterioration in the environment . including: (a) reducing its high domestic savings rate and correspondingly low domestic demand. China in 2010 stood as the second-largest economy in the world after the US. creation of a diversified banking system. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. living st an dard s ha ve impr oved dr amat ica lly and t he ro om for pe rso na l choice ha s expa nde d. when Beijing allowed resumption of a gradual appreciation. In 2009.in 2010 China became the world's largest exporter. Economic development has progressed further in coastal provinces than in the interior. but China rebounded quickly. but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010. imp ose d str ict contr o ls over ever yday life a nd co st t he lives of te ns o f m illio ns o f peo p le. having surpassed Japan in 2001. In recent years.
3 F i n d i n g s o f t h e t r a d e a n a l y si s Figure 3. No major impact from the economic crisis is shown. EU27’s export to China compared to EU27’s total exports 500 450 400 350 2000 = index 100 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to China Non-SME export to China SME total export Non-SME total export Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”. lending credibility to the stimulus policies the regime rolled out during the global financial crisis. late in 2010.4 Findings of the surveys Of all internationally active SMEs in the European Union. which swelled as a result of stimulus policies. Two economic problems China currently faces are inflation . and is largely off-the-books and potentially low-quality. surpassed the government's target of 3% and local government debt.1. in the 12th Five-Year Plan adopted in March 2011.which. However. For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research.1: Development in exports 2000-2010 (value). The government vows. Both for SME and for non SME sectors. about 10% have international business activities in China which is second to neighbouring market Russia only (Figure 3. to continue reforming the economy and emphasizes the need to increase domestic consumption in order to make the economy less dependent on exports for GDP growth in the future.2. Figure 3. the index developed from 100 in 2000 to about 425 in 2010. measured over the period 2007-2009). 3 . China likely will make only marginal progress toward these rebalancing goals in 2011. 45 .strong growth trajectory in 2011. 3. 1 .1 clearly shows that economic development in China is indeed very important for the EU. Denmark.
3 Major barriers for China.2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% 2% 4% 6% 8% 10% 12% 14% China Russia Ukraine Japan Brazil India South Korea Source: Survey 2009-2010. price of products is more important than elsewhere. N=6649). The barriers reported for China (Figure 3.Figure 3. Also different business culture is somewhat more important.3) are rather similar to the average for the 7 key target markets. Opportunities Internationalisation SMEs. 46 . bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% China Average 7 key markets Source: Survey 2009-2010. quota and lack of qualified personal are less important with regard to the Chinese market. Opportunities Internationalisation SMEs. EIM/GDCC (EU27. Figure 3. Major differences: China is a very competitive market. N=6649)./serv. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. Tariff. EIM/GDCC (EU27. percentage of SMEs Conformity of prod.
China's economy has changed since the 1970s from a closed. and townships.1 Introduction China is the fourth largest country in the world with an administrative organisation based on three-levels.4 shows that there are no support se rvices that are – in the perception of European SMEs much more effective for China than in the other key target markets.Figure 3.2 China as a trading partner 3. N=6649). dividing the nation into provinces. centrally planned system to a more market-oriented one 47 . 3. Support in dealing with national te chnical standards in China scores lower than average Figure 18.104.22.168 Anticipated effect of possible public support measures for China. This is a relevant issue for the present study as shown in the chapters to follow: European SMEs tend to under-estimate regional differences on the Chinese market. Opportunities Internationalisation SMEs. Information on market opportunitie s scores a bit higher and is the service with the highest score . 5 autonomous regions. and 2 special administrative regions. 4 municipalities directly under the Central Government. counties. At present. percentage of SMEs expecting the instrument to be effective or very effective. China has 23 provinces. As already mentioned in Section 3. EIM/GDCC (EU27. both with regard to general market conditions as with regard to interpretation and enforcement of rules and regulations at local and provincial levels. ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% China 30% 40% 50% 60% 70% Average 7 key target markets Source: Survey 2009-2010.
2 The image of China in Europe The development of China in the last decade is impressive by any standards. the global economic downturn reduced foreign demand for Chinese exports for the first time in many years.eu/trade/creatingopportunities/bilateral-relations/countries/china/. Asean countries.o. outperforming all other major economies in 2010 with GDP growth around 10% (in 2008 and 2009 still about 9%). EU-China trade has increased dramatically in recent years. The EU's open market has been a large contributor to China's export-led growth. (See: http://fta.europa.that plays a major role in the global economy.2.506 trillion.gov. In 2009. But the Inflation rate (consumer prices) is now 5% (2010 est. large scale European car makers. 1 News release on http://www. And on http://www. China is now the EU's 2nd trading partner behind the USA and the biggest source of imports.com dated 10-2-2010 reports: Deliveries for 2010 in China totalled 148. Chilli. 3. and now the second largest economy) and the biggest exporter in the global economy. − very high growth rates. such developments also provide opportunities for SMEs as subcontractors. more than double the number of units sold in 2009 (70. 2010 estimate). The EU is China's biggest trading partner. Volkswagen reports Record year 2010: 1. as of 23-2-2011) it reads: China is the single most important challenge for EU trade policy. respects intellectual property rights and meets its WTO obligations.mofcom. New Zealand. but there is not yet a FTA signed with the EU or EU Member States. The EU has also benefited from the growth of the Chinese market and the EU is committed to open trading relations with China. even in 2010 compared with 2009 1. Singapore.) surpassing the government's target of 3% The total imports and exports in 2010 increased by 35% compared with 2009 making China in 2010 the world's largest exporter ($1. with the business press emphasising China's: − huge market. but China rebounded quickly.cn/topic/enperu. Costa Rica etc). 48 .com.500 cars delivered with a solid growth of 37 percent.100 units).volkswagenag.shtml) On the website of DG Trade (http://ec. China has already concluded a lot of Free Trade Agreements (with a. However the EU wants to ensure that China trades fairly. China has reemerged as the world's third economy (recently overtaken Japan. Pakistan.400 passenger cars. Whilst these are very large corporations. − and unlimited business opportunities Moreover.emercedesbenz. Peru. such as Mercedes Benz and Volkswagen report very large annual sale increases. but also an increasingly important political power.923. when trading conditions in many other markets were difficult. In 2010 more than 27000 new foreign companies were established (a 17 % increase compared to 2009) in China with FDI of about $11 billion (both figures about 17% in creased compared to 2009).
I should be there') without studying whether or not their business proposition is likely to be successful in China. including the SME sector. some enterprises come to China with a rather vague and naïve idea ('huge market.The coverage given to the experience of Europe's leading companies has a positive effect on making the wider business community in Europe. The market is indeed very large. etc. more aware of the changes in the world economy and the need to see whether their business strategies need adaptation to reflect these developments. that knowing and understanding the rules and regulations are the key to understanding the local business environment (investment laws. 1 This may also be related to corruption practices that also in China have to be dealt with occasionally. such as customs. but many tend to overlook that in China power and relationship are much more important than most Europeans assume 1. such as language. One needs not just to find good local staff and build up relations with local business partners but also to invest in building good relations with local governments and government agencies. 49 . but so is the competition on Chinese markets both from local and from international suppliers. These include inadequate protection of intellectual property rights.3 WTO membership In 2001 China accessed to the WTO. It is important to invest in the initial years in obtaining an understanding of the (business) culture in China – and of the specific province in which one would like to make a start. banking. This does not only refer to issues. 3. The EU uses also the regular Trade Policy Review of China in the WTO to raise a number of concerns regarding China's trade policy. financial and fiscal arrangements. telecommunications.2. At the same time. and tax offices. personal attitudes and relations.). One needs a serious unique selling point (USP) to have a reasonable chance of a successful business development. and express postal services). employment laws. Access to raw materials has also been identified as a major trade obstacle as well. how business relations are established and developed and how to organise communication with local staff in China but also to more structural issues. Nearly all the people that were interviewed stressed that one needs several years to build up relations with business partners and government agencies before business will really take off and can become profitable. several people have drawn attention to negative side effects. for example. environmental inspection. As a consequence. it is necessary to take a long-term view and be willing to invest time and other resources for a few years. For example. the maintenance of industrial policies which may discriminate against foreign companies especially in sectors like automobiles and barriers to market access in a number of services sectors including construction. A second issue is that some SME are too optimistic about the extent to which quick gains are possible. Europeans tend to believe.
To compare: most EU Member States have a better score.3 which is higher than Russia (nearly the same). statistics in focus 48/2010. 3. EFTA combined 130 000. 3% − local government debt. Figure 3). Brazil (127). 50 .3. India (about 2. Brazil (about 1.9). In the World Bank ranking the other 4 key target markets score much worse than China: Russia (123). mainly industrial goods: machinery & transport equipment and miscellaneous manufactured articles.1 Trade in goods and services Goods Eurostat 1 reports near the end of 2010 that 2009 was marked by a considerable drop in the total value of goods traded: EU-27 exports to the selected countries decreased by 16%. India (134) and Ukraine (145). 3. 17/9/2010. only Italy and Greece have a lower score (respectively 80 and 109).5 Future The economy appears set to remain on a strong growth trajectory in 2011.1.2. Euro zone scores 1.3 Trends in trade and investment from the European Union 3. 1 Eurostat. The government intends to continue reforming the economy and emphasizes the need to increase domestic consumption in order to make the economy less dependent on exports for GDP growth in the future. Of the 7 target countries. only South Korea (16) and Japan (18) score higher. executive summary. Presently.2. China is by far the main source for EU's imports. However according to OECD. barriers to entrepreneurship and barriers to trade and foreign investment and China scores in 2008 about 3. China is still one of the most regulated economies in the world. China faces two economic problems: − inflation is presently some 5% well above the government target of max. but exports to China were the exception even a slight increase.3 (Source: EUCCC's position paper 2010/2011. on the Product Market Regulation (PMR) index that measures the degree to which policies inhibit competition. The PMR tracks state control.3.9). lending credibility to the stimulus policies the regime rolled out during the global financial crisis. external trade. which swelled as a result of stimulus policies. China 100 000). The export to China mainly concerns machinery and transport equipment that make up even 55% of total as shown in Table 3.4 Cost of d oing business The ranking of China in the index 'Ease of doing business (listed) as published by The World Bank and the International Finance Corporation on 4 November 2010 is 79 out of 183 countries listed. But also in EU-exports China is very important (third position: approximate figures in million euro's: USA 200 000.
EU exports to China 2035 893 6722 237 61 12660 12485 54736 9273 1177 100279 Distribution (%) 2% 1% 7% 0% 0% 13% 12% 55% 9% 1% 100% Share China (%) 5% 5% 27% 0% 2% 6% 9% 12% 8% 3% 9% Services (i) (ii) EU services exports to China 2009: €18 billion EU services imports from China 2009: €13 billion Eurostat 1. 152/2010. 48/2010 (17/9/2010).e. and for imports from Russia (+43%). China (+41%) and Turkey (+38%). EU27 exports of services to the rest of the word fell by 10 and EU27 imports by 8. As a result. 4: animal and vegetable oils. n. euroindicators. Russia (7 bn).Table 3. except for imports from the USA which remained nearly stable. newsrelease.e. 25/11/2010. the highest surpluses were observed with the EFTA countries3 (23 bn). The most notable increases were recorded for exports to Brazil (+57%). by type of product. except for the USA. The shares of China in these provisional data on 2009 are: export of services (4%). China and Japan (both 5 bn). statistics in focus. 51 . EU27 external trade in services slowed down compared with 2007 and 2008. Among the other main partners. import of services (3%) and in the trade balance of services (9%). Developments 2010 In October 2010 Eurostat 2 reported that in 2010 the EU27 trade with all its major partners grew again (January-July 2010 compared with January-July 2009). inedible. lubricants and related mat. In 2009. Total exports 44746 17971 25168 57157 2585 195613 139512 455799 119006 38143 1095700 Source: Eurostat. 1 2 Newsrelease.c. euroindicators.4 bn compared with -75.c. the EU27 recorded relatively stable surpluses in trade in services with all its main partners.2 bn). China and India (both +25%). fats and waxes 5: chemicals and related products. 2009 (EUR million) Total EU27 Type of product 0: food and live animals 1: beverages and tobacco 2: crude materials. EU27 trade in services recorded a reduced surplus. 6: manufactured goods classified chiefly by material 7: machinery and transport equipment 8: miscellaneous manufactured articles 9: commodities and transactions n. except fuels 3: mineral fuels. reports that in 2009. STAT/10/177.1 Total EU-27 export of goods and exports to China. Eurostat. 15/10/2010. The EU27 trade deficit with China increased China (-86.
4 -3.8 billion euro). UK. Kingston University. shows that both the inflow and outflow of FDI between the EU and the 4 BRIC countries show a major decrease over the period 2007–2009 (the share of outflow to BRICs in total EU outflow is now som e 7% and in inflow some 3%). as the Chinese government increase the priority given to environmental protection. In Beijing by a team of local researchers from Beijing Newst Secretary-Accounting Co and Prof. 52 .3. 1 Eurostat. such as healthcare and medical services. The most commonly mentioned sectors of business opportunity for EU SMEs included: − machine tools.2 Foreign Direct Investment Eurostat 1.9 are mainly based on interviews. The Sections 3. In the stock of EU FDI in China. Jade Xu (Wuxi National Hi-Tech Industrial Development Zone. So together these 4 countries have a share of nearly 90% (7. data in focus 29/2010.3. others relate to rapidly growing consumer markets in the country. specialist management consultancy. private equity. as the Chinese economy continues to develop. Some of these relate to China's ongoing need to modernise and upgrade its technology base. advertising and specialist financial services. UK office and Director LiCathay LTD) and Koos van Elk from EIM Business & Policy Research. 3. − France (some 2300 million euro). Mrs.4 Opportunities for EU SMEs Informants identified a variety of sectors in which they suggested business opportunities for EU SMEs were likely to be maintained or emerge. education − Environmental products and services. − Belgium (some 1900 million) and − Germany (some 1000 million). Next to interviews in Beijing. − business services. − Consumer and personal services. The outflow to China was almost 9 billion euro in 2009 of which over one third went to Hong Kong. Examples mentioned include public relations. data in focus 29/2010 (EU-27 Foreign Direct Investment in BRIC1 countries). reflecting China's ongoing strength in manufacturing. while others are related to the ongoing processes of structural change within the Chinese economy. EU-27 Foreign Direct Investment in BRIC1 countries. also interviews in an important commercial centre (Shanghai) and an important second tier city (Nanjing) were held. All interviews were conducted in January and February 2011. David Smallbone from the Small Business Research Centre. the largest share is in financial services (financial intermediation is some 50% of total). as Chinese companies continue to upgrade the technology. In Shanghai and Nanjing interviews were held by a team composed of Mrs. 5/7/2010. The main four investors from EU27 are: − UK (nearly 2600 million euro). such as factoring.
as a result. Other informants stressed that the problem is not confined to trademark issues but also to production technologies that might be protected by patents. Although some think. At the same time. yachts and ski equipment. particularly in the case of smaller enterprises. − life-style products. − automotive and aeroplane technologies. according to some Chinese informants. electric cars and high quality machinery. Current examples of opportunities mentioned in this context included environmental projects. such high specification cars for the growing consumer market. particularly renewable energy has great market potential in China. − building materials. 3. one Embassy informant reported that the first advice they give to their companies seeking to enter China is to register their trademarks two years before entering. which means companies need to register trademarks prior to entering the Chinese market. Nevertheless. because they typically do not have 53 . some informants think it is often overstated and few could think of many specific cases where European firms had experienced serious loss over an IPR infringement.− Energy. Other specific areas of opportunity mentioned included: − plastics industry. etc. This informant reported that they currently have an active caseload of 40 companies. The most commonly reported were: (i) Not surprisingly. IPR problems can present more of a cha llenge to SMEs than larger enterprises. − high value brand products. it is an issue and one specific problem is the so-called 'first to file' principle.5 Bottlenecks to doing business between the EU and China Informants referred to a variety of tangible and less tangible barriers or challenges faced by EU SMEs seeking to enter the Chinese market. such as ultra light aeroplanes. which comprise the more difficult cases. IPR issues are often exaggerated. − Luxury products. wind turbines). optical fibre manufacturing technology. An important suggestion from several informants was the idea of paying more attention to the contents of China's 5 year plans of China. with only a few copyright issues. − Low-carbon technologies. such as low carbon and renewable energy technologies (e. Indeed.). pharmaceuticals.g. reporting that 90% of the IPR cases they deal with are trademark related. Another Embassy informant from one of the larger Member States confirmed the importance of the trademark issue. IPR was raised in response to a question about barriers in most interviews. but also niche opportunities. − tourism. it was widely agreed that they do add to the cost of doing business in China. healthcare. biotechnology. Such analysis could be undertaken by individual enterprises as part of their market research but also by government and organisations such as Chambers of Commerce to guide their members. to identify the sectors that will be supported by Chinese government in the near future providing many business opportunities. − life sciences (medical supplies.
which as it was pointed out is not unique to China. Being well dressed in business meetings may be an unspoken rule in Europe. The pattern was reported to be that in the more developed regions. but also for European enterprises in other sectors to deal with financial (investment) issues in China. language barriers can contribute to the cultural misunderstandings although most are more deep rooted. 54 . a Chinese business service provider referred to a meeting involving himself. because the approach of some European business people is too strongly influenced by the experience they have gained in more familiar markets. (iii) Similarly. Another example mentioned was China's Indigenous Innovation Policy which makes it difficult for nonChinese owned companies to access to public procurement contracts. with variations in interpretation and implementation additional issues. One example is the banking sector. This is a particular challenge because of frequently changing laws and uncertainties about how laws and regulations will be interpreted and implemented. not least because some laws can be conflicting. which not only makes it difficult for European financial service providers. However. a European customer and two Chinese clients. because of lower competence levels on the part of regulators. Ch inese companies are favoured because the government believes innovation needs to come from within China. interpretation of laws is relatively strict whilst in the less developed regions interpretation is less predictable. access to good quality information is reported to represent a higher cost than in other markets. for firms seeking to enter China. contrasting with Chinese clients who were only dressed in T-shirt and shorts. interpersonal habits. For example. laws and regulations. some informants also suggested there is a difference in enforcement practice by the courts in China with respect to indigenous and foreign companies. potential distributors. He reported that his European customers were well-dressed in summer. etiquette. it also requires knowledge of how these regulations are likely to be applied. Of course. One example is an underestimation of the importance of building strong relationships with local government. (v) Cultural differences: Culture affects business practices. where it is unclear what the implications will be for businesses. and spitting on the ground. making it necessary for them to use externals that are not always easy to find. Local variations in regulations add to the difficulties. However. market opportunities. However. in order to identify the implications for their (planned) activities. achieving this in China requires more than just information about the relevant regulations. as part of the government's attempt to protect Chinese enterprises. One informant gave the example of changes in tax laws in 2010. Another example mentioned is the attitude towards corruption. when entering new markets businesses need to understand the regulations governing those markets. A potentially important point is the commonly reported view that perceived IPR problems dissuades some European SMEs from entering China.in-house lawyers. (ii) Firms entering new markets require various types of information about: for example. (iv) Market access issues: non-tariff barriers exist in several industries. and the availability of business services. which mean that cultural differences can lead to misunderstandings. It was reported that a promising sale was prevented because of the culture clash. Once again this can be a particular problem for SMEs faced with more limited internal resources than larger enterprises. but not in China.
Training is obviously one of the possible solutions to this and a number of Chambers and support organisations are involved in cooperating with the Chinese government to set-up more advanced technical training. most key informants reported that entering China represents a bigger challenge for SMEs than entering many other markets. Business support organisations can help to change this attitude over time by organising meetings in their offices where Chinese business people are invited to meet European SMEs. which is often needed to accommodate expansion. the Chinese government retaliates by banning some European products from the market It is important to recognise that the issues European businesses face in China vary according to what's a company is trying to do. Informants often distinguished between firms looking for agents to sell into China and those wishing to establish a physical presence in China. stating that bad experiences are more than just isolated cases. there are also important differences. In this regard. SMEs may have different support needs at different stages of market development. They also referred to cases of business partners disappearing. Problems reported with Chinese suppliers included orders placed but no delivery and some quality issues. Although China is a large market with many business opportunities. When asked for examples. − Anti dumping disputes.Additional barriers mentioned by some informants included: − Recruiting the right local employees can be a major issue. As a result. and foreign government take action. − It is important to keep in mind that entering China is only the first stage in successful market exploitation. This is fuelled by reports of national counterpart firms having bad experiences in China. when entering China. As a consequence. Firms looking to establish a physical presence need help in overcoming some of the basic entry requirements such as legal registration. As the Chinese side is sometimes accused of engaging in dumping (supplying below cost price). − Some SMEs are said to face financing constraints. where the thresholds for minimum investment are relatively high. which some East European businessmen feel more comfortable in for historical reasons. These include recruiting staff. which refers to the widespread perception in China than large enterprises are more competitive and competent than small firms. Fear is also fuelled by a lack of any real success stories of national companies in China. − What one informant described as the big is beautiful issue. they described attempts on the part of their enterprises to do business with Chinese partners who kept raising the level of investment required. which firms experience once they become established. A similar argument applies to suppliers. one informant referred to growth constraints. according to informants representing two of the EU's smaller Member States. This represents a challenge for European SMEs who need to overcome the view. − The distance from Europe can also be a barrier to entry. − Fear can be a key bottleneck. 55 . but they can also benefit from being part of an established national business community in China. such as Russia and Ukraine. Whilst these two groups share some support needs. ongoing regulatory issues and relocation. particularly when intervening market opportunities exist. which increases the comfort factor for them. one of the messages promoted to companies is don't go to China without a reliable Chinese partner.
(i) Thorough preparation before entering China. Clearly. Public relations and advertising material needs to be translated into Chinese and adapted to local conditions. but an environment with the possibility of learning from others. European firms must be willing to adjust to the business etiquette in China. Speaking to other European businesses that already have experience in China was recommended by some informants. Concerning the popular perception by European businesses of the IPR problems that exist in China. it is doubly important in the case of China because of the challenges and potential pitfalls described above and the widely accepted importance of taking a long-term view. three interrelated messages shone through. but the idiosyncrasies of the Chinese market underline their importance. 56 . Whilst good preparation may be recommended before entering any new market. accessing external advice is one of the ways businesses can overcome barriers. entertaining potential business partners and government officials with lunch or dinner to build develop net- 1 Even overseas Chinese that set up a company in China after having been abroad for 10 years or more experience such a cultural gap (huge changes last 10 years). This includes incubator services. As one informant put it 'do your home work' (better) and do not overlook regional differences!' The initial investigation of the China market should address the question 'is China right for my business?' This may lead to some adaptation of products and services to the local market. following up on visits. which are required to seek out good Chinese partners and invest time in building relations with them and with government officials. Early. most informants emphasised that insufficient attention to due diligence on the part of European companies was at least partly to blame for this. which involve not only an office and other facilities. As far as IPR issues are concerned. 500 enquiries have been received by the EU IPR Helpdesk over a three-year period. One spokesperson stated 'it is better to find local people with European experience to run your local venture than Europeans with some China knowledge'. Both the level of demand and the fact that it appears to be growing. None of these are unique to China.6 Overcoming bottlenecks Although the informants offered a variety of detailed responses when asked how European SMEs overcome the barriers and challenges faced. (iii) Be sensitive to Chinese business etiquette and practices. although 50% of these were in 2010.3. This includes sending out documentation about the company and its products ideally before visit is made. In addition. Thorough preparation requires an investment of time and other resources. A reliable Chinese partner can help to bridge cultural gaps1 and provide local market knowledge. where too much hi tech can quickly price a good out of the market compared with "just-goodenough-versions" which are able to survive price competition. pre-entry registration of trademarks is recommended. suggests that advice with respect to IPR is an important support need of European SMEs. as described in the following section a wide variety of support is available from national and EU sources. (ii) Be willing to seek out expert advice and support from organisations with practical experience of the Chinese market.
which includes: − Information provision − Advice and consultancy − Visits to events in home country to inform business community on 'how to do business in China' − Undertake market research and deliver market reports − Event management: trade missions. the Chinese market is clearly not a priority either for the country's businessmen or for the government. both at home and within China for EU SMEs interested in entering the China market. organising business meetings and accompanying to the meeting (in some cases) − Helping companies find other business services such as interpretation. at least in Beijing and Shanghai. It is better to discuss such issues in private. in the larger Member States. specifically Russia where for historical reasons their businessmen feel more comfortable. 3. consulates and other service providers. For example. matchmaking events etc. With only one enquiry per week on average. such as bi lateral chambers. Even details such as seating arrangements – Chinese and European guests spaced evenly – are important in China. since people should not be put in a position where they 'lose face'. − Overseas market introduction service − Help in setting up representative offices − Offering temporary office facilities (sometimes also temporary staff) − Being an intermediary where disputes develop between European and Chinese business partners − Helping with sourcing on the Chinese market − Undertaking a legality check of a potential Chinese partner − Identifying potential distributors and/or suppliers in China − Helping with language. have a similar package of services. not all of the new member countries are necessarily targeting China. one informant in an Embassy of one of the smaller Member States. the support offered appears comprehensive. In the larger and more established Member States. However. with potential implications for the system of linkage and referral between support offered in Europe and that offered in China. not surprisingly. consulting companies and will make recommendations (in some cases). Differences also exists between countries in the way business support is accessed at home. referred to better market opportunities for their SMEs existing in markets closer to home.works. and consider using an intermediary to convey criticism for example to a person of high social status. This has potential implications for the effectiveness of the channels used to disseminate informa- 57 . Whilst there is considerable similarity in the types of support offered by national governments. trade fair participation. and only 25% of the Consuls time spent on commercial issues.7 Policy support for EU SMEs A variety of business support is available from national and EU sources. It is also necessary to be careful when expressing criticism. the extent and intensity of support varies between Member States of different sizes. Most service providers. as well as between the more established and new EU members.
but also in some of the former transition economies that have recently joined the EU (such as Estonia). to German companies at the market rate. which means that rather than providing lists of all German lawyers to a client business. most countries now recognise the i mportance of their Embassies including staff with business experience. The support required in these cases was described by our informant as similar to that required by a business start-up. where Business Link performs this function. It was reported that this has contributed to a significant increase in the volume of enquiries from one or two per week in 2008 to between 30 and 40 per week in 2011. The main service involves sub leasing premises in the form of small office space (mostly unfurnished). membership-based organisations are relatively weak. dealing with the two governments and coordinating high-level visits. SMEs can find out about foreign market opportunities and potential pitfalls in them through Chambers of Trade or Commerce. for example.tion about the national and EU support available in China. The Centre also produces a monthly newsletter which is distributed to the German community. although in the case of some of the new member countries this recognition is relatively recent. For example. even the smallest Embassies in Beijing provides some support to their national SMEs seeking to do business in China. they provide a short list of two or three who they have heard positive feedback about. as well as providing concrete help to domestic companies. Significantly. as well as to a wider audience. Clients typically rent the space for one-year although some of the present occupants have been there for longer. Networking is also part of the service offered to client businesses by the German Centre. Examples include sessions on visa requirements and intercultural management. In the case of some of the larger and more established Member States. The support offered by the German Centre is for German companies wanting to establish an office in China. But in some countries. 2008 in the case of Hungary. Examples include the UK. which conforms to local regulations. with multiple roles that can include: observing China as a market and providing basic information for domestic companies such as through an Embassy homepage. As a consequence. The advisory support offered is practical nature. In a small Embassy. The Centre offers services that are complementary to those offered by the Consulate. the business support concept focuses on the principle of incubation. Various events are organised for this purpose. business support in China comes from a variety of sources. which typically means some form of quasi-public sector agencies make up the mainstream business support system. there may be a single commercial representative. The ad- 58 . However. where a lack of recent tradition of selfgoverning organisations has contributed to slow development of membership based business organisations. assistance in gaining a market entry visa etc). EU delegation and the German Chamber (such as legal services. for whom it represents a marketing tool. typically to locate one or two sales or sourcing staff. the German Centre for Industry and Trade in Beijing (which is one of 7 centres worldwide) is owned by the Landesbank Baden Wurttemberg (a state-owned bank). whose role is often underpinned by a compulsory membership requirement. helping them to connect with other businesses. although not surprisingly the resources devoted to this task vary enormously with size of country. In most continental European countries.
there are many stakeholders in the UK whereas in Germany the Chambers and trade associations are the main source. such as the German Chamber. who have offices in Shanghai. it has increased its presence in the building which it now occupies 100% (10. international trade advisers in Business Link in the UK. perhaps because of limited resources as in the case of a SME. with a membership of 900 businesses. complementary business support services for UK companies involve partnerships between a number of organisations. This represents low risk for the UK company who are avoiding the cost of investing in property or to incorporate in China. but sector level activities are not d irectly charged for. The activities of the project manager are limited by legal stat- 59 . They have sector teams within the UK. It was reported that all space is now occupied by tenants and has been for two or three years. help in researching markets and finding joint venture partners. The China British Business Council (CBBC). which may lead to forming a delegation to visit China. such as railways. The demand for space in the German Centre is high. trade associations. advocacy role with respect to access to markets. Products offered to members only include LAUNCHPAD It is aimed at its new entrants to China. who refer clients to them. In addition. Businesses come to UKTI through a variety of routes: a website. Chongqing. specifically businesses that are interested in the Chinese market but are uncertain as to whether or not they require offices. offers a range of support in addition to that delivered as part of the contract with UKTI. Since its establishment in 2000. which has 13 offices in China and a geographical coverage that complements the UKTI offices. Guangzhou. Launchpad supports companies for 1 to 2 years after which some pull out of China but most go on to establish their own offices. who are responsible for arranging an annual programme. Compared with Germany. Led by UKTI. The UK model also involves inter-agency cooperation. support for UK companies appears well resourced in China.000 sq m). The delivery of business support offered by UKTI is through a service level agreement with the British China Business Council.visory and networking services are not charged for but rather casted into the rental charge. These visits are used to lobby the Chinese government for market access. The complementary nature of the Centre's activities is reflected in their cooperation with other organisations. A comprehensive range of business support is offered including a general enquiry service. This has implications for how information about support services in China is disseminated. but also member focused events in different parts of the UK. as well as Beijing and a total of 100 staff. UKTI have a lobbying. Business support services are chargeable as is lobbying on company specific issues. the CBI and some direct contacts. some of which are open to non-members. market research including UKTI's Overseas Market Introduction Service (OMIS). where they work closely with the EU Chamber and the EU Delegation. Members buying Launchpad hire a project manager from CBBC. which in the case of agriculture is contracted out to an organisation in the West Midlands. Organising visits by ministers and the Prime Minister is also part of UKTI service. As in the case of Germany. This includes organising events in China. UKTI also develop market access strategies for specific sectors. for example.
Events are organised in China as well as in EU countries in a ratio of 1:2. However. the IPR helpdesk offers advice to EU companies with respect to copyright. As far as EU support is concerned. Guangzhou and Hong Kong as well as Beijing.financing. and through activities in Europe with industry associations and similar organisations IPR Helpdesk. Enterprise Ireland. it was suggested this would be through consortium members including the Euro Chamber. mainly for client businesses in Europe. Their role is market research. the site will include a training/conference room.ute in China. in China two recent developments with respect to EU support are of particular interest. trademarks and patents. its activities were limited to China but now staffs are also active in events in EU Member States. promoting its services through a dedicated website. Five key expert staff cover legal. This is a new venture which began operation on 1 November 2010. for example. However. with a consortium of existing Chambers of Commerce contracted is to run it. Similar EU Centres exist in other countries including India. The Centre has a budget for three years. EU SME Centre Beijing. offering comprehensive business support is not confined to the larger Member States. China is the only centre focusing solely on business. In practice. so that informing companies about EU support is not common in the national embassies and support providers in Beijing. training. by recruiting staff and identifying office space. These are the new SME Centre in Beijing and the IPR Helpdesk. what needs to be done to meet them and who to contact for advice or help in this regard. through the Enterprise Europe Network. has offices in Shanghai. All services will be offered free to businesses. There will also be a multilingual website containing market information. essentially to focus on planning at the stage prior to the establishment of office in China. In addition to the offices for key staff. which are mainly SMEs assessed as having export potential. but these include technology as well as business support. most informants reported that SMEs are made aware of what is available within Europe. with free Internet access and help in producing business cards for China. Located within the SME Centre. which also prevents any co. showing that geographical coverage outside Beijing is not confined to the largest Member States. standards and market information. At the same time. In response to a question about how client businesses in Europe would find the SME Centre. there is no choice on this matter because of the nature of the service contract with the EU. These events are 60 . Although a much smaller operation than UKTI. Services will be offered to SMEs in all 27 Member States but with particular attention paid to the needs of businesses in new member countries. Enterprise Ireland has the advantage of a strong domestic presence with more than 3000 core clients. At the outset. Enterprise Ireland offers incubation space to fully owned Irish companies in each of its offices. information about dealing with the kind of problems and challenges faced in entering Chinese markets. hot desk facilities where SMEs can come and work. information about relevant standards. The focus will be on offering practical information and advice since this was one of the findings from the needs assessment investigation. building contacts. The concept of the SME Centre was described as one of signposting clients to value-added services.
The geography of existing European business support in China has been reinforced with the location of the IPR Helpdesk and the new EU SME Centre in Beijing. When asked about sustainability. This can affect financial support for individual companies for visits and other activities but also exhibitions and networking activities organised by Embassies. A high priority for the future development of business support in China is to pay explicit attention to increasing access to support services outside these large centres. a total of 500 enquiries have been received but 50% of these were in 2010. One IPR expert is employed in-house. 3. they also work with business associations throughout Europe on an ongoing basis. Of the remaining 30%. (iv) Gaps exist in the market information available in some provinces in China. (ii) Existing support for European SMEs in China is concentrated in Beijing and Shanghai. (iii) SMEs in some Member States have little if any access to financial support for marketing activities for state budgetary reasons. In this context. 61 . some involve referral to a Chinese organisation. more explicit attention needs to be played to the support needs of European SMEs at different stages of market development in China. some involve tapping into a pool of experts. one informant referred to the needs of companies after distributors have been identified and met face-to-face.8 (i) What support is missing? Recognising that market entry is only the first stage of successful market exploitation. She also stated that it needs to be provided free of charge. Over the three years since the Helpdesk was established. For example. (vi) Finally it should be noted that the nature and extent of any business support gaps facing individual SMEs vary between EU countries according to whether or not there is a Chambers presence in China. with some countries having a presence in other large provincial cities such as Guangzhou. offering one-to-one advice SMEs. to which the helpdesk adds a China Day.viewed mainly as training activities. SMEs often lack the internal resources to manage this effectively. our informant reported that the need to maintain the service was demonstrated by the level of demand which was increasing. European SMEs will need to investigate new geographic market opportunities in China. Other partners include IP Europe who organised events offering general information about IPR. This should be part of basic provision across the EU. This represents a growing area of need as the Chinese economy continues to grow and competition increases in markets in the main centres of Beijing and Shanghai. He reported that in 99% of cases contact with distributors will need to be followed up once EU companies visiting China are back in Europe. (v) Some informants also referred to gaps in the market information available for certain sectors. Approximately 70% of these were described as simple queries which can be answered by e-mail using a template.
More detailed investigation is required to decide if the Enterprise Europe Network is an appropriate model for this. 6. Nanning (China Council for the Promotion of International Trade Guangxi Sub Council. Wuhan (Wuhan Science & Technology Exchange and Technology Transfer Center).9 Possible role for the EC to foster EU business in China Which role could the EU play in stimulating EU SMEs to do (more) business in China? A number of suggestions emerged from the investigation concerning possible future roles of the European Commission in fostering the activ ities of EU SMEs in China. Guangzhou (China Council for the Promotion of International Trade Guangdong Sub Council). however these are Chinese organisation possibly with a different set of objectives as European organisations (In India the idea is for example to make the EBTC as set up the Commission. 3. 2. since they identify the sectors that will be supported by Chinese government in the near future. the EC has a potential role to play in ensuring that the future business opportunities contained in the Chinese government's 5 year plans. Attracting Chinese investment into the EU is complementary to efforts to increase business opportunities for EU firms in China. Changsha (Center of International Scien tific Exchanges and China Council for the Promotion of International Trade. 4. (ii) The EC should co-ordinate efforts to attract investment into the Single Market with its attempts to increase opportunities for EU businesses in China. This should 1 10 partner organisations in China. 5. 62 . sub-councils Hunan and Fujian) and three are near completion). rene wable energy technology (e. in 8 cities: 1. The current plan. refers to environmental projects. Some of these focus on the development of the EU's new SME Centre in Beijing.g. (iii) The EC should prioritise the development of a structure that can act as a platform for SMEs to develop business relations in China. 7. are disseminated to EU businesses. Haikou (China Council for the Promotion of International Trade Hainan Sub Council). The 5 year plans produced by the Chinese government are a potentially useful source of information about emerging business opportunities for European businesses. 8. Xiamen (High Tech Industrial Zone Xiamen Torch). S u g g e s t i o n s f o r n e w i n i ti a t i v e s (i) Working closely with national organisations.3. wind turbines) and electric cars. Fuzhou (China Council for the Promotion of International Trade Fujian Sub Council and F ujian Productivity Promotion Centre). Some of the suggestions made by informants are already taken on board in the activities planned for the new SME Centre. Hunan Sub-Council). whilst others would require new initiatives on the part of the EC. The European Commission is further extending the network in China by associating with local Chinese organisations. The two sub-councils already provide access to 10 organisations in 8 cities 1. for example. including low carbon technology. Co-ordination of the two actions could help to open up Chinese markets to EU firms. the Enterprise Europe Network contact point in India). (iv) The EC should actively disseminate information about the experiences of European SMEs in China which highlight positive outcomes. and high quality machinery. Hangzhou (China Council for the Promotion of International Trade Zhejiang Sub Council). Two agreements have been signed (China Council for the Promotion of international trade (CCPIT).
i. However. This is necessary to counter the exaggerated negative perception of IPR issues. (e) further improve quality of advice services offered. (vi) If SMEs in all Member States are to make full use of the support that will be available through the SME Centre. Mid 2010 the IPR helpdesk China has been positively evaluated. (b) provide more information on what the actual situation of SMEs in Chin is. proper attention paid to due diligence and a willingness to take early advice. (viii) The European Commission should continue to actively support and promote the IPR Helpdesk. However also a number of improvements were identified: (a) increase the information on how to use the Chinese (legal) system from a practical point of view. cost will not be a barrier to SMEs interested in accessing them. cost may well be a barrier. for example. However. As a first step in this process. the European Commission should actively support the development of European business service providers in China. (b) focus of the project should be more on prevention in Europe. provides good services that are targeted at SMEs. This is important because the new EU SME Centre in Beijing is likely to be of particular interest to SMEs in the smaller Member States where national support is more limited than in the case of larger and more established EU members. which in some European countries is said to dissuade SMEs from approaching China. The cases could be posted on the SME Centre's website with links with national websites should be actively promoted. it is recommended that research into 63 . (vii) As well as promoting and supporting the entry of European SMEs into the China market. in cases where an initial enquiry for assistance leads to referral to another organisation which makes a charge for its services.(d) improve clarity: what is output and content of the advice services than can be expected. (ix) The establishment of the new SME Centre is a positive first step to improving access for SMEs to business support in China from across the EU. (v) The EC should work closely with the new SME Centre to encourage cooperation between smaller and newer Member States where budgetary constraints affect their ability to arrange exhibitions and other networking activities. A large majority of users believe it is indeed needed. Since the SME Centre will provide core support services free of charge. These cases should include examples from all member countries. which can help the development of SMEs seeking to export and develop the Chinese market. There are also three main elements identified with respect to the overall design and strategy of the IPR helpdesk: (a) understanding and better cooperation with already available services. (c) improve navigation of IPR helpdesk's portal. there is a priority need to increase access to support services outside Beijing.emphasise that with adequate preparation. successful entry to the Chinese market can be achieved. some financial support for SMEs from poorer EU countries is likely to be necessary to enable them to access chargeable business support services to which they are referred. at which most informants spoke highly of. before SMEs enter the Chinese market). One way of achieving this would be through case studies of SMEs that have had successful experience in China. (c) follow a more sectoral approach.e.
the business development services available in other parts of China. S u g g e s t i o n s f o r t h e ne w E U S M E C e n t r e It is important that the full range of business support available to EU SMEs in China is actively promoted within Europe. such as developing and creating a major hospital. perhaps linked to an assessment of market opportunities for European businesses would be useful to guide this process. So European consortia with the best players in each specific market segment are eligible. internal document) focussed on four main areas: (a) Standards and Conformity Assessment. in order that SMEs in all Member States are cognisant of what is available.dk/en/menu/exportcounselling/industryteams/constructionandbuilding. (b) Legal issues.g. airport or other large infrastructure project. 64 . It should not be assumed that Chambers of Trade and Commerce are the primary source of business support in all countries. since the nature of business support systems varies considerably within Europe. An innovative example reported is an initiative of Trade Council of Denmark (TCD)1 In order to assist Danish companies get access to the China market. e. This should include regional as well as national organisations. wood components. (xi) The European Commission should promote and disseminate information about good business support practices undertaken by national organisations in China. many players in EU27organising trade mission to China. ceramics. Companies with the most appropriate offer can participate in the consortium. construction and building materials (the latter includes sourcing of components such as tiles. Specific suggestions made for services to be offered included the translation of 1 See ‘Building China Project’ at http://tradecouncil. (x) The EC should map and actively disseminate information about network of organisations from different European countries that are currently providing support to European companies in China. The new team appointed to establish the new EU SME centre in Beijing did a good job in doing such an exercise as part of the planning period of the project.um. metal components. insulation components and coatings). A questionnaire was used to obtain information from many European Chambers and Embassies. However actions might be taken to assure that such an exercise is repeated regularly to allow proper coordination of activities.china. This promotion should include the services provided by the new EU SME Centre and those that may be accessed through it. Within China this will require close cooperation between the SME Centre and the national embassies and support organisations. Some of the specific suggestions for support to be provided in the new EU SME Centre made by informants are already incorporated into the plans for Centre. The idea is to set up a consortium that is well positioned to bid for contracts. it is important that the SME Centre establishes links with the most appropriate support organisations in each Member State. (c) Business information and (d) Training.htm. resulting in a good assessment of information and services already available and the need for improvement (coordination). However. not necessarily Danish companies. TCD-China has established a nationwide industry team encompassing activities mainly within architecture/engineering services. This mapping exercise (Needs assessment and gap analysis.
10 Workshop agenda 13:00 13:30 13:45 14:00 – 13:30 – 13:45 .regulations. 3. co nsultants. − Seek out expert advice and support from organisations with practical experience of Chinese market − Be sensitive to Chinese business etiquette and practices The most promising sectors as discussed above were also briefly mentioned.50 . 65 . (2) More attention might be required to increase access to support services outside Beijing & Shanghai. The ideas presented on support that might be missing were: (1) Answer varies for SMEs in different Member States − Some SMEs have little if any access to financial support for marketing activities for state budgetary reasons. Trade Council of Denmark (TCD): Support provided Build consortia. − Whether or not there is a chambers presence in China.50 15:20 15. and producing enhanced databases of distributors. by Mr. (3) Address gaps in the market information available in some provinces in China & in some sectors (4) Pay more attention to the support needs of SMEs at different stages of market development in China. Prof.14:50 – 15:20 – 15:50 . Next the main barriers as seen by the key informants interviewed in Shanghai and Beijing area were presented (as listed above) and the type of support services generally provided by European organisations in China. however. it should be noted.11 Major results from the workshop discussions During the workshop the preliminary findings of the study so far were presented. Chang Tian Case – Danish Embassy. Franz GammelgaardSchmidt Preliminary findings – part I. Also the main things SMEs need to do themselves were discussed: − Thorough preparation: do homework better.20 – 17:30 18:00 3. Koos van Elk Introduction Participants by Mrs. marketing assistance.20 17. that some informants suggested this should include sharing tacit information. the organisation of a mentoring scheme for new entrants in China. Koos van Elk Break Preliminary findings – part II. David Smallbone Discussion / Tour de Table: .How to facilitate access to Chinese market? .17.14:00 – 14:20 Registration and refreshments Introduction and welcome by Mr.What (additional) role could the EC play? Concluding remarks Dinner 14:20 14. With respect to shared databases. such as of Chinese companies not to do business with. by Mr. because of previous bad experiences.
Participants mainly stressed that the workshop was considered to be rather useful and that appreciated very much the chance given to attend. which includes sharing tacit information Finally. and private commercial consultants? − Will the model of the Enterprise Europe Network in China provide an effective platform for EU SMEs to develop business relations in China? − Better coordination between services? By whom? − How to serve businesses from new and/or small EU Member States? − Is there a conflict between the EU SME Centre being managed by a consortium of Chambers & other organisations from established member states and its role in serving the needs of SMEs in countries without a Chambers presence in China: a) b) c) Is there a danger of crowding out? Will the model mainly serve the needs of the consortium by increasing business for their services? How can these risks be best managed? There was a lively exchange of views with the participants. How can EC further support EU SMEs in China? − Disseminate information about future business opportunities contained in the Chinese government's 5 year plans − Prioritise the development of a platform for SMEs to develop business relations in China. to further stimulate discussion a few teasing statements were presented: − What should be the role of the EU in relation to Chambers. 66 . perhaps linked to an assessment of market opportunities for EU businesses − Disseminate information about good business support practices unde rtaken by national organisations in China. Is the Enterprise Europe Network the model? − Disseminate information about experiences of EU SMEs in China which highlight positive outcomes & how they were achieved − Encourage cooperation between smaller and newer member states where budgetary constraints affect their ability to arrange exhibitions and other activities − Provide financial support for SMEs from poorer EU countries to access chargeable business support services − Actively support the development of EU SMEs in business services in China − Continue to actively support and promote the IPR Helpdesk − Map and actively disseminate information about the network of business support organisations from EU countries − Research the availability of BDS outside Beijing & Shanghai. but not really a fierce discussion of these items. EU Member States. − Suggestions fro the new SME centre: Actively disseminate information about the support available to EU SMEs in China recognising that the structure of the business support system varies between Member States Specific suggestions for services: a) translation of regulations. But most interventions provided additional illustrations to the points already listed or asked for some clarification. consultants.Finally the most important part of the Workshop was devoted to two important issues hoping to result in a lively discussion with the participants was expected: A. b) organisation of a mentoring scheme for new entrants in China c) marketing assistance d) enhanced databases of distributors.
) 'think big'. If similar services are available from different service providers efforts should be made to clearly present the available options to European SMEs so that they can make a choice were to go. 67 . − The need to pay attention for the different position of various (SMEs from) Member States was pointed at: some Member States have an important and well functioning support structure located in various cities in China. enterprise development zones etc. − Several participants noted that they feel especially SMEs prefer services being offered by people from their own country. − It was also mentioned that many of the Chinese counterparts (e. Chinese counterparts often look for big projects making major investments. The following points were stressed: − The need for coordination to avoid duplication in offering services by various European players was stressed. not only because of the language but also because of being familiar with the expectations and capabilities of the local business community at home. other Member States have hardly anything.g. If you represent a European SME you do not feel welcome al the time. − The need to develop a good link with they business community 'at home'.Some of the dilemma's were acknowledged (confirmed that these points needed attention) without clear positions already taken. local government. to guide them to the services locally available in China.
Annex I List of interviewees I n t e r vi e w e e s f r o m B e i ji n g a r e a Name Mr. Feng Guo Mr. Liu Wenmei Mr. Adam Dunnett Ms. Zhengzhi Mr. Ltd Beijing Gaowen Law Firm Beijing Huacai Financial Consulting Co.. Zhaoqing Ms. LTD) China Council for the Promotion of International Trade (CCPIT) Netherlands Provimi Beijing Office French Bourdier Beijing Office Cooper Bearings Group(Beijing) China Chamber of International Commerce Chief representative Representative Sales Management Deputy Director Membership affairs Division Director of the Department Registered manager General manager Chief Representative Chief Representative Senior Partner Chairman Deputy Head Law and Business Department Deputy manager Counsellor Second Secretary Director Managing Director Project Manager Plenipotentiary Minister Senior Business Manager EU Delegation. Wang Mr. Monika Hencsey Ms. Embassy of the Republic of Hungary EU Delegation. Alan Buckley Ms. unit Trade EU Delegation.. Qi. Embassy of Ireland Delegation of German Industry & Commerce Beijing (AHK) Mr. Bernard Srajner Mr. Hanna Bohme Ms. Section Science and Technology Organisation Office of Economic Affairs. unit Corporation Position Counsellor. David Lavorel Ms. Yingze Liu Ms. Jiuli. Song Jianxin Ms. Hong Xiguo Beijing Foreign Enterprise Human Resources Service Co. Marta Balogh Ms. Margaret Philipson Mr. Geng Zhirong Mr. Li jiebo Mr. He Xin Embassy of the Republic of Slovenia European Union Chamber of Commerce in China UK Trade &Investment (UKTI) EU SME Centre German Centre for Industry and Trade Project Manager China IPR SME Helpdesk Enterprise Ireland Commercial Section. Philippe Vialatte Ms. Head of the Office Second Secretary Trade and Investment Officer First Secretary Project Assistant First Counsellor 68 . Jessica Mitchell (EEAS-BEIJING) Mr. Jaspal Channa Mr. Maria Linder Ms. Csaba Wolf Ms. Ying Liu Mr. Liu Yongliang Mr. Wang. Trina Guo Mr. Ltd Carl Duisberg Centren Beijing Representative Office Finland OY Windside Production Limited Beijing Representative Office Beijing Eusino Import &Export Company Newst (Beijing Business Center Co.
Bill Yi Mr. Shanghai China-Britain Business Council in Shanghai General manager Business Manager Trade Services Director Consul Commercial Senior Commercial Officer Mr. Business Development General Manager German SME Chief representative China Liaison Office Nanjing Chief Representative Deputy Representative Sales Manager Sales manager Director Project manager 69 . Jan Noether Mrs. Winch Wu (Yun Qian Wu) Baden-Württemberg Netherlands Business Support Office (NBSO). Steven Kool German Chamber Network Abroad (AHK) Austrian Consulate General. Wuxi National Hi-tech Incubator Service Centre Shanghai Chief Representative Vice-Consul Commercial Affairs General manager Vice general manager Managing director General Manager Vice General Manager. Nanjing WUXI JINGTECH CO. Gang Lu Mr. Yin Linggu . Jennifer Lu (Ms. Helmut Guesten Shanghai Sky Universe Investment Consulting Firm (assisting European SMEs. Tim Werkhoven Mr.I n t e r vi e w e e s S h a n g h a i a r e a Mrs. Simon Stewart European Union Chamber of Commerce in China. Commercial Section TVH. Ziqi Xu Mr. Ionan Kraft Mr. Steven Wang Mr. Bettina Lindner Mr..retired - Senior advisor West Flanders Development Organisation Belgium Dr.Royal Danish Consulate General in Schmidt Mrs. Ltd. Franz Gammelgaard. Jiangwen Yang Mr. Jian Ping Lu) Mr. Stefaan Blondeel Mr. both in Nanjing Mrs. Wuxi Goldlink Import & Export Co. Julia Guesten Mr. Tao Gui Mrs. especially from Belgium) Scottish Development International in Shanghai (SDI) Member of the European Union Chamber of Commerce in China (EUCCC. Jessie Ji Mr. sales office of Belgium family enterprise Rotterdam Commercial Representative Office (RCRO The Netherlands). Shanghai Mrs. before Chairman) and presently working for private European SMEs. LTD. Erik van der Molen Mr..
unit Trade EU delegation. unit Cooperation EU delegation Science. Ltd Carl Duisberg Centre. Jessica Mitchell Mr. Ltd Beijing Gaowen Law Firm Beijing Huacai Financial Consulting Co. Technology and Environment Section EU SME Centre..Annex II List of workshop participants From Beijing area Name Mr. Jie Hujie Mr. Yun Qian Wu Ms. Feng Guo Ms. Hongxin Sun Ms. Markus Klemt Ms. Helmut Güsten EMZ Smart Solutions (German SME established in Nanjing). Jaspal Channa Ms. Steven Kool Rotterdam Commercial Representative Office Shanghai (RCRO. Liu Ying Mr. the Netherlands Ms. David Lavorel Mr. director German Centre for Industry and Trade Project Manager China IPR SME Helpdesk Beijing Foreign Enterprise Human Resources Service Co. and The European Union Chamber of Commerce in China (Nanjing) Member of the board General Manager Project Manager Director Managing Director Organisation The Royal Danish Consulate Shanghai Position Consul Commercial 70 . Katalin Posa Ms. Yingze Liu Mrs. Franz GammelgaardSchmidt Mr. He Xin Organisation Office of Economic Affairs. Jing Xie Mr. Naomi Saunders Mr. Beijing Representative Office Foreign Trade Chamber of Germany (AHK) Position Counsellor. Csaba Wolf Ms. Head of the Office Second Secretary Trade and Investment Officer Project Assistant Intern First Counsellor Head of Science. Suciu Sebastian Philippe Vialatte Mrs. Jian Ping Lu Wuxi Incubator Service Centre Shanghai Sky Universe Investment Consultancy Assisting especially Belgium SMEs Mr. Technology and Environment Section Director Manager Project Manager Deputy manager Lawyer Strategic Planning Supervisor Chief Representative From Shanghai area Name Mr. Embassy of the Republic of Hungary EU Delegation. Maria Linder Ms.
Koos van Elk EIM Business & Policy Research The Netherlands Project manager 71 . Tian Chang Mr.Research team Prof.. Ltd Beijing Newst Secretary-Accounting Co. Li Baojie Mrs. Jade Xu Beijing Newst Secretary-Accounting Co. Ltd Wuxi National Hi-Tech Industrial Development Zone Workstation for Overseas Talents Introduction UK Office Research Project Country Coordinator for China-Beijing General Manager Project manager Project manager Director Mr. David Smallbone UK Kingston University. Ltd Beijing Newst Secretary-Accounting Co. Cui Zhejiong Mrs.. UK Mr. Liang Wanjun Mr..
Profile of India
4.1.1 Key data
1. 2. 3. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP, in 2010 USD) 4. Total imports; goods imported and trade partners $ 327,000,000,000 2010 est. , rank 13 in the world Goods: crude oil, precious stones, machinery, fertilize r, iron and steel, chemicals Partners: China 10.94%, US 7.16%, Saudi Arabia 5.36%, UAE 5.18%, Australia 5.02%, Germany 4.86%, Singapore 4.02% (2009) 5. Total exports; goods exported and trade partners $201 billion (2010 est.); rank 23 Goods: petroleum products, precious stone s, machinery, iron and stee l, che micals, vehicles, apparel Partners: UAE 12.87%, US 12.59%, China 5.59% (2009)
Source: World fact book CIA (//www.cia.gov/library/publications/the-world-factbook/geos/ks.html; 28-5-11)
1,189,172,906 (July 2011 est.);2 rank in the world 3,287,263 sq km; rank 7 in the world $1.43 trillion (2010 est.); rank $3,400 (2010 est.), rank 163
4.1.2 Economy 1 India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labour force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. Merchandise exports, which account for about 15% of GDP, returned to pre-financial crisis levels. An
World fact book CIA (//www.cia.gov/library/publications/the-world-factbook/geos/ks.html; 28-511)
industrial expansion and high food prices, resulting from the combined effects of the weak 2009 monsoon and inefficiencies in the government's food distribution system, fuelled inflation which peaked at about 11% in the first half of 2010, but has gradually decreased to single digits following a series of central bank interest rate hikes. In 2010 New Delhi reduced subsidies for fuel and fertilizers, sold a small percentage of its shares in some state-owned enterprises and auctioned off rights to radio bandwidth for 3G telecommunications in part to lower the government's deficit. The Indian Government seeks to reduce its budget deficit to 5.5% of GDP in FY 2010-11, down from 6.8% in the previous fiscal year. India's long term challenges include widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, insufficient access to quality basic and higher education, and accommodating rural-to-urban migration. 4 . 1 . 3 F i n d i n g s o f t h e t r a d e a n a l y si s Figure 4.1 shows that also the increase in the volume of exports to India is well above the overall increase of EU exports. For India the increase of the non SME sectors was especially fast prior to the economic crisis. But also the export of the SME sectors doubled in the period 2000-2007.
Figure 4.1: Development in exports 2000-2010 (value). EU27’s export to India compared to EU27’s total exports
2000 = index 100
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SME export to India Non-SME export to India SME total export Non-SME total export
Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”. For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research, De nmark.
4.1.4 Findings of the surveys Of all internationally active SMEs in the European Union, about 6% have international business activities in India which is equal to Brazil (Figure 4.2, measured over the period 2007-2009). For 4 out of the 7 key target markets the figures are higher.
The percentage of internationalised EU SMEs that have business activities in the 7 target countries
0% 2% 4% 6% 8% 10% 12% 14%
Source: Survey 2009-2010, Opportunities Internationalisation SMEs, EIM/GDCC (EU27, N=6649).
The barriers reported by European SMEs active on the Indian market deviate quite a bit from the average for the 7 key target markets(Figure 4.3). Especially transport costs and lack of finance are more important for India. Lack of qualified personal and knowledge of foreign languages score much lower than average.
Figure 4.3 Major barriers for India, percentage of SMEs
Conformity of prod./serv. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork, bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages
0% 5% 10% 15% 20% 25% 30% 35%
Average 7 key markets
Source: Survey 2009-2010, Opportunities Internationalisation SMEs, EIM/GDCC (EU27, N=6649).
The anticipated effect of support on the other hand shows a very similar patter across all target markets including India (Figure 4.4). Dealing with IPR issues scores a bit higher, whereas auxiliary services in offered in India, information on rules and regulations and on market opportunities score somewhat lower.
Figure 4.4 Anticipated effect of possible public support measures for India, pe rcentage of SMEs expecting the instrument to be effecti ve or very effective, ranked by average
Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners
Average 7 key target markets
Source: Survey 2009-2010, Opportunities Internationalisation SMEs, EIM/GDCC (EU27, N=6649).
India as a trading partner
4.2.1 Introduction India is a federal republic with 28 states and 7 union territories and a population of almost 1.2 billion people. As in China, this is a relevant issue for the present study as shown in the chapters to follow: European SMEs should not underestimate regional differences on the very large Indian market, both with regard to general market conditions as with regard to (interpretation and enforcement) of rules and regulations at state level. The Indian economy is described in Section 4.1 on the basis of the World Fact book of CIA as developing into an open-market economy. The sectoral composition of its GDP: agriculture 16%; industry 29% and services 55%.
but it is a market with relatively low prices so enterprises really have to consider their own business proposition very well in advance: are sufficient margins feasible considering local price levels and my cost level? (overpriced products are not uncommon). 4. India still maintains substantial tariff and non-tariff barriers that hinder trade with the EU. Russia (123) and Brazil (127) only slightly better. the role it intends to play and what type of services it could and could not provide 1. Of the 7 target countries.2.4. South Korea (16) and Japan (18) perform really better. Denmark and Ireland in the top (rank 4.eu/trade/creating-opportunities/bilateral-relations/countries/india. only Ukraine scores lower (145). India is an important trade partner for the EU and a growing global economic power. But the communication strategy of the various players should be improved.g. The market is huge and certainly has opportunities for European SMEs. Source: http://ec. The EU and India hope to increase their trade in both goods and services through the Free Trade Agreement (FTA) negotiations that they launched in 2007 2. And since the indigenous private sector in India is growing and is taking up a larger share of economic production as mentioned above. there are also growing opportunity for European SMEs to do business with these growing private enterprises and set up ventures in India.3 Future The economy of India shows a very strong growth.europa. ranging from UK. Together the EU accounts for approximately 13% of all Indian imports.ebtc.3%). only 7 out of 220 c ountries in the world show a higher annual growth than India (estimated growth 2010 8.eu/. Although it is far from the closed market that it was twenty years ago. 77 . The India Commerce and Trade Minister Anand Sharma expected for example in October 2010 that the FTA India-EU would be concluded end 2010 and also the European parliament wanted the FTA to be concluded end 1 2 See: http://www. but this market share has been decreasing significantly in recent years especially due to the above average growth of imports from China (nominal imports from the EU to India are still growing). Even people working in the business of guiding and supporting European enterprises (e.3 Trends in trade with the European Union In the world ranking of imports nations India ranks 13. 4. with Member States services) to the Indian market are not all aware of the present situation with regard to for example the European Business and Technology Centre (EBTC) in Delhi.2 Cost of d oing business The ranking of India in the index 'Ease of doing business' (listed) as published by The World Bank and the International Finance Corporation (IFC) on 4 November 2010 is not really positive: 134 out of 183 countries listed.2. For some of these issues support services will provide a useful contribution. To compare: all EU Member States have a much better score. 6 and 8) to the EU Member States with the lowest scores Poland (70) Italy (80) and Greece (109).
and reaffirmed the importance of an ambitious and balanced conclusion in the spring of 2011. Early February 2011. but it is proposed (expected) to be signed during next summit in New Delhi in Dec 2011. Clean Development and Climate Change. 78 . leaders welcomed the significant progress recorded during recent negotiations.2010 after three years of negotiations On 10 December 2010.6 billion. So a EU trade surplus of over 1 billion T r a d e i n s e r vi c e s EU services exports to India 2009: €8. Next to negotiations at EU level there are also negotiations between individual Member States and India.India Summit was held in Brussels. Indian inward investment to EU 2009: €0.4 billion. Some parties expect the text of the agreement to be ready in April. with a view to enhancing energy security. the Eleventh European Union . agreed on the contours of a final package. − They welcomed the business summit held in the margins of the summit and agreed that enhanced cooperation between business organizations from EU and India would greatly benefit their respective companies and improve opportunities for cooperation. energy efficiency and promoting the development of renewable energy (note: relevant for opportunities being fostered by EBTC in Delhi). The Joint Statement 1 contains inter alia the following relevant issues: − Recognising the value of an ambitious and balanced broad based trade and investment agreement. However. so an EU trade surplus of over 1 billion. The trade summary on the website of DG Trade (as of 10-2-2011): Trade in goods EU goods exports to India 2009: €27. EU goods imports from India 2009: €25.4 billion.2 billion. presently the talks are continuing for example discussing more progressive abolition of restrictions on investment. − Building on the 2008 EU-India Joint Work Programme on Energy. The FTA is officially (also) called: BITA Bilateral Investment and Trade Agreement. EU services imports from India 2009: €7.4 billion. leaders reaffirmed their commitment to cooperation in these fields. 1 Joint Statement by India and the European Union (EU) on Friday 10-12-2010 at the India-EU summit in Brussels.5 billion. which will bring significant economic benefits to both sides and further strengthen the bilateral economic relationship. Foreign Direct Investment EU outward investment to India 2009: €3. for example Italy and India agreed to set up a joint business council to boost to investment flows between the two countries.
).5 1. All interviews were conducted between 17 January – 10 February 2011 by a team of 3 researchers (at most interviews 2 were present): Dr. 4. Bottlenecks to doing business between the EU and India Cultural differences not only between Europe and India but also cultural diversity within India. 13. life sciences (medical supplies. oil and gas. agriculture.9 are mainly based on interviews. bureaucratic. 3. 14.4 1. biotechnology. So there is a large number (around 800) of especially German SMEs established in Pune and the Indo-German Chamber of Commerce plays an important role in this process (focussing on the automotive and engineering sector). for example high quality agricultural seeds.P. and other energy sectors (renewable energy such as wind). 2. project manager from EIM Business & Policy Research in the Netherlands. 11. machinery. also interviews in an important commercial centre (Mumbai) and an important second tier city (Pune) were held. healthcare. seed improvement technology. Sectors with opportunities for EU enterprises automotive (parts). Indian Rules and Regulations are generally difficult to understand. Pune has for example a large engineering and automotive sector with a lot of European involvement. European entrepreneurs should realise that personal relationships are a crucial factor in Indian culture: personal relationships are more important than a memorandum of understanding (MoU). logistics. Koos van Elk. etc. Customs issues (very high duties exist on certain products and administrative issues) are one of the main problems for doing business with India. telecommunication and electronics. 8.The Sections 4. financial services. Next to interviews in Delhi. infrastructure. 16. 5. 4. lack of transparency.g. Harnita Chowdhary (both management consultants) and Mr. such as designer clothes. aerospace. cosmetics.4 -4. 7. High Yielding Varieties.g. 2. grey areas which have to be handled. 12. 17. niche market for high priced products. 6. 4. A. retailing. 15. Ghosh. The respondents mentioned a wide variety of sectors: 10. food and beverages. Dr. education sectors (see foreign university bill in the Annex). such as machines for food processing industries. The legal system in India is traditional and it 79 . e. e. 9. Also frequent changes in customs rules. The fact that several major German car manufacturers are established in Pune provides a bridge for other – smaller enterprises – to allow enter the market in Pune. luxury goods. organic products (increase standards awareness and need to comply with organic standards set by national governments and international organizations). advanced engineering. pharmaceuticals. aviation leasing services. HYV-seeds.
subsequently negotiations continue. (b) delays in settling the case. (c) legal system being misused. it is an issue. 10. IPR issues (more in pharmacy and chemicals than in engineering): lack of adequate IPR lawyers. 8. hence the European party which is not adequately informed about the business in India is in a disadvant ageous position. 14. Access to financial services for foreign companies in India. market conditions in India and EU creates marketing problem for European SMEs due to lack of local knowledge. Large differences between different regional markets within India provide difficulties. 16. the right person who can be relied upon. The changes in the regulations are difficult to predict (including the tax system). This is related to (a) corruption. There are some negative aspects of the business environment: insufficiencies in the infrastructure in India (roads. the existence of proper legislation (modern standards) is not the problem. etc. 80 . Lack of arbitration practice in India (out-of-court settlements). In addition there are major differences between states that should not be overlooked. for th e SMEs from large MS like UK or Germany. If high level delegations from such countries do not visit India regularly to work on 'national branding' this is a serious problem. 4. land ownership problems (title not always clear). Some products offered by European enterprises are not really adequate for the Indian market. etc. 6. different languages and cultural diversity. 3. socialistic and bureaucratic attitude. there still persists a protectionist. difficulties in finding proper staff. Differences between business environment. It is indeed a large growing market but also very competitive. but enforcement and getting cases sorted out within a reasonable time span certainly is. 7. but for the SMEs from smaller Member States such as Ireland. Execution of contracts (solving business cases) is difficult. 11. machinery that is too much automated (and hence too expensive) for Indian manufacturers that can – given the local wage rate for labourers – use a more labour intensive process (but salary costs are on the increase in India). Much flexibility required: fixing a contract is not the end of story.). 13. electricity supply).takes a long time to get licences and especially to settle court cases. e. 9. 5. The effect of regional differences (also with regard to taxes) on business operations is often underestimated. In some areas the influence of trade unions is too strong (for example blocking roads outside customs warehouses demanding goods can only be transported by their members). there is no problem. Although the Indian economy is opening up over the last 20 years.g. 15. 12. Sometimes European companies arrive with a preconceived plan and are not flexible enough to adjust to the local business environment and the local market. Overestimation of possibilities on the Indian market. The Indian party generally knows how to play the game very well. Finding the right business partner (distributors etc. The EU as such is not much known in India. for example in offering after sales service or repair to machinery: very long distances. Visibility might be a serious problem for SMEs from smaller Member States. Access to public procurement is difficult for foreign enterprises (strict rules). is stressed by most respondents as a crucial factor in setting up business in India.
7 1. Be ready to invest in personal relationships. registration. − Identify market (business) opportunities. chambers). consultants. 2. − Assistance with regard to recruitment of Indian staff. English is of course widely spoken in India but that might not be enough for all European SMEs whether from SouthEastern Germany. advise. − Preparing and distributing reports on Indian economy and markets. consultants.g. − Coaching. commercial sections of embassies) or private (chambers of commerce or private support centres) offer a comparable package of services: − Partner search. coaching and training events could be organised. 2. obtain permissions. 3. successful business is generally more based on personal relations than on contractual relationships: so come 81 . banks. international trade shows and seminars should be increased. − Advice and information on how to do business in India (consultancy. − Organising and hosting visiting business delegations. Advice SMEs should do their homework better in knowing Indian business environment (many are not sufficiently prepared). On the one hand not all European enterprises have access to much support in market entry. − Providing office space for initial period with help in networking (business partners.17. information on legal system and financial regulation. 4. − Assistance in contract negotiations with Indian parties. 4. incubator services). reference to consultants). − Reference to local service providers such as lawyers. government agencies. proper "scenario analysis" about India should be made in full before landing on to the Indian soil. Also more information about the future strategies and developments that are taking place in India.6 Policy support for EU SMEs Many organisations whether public (e. − Help in setting up an enterprise locally (formation. Spain or countries in Central-Eastern Europe. What support is missing? The number of trade missions. Language might also be an issue. Lobbying for the business interests of European business is essential and should be further developed. negotiation practices in India (improve negotiation skills). More efforts should be devoted to prepare European business (already at home): inform them on 'how to do business in India'. In short.8 1. legal form. private service providers. 4. accountants. reference to India support e. In the process of setting up a local venture and also thereafter. lawyers. on the other it is sometimes confusing for individual SMEs to know where to go. For example for French SMEs there is already a variety of organisations providing support services.g.
they see light at the end of the tunnel: "The Indian market is difficult to enter. 2 3 4 Finding a right partner in India is essential.9 1 Possible role for the EC to foster EU business in India More officials from the EU Member States to be posted in India and more (government) officials to participate in trade missions. but easy to work on later". Also Indian embassies in Europe should be a better source of information on India market conditions (rules and regulations) for European enterprises. People tend to be positive (they are generally polite and will not start by disagreeing with you). 7. more elaborate on-line information that companies can use before actually entering the market. Do not be too naive. The present paid-up capital of the company is Rs. 8 billion and authorized capital Rs. To conclude this section with a positive statement: some observations by keyinformants are rather optimistic. ECGC is essentially an export promotion organization and is the fifth largest credit insurer of the world in terms of coverage of national exports. SMEs should where possible link up to larger companies with experience in the Indian market (mentorships?) European SMEs should rely more on Indian distributors who not only know the markets (identify the customers) but also can guide the SMEs in the entire process. One might consider doing international trade via Export Credit Guarantee Corporation of India Ltd (ECGC) a government of India enterprise established in 1957 to strengthen the export promotion drive by covering the risk of exporting on credit (see: https://www. many Member States and the European Commission is rather low. talk to business people locally to get better acquainted. consulates chambers of commerce etc.in).cn/view/media/publications 82 . Lobbying for the business interests of European enterprise should be better organised.to India.europeanchamber. product and services before you actually start in India. 1 See: http://www. local business environment and local culture in order to adapt your business model. rather a start. 8. strengthened. 10 billion. The Chamber annually presents a Position Paper to the Chinese government and EU authorities with the aim of improving the investment climate in China 1. Know the market. 6. but do not understand this as 'we are all in agreement and can move on'. They advice on changes in the local regulations affecting the business environment and lobby for required changes in policies of both the Chinese and the European Government(s). so more. 3. Sometimes the signals of the Indian (potential) business partners are misunderstood.ecgc. The model as applied in China might be considered: Member State organisations such as embassies. Develop better. Do realise and adjust to practise that contract is not end of negotiating process. 4. provide trade support services but there is also a European Union Chamber of Commerce in China that does not involve in assistance to new entrants on the Chinese market but lobbies for its members (all enterprises that are well established in the local market). 5. 4. good matchmaking events between European and India businesses. Visibility of 'Europe'.com. Arbitration practice in India should be improved.
12.30 .4.30 . European Commission and private commercial consultants? EU programmes: ETP.09.45 14. The German Centre uses social and business events to connect German with Indian companies and institutions.00 Concluding remarks by Dr. Harnita Chowdhary Case 1 Business relations India – Europe.13. Gateway. statistics? IPR Helpdesk (like in China)? SME Coordination Centre (like in Japan)? EU SME Centre (like in China)? Servicing businesses from new and/or small Member States? Case -1 The services of the German Centre The German Centre is located in Gurgaon.10 . The combination of providing local offices.10. south of New Delhi. EU Member States.40 . 10:30 .How to facilitate access to Indian market? .30 11. conference rooms and services enables companies to quickly establish the mselves in the Indian market. P. Gurgaon. so that firms have easy access to important networks. Since its opening in 2008. the German Centre supports small and medium-sized German companies venturing into the Indian market. Enterprise Europe Network. The German house is supported (owned) by two German banks.50 09. This model works for SMEs in India as it lowers the entry barrier and provides especially 83 . SME centres? Better coordination between services? By whom? How to serve businesses from new and/or small EU Member States? Which role for the European Commission? Coordination? Market studies.11:00 11. Ghosh Lunch 4. Koos van Elk Introduction of participants by Dr.30 Questions and answers Break Preliminary findings by Mr.10.00 .10 Reception – refreshments Welcome by Mr. A.11.30 Case 2 Support offered by the German Centre for Industry and Trade in Delhi.10 Workshop agenda 09:00 09:00 09.00 12.13.11 Major results from the workshop discussions After the presentations the following questions were put on the table: How to facilitate access for EU SMEs? How to improve the support to EU SMEs? Role of different players in the field: Chambers.30 .What (additional) role could the EC play? 13. Experience of an Indian SME doing business with European SMEs (located in India) 10.50 . Koos van Elk Tour de Table: .
9 described here: 2.both in EU and India – too much. The main difficulties relate to: − The (non) availability of high quality technical application support from European SMEs (located in India) at pre-sale and post-sale stages. not properly adapted to the local circumstances. − European & US companies are perceived as too expensive. technical centres. 3.very practical day-to-day hands-on services starting from where to hire a car or how to find accommodation. 5. This suggests lesser trust in their Indian teams.e. These phenomena create a unique situation with its related problems. − The expectations of the Indian market are too high. i. − The Indian clients are very demanding and choosy. The situation with regard to opportunities for European SMEs on the Indian market was sketched using the slides 2. Case – 2 A representative of an Indian SME active in the engineering sector and machinery sector located in Pune presented a contribution on the business relations India – Europe. − Globalisation & internet help Indian clients discover alternative sources. so this might be an example of a pan-European initiative. − Many SMEs have too much rigidity in following 'policies'. Reasons for technical problems − Technology advances do not percolate to the Indian teams of European SMEs fast enough. with local partners and with actual clients in India. − Indian bosses of European companies located in India tend to look-up to their head quarters in Europe even for routine business decisions. There is a lack of courage in adapting to local circumstances. no R&D set up and no easy access to European experts.g. 4. Other business considerations do not get enough atte ntion. this causes much delays. Current business scenario − The Indian market has been growing faster. 84 . no application support centres. Indian teams of EU companies in India depend on their headquarters in EU resulting in delays and in incorrect proposals. too arrogant. − Short term financial considerations dominate business decisions . The flexibility of EU SMEs located in India is too low. − For every technical proposal. More interaction should be with the Chamber of Commerce. Given the European orientation of this project it is important to note that the German Centre not only deals with German SMEs but is also servicing clients from other Member States (and also SMEs from countries outside the EU). Back office and administration − EU companies in India depend on their HQ for business back-office administration leading to delays. This leads to slow technical knowledge assimilation and to sub standards support to Indian clients. − Lack of local technical support e. − There is virtually no interaction between the Indian market and the European technical teams. based on their experience with doing business with many European SMEs.
So the need for awareness campaigns – possibly supported from EU level – for third markets bringing awareness and a basic understanding of the market possibilities. administrations and clerical offices of EU companies should be lo cated in India armed with authority and responsibility. within the ambit of compliance for a mutually beneficial & growing business. So a major part of the presentation referred to dealings with local offices of European firms. But back home in India. Belarus and Ukraine. − Common procedures and more empowerment of Indian set-up are required to handle such issues. − The special clauses like 'Limitations of Liabilities' or 'End User Certificate' are enforced by EU companies even for benign items (such as cables). 7. professional approach with good trust on all stakeholders.g. the Indian office of the European manufacturer failed to rectify the machine for months (citing formalities) and the machine is lying idle till today. quick-response. For SMEs from new Member States in Eastern Europe markets in western EU might be considered and neighbouring markets in the east such as Russia. e. asked for permission. Case study − This is about a leading Indian Company (known world over as largest player in its field). − They got excellent support from parent company in Europe when they carried a machine to Europe. Often only a low number of staff is posted in India as well as in Europe. SMEs from some Member States are not sufficiently aware of the opportunities offered by the Indian market. managers of local offices of European firms do very often lack the authority to properly deal with business contacts in India. For many decisions the head offices in Europe need to be consulted. 8. but still cultural gaps/ differences in business culture are important. − Documentation by EU companies is often wrong. P o i n t s c o n t r i b u t e d b y t h e p ar t i ci p a n t s a t t h e w o r k s h o p Awareness in Europe about India as market is too low. − Cost & time incurred in this is too high. 85 . − There is a need of change in attitude of administrative staff in EU. This leaves the impression that either EU companies are careless or that they neglect the Indian businesses. Preferably.− Rigid systems. This not only slows down the process enormously but also decreases the creditability of the local management versus its business partners in India. These ventures might be managed by Indians. The machine was in a different EU Member State but got excellent support from the original EU supplier. the export control authorities of the Federal Republic of Germany are very rigid. 6. Possible solution A fair. Policies and authorities − The EU export authorities and controls. − Lack of understanding of Indian business style & business environment by EU. In the view of this participant. enterprises from several Member States need to be convinced by public authorities to seriously consider India as an option. This creates problems in responding to queries resulting in delays and slow decision making (Illustrations: delayed submissions of documents like Order confirmation & Proforma Invoices and missing Delivery Schedules).
providing consulting services. Key target markets like India or Brazil are often ignored. Indian SMEs should adapt to international SMEs standards.but not very often more distant markets outside the EU. Add more member countries to the existing EU Chambers / organizations. and will not immediately state if they disagree with a statement or proposal made. Such workshops should be held frequently. In addition. Overlapping of functions of the EU organizations in India should be eliminated 86 . and also create visibility of Europe in India. Coordinate. events. Free Trade Agreement (FTA) may help to solve many of the barriers for the EU to enter Indian market. This is often misunderstood by EU businessmen as that the Indian counterpart fully agrees. Lots of events go on during the year in India . This single document makes it easier for business to get informed on the framework for doing business between EU and India. etc. Workshops like this one are important to discuss and find out the barriers of the EU SMEs to access the Indian market and the probable solutions to these problems. However there were also several participants who were of the opinion that cultural differences are not that critical in India (anymore) as most of the local business people now have interactions with EU countries already. the FTA documents might serve as a single point of reference for most issues (legal aspects) with regard to EU-India trade in the future. Also. Meeting business partners. get in touch with right people in India.g. The EU should sell India in Europe. The FTA agreements may result in improvements with regard to such issues. presently many different documents need to be identified and studied. not only for EU SMEs that need to understand the Indian business culture. Help in finding right business partners is considered to be a task of the Chambers. A well known issue that still creates noise in the communication: Indians believe in niceties before actual business discussions start. e. Lack of integration between different EU countries representatives and Indian representatives. The idea is that a central database should be developed (by EU Chambers?) containing certified Indian intermediaries etc. the EU standards are not always cost effective in India (they might require procedures. hand-holding by the EU Chambers / EU organizations. One issue is for example difficult access for foreign enterprises to public procurement in India. EU companies should adapt to the Indian standards for doing business in India and also to meet the requirements of the customers. but also for Indians that do not always understand the business style (way of functioning) of EU companies. As elsewhere the importance of 'the need to find a reliable local business partner' is emphasized quite a lot. Also organising meeting points (events) for Indian and European SMEs might be a good contribution: EU should help and bring together different companies from different nations. The cultural gap remains an important issue. Technical standards. But Europe should not impose European standards on India. This would make the work of SMEs much easier and this would add to their understanding and would also save much time (resources) to be spent. EU SMEs have big potential in the Indian market and there should be gradual growth. conducting trade shows.more cooperation and coordination required for EU SMEs to participate in such events. for testing that are relatively expensive in Indian circumstances).
but of some competitors like China. India should develop physical infrastructure which is very important especially in areas like food products / food processing. might indeed bring added value. There is still nominal growth. the growth is much faster. There should not be competition between the EU organizations themselves. It should be further studied whether European programmes such ETP. The ECGC can also serve as an example of an institute providing an important insurance cover function for exports and foreign investment from India. C. B. and therefore the EU SMEs need to study the Indian market better before entering India. The EBTC is an initiative that aims to serve this need. Relevant information about the business environment in India should be made accessible easy and for free at the EU chambers / organizations to all potential as well as existing SMEs so that they get first hand information about the changes in Indian policies regarding legal issues. EU trade delegations should frequently visit India. Logistics in India could be improved drastically which will result in saving of time and cost.and their roles must be sorted out. Preparing for a Demographic Dividend Goods and Services Tax Foreign university bill gets Cabinet nod 87 . Enterprise Europe Network. Also business schools in Europe should promote India and make it known to the business people in the EU. This idea may be recommended to the EU as a policy measure. but also technology from the EU. Three other issues that have been brought to our attention are listed in the annex: A. etc. The Indian market is more mature than many SMEs think. Strong European chambers should be set up all over India and there should be one organization that would be the apex body to coordinate and control all these chambers. Do your homework. heavy machinery items. The EU should take SMEs abroad (to India) instead of SMEs trying to come to India on their own. rules and regulations. taxation matters. Entering the Indian market may be taken as a challenge and this challenge should be taken up faster and in a systematic manner. Legal system in India is slow and needs clarity because the Indian law though good is complex and cannot be understood by the EU SMEs. The Export Credit Guarantee Corporation of India Ltd (ECGC) mentioned above has a role to play in sorting out export issues for example about supposedly inferior quality of spices exported from India. especially those from Eastern Europe or the smaller EU countries when doing business with India (or any other country). EU should for example study as to why EU business with India has dropped down to only 20% from 33% of overall international trade of India. Gateway to …. Considering the ECGC model. India needs not only trade. the European Commission may consider to provide insurance cover for EU SMEs. etc.
Annex I List of interviewees India Name 1 2 3 4 5 6 Mr. Hans-Joerg Hoertnagl Mr. Delhi Delegation of the European Union to India. Maneeta Sahmey 18 19 20 21 Ms. Mumbai Delegation of the European Union to India. Mumbai Advantage Austria. Counsellor. Pune Embassy of Ireland. Rooma Bussi Ms. Indo-German Chamber of Commerce. Mumbai German Centre for Industry & Trade. Debjani Chowdhury Mr. Antonio Bullon Mr. Patric Bressers Mr. Delhi 89 . Ghate Ms. Austrian Embassy. Anders Ullberg Mr. Pune 12 13 Mr. Gabriel McCarrick Ms. Wlodek Czausow Mr. Jeroen Roodenburg Mr. Delhi Indo-French Chamber of Commerce & Industry. Pune AHK. Pierre Labail Embassy of the Netherlands. Delhi EBTC. Zubin Kabraji Mr. Delhi Francis Klein. Harry P. Jensen Mr. Poul V. Mumbai The Council of EU Chamber of Commerce in India. (Ms) Renu Shome Ms. P. Pune Scottish Development International (SDI). Mumbai Position Consul. Delhi World Trade Centre (MVIRDC). Delhi Rabo India. Smita Singh Director Project Manager Economic Cooperation Section Regional Manager Head – North & East India Business Development Manager Director British Trade Office Regional Director Commercial Counsellor First Secretary 16 17 Mr. Chennai SlipNNaxos (Sweden) Bharat Forge Ltd. J. Renita Bhaskar UKTI. Economic & Trade Managing Director Director Chief Finance & Risk Officer Commercial Counsellor Commercial Counsellor Director Deputy Director Research Director Technical sales Senior Manager Senior Executive Business Development Deputy Head of Mission Manager 7 8 9 10 11 PetRa Ltd. Delhi 14 15 Dr. Abhay Ghosarwadkar Ms. Mumbai Consulate General of Spain. Suhasini Kirloskar Mr. Commercial Section. Subrata Das Mr. Martin Fuchs Mr. Peters Mr. Pune Comtel Ltd. Devendra Matade Organisation Consulate General of the Republic of Poland..
Delhi Mr. Poul . Pune Senior Executive-Business Development Comtel. Delegation of the European Union to India. Austrian Embassy Commercial Section. Joanna Mlynarczyk. other EU related organizations. Delhi Director International Affairs. Counsellor Economic & Trade Affairs. European Business and Technology Centre (EBTC). Deputy Head of the Economic Division. Balazs Gargya.. Chambers of Commerce. Consulate-General of Spain. First Counsellor. Fernando Nino Page. Indian importers. Pune Director PetRa Engineering Pvt. Mumbai Ms.V. Mumbai Commercial Counsellor. Martin Fuchs Mr. Delhi Mr. German Centre for Industry & Trade. Delhi Mr. Jensen Mr. Mr. Harry Peters Senior Manager Bharat Forge. Hans-Joerg Hörtnagl. Mumbai I n d i a n e n t e r p ri s e s Mr. Director General. EU embassies. Debjani Chowdhury Deputy Director-Research. distributors and consultants. Chennai Consultants Ms. Eurochambres (implementing EBTC). Eurochambres (implementing EBTC). Embassy of the Republic of Poland. Subrata Das Mr. Delhi Chief Finance & Risk Officer. Brussels Ms. Karl-Hans Sturn. Delhi Managing Director. Micol Martinelli. Director. World Trade Centre. Devendra Matade. Advantage Austria. Wlodek Czausow Consul. Delegation of the European Union to India. Head of Economic Cooperation Section. Name Dr. Dirk Vantyghem. Position and organisation First Secretary Trade & Economic Affairs.Annex II List of workshop participants Participants were invited from the EU Delegation. Mumbai 90 . Patrick Bressers. German Centre for Industry & Trade. Antonio Bullon Mr. Consulate General of the Republic of Poland. Consul General. Ltd. Brussels Mr. Rabo Bank India. Mr. Delhi Mr. Senior Advisor International Affairs.
Pune Researcher. A. Koos Van Elk Country Coordinator .Project team Mr. Netherlands Dr. Harnita Chowdhary Local Researcher – India Consultant. Ghosh Dr. A. P. Pune 91 . Ghosh). (Associate with Dr. P.India Senior Researcher and Consultant EIM.
Integration of goods and services taxation would give India a world 92 . unencumbered workers spur entrepreneurship and innovation. there are parallel systems of indirect taxation at the central and state levels. Presently. 45 in Western Europe. The goods and service tax (GST) is proposed to be a comprehensive indirect tax levy on manufacture." by Nandan Nilekani. He proposed to set April 1. Shobana Kamineni. Moreover. five experts discussed the challenges and opportunities India faces as its population becomes increasingly youthful (with Sudhakar Balakrishnan. up from 61 percent now. The World Health Organization (WHO) estimates that the demographic dividend can increase a country's GDP growth by as much as a third.) In 2020. s+b. the proportion of children younger than 15 will fall to 23 percent of India's total population. goods and services attract the same rate of tax. and C. No country is better poised to take advantage of the demographic dividend than India. while the share of people older than 65 will remain around just 5 percent. B. Prahalad. 70 percent of Indians will be of working age in 2025. Countries with a large and expanding workforce and relatively few people of dependent age (under 15 or over 64) can reap what Harvard School of Public Health demographer David Bloom has called a "demographic dividend. Stewart).Annex IV Other issues been brought to the attention of the study team A. moderated by Thomas A. and 48 in Japan. C. (See "India's Demographic Moment. B. The first step towards introducing GST is to progressively converge the service tax rate and the CENVAT rate. Also by 2025. 2010 as the date for introducing GST. savings. Each of the systems needs to be reformed to eventually harmonize them. P r e p a r i n g f o r a D e m o g r a p h i c Di v i d e n d At the World Economic Forum's fall meeting in New Delhi. enabling significant gains in productivity. That is the foundation of a GST. governments can focus on improving infrastructure and helping to fund such critical technologies as intelligent transportation systems. Finance Minister proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. the average age in India will be only 29 years." Young. World over. and capital inflows. Goods and Services Tax Goods and Services Tax (GST) is a part of the proposed tax reforms that centre round evolving an efficient and harmonized consumption tax system in the country. compared with 37 in China and the United States. and renewable energy. because the government's policies to limit population growth will have created an abnormally large cohort of people over age 60 by 2040.K. In the Union Budget for the year 2006-2007. As fresh ideas flourish. Naresh Malhan. Preparing for a Demographic Dividend Goods and Services Tax Foreign university bill gets Cabinet nod A . Autumn 2009. China's demographics are not as rosy as India's. from 34 percent today. smart utility grids. Demographics are destiny. sale and consumption of goods as well as services at a national level. Thomas Crampton.
which needs to be passed by two-third majority in both the Houses of Parliament. The introduction of goods and services tax will lead to the abolition of taxes such as octroi.31pm IST NEW DELHI: Government on Monday approved a bill to allow foreign education providers set up campuses in India and offer degrees. Pranab Mukherjee said. F o r e i g n u n i v e r s it y b i l l g e t s C a b i n e t n o d AGENCIES. was cleared by the Union Cabinet presided by Prime Minister Manmohan Singh. During his budget speech. NEW DELHI (Commodity Online): India will introduce the long awaited Goods and Services Tax (GST) during the current session of the parliament. stamp duty.class tax system and improve tax collections. Central sales tax. turnover tax. As India has parallel systems of indirect taxation at the central and state levels. each of the systems needs to be reformed to eventually harmonise them. entry tax. and eliminate the cascading effects of multiple layers of taxation." HRD minister Kapil Sibal said after the approval of the bill by the cabinet. This paves way for its introduction in Parliament. making rules easier for the industry and other tax payers. "This is a milestone which will enhance choices. said country's finance minister during budget presentation for 2011-12. The central excise duty should be converted into a full fledged manufacturing stage VAT on goods and services and the states sales tax systems should be transformed into a retail stage destination based VAT. which will set up centre and offer degrees in India. It would end the long standing distortions of differential treatments of manufacturing and service sector. The Foreign Educational Institution (Regulation of Entry and Operation) Bill. State level sales tax. beginning has been made by converging widely varying tax rates and extending input tax credit to convert excise duties into a CENVAT. 01. "I propose to introduce the constitution amendment bill in this session of Parliament. tax on consumption or sale of electricity. C . before the two are integrated. Roadmap to GST. GST will facilitate seamless credit across the entire supply chain and across all states under a common tax base." The government originally planned to roll out GST from 1st April last year but a consensus could not be reached on the introduction of the Bill. In its latest GST constitution amendment draft the third of so far the Centre has proposed to give powers to Parliament for constituting the GST council. The bill seeks to regulate the entry and operation of foreign institutions. 93 . 2010. taxes on transportation of goods and services. Mar 15. At the central level. GST would subsume most of the central and state taxes like excise and sales tax. 2010. telecom licence fees. increase competition and benchmark quality.
South Korea 3. Taiwan 6.13%. . Australia 6. 28-511) 2 95 .gov/library/publications/the-world-factbook/geos/ks. chemicals.200 (2010 est.). World fact book CIA (//www. and the guarantee of lifetime employment for a substantial portion of the urban labour force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. US 10.29%.664 (July 2011 est.Rank 5 in the world Goods: machinery and equipment. and a comparatively small defence allocation (1% of GDP) helped Japan develop a technologically advanced economy. 2.) $34.42%.000. Total exports and share of EU in total exports $765.915 sq km. 28-5-11) 126.49% (2009) Source: World fact book CIA (//www.29%. US 16. motor vehicles.96%.000 2010 est.) rank 5 in the world Goods: transport equipment.html. rank 61 in the world $5.cia.2%. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP.1 Profile of Japan 1 5. UAE 4.2 billion (2010 est.475. electrical machine ry.2 Economy 2 I n the years following World War II. and distributors. foodstuffs.) rank 38 in the world 5. a strong work ethic.88%.5 Japan 5. Usually self sufficient in rice. 3. with crop yields among the highest in the world. Total imports and share of EU in total imports $ 636.1 Key data 1. Japan 1 It should be noted that the interviews in Japan were conducted before the earthquake and tsunami hit Japan.95% (2009) 6. textiles. government-industry cooperation.1.98%.cia. mastery of high technology. known as keiretsu. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers. raw materials Partners: China 22. When this report was completed it was unsure what the long term consequences will be of this disaster on the business opportunities for EU SMEs. semiconductors. A tiny agricultural sector is highly subsidized and protected. Hong Kong 5.27%.12%. in 2010 USD) 4. Saudi Arabia 5.html.800.391 trillion (2010 e st. chemicals Partners: China 18. fuels. rank 10 in the world 377. Japan's industrial sector is heavily dependent on imported raw materials and fuels. suppliers. Ind onesia 3.1. South Korea 8.gov/library/publications/the-world-factbook/geos/ks.
largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt. a 5% average in the 1970s. 96 .1). 5 . and labour. Japan in 2010 stood as the third-largest economy in the world after China. The catastrophe hobbled the country's economy and its energy infrastructure.rebuilding homes and factories range from $235 billion to $310 billion. but the country remains a major economic power. Japan's huge government debt. 1 . overall real economic growth had been spectacular . but a sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. and a 4% average in the 1980s. For three decades. M easured on a purchasing power parity (PPP) basis that adjusts for price differences. reliance on exports to drive growth. In order to stabilize financial markets and retard appreciation of the yen. Following three decades of unprecedented growth. Some economic forecasters. and an aging and shrinking population are major long-term challenges for the economy. killing thousands and damaging several nuclear power plants. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. but debate continues on restructuring the economy and funding new stimulus programs in the face of a tight fiscal situation. Estimates of the direct costs of the damage . the Bank of Japan injected more than $325 billion in yen into the economy. which exceeds 200% of GDP. whereas for total extra EU export this is 150. devastated the northeast part of Honshu island. The Japanese financial sector was not heavily exposed to subprime mortgages or their derivative instruments and weathered the initial effect of the recent global credit crunch. 3 F i n d i n g s o f t h e t r a d e a n a l y si s For Japan. respectively 160. who previously had anticipated slower growth for Japan in 2011.imports about 60% of its food on a caloric basis. In March 2011. Prime Minister KAN's government has proposed opening the agricultural and services sectors to greater foreign competition and boosting exports through free-trade agreements. which surpassed Japan in 2001. Government stimulus spending helped the economy recover in late 2009 and 2010. Growth slowed markedly in the 1990s. Japan's economy experienced a major slowdown starting in the 1990s.a 10% average in the 1960s. persistent deflation. Japan's strongest-ever earthquake. capital. now believe GDP may decline as much as 1% for the year. and an accompanying tsunami. both SME and non SME sector score substantially below the volume increase for overall EU27 exports for the period 2000-2008 (Figure 5. In 2010 – prior to the earthquake and the tsunami disaster – the SME and the non-SME index for Japan are about 96. averaging just 1. and severely strained its capacity to deal with the humanitarian disaster.7%.
N=6649). 97 . For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research.Figure 5. Opportunities Internationalisation SMEs. Of the other 6 key target markets only China and Russia score higher as shown in Figure 5.4 Findings from the surveys About 8% of internationalised European SMEs have any activity in Japan in the period 2007-2009. De nmark.2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% 2% 4% 6% 8% 10% 12% 14% Japan Russia China Ukraine Brazil India South Korea Source: Survey 2009-2010.2.1. EU27’s export to Japan compared to EU27’s total exports 180 160 140 120 2000 = index 100 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to Japan Non-SME export to Japan SME total export Non-SME total export Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”. EIM/GDCC (EU27. 5.1 Development in exports 2000-2010 (value). Figure 5.
Political risk. different business culture.The barriers for Japan show a rather different pattern as for the 7 key target markets on average (Figure 5. bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% Japan Average 7 key markets Source: Survey 2009-2010. 98 . As for the other countries the expectations for the effect of possible support measures are rather similar for Japan to the overall average. Opportunities Internationalisation SMEs. tariffs or quota. transport costs.3). knowledge of foreign languages and especially lack of qualified personnel score all relatively high. N=6649). percentage of SMEs Conformity of prod. in absolute terms the expectations are a bit higher for Japan e.g.4). This is especially true for the pattern (the ranking of support measures)./serv. Quality of products. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. Figure 5. EIM/GDCC (EU27.3 Major barriers for Japan. with regard to locally provided services (Figure 5. lack of finance and especially difficult paperwork and payment risks score relatively low for Japan.
Opportunities Internationalisation SMEs. because Japan's import from China recorded dramatic expansion.4 Anticipated effect of possible public support measures for Japan. but dramatically decreased in 2009. mainly to Asian economies. the exports to Japan means around 5% out of total export to outside area. percentage of SMEs expecting the instrument to be effective or very effective. ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% Japan 30% 40% 50% 60% 70% 80% Average 7 key target markets Source: Survey 2009-2010. 5. and the economic booming of the world economy seems to boost the imbalance.2 Import and export Japan's export was boosted in the late 2000s. EIM/GDCC (EU27. even while the increase of imports so far has been dominated by Chinese products. and has been stable or gradually declining. The fall in 2008 and 2009 was extreme. From the EU's viewpoint. This means the Japanese market potentially keeps room for the European exports. which shows it’s still strong competitiveness in the world market despite of successive Yen appreciations. but export to the EU recorded a fluctuating growth too. Its claiming ratio out of Japan's total import is getting smaller. and the EU's share also declined.Figure 5. and rather flagging domestic consumption and investment allow that imbalance. which again 99 . Japan's economy has been keeping macro trade surplus for many years. Japan's import from the EU has been gradually increasing in the last decade. reflecting the world financial crisis and soaring Yen. N=6649). The balance of trade between Japan and the EU has always been recording an excess of export. along with export to the US.
(MOF Trade Statistics. but a drastic fall in 2009 on a flow base. takes it seriously to establish a TPP (Trans Pacific Agreement) with Asia-Pacific countries. At the same time. for years the former requested more open market policy and FTA. Both basically keep many interests in common.2. a comprehensive free trade zone plan. which is now under Democratic Party's control.e. and EU receives more than 20%. 5 . EU's main exports to Japan are Chemical products. Total FDI inflow from the EU to Japan was hit by the world financial crisis in 2008. Both stock and flow base from the EU indicate similar trends. 2 . Automobile. i. it still keeps considerable amount in the US and EU. Engines and motors and Video Machines dominate. Cheese. a huge pullout occurred. Above all. but its share has been rather stable and a bit declined among other investors.2 trillion in 2008. Foods. and its stock in Japan ran up to \18. to establish a common legal and administrative framework for promoting trades and economic cooperation. but the latter failed in showing stable growth and recorded some fluctuations. Both organise Business Round Table Talks. Nevertheless. On the other hand. Both made up an Action Plan for EU-Japan Cooperation in 2001. Both keep a series of talks. 5. and the Mutual Customs Office Support Agreement in 2008. Footwear. Bags. In 2006. by involving business communities and exchange opinions in a frank and constructive way.means the potentiality of the Japanese market has not been fully exploited by European industries. the future economic relationship with Europe is expected to enter up a new phase. FDI to Japan also recorded growth in the 2000s. and can expect many benefits from more trades. $200 trillion. Pharmaceutical products. and the drop after the 2008 crisis is much more drastic concerning the flow base trend. Knitted products and Chocolate occupy the top 5 among heavy-duty items. Eurostat) 100 . Both also signed the MRA (Mutual Recognition Agreement) in 2002. Machinery and Transport equipment in the industrial classification. including annual regular top -level meeting (Japan-EU Summit). EU's FDI inflow to Japan also recorded growth. As the Japanese government. By item. 5 . the EU mainly imports Machinery.456. 3 O r i e n t at i o n o f E U e x p o r t Using the industrial classification. Automobile. 2 . discussions and dialogues. Scientific optical equipment successively dominate. which reflects the taste of quality consumers in Japan. Transport equipment and Electric machines from Japan. EU and Japan started Regulatory Reform dialogues from 1994. On a stock base. By item. investments and world economic development. but the EU's first target countries are not necessarily Japan. and agreed on many important issues. Organic chemicals. a continuous growth was generally recorded in the 2000s.1 F D I As far as Japan's FDI is concerned. 2 T r a d e n e g o ti a t i o n s Concerning diplomatic trade negotiations between the EU and Japan.
both in quantity and quality have not changed much over the last decades. Then. and expected a dramatic increase of exports and investments from Europe if many barriers of Japan would be removed. to construct complementary alliances or collaborations between European and Japanese partners. but start own active offshore operations by themselves will be questioned. or more tourists from Japan to Europe. Some cases can be interpreted to keep more profits within own businesses.Trade trends. despite the already mentioned weak points and catching-up economies such as South Korea and China. sophisticated technologies. showed more optimistic prospects about the Japanese market. European researchers and firms may keep advantageous positions by consisting various global/ universal technological standards or qualifications for new products or innovative applications. universities or firms still keep a high reputation in the Japanese markets for their professional skills.3 Opportunities for EU SMEs in Japan Japan is obviously a high-cost economy. or institution staff admit it. 2 Technological advantages in many different industries and new product developments. 3 Japanese businesses. managers. Therefore. Japan still keeps its leading position in many new product developments and innovating production technologies. but they can find a variety of opportunities to offer their own inventions or professional knowledge to Japanese manufacturing firms or R&D institutions. This is not necessarily good news for European businesses. above all local SMEs are not good at international business operations. such as pharmaceutical chemicals. At the same time. The following are trying to extract business opportunities and accompanying characteristics and problems. It is widely believed that European institutions. reasons or necessities why European businesses should not be simply depending on exporting alone to well-developed Japanese importers and traders. and expect other advantageous points concerning the Japanese economy and to start a business there. or to implement more strategic and aggressive sales promotions and marketing efforts in Japan. perhaps the highest in the world in terms of the present unfavourable exchange rate for foreign businesses. however. All the interviewed business people. soaring Yen means more imports from the European economies. The European Business Council in Japan EBC. and p recision machinery. is very attractive for high value consumer products. On t he other hand. Especially design or culture oriented ones which are upper class consumers' heartthrobs for ages in Japan as the symbols of the Western culture. it is completely unsuitable for any volume production operations. advanced inventions and unique product designs. 1 The size of the Japanese economy. even if it can offer many technological advantages. with a matured and high income/ quality markets. In addition. it also admitted that European SMEs would face a series of difficulties to operate in Japan even if many barriers were dropped. the second largest GDP in the world. tradition or tastes. 5. Though not 101 . A number of interviewed business people mentioned it as their reasons for starting businesses in Japan. They are now keen to find good business partners which have their own world networks and keep good skill and records.
France or the UK in the continent. and are rather uncertain whether they can successfully hold their business basis in the Japanese market or not. we must be a bit careful because 5 SMEs started their operations in Japan in the late 2000s. Though European businesses are not necessarily so familiar with Asian regions as Japanese. Japanese businesses and people are not far more successful in overseas markets. and surprisingly its younger generation is getting more inward looking and unlikely to challenge global opportunities and businesses. despite of its high cost.all European businesses are necessarily keeping advanced positions in the world markets. some European businesses expect to benefit from their successful operations in Japan. more internationalised European people and firms can show their supportive roles and find many good business chances. Therefore. 102 . and so far not promoting a sense of intimacy among Asian people thanks to its history of nonAsian and pro-Western tendency and its occupations over a century. 6 in the early 2000s and only 1 in the 1990s (leaving 1 without certain information). It seems a sort of 'national brand' idea or a quasi-quality rating system. footholds or even trial points. and consider Japan as their bases. in either case of production developments or domestic sales. Japan may be easier to start the trial stage of offshore operations than other economies. the fact that Japanese and Chinese keep almost the same characters in common. they also claim established appraisal as the high-quality and reliable ones. business or financial services. In addition. In addition. Many of the inte rviewed European SMEs keep a strategy of future development in Asia. the interviewed SMEs are active with: − Import and sales of industrial machinery: 5 − Import and sales of office machinery: 1 − Development and sales of IT products: 3 − Providing professional services: 4. This composition clearly indicates the above mentioned trends how and where European businesses can find their potential opportunities despite a series of difficulties and disadvantages. legal framework. If an industrial classification is applied. This means that the majority of interviewed companies have a business history of less than 10 years. However. political stability and public security. many Japanese firms including SMEs have been managing their subsidiaries or JVs in East or Southeast Asia. Japan's characteristic advantage in Asia is rather limited. but most Asian languages are completely different from each other. as a good proof of their reliable and valuable products or services to claim more reputation in other parts of the world.e. Japan still offers a variety of business opportunities for European businesses. i. Therefore. but they must be carefully examined and strategically challenged. the latter does not keep the similar position in Asia to European big countries like Germany. with advanced technology and special values despite their high prices all over the world. distribution network. 5 As the "made in Japan" products still keep good reputation among Asian customers. Some language advantages. 4 In that sense. and above all the reputation of "made in (or by) Japan" products is still very dominant. Japan may be playing a gateway role for the Asian markets. However. are useful. the geographical distance matters for Japanese businesses to operate in Asian region if compared with European or American ones. which is again a barrier for global businesses. To sum up. which have been confirmed by many reports and observations. in terms of infrastructure.
any structural. which is not any of local managers' business. In that sense. the interviewed SMEs from Europe face a number of difficulties and wonder whether their expectations will be fulfilled in the near future. Then. the interviewed business people or managers indicate that the cultural gap in Japan is beyond their imagination. Japanese literacy is indispensable to communicate with company staff. Geographic distance and communication problem: Though geographic distance between Japan and Europe is also obvious. interviewed business people or managers still feel it is not negligible. 1. the mental or psychological gap. he /she can exercise more localised and effective operations under own supervision in a familiar background and culture. It is not necessarily a simple disillusionment. 2. Nevertheless. This does not necessarily simply mean the transportation or communication costs or time lag. they often find a sort of communication gap. the surviving European businesses in Japan are rather determined and their future depends on their parent company's sole decision. Above all. no matter that learning English is compulsory in junior and senior high schools across the country. The above mentioned unfavourable exchange rate might be beyond their imagination. but everybody had to admit that the damaging blow from the 2008 world financial crisis and still soaring Yen against Euro is considerable.4 Bottlenecks of doing business between the EU and Japan Despite the opportunities and expectations mentioned above. and are likely to complain about their bosses' incomprehension of the cultural and institutional bottlenecks they face. but they are still complaining about it. and it is very difficult to find 103 . institutional or long-term economic factors which constitute the bottlenecks of doing business in Japan are not easy to detect. And they feel that. but more invisible. The language problem seems more serious. and the fact that the interviewees are those who are still surviving in Japan despite many difficulties. Most European SMEs realise that mastering the Japanese language is very valuable. but may face a more serious gap and uncertainty with the parent top managers. letters or telephone calls. must be noticed. providing them with enough information to make well-funded decisions. 5. Therefore. simply depending on e-mails. a very important problem for them is the communication between the Japanese venture and the mother company. Therefore. Cultural and language differences: Surprisingly. any business would not be successful even if they are not trying to penetrate in large volume consumers markets. which is also reflected in many statistical figures. they tend to interpret different business customs and practices as cultural differences. without understanding it. European organisations also suggested their ideas and pointed out potential bottlenecks. including size constraints. If the MD or top managers of European subsidiaries in Japan is a native Japanese. 3. High cost: All the interviewed businesses had prepared themselves to deal with the relatively high cost in Japan before landing.with understanding own advantages and disadvantages as well. one of their priorities is to make executive officers at home understand the background or context-depending situations behind daily routines or business performance figures and allow long-term strategic behaviour and investment.
These difficulties should be recognised and examined as early as possible. preferably before starting full-scale operations. also suggest very different business customs and practices. which might be interpreted they know quite well and are not so amazed nor discouraged. Most irritating for them is the slow decision making process and the time it takes to conclude contracts with Japanese big businesses. Cautious. 5. and Japan is not exceptional. On the other hand. and it is difficult to find out who is taking the decisions. Despite contracts and agreements a great variety of services and qualities are demanded. which may fatally damage their efforts. Nevertheless. corporate systems and organisations are also different. and rather reluctant in adopting and applying new inventions. and above all many public regulations or permissions are available in Japanese only. though 'Keiretsu' close ties are not necessarily mentioned.professional staff with both high skills and Western linguistic ability (mentioned below). regulations and red tapes: Perhaps public regulations and administrative procedures are the targets of business people's criticism almost everywhere in the world. comprehensive and well-informed strategies are indispensable. 6. Such rather reckless decisions are not only taken by SMEs but even by big corporations from Europe. Therefore. or setting up their locations without understanding transport systems in Japan. at least to keep good relations with their own staff. and measures must be prepared and developed. Nevertheless. this difference had been frequently pointed out more than 2 decades ago when Japanese big companies started their overseas operations and local suppliers or customers approached them. This had been mainly explained by the idea that Japanese companies preferred a long-term and stable relationship with suppliers and customers and were rather cautious and prudent before establishing business relationship. many European business people feel that Japanese markets and business systems are very complicated and quite different from Western counterparts. Language problem seems almost an absolute barrier for European businesses. and that payments in Japan are slow. and business infrastructures are well developed. 4.' Interviewed European SMEs. Business customs and practices differences: Again. Above all. In business relationships. 8 out of 13. and damage customers' credibility. Some also criticise that too many details are checked before making contracts. 104 . Some criticise Japanese staff because they are incompetent in independently setting priorities. Tax burdens are also indicated. documents must often be written in Japanese. some European business people have a common impression that Japanese businesses are conservative in business cultural senses. and the top managers must learn and acquire some primary level of Japanese conversation ability. above all in starting and implementing business operations in Japan. EBC criticises some European businesses that are making over investments in fixed equipment or premises at the primary stage. The same can be easily found now. Institutional framework. are not necessarily pointing these problems and burdens so seriously. Peculiarity of Japanese markets and business systems: As often taken up and criticised. most are written in Japanese and governmental offices are likely to stick to their own interpretations and 'window operations. most interviewed SMEs. however. some suggest that Japanese markets and negotiations are generally fair. Even so.
as well as boost customers' credibility. Most cases prove that persistent and unbroken efforts and trial and errors are the key.5. They are likely to offer good linguistic competence and plenty of knowledge about the differences of culture and business practices. They may be very useful for further expanding operations in Asia. as well as utilising any potentialities of human networks and meeting opportunities. To some extent. to a more internationalised group. Though this problem is mutually dependent on their potential growth abilities. They could facilitate smooth communication. Collection of information is also indispensable. experiences and various management resources. At the 105 . This difficulty can be attributed to European SMEs' rather low profiles and shortage of resources to carry out large scale recruitment strategies in Japan. Some foreign businesses are turning their attention from purely native Japanese people. one of the keys to overcome bottlenecks is making a close partnership or collaboration with Japanese firms. but the labour market mechanism and employment practices are very blockading against their access and successful recruitments. if they are fully backed by their parental companies in Europe and utilise policy support from both European and Japanese institutions. Japanese partners could be very helpful guides in the rather complicated and high cost market. business opportunities. to find and form a connection with key persons in potential clients. In that sense. which is a cardinal rule in the business community. who are not necessarily well treated within Japanese enterprises or the mainstream of labour market. as well as from key staff.e. most difficulties and problems could be solved if European businesses could employ good staff who are equipped with professional expertise and linguistic ability and who are used to business practices in Japan. interviewed business people are not satisfied with their local recruitment records. by sharing information. smooth communication will be rather decisive. i. as they are still operating in Japan. introduce to business communities and human networks and accelerate business developments. Therefore as mentioned above. and policy support may ease them or at least reduce entry costs to a certain extent. Nonetheless. customers or partners is very important. European SMEs face and struggle with many bottlenecks in Japan. even including human resources. intermediate with different parties. These could lead to very useful and complementary relationships and mutual supports.5 Overcoming bottlenecks The interviewed European SMEs have apparently succeeded in overcoming the bottlenecks. such as Spanish. First of all. Japanese who had been born in Japan but passed through career experiences in overseas countries as business professionals or even students. and express how difficult it is to find good people in Japan. the linguistic prevalence other than English is extremely low. administrative frameworks and own actual business activities from both parent and subsidiary managers. Italian or Polish. Recently foreign businesses have also become interested in recruiting overseas (third country) students who stayed in Japan for years and are well motivated. if both could establish committed trusts and win-win relationships. In addition. These efforts demand good explanations and objective and comprehensive information about Japanese markets. difficulties and costs to overcome are serious for European SMEs in Japan.
The new programme continues to introduce EU businesses of promising industrial sectors to Japanese business partners. The EU Gateway Programme covers the following industrial sectors. The EU Gateway Programme: The programme opens new business horizons for EU enterprises in Japan. long-term. determined and committed efforts are always indispensable in achieving successful business developments in Japan.' 'EU-.' '2005 EU . In Japan. Since 1994 the EU Gateway to Japan campaign has fostered export and exchange between Europe and Japan. 2. Fashion Design: 17th -18th March.1 T h e D e l e g at i o n o f t h e E u r o p e a n U n i o n t o J a p a n The Delegation of the European Union in Japan offers ETP.Japan Year of People to People Exchange. 'Vulcanus.' 'Study in Europe.' 'European Union Visitors Programme. 5. namely "The EU 7th Framework Programme for Research''. which is the second largest worldwide and still not easily accessible to European industries and businesses. Gateway to Japan and a series of Programmes. Health care and Medical Technologies: 18th 19th May. Information and Communication Technologies: 14 th 15th September. In June 2008. Fashion Design•Interior Design.People Programme. Most relevant for European SMEs seem to be ETP and the Gateway Programme. 'Governmental Academic Cooperation. The Programme brought about 2. Business Mission Structure The Business Missions include the following activities: − Pre-departure coaching: selected companies participate in a coaching meeting with their local EU Gateway Coach.' 'Annual EU . Industry sectors: The Programme organizes business missions for: Construction and Building Technologies. European organisations have been offering a series of supporting policy measures for European businesses to start and run their operations.same time.Japan Journalists Conference.' 'Marie Curie Action .700 companies to Japan. − Business Mission Week: one week from Sunday to Friday in the target country: − Introduction to the Japanese market by a European and a local business representative 106 . In 2010. Health care and Medical Technologies. where they receive a thorough briefing about the target market and the organization of the business mission. Cutting-edge technologies.6. 5.' 'Erasumus Mundus'. Construction and Building Technologies.' and 'Other Academic Programmes.Japan Friendship Week. five missions have been held: Construction and Building Technologies: 2nd-3rd Feb. the campaign was re-launched in Europe as the EU Gateway Programme.' Obviously they are not necessarily planned solely for Japan nor business oriented ones. Information and Communication Technologies. 1. It is an introduction to European products in selected industries.6 Policy support offered to EU SMEs In Japan. business events have been organized since 2009. designs and products from businesses in the EU were introduced to the Japanese market.
ETP has welcomed more than 1. the requirements and the application form can be found on the web site. There are only 45 places available for ETP Japan. designed for promoting studies in Japanese language and business. Waseda University in Tokyo. European sponsoring companies.000 business professionals to Japan. have proven track records of international business cooperation. More details about the programme. being located and having its main activities in the European Union. SDA Bocconi School of Management in Milan.− Study Tour related to your sector activity − Individual meetings following a pre-arranged schedule − Two day Exhibition in an organized setting (venue and booths) to present your products or technologies to selected Japanese business community − Reception hosted by the European Union to invite your contacts and meet your partners − On-site coaching and logistic support − Individual strategic and logistic de-briefing Follow-up coaching: At their return from Japan participants are advised on how to follow-up with potential Japanese business partners. active in one of the economic sectors covered by the EU Gateway Programme. Three months of internship in a Japanese-based company. Yonsei University in Seoul." The EU Executive Training Programme (ETP) ETP is a professional development programme designed for European business professionals aimed at expanding their business into the Japanese marketplace. language and business culture. Six months of advanced language and business culture training in Tokyo. Conceived in 1979 by the European Commission (EC) with the support of Keidanren (Federation of Economic Organisations in Japan). The training period runs from March to March. "Exist for at least 5 years. have a sufficient turnover and number of people employed to guarantee a market entry to Japan. ETP is a one-year professional development programme. offering EU business people a detailed insight into the Japanese economy. The School of Oriental and African Studies in London. The ETP has evolved into one of the EU's longest running and most highly regarded EU-Japan trade-building and foreign direct investment initiatives. The participants follow: "Three months of intensive seminars in Europe. 3. fully or majority-owned by European Union capital. are those who hold prominent leadership positions in European companies based in Japan and many have become industry opinion leaders on EU-Japan economic relations. ETP is not only for executives but also for middle management. have a solid business strategy for entering the Japanese market." The curriculum of the ETP is provided by a consortium of internationally recognized universities: Sciences Po in Paris. The programme is a showcase of successful collaboration between Japanese host companies. One part of ETP handles the internship in which Japanese companies accept EU students for a few 107 . Eligibility and conditions for participating in the programme are following. and the participants themselves. Among the participants who have successfully completed the programme.
field trips and individual company visit. This programme has been running since the launch of the Centre in 1987. Its key programme is HRTP. Furthermore: − To promote all forms of industrial.2 T h e E U . business practices and management through lectures. Julien Guerrier and Mr. 2 The Exchange Professor programme is rather expensive the Collaboration Programmes are too comprehensive. 2004). the EU-Japan Centre for Industrial Cooperation. − To strengthen the technological capabilities and the competitiveness of the European industrial system (Council decision of 18 May 1992. Hiroshi Tsukamoto. Trade and Industry of Japan's contribution 24 Contributions and charges from EU and Japanese businesses. But the projects are not only for SMEs. confirming the consolidation of the Centre). but also improving the competitiveness of manufacturing in Europe by learning from manufacturing technologies in Japan. CIC's mission is mainly to make European business managers understand the Japanese market. trade and investment cooperation between the EU and Japan (Statutes and rules of procedures of the Centre. It is a short programme (one month) which provides an in-depth approach to examine the Japanese industrial structure. It is a non-profit organization aimed at improving European and Japanese companies' competitiveness and cooperation by facilitating exchanges of experience and know-how between EU and Japanese businesses. by adapting their products to the Japanese market. 108 . and is headed in Tokyo by two General Managers. confirming the consolidation of the Centre). CIC offers many different programmes and seminars. CIC has become a bridge between European and Japanese business people. ITC and bio-technology run by European coordinators. 5.J a p a n C e n t r e f o r I n d u s t r i a l C o o p e r a ti o n ( C I C ) CIC. Only some medium-sized firms who can afford to send someone away for one year may benefit from it. and has a total staff of 27 persons. 1 Research Framework Programme which budget amounting €33 million. which was established in 1987. so these are not suitable for SMEs. CIC's annual budget is \660 million for the fiscal year 2008. such as nanotechnology. As the participants of the ETP have to follow a 12 months training. − To contribute to industrial cooperation between EU and Japanese companies (Council decision of 18 May 1992. the programme is not relevant for the average internationalised SME. Some research projects are interesting for SMEs. the revenue source of which are: 22 Directorate General for Enterprise and Industry of the European Commission's contribution 23 Ministry of Economy. HRTP Human Resources Training Programme HRTP is a training programme in Japan for senior executives from EU enterprises.6.months. It has its head office in Tokyo and another in Brussels. mangers training in Japan. Mr. is a joint body sponsored by the EU and the Japanese Government (METI). as well as business missions.
more focused missions compared to HRTP. Topical Missions Topical Missions are two week programmes based in Japan which began in 1988 in response to the need to provide shorter. case studies. France. In 2010. France and the United Kingdom are the main player and account for over 50% of participants. the number of HRTP participants amounts to 578 persons. it received only about 30 from Europe. general merchandise stores and supermarkets)•(Source: Information by CIC•) Past record of Topical Missions: A total of 644 participants have taken part in the Centre's various Topical Missions from 1988 to 2002. and 25 from Japan in 2009. the focus has been on particular topics ranging from distribution and business practices to market and product strategy. The Centre operates between three and four topical missions each year. (Source: Information by CIC•) DBP (Distribution & Business Practices in Japan) Distribution and Business Practices in Japan is a comprehensive 5/7-day training programme both for companies planning to enter the Japanese market and for those with some Japan experience but looking for new approaches to expanding their business there. the number of Topical Missions participants amounts to 970 persons or more. Italy.Past record of HRTP: 431 HRTP participants completed the training by the Centre from 1987 to 2002. WCMP World Class Manufacturing Programmes WCMP is also a training programme for European executives. CIC cannot keep up with their demand. To date•2008 year). 109 . It includes visits to some of the world's most advanced factories. Topical Missions give EU managers the opportunity to learn about Japanese innovation. The programme has been relatively successful at encouraging participation from all the Member States. It provides participants with a deep insight into the Japanese market and consumer's needs thorough lectures. distribution centres and retailers (convenience stores. This spread of participation is roughly in line with FDI flows between Japan and the EU. Over the years. Recently CIC faces the shortage of allocated budget and is obliged to reduce the size of programmes. seminars. The programme has been relatively successful at encouraging participation from all the Member States though Germany. field trips and visits to wholesalers. and 25 from the Japanese side. If the budget is more reduced. as far as participants of programmes are concerned. production and distribution techniques and improve their firm's competitiveness. though Germany. CIC had about 45 participants from Europe. Overall participation from small and medium sized enterprises stands at 44%. because CIC's Programmes are extremely cheap for participants. the United Kingdom and Italy are the main players and account for over 50% of participants. Until 2009. 'TQC' (total quality control management). 'JIT '(just-in-time). For instance. Topical missions on WCMP is an intensive 5/8-day mission in Japan about improvement of productivity. despite the increasing demand. helping managers and executives from EU companies to acquire a better understanding of key Japanese business practices & manufacturing methods: 'KAIZEN' (incremental improvements).
for example.3 M e m b e r S t a t e s ' e m b a s s i e s a n d c h a m b e r s Many Member States' embassies in Japan are not simply engaged in diplomatic activities. where DE stands for Deutschland (Germany). In total DE International has over 450 members in Japan. It also participated in the Mass-Trans Innovation fair 2010 at the first Railway Trade Fair in Japan (November 10-12. The Austrian Embassy For instance. and its main missions are: − To promote trade. and acts as an official lobby.5. This is a joint body between the Austrian Government and Austrian Federal Economic Chamber (WKÖ-Wirtschaftskammer Österreich) in Vienna. It participated. voluntary membership or donations b. with 18 Austrian designers in the 2010 Tokyo Designers Week. individual provision of services to companies doing business Japan. the Austrian Embassy has been operating its Commercial Section for years. German Chamber of Commerce and Industry German businesses are supported by the German Chamber of Commerce and Industry (GCCI. Advantage Austria keeps 13 staff.e. representing the interests of its Austrian members both at home and abroad in many countries. It is called Advantage Austria.November 3. It is a consultancy for German companies and not a sales bureau 110 . which focuses on investment into Germany. technologies and services. by providing services. Austria does not really have large multinational companies.6. Beside the embassies and Chamber of Commerce and Industry. but are also supporting businesses which will be or are developing activities on the Japanese market. In Japan. 2010). i. There are three main organizations supporting German companies and citizens. The GCCI promotes itself abroad under the name DE International. − To assist Japanese companies interested in Austrian products. Advantage Austria is basically doing whatever its clients want them to do in terms of export promotion. governmental subsidies c. − To support Austrian companies in the Japanese market. a third organisation is active called GTAI (German Trade and Invest). (October 29. − organising many events. most of which are however large companies and multinationals. and actually the latter takes charge. The Japanese office (GCCIJ) and other offices abroad have 3 sources of income: a. AHK). 2010). Advantage Austria's main services are the following: − coaching. GCCIJ can be defined in broader sense as a service provider for SMEs willing to invest in Japan. which has branches in 80 countries with 120 offices. investment and economic cooperation between Japan and Austria. In Germany GCCI has 48 local offices and is financed by compulsory membership fees. Its main function is to support German businesses by providing information about the host country and by offering necessary services mainly in order to build up a presence abroad. b and c together cover 80% of the total income. The clients are almost without exception small and medium-sized enterprises.
are more oriented to knowledge and information dissemination and personal training programmes for individuals. 7 replied 'No' or 'DNK. European support frameworks. exhibitions. but also offer a variety of services for British businesses in the world. the awareness or recognition among European SMEs is not very high. It must be noticed. legal procedure support and financial support. 5. including company visits. 9 out of 13 SMEs. committed or dedicated practical support for their native businesses in Japan. Another joined the Gateway and ETP Programmes. Trade exhibitions and press releases are rather popular.which tries to sell the Japanese market. market researches. only 6 gave their positive answer. because its head office in Europe applied and the Japanese branch knows nothing about it. First of all. The most popular support comes from the JETRO. trade organisations or CCIs. practical works and internship. only 2 actually applied and took up individual measures. the Japanese governmental organisation to promote international trade. Its picking-up rate is nearly 70%.' Among 6. by collaborating with industrial organisations in the private sector. Information collection. that the interviewed 13 SMEs 111 . however. Whether these supporting policy programmes and opportunities have been fully utilised or not will be examined in the following sections. To conclude: embassies and attached organisations can provide dense. leaving Japanese subsidiaries or their managers with no knowledge and information. Last mentioned function is already covered by JETRO. The support includes market information. One is rather uncertain. which are mainly attracting more FDI inflow to the UK or promoting international R&D venture developments. business partner search." The British Embassy The British Embassy in Japan also operates its Trade and Investment Section and Science and Innovation Section.e.7 Policy support used by EU SMEs Though the EU and many national institutions are offering a variety of supporting measures for European SMEs which are or will be operating in Japan. including that perhaps their European head offices may know of the European supporting policy schemes. i. press releasing. 7 SMEs r eceived various supports from their embassies. trade missions and fairs are available and cheaper than at market prices. the picking-up rate of their supporting measures or opportunities is much higher. As far as individual Member States are concerned. however. organising platforms and tailoring counselling activities. by investing resources. and expressed that these opportunities are very useful to learn about business practices in Japan and to find good partners. Japanese policy schemes promoting industrial cluster developments and industry-academia collaborations could be involved. which represents the "sales office to Japan. Out of 13 SMEs interviewed. the picking up rate does not seem high. human resource search. Science promotion can support collaborations between universities and SMEs.
but this is clearly reducing the cost bottleneck for European SMEs to enter the Japanese market. and it is likely that businesses which applied to JETRO schemes are keeping high profiles and tend to cooperate more with the interviews. it can screen the flood of information that is available. and most are very impressed. and even partner search. and its local offices keep good relations with individual governments and organisations. This is very attractive because office rent in Japan is extremely high. This could be understood that SMEs with less resources are likely to apply to as many supporting facilities or opportunities as they can. or they are still on the midway of business development. JETRO keeps close partnership with many local governments in Japan and intermediate for them. the JETRO keeps its global network. what is rather natural. JETRO also offers a variety of other support. offers very committed and individually dedicated support to attract overseas businesses to Saitama and to achieve their successful start and developments. and the JETRO can mainly offer the most convenient locations in big cities. tailor the best choice of location and business opportunities and introduce potential customers. 6 out of 9 SMEs used at least one of them. Many European businesses made their first contact with the JETRO office in their own country or region before coming to Japan. are not negative on the potential role of such policy support. Some local governments in Japan also offer supporting measures to attract more FDIs in their own regions. 2 European SMEs received local governmental support. out of 9 SMEs which have used the JETRO supports. 7 also used the European or Member States' supporting measures. the actual involvement seems rather scarce. to find a variety of support. providing information. Business relationship is solely depending on rather personal contacts and trust. Recently it succeeded in supporting a German SMEs' start in Saitama. the taking up rate would be much higher because their local governments are enthusiastically promoting more FDI. Only 2 SMEs replied that they had no experience of receiving public support. For overseas businesses. covering more than 55 countries. with relatively cheap rents. a public body jointly sponsored by Saitama Prefectural and City governments and JETRO. nor dislike policy involvement. SBSC (Saitama International Business Support Center). including free temporary office space. If many remote regions could be covered. Their reason was rather simple. one of which is inside its head office in the heart of Tokyo. The leasing term is rather short. which was taken up by 7 interviewed SMEs. regardless their origin or base. but hopes to get support for development investments or public procurement opportunities. Like SBSC. One criticises the necessary paperwork. and key persons within firms must be found and approached. informal network and personal trust. namely 2 or 3 months. as the geographical constraint did not allow more remote visits and interviews from Tokyo. And. In addition. The most popular support given by the JETRO is its temporary office space service. 112 . In this survey. SBSC's support is strongly depending on its coordinator staff's own experience. however. its staff believes. Among the interviewed.were not selected at random. They. human resources. information or opportunities of making contacts with local firms. consulting. that so far they are enough supported by their parental companies.
and the preferred ones are their own national or local institutions' and Japanese institutions' supports. the business organisation stipulated that "coming to Japan means commitment. but the existing policy framework attached to the EU and European institutions are far less useful and effective. that is not a problem. eligibility and entry cost. Japanese youth are becoming inward looking. however. It is much more difficult to enter the Japanese market than entering the market of another European country. One of the European organisations believes that in principle EU's Executive Training Programme is useful. because it provides training to European executives. It is useful to take into account the opinions and recommendations of European business organisations in Japan. 5. Desirably. In general. scheme frameworks. shorter programmes basically provide European companies with some information. But this is only limited information. Companies participating in the Gateway Programme receive a market research report. The reason is that Japan's economic position in the world is not so strong as before. specific and practical. However. Recognitionality or dissemination of information itself matters for European level policies." This could be interpreted that if European companies seek new markets for their products or services in Japan. European SMEs which are trying to enter the Japanese market are seriously considering the necessity of some supporting environments or measures. they have to be ready to make a long-term commitment. In recent years the involvement of EU businesses in ETP has however become problematic. Europe and Japan. At the same time. generally speaking. most interviewed SMEs think supporting policy measures are useful. From this point of view. By quoting their opinions. it is not useful. It is. it is just a staring point. So. The recruitment of participants is very difficult. It means that ETP has been successful. the European organisation somewhat doubts the usefulness of shorter programmes of the EU-Japan Centre. the companies need to follow up with money and time. Some European companies are underestimating the need to invest in Japan. argued that shorter programmes lead to participants' decision making about whether to come/invest to Japan or not. both division of roles and information sharing are useful and must be combined between different levels of policy frameworks and policy actors in local regions.In conclusion. especially a number of seminars. During the discussions about the programme. Many ETP graduates of European companies have played important roles in Japan as well as in Europe and elsewhere in the world. which are rather familiar and easy to access or more concrete. But it is believed that if a shorter programme helps companies that will not come or invest to Japan. what is missing or problematic are their objectives. it is suggested that restructuring of shorter programmes from supply-centric to demand-centric 113 . nations. and not interested in going abroad and using English or other foreign languages anymore. The EU-Japan Centre is running programmes for European companies.8 What support is missing? As was seen above. The same European business organisation was not able to make an overall judgement whether the Gateway Programme is useful or not. design or regulations. What is good about ETP is that European companies get the spool of Japanese speaking young European businessmen.
For old Member States s the existence of additional programmes does neither have an advantage nor a disadvantage.will be necessary. since a consultancy firm is now running the programme. Despite a lot of financial means put in the Programme. it might not be appropriate for SMEs anymore. the following recommendations could be made. This means designing and running shorter programmes based on businesses' need or demand at a lower cost. The European programmes are certainly useful especially for new Member States of the EU who are interested in the Japanese market. The EU Gateway to Japan is interesting and several national companies made apparently use of it. However. in order to exchange experiences between them and the national participants. As long as Eur opean programmes follow the principle of subsidiary. since the consultant might focus on bigger companies. it is fine. participants need to be followed-up. One of the national European organisations also gave its opinion and ideas. After examining these opinions from the European organisations and public bodies. but it is better able to identify focus areas than the Programme. For the future this programme is probably more important for new Member States than for countries which have a representation in Japan. This is because the organisation does have participants in the Gateway Programme and it also takes care of them. The Gateway to Japan programme is in principle a good one. Since this national organisation provides services similar to a consultancy and all services are charged. Another national organisation expressed its opinion as follows. The programmes offered by the EU can be seen as competition to the services offered by the embassy. This information is now confidential. But there should not be overlap with national programmes. ETP is also useful but the information about who participated should be shared with other organisations active in Japan. because both use tax payers' money and also EU companies get confused. these services could potentially also be provided to businesses from other European countries in the f uture. As for educational aspects most programmes are complementary. The ETP pr ogramme is very valuable.7: − Conditions and criteria for applying to individual programmes must be more suitable and friendly for SMEs by understanding their constraints and situations. However the EU and the embassy have agreed to exchange reports of their programmes in order to evaluate advantages and disadvantages of their activities. The support from the European Commission is certainly helpful. But the Commission should not involve itself with trade promotion. An embassy of a European country gave the following opinion. Moreover national companies have cost advantages when using the services offered by the chamber of commerce. this is neither necessary nor really desirable because you are running through a lot of overlaps. with reference to European SMEs' experiences and opinions as presented in section 5. but conclusions on their effectiveness can only be drawn when evaluations have been conducted. In any case the number of participants in FP7 in Japan is particularly low. 114 .
opinions and recommendations in chapters 3-8. well established framework and practical measures. − All parties concerned should pay attention to the distinction between offering general information and more committed support. avoiding duplications but rather creating synergy effect. lower costs as well. the subsidiarity principle must be observed. challenges. the fact was confirmed that policies are generally welcomed and believed to be useful and supportive. bottlenecks. duplications must be avoided. − To avoid wasting tax payers' money and to keep balanced support among Member States. − Various types of follow-ups and action involvements of participants after completing individual programmes and schemes are useful and effective. easier access and application. measures to improve recognitionality or dissemination of information itself about supporting policy schemes and opportunities must be enhanced. opportunities.g. limitations and problems must be recognised by all parties concerned. policy schemes more familiar. division of roles and information sharing among policy delivery systems. publicity can be improved. The following proposals could be offered to stimulate EU SMEs to do more businesses in Japan. see to it that programme participants are followed up. By utilising various networks and local supporting institutions. above all for SMEs in new Member States. This is particularly concerning the EU policy framework and individual supports.− Low cost and easy-accessible opportunities and programmes are useful. among various institutions and organisations. no matter how comprehensive information and training are still very necessary for European SMEs. 5. purely support. advantages. stress on the human factor and on human resources with promoting human networking. A few basic principles must be observed.9 Which role could the EU play in stimulating EU SMEs to do more business in Japan? After having examined the situation. clearer policy objectives. carry out proper evaluations and make necessary improvements. − More practical and committed supports. but shared and joint actions are recommended. not directly subsidising. effective collaboration between policy delivery institutions. which is especially relevant for SMEs. 115 . Opportunities. consulting on particular problems. by timely reflecting on individual needs. − Dedicated or agilely tailored programmes are useful. − Coordination. and individual measures can do more if they are more involved and informed. Publicity First of all. experience sharing and follow-ups would be very useful and indispensable. And some national organisations rather prefer national support measures which reflect individual advantages and interests. is very important. results. joint activities. finding partners and exercising marketing strategies. e. but it is questionable whether these supporting activities must be done by the EU.
regulations or standards. Participants' conditions and burdens are not negligible. Clearer objectives and categories Apart from overall and political or institutional issues. staff recruitment support. above all for SME ownermanagers and staff. EBC is not a common body. and their governmental bodies are more interested in attracting FDIs to own local markets and less in supporting businesses abroad. but the length of programmes also matters because it is very unacceptable for them to spare so many days without doing their daily businesses or finding substitutes. which will be rather difficult under the very limited size and head count. which could be only managed and treated by governmental bodies like the EU Delegation.SMEs' priority and opportunity Though some policy measures are intended to cover wide range of businesses. Therefore the EU institutions could be more friendly and helpful for businesses from new Member States. must carefully consider the different interests among Member States. but by whom and how they could be implemented and practised must be carefully discussed and examined. sponsors and trade secrets. business practices and markets in Japan. such as France. and individual counselling and advices. as was seen in Part 7 and 8. Concerning training courses and missions. And. culture. human development training programmes. which keeps very familiar position to overseas businesses in Japan. not only fees and commutation and accommodation expenses. Business organisations including old Member States' ones may also offer supporting measures. more practical and committed supports are requested by business people and organisations. This was indicated by JETRO too. such as customs. the UK. 116 . but depending on own membership. guidance on administrative systems and procedure. and programmes must be tailored corresponding to SMEs' constraints and requests. trade missions and fairs. Germany. which are in a disadvantaged position and lacking resources and information. These might be more practical and business-oriented or project-based supports. however. the Netherlands. and other organisations. All of them are useful and necessary. can take more direct activities for SMEs within a policy framework. registration. business matching or partner introduction. At least they may offer indirect support or subsidies. Austria and Italy. More support to businesses from new Member States It was frequently mentioned that many European businesses can draw on powerful or well-established organisations like CCI from old Member States. even confidential matters for individual businesses or not. More practical and business-oriented supports It is not certain to what extent the EU and other institutions must help European SMEs in Japan. location. both at national and local levels. but businesses from new Members cannot find similar organisations. and it is also not clear whether they can be involved in very detailed and practical. Policy measures must be to respond to SMEs' actual problems and difficulties. Other Member States organisations cannot help new Members' so much because of the limitations of membership. private firms or Japanese organisations. general information about economic trends. policy supports for European SMEs in Japan should be classified into several different categories and measures. such as Member States' organisations and public bodies. SMEs should be given more priority and treated preferred. marketing researches. This idea. tax.
also many local governments and business organisations like SBSC are very active to attract more overseas businesses and promote international business opportunities. it can offer or facilitate consulting and business services. including European. and experiences to Japanese or third country staff. European organisations will benefit from collaborating with JETRO on different levels. such as Chinese. Alumni activities among those who completed different training or mission programmes may be rather useful because they can share experiences and knowledge. Therefore. in particular JETRO and its IBSC (Invest Japan Business Support Center). Above all. Discussions. Simple outsourcing of programmes. Those staff members could play key roles in managing Japanese operations or 117 . however. overcome legal obstacles and identify potential business partners across Europe. In this context. a triangle collaboration and intermediation between European public bodies. But not only with JETRO. governmental bodies and organisations. information sharing. helping them among others to access market information. exchange of best practices and experiences and joint activities such as joint sponsorship for business events can be useful for promoting more cooperation and cost-effective policy implementation. to give information. South Korean or Indian. EU Member States. which is a comprehensive network offering a range of services to SMEs and entrepreneurs. and keeping a number of useful networks of business communities in Japan and abroad. The Enterprise Europe Network. Japanese national or local bodies and activities can be improved and smoothly promoted. Member States' organisations and Japanese organisations like JETRO will be effective. JETRO is a very important and resource-rich public institution offering one-stop service desks in many countries and cities. language skills.which involve very committed and specific matters for making actual performance and outcome. including test marketing or sales representative operations. Training in Europe Some training or internship schemes could be done not only in Japan but also in Europe. and form a common atmosphere and sympathy which will be very encouraging and supportive for business people in Japan. Collaboration with Japanese institutions As this research report clearly indicates. cheap business office spaces and accompanying services for new entrants. though they can save public expenditure and promote policy efficiencies. In addition. the next issue to be examined is how the coordination between different parties. could be a bit criticised if contractors might lose focus on SMEs' actual needs and conditions. Private bodies or professionals can play important roles within individual projects. can further extend its franchise to third countries and may be very supportive for European SMEs if it creates partnerships with Japanese institutions. Japanese organisations are very useful and supportive for European SMEs. Collaborations and cooperation between European organisations are also very necessary. More coordination and collaboration for overall policy developments and implementations If European organisations are successfully establishing close and practical ties with Japanese institutions at various levels. a very supportive environment will be constructed for European businesses. needless to say about business opportunities. in European SMEs.
12. Therefore.future Asian expansions.30 Registration. with less cost both for participants and policy bodies. and the rest not only show little interest but conceive of no idea whether they may find any chances in Japan. moderator Prof.40 . Rob van der Horst Business lunch Overview on interviews of EU SMEs by Dr. although many show strong interests in doing business abroad. EIM Business & Policy Research. Some SMEs tend to start business operations in Japan without enough information and enough consideration. and facilitating communications and understandings to European parent companies in the future. Executive Vice President of JETRO Introduction to the workshop.00 . Yokohama National University Discussion. Itsutomo MITSUI Discussion.11.00 . Obviously European managers and staff can also expect more opportunities of preliminary training and learning in Europe. Rob van der Horst 118 . as well as expanding the range of choices and promoting attractiveness in the Japanese labour market. Such opportunities are also good chances to find potential partners or customers from Japan.30 14.10 . Mr. Naturally the advantages of staying in Japan and having experiences are immense.25 11. These recommendations and ideas would be helpful for European SMEs to internationalise themselves and to make advantage of opportunities in Japan. This idea is somewhat difficult because it might subsidise non-European people and it is not guaranteed whether they will continue working for the present firms after completing the programmes.10 11.50 13. moderator Mr. however.16. the Netherlands. Country Coordinator Overview on interviews with organisations by Prof. Itsutomo MITSUI Concluding remarks by Mr. Hiroaki ISHI.14.00 11.00 .20 . 5.10 Workshop agenda 10.11. it is a fact that only a very small number of European SMEs have decided to come to Japan and make efforts for years.00 15.15.25 . Such programmes. it would be very useful to disseminate information and organise many opportunities to make local business people understand Japan and its market potentialities in the real and deep sense. are to respond to the actual necessities and feasible solutions concerning human resource recruitment and management problems in European SMEs in Japan.16. Rob van der Horst. and would promote better business ties and cooperation between the EU and Japan.30 . as well as inform them about the many support measures.11. both European and Japanese. coffee Welcome by Mr.11.40 11.20 16. Yoji MIZOBE. It must be admitted that Japan is still one of the farthest distant countries for ordinary European citizens.45 . More promotion and awareness in European business communities Though this may not be an issue which individual country reports must take up.
Conveying Equipments Electronic Control Software for Automobiles Communication Consulting IT Services (Data processing) Real estate Investment Consulting Software & Hardware for embedded systems Germany Germany UK Austria France UK Italy Japanese Sweden France Nationality of HQ France (M&A by US) France Germany List of other organisations interviewed: Organisation EBC AHK European Business Council in Japan German Chamber of Commerce and Industry in Japan Marcus Schuermann Director Name Alison M. List of 13 European SMEs in Japan interviewed: Business Nano SIMS Analyzers Optic Sorting Plastic Machines Measurement Equipment for Mobile Telecom Marketing Support and Consulting Digital Pen and Paper Trend Information (Trend Prediction Art & Design) Electro Magnetic Technology applied Machine Screening Feeding.Annex I List of interviewees The interviews were conducted during November and December 2010. Science and Innovation Section Advantage Austria Commercial Section. Murray Position Executive Director UK Trade and Investment. Head of Commercial Section CIC SBSC EU-Japan Centre for Industrial Cooperation Saitama International Business Support Center Julien Guerrier Kunio Miyagawa Secretary-General Chief Advisor 119 . British Embassy in Tokyo Sue Kinoshita Chris Pook Director of Trade and Investment Counsellor. Austrian Embassy in Tokyo Martin Glatz Commercial Counsellor.
PA Section Senior Research Officer. Trade Section Barbara Rhode MinisterCounsellor Science and Technology 120 . Russia and CIS First Counsellor. Stalsbo Sayuri Fujita Nikolaos Zaimis Senior Coordinator for Europe.. Trade Section Attaché. Ryo Koba Deputy Director.Organisation JETRO Japan External Trade Organization Name Kazuya Nakajo Shiro Akiyama Position Director. Overseas Research Dept. Europe. Head of Trade Section First Secretary. Russia and CIS Division Yasuhiro Nagamatsu EU Delegation Delegation of the European Union to Japan Julie Raynal Helene R. Invest Japan Division Chief Deputy Director. Research Planning Div.
Europe. Trade and Industry Director. Industries Department. Overseas Research Department Senior Coordinator for Europe. Russia and CIS Division. Business Environment Division Assistant Director. Invest Japan Department Small and Medium Enterprise Agency Deputy Director.Annex II List of workshop participants The workshop was held on 27 January 2011 in Tokyo Organization Delegation of the European Union to Japan Title and Division Attaché. Assistant manager Industrial Promotion Division. Russia and CIS Division. International Affairs Office. International Affairs Office. Europe. Business Environment Division Kanto Bureau of Economy. Europe Division. Deputy Head of Commercial Section President Deputy Director. Russia and CIS Division. Planning Department Director of Academic School. Public and Cultural Affairs Section Senior Research Officer. Research Institute of Developing Economies Director-General. Russia and CIS Division. Europe. Trade Policy Bureau Masaru KANKE Takayuki NISHINA Keiko MOCHIZUKI Makoto YOSHIDA Yoko OHGAWARA Tatsuya SUZUKI Asuka KITAJO Name Helene Retsinis Stalsbos Sayuri FUJITA Fabrizio Mura Valerie Moschetti Bjorn Kongsad Kyoko MATAKI Manfred Hoffmann Rachael Bayfield Klaus Hofstadler Michitaka NAKATOMI Ryo KOBA Hiroaki ISHII Atsuho MAEDA Yukihiro UEHARA Naofumi MAKINO Yasuhiro NAGAMATSU Masako OSUNA Tadayuki NAGASHIMA 121 . Overseas Research Department Europe. Trade and Industry General Affairs Division. Industries Department. Assistant manager Industrial Promotion Division. Overseas Research Department Deputy Director. Assistant manager General Affairs Division. Press. Policy Planning Division. Trade Section EU Japan Centre for Industrial Cooperation European Business Council in Japan German Chamber of Commerce and Industry in Japan British Embassy Tokyo Austrian Embassy Commercial Section Japan External Trade Organization JETRO Deputy General Manager Manager Policy Director Management assistant Executive Director The head of the Trade Team Commercial Attaché. Russia and CIS Division. Overseas Research Department Executive Vice President Director. Assistant manager Ministry of Economy. Policy Planning Division.
Center for Corporate Strategy and Economic Growth Researcher. Center for Corporate Strategy and Economic Growth Researcher.International Center. JAPAN Japan Small Business Research Institute Deputy Manager Yuko SAKAGUCHI Counsellor Kunio MAEDA Business Signalion Japan K. Venture Business Laboratory Project Manager.K. Center for Corporate Strategy and Economic Growth Researcher. Center for Corporate Strategy and Economic Growth Emiko NISHI Keisaku KOGA Inao TSUKUI KIM Koan Jeong Hirofumi SHIMAYA Qing-Bin LIU Rob van der Horst Itsutomo MITSUI Tatsumi ISHIZUKA Yoji MIZOBE Lucas Witoslawski 122 . Center for Corporate Strategy and Economic Growth Student of Doctoral Programme. Center for Corporate Strategy and Economic Growth Researcher. Japan Takashi MUKAI EIM and YNU EIM Yokohama National University Director Brussels’ office Professor. Organization for Small & Medium Enterprises and Regional Innovation. Representative Director. Graduate School of Environment and Information Sciences Professor. Graduate School of Environment and Information Sciences Staff. Center for Corporate Strategy and Economic Growth Researcher.
US 4.1 Key data 1.46% (2009) 5.html. pharmace utical products.cia.3%.98%. and the third largest exporter of steel and primary aluminium . Germany 6. meat.1 Profile of Russia 6. Italy 6.6 Russia 6.cia. This reliance on commodity exports makes Russia vulnerable to boom and bust cycles that follow the highly volatile swings 1 World fact book CIA (//www.1.7 billion (2010 est.48%. 28-5-11) 138. Total exports.html. fruits and nuts. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP.739.098. rank 1 in the world $1. wood and wood products. iron. 28-511) 123 . centrally-planned economy to a more market-based and globally-integrated economy. 3.).)¸ Goods: petroleum and petroleum products.gov/library/publications/the-world-factbook/geos/ks.300.24%.. rank 9 in the world 17. goods imported and trade partners $ 237. goods exported and trade partners $376. moving from a globally -isolated. metals. the second largest exporter of oil.84%. 2. Economic reforms in the 1990s privatized most industry.477 trillion (2010 e st.000. China 5.62% . China 13.242 s q km.46%.69%. vehicles. Total imports.892 (July 2011 e st.900 (2010 est.01% (2009) Source: World fact book CIA (//www. rank 71 in the world 6. che micals.000 2010 est. and a wide variety of civilian and military manufactures Partners: Netherlands 10.1. Uk raine 4. Italy 4. steel Partners: Germany 14. se mi-finished metal products.).gov/library/publications/the-world-factbook/geos/ks. natural gas. optical and medical instruments. rank 19 in the world Goods: machinery. plastic. Turkey 4. Ukraine 5.2 Economy 1 Russia has undergone significant changes since the collapse of the Soviet Union.in 2009 Russia was the world's largest exporter of natural gas. Russian industry is primarily split between globally-competitive commodity producers .) $15. in 2010 USD) 4. with notable exceptions in the energy and defence-related sectors.39%. The protection of property rights is still weak and the private sector remains subject to heavy state interference.and other less competitive heavy industries that remain dependent on the Russian domestic market.
but inflation and increased government expenditures may limit the positive impact of these revenues. In 2009. the export of SME sectors to Russia recovered. resulting in a doubling of real disposable incomes and the emergence of a middle class. 6 . However. 3 F i n d i n g s o f t h e t r a d e a n a l y si s The export to the Russian market showed a strong increase over the period 2000-2008. EU27’s export to Russia compared to EU27’s total exports 600 500 400 2000 = index 100 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to Russia Non-SME export to Russia SME total export Non-SME total export 124 . a high level of corruption. High oil prices buoyed Russian growth in the first quarter of 2011 and could help Russia reduce the budget deficit inherited from the lean years of 2008-09. But Figure 6.1: Development in exports 2000-2010 (value). 1 . prompting a ban on grain exports for part of the year. The Russian economy. The government since 2007 has embarked on an ambitious program to reduce this dependency and build up the country's high technology sectors.1 also shows that the downturn after the economic crisis in 2008 was very steep. The Central Bank of Russia spent onethird of its $600 billion international reserves. non-energy companies. was one of the hardest hit by the 2008-09 global economic crisis as oil prices plummeted and the foreign credits that Russian banks and firms relied on dried up. but not as strongly as the non SME sectors. but with few results so far. The economy had averaged 7% growth since the 1998 Russian financial crisis. and slowed growth in other sectors such as manufacturing and retail trade. The economic decline bottomed out in mid-2009 and the economy began to grow in the first quarter of 2010. however. difficulty in accessing capital for smaller. Russia's long-term challenges include a shrinking workforce. in late 2008 to slow the devaluation of the Ruble.in global commodity prices. Figure 6. The government also devoted $200 billion in a rescue plan to increase liquidity in the banking sector and aid Russian firms unable to roll over large foreign debts coming due. and poor infrastructure in need of large investments. the world's third largest. a severe drought and fires in central Russia reduced agricultural output.
For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research. De nmark. 125 .Source: Oxford Research and Eurostat Note: Manufacturing sectors where S MEs account for more than 50% of total value added have been named “SME sectors”.
tariff and quota and payment risks score much higher. Figure 6.3 Major barriers for Russia.2). N=6649). EIM/GDCC (EU27.6 . Also difficult paperwork is relatively important and tops the list together with knowledge of foreign languages.3). SMEs active on the Russian market perceive more often barriers than for the seven key target markets on average (Figure 6. bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% Russia Average 7 key markets 126 . 4 F i n d i n g s o f t h e s ur v e y s Russia is the key target market with the highest share of internationalised EU SMEs active (13% as shown in Figure 6./serv. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. percentage of SMEs Conformity of prod. 1 . Especially political risks.2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% Russia 2% 4% 6% 8% 10% 12% 14% China Ukraine Japan Brazil India South Korea Source: Survey 2009-2010. Opportunities Internationalisation SMEs. Figure 6.
the pattern of the type of support for which most effect is anticipated is rather similar (Figure 6. 127 . percentage of SMEs expecting the instrument to be effective or very effective.3% of its overall trade turnover in 2008.europa. a larger part of the SMEs expect support to be effective than on average Figure 6. The EU is by far Russia's main trading partner. N=6649). It is estimated that up to 75% of FDI stocks in Russia come from the EU Member 1 http://ec.2 EU-Russia relations in trade and commerce The European Union and the Russian Federation have a strong trade relationship. It is also by far the most important investor in Russia. Opportunities Internationalisation SMEs. EIM/GDCC (EU27. EIM/GDCC (EU27. Russia is one of the EU's key trading partners 1.Source: Survey 2009-2010. 6. ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% Russia 30% 40% 50% 60% 70% 80% Average 7 key target markets Source: Survey 2009-2010. But for most services in the case of Russia. This trend was interrupted by the economic crisis and the unilateral measures adopted by Russia which have affected the bilateral trade. Opportunities Internationalisation SMEs. accounting for 52.eu/trade/creating-opportunities/bilateral-relations/countries/russia/. Bilateral trade and investments continue to grow rapidly. N=6649).4).4 Anticipated effect of possible public support measures for Russia. Again for Russia. Trade between the two economies has showed steep growth rates until mid 2008.
Ufa (1.4). At the centre of EU-Russia relations at present are ongoing WTO accession negotiations and the negotiations of a New Agreement to replace the current Partnership and Co-operation Agreement. 2 cities of federal subordination (Moscow and St. Also that there are 11 cities in Russia with population exceeding one million inhab itants: Moscow (10. 128 .3%). covering nearly all categories of machinery and transport equipment (42. St.0) 1. currently under negotiations. 4 autonomous areas. manufactured goods.1).1).0). Samara (1. 2009: €65.6 billion − EU goods imports from Russia. Novosibirsk (1.1). should strengthen bilateral trade relations by enshrining some basic principles and objectives in the area of trade. The Partnership for Modernization is designed to boost cooperation under the EU .3). The New Agreement with Russia. 46 regions (oblasts). Rostov-on-Don (1.6 mln. Chelyabinsk (1. some manufactured goods chemicals and raw materials. 2020 the Russian Federation consists of 21 republics.8 billion Foreign Direct Investment − EU outward investment to Russia 2008: €25 billion − Russian inward investment in the EU 2008: €2 billion 1 Data from Rosstat. 1 autonomous region. EU exports to Russia are diversified. Trade in goods − EU good exports to Russia. Omsk (1. In order to understand the trade relations between Russia and the EU it is useful to note that –as of January 1. Petersburg (4. 9 territories (krai).6). food and live animals.States. Kazan' (1.Russia Common Spaces.).2 billion − EU services imports from Russia 2009: €10.1).-Petersburg).3). Ekaterinburg (1. 2009: €115 billion Imports from Russia are mainly energy and mineral fuels products (77. Nizhny Novgorod (1. T r a d e i n s e r vi c e s − EU services exports to Russia 2009: €18.9%).
7 0.8 10029 36568 17.7 0.0 Total investments of which: direct investments of which: contribution in capital credits from foreign owners of organisations other. euro 70591 % of total 100.2 4820 26996 11.4 * Source of data: Russian Federal Statistical Service (Rosstat).1 43.3 1.5 0.4 1. euro 42921 % total 100.3 8288 1732 438 362 19.0 1806 2382 93 18.4 1.7 25.8 7.0 766 195 194 51243 1.6 272 357 285 46863 0.4 938 2422 558 128 9.0 0.0 57.2 62.5 97 32101 0. 129 .3 4.9 10999 39384 15.0 2009 mln.9 0.1 0.3 262 0.1 64 64 1 5646 0.0 1.8 1.0 0.1 54.3 72.8 1.9 1.4 18386 26.0 58.0 11443 19.8 10805 6654 927 963 15.1 Investments: inflows of foreign investments by types 2003 mln.0 2125 24871 285 5.3 9.Table 6.2 4751 31817 265 8.3 0.2 74.7 4501 34883 860 6.5 79.4 49.4 5753 4633 1057 635 9. euro % of total 100.0 2008 mln. direct portfolio investments of which: shares and stakes debt securities of organisations of which promissory notes other investments of which: trade credits other credits of which for the period of: up to180 days over 180 days other 9692 3917 40.0 5.0 2005 mln. euro 58940 % of total 100.8 1366 4188 14.6 1.6 24.0 62.4 10458 24.6 0.6 0.6 55.
2 11.9 billion).1 billion) 1.1 9.9 billion).2 6 .ru. euro Percentage of total 100 Total investments of which by countries: Luxembourg Netherlands China Cyprus Germany United Kingdom Switzerland Japan France Virginian Islands (UK) * Source of data: Rosstat.5 billion). Japan (USD 14. 2 .7 billion).0 2.4 3.5 billion). 1 O r i e n t at i o n o f E U e x p o r t Russia's main trading partners globally are Germany (turnover USD 39.0 7.9 billion). Ukraine (USD 22. the Netherlands (USD 39. Italy (USD 32. and Finland (USD 13. 130 .Table 6. China (USD 39. 58940 8434 8374 7019 5961 5299 4619 2580 2173 1792 1289 14. the US (USD 18. www. France (USD 17.7 3.6 billion).1 billion). 1 "Doing business in Russia".9 10.4 billion).2 Inflow of foreign investments in Russia's economy by main countriesinvestors in 2009 Mln.3 14. Belarus (USD 23.9 billion).4 billion). Turkey (USD 19.pwc. Poland (USD 16.8 4.
0 20.3 0.0 1.6 29.0 0.3 Import of the Russian Federation from far abroad countries (at actual prices.7 11.4 52. precious stones and articles there of machinery.0 103.7 2008 185.8 16.6 3.3 Import.3 3.6 0. rubber leather raw materials.0 10.7 23.5 2.4 4.4 2.0 0.9 3.4 Commodity structure of import to the Russian Federation from far abroad countries (at actual prices) 2000 2004 64.4 2006 101.9 20.9 0.6 3.0 18.6 2009 116.9 2.8 8.3 19.2 1.8 4.5 25.6 2005 84.4 8.4 5.1 74.2 2. pulp-and-paper products textiles. textile articles and footwear metals.6 3.6 6.1 4.4 6.4 3.8 5. equipment and transport means others 24.8 0. total of which: foodstuffs and agricultural raw materials (excluding textile) mineral products chemical products.9 0.4 0.8 15.1 0.Table 6.1 131 .1 1.6 14.7 0.7 11. mln.1 5.2 2. euro) 2000 2004 46525 2005 64049 2006 91942 2007 124002 2008 156623 2009 104533 Total Europe Austria Belgium Bulgaria Hungary Germany Greece Denmark Ireland Spain Italy Netherlands Norway Poland Romania Slovakia UK Finland France Czech Republic Switzerland Sweden 24113 454 521 126 437 4220 135 375 115 339 1312 801 167 775 86 114 932 1037 1285 397 293 503 738 946 162 595 8489 134 577 192 707 2572 1106 373 1858 105 326 1662 1878 2470 671 521 1296 973 1186 194 884 10664 151 740 233 986 3548 1560 603 2207 205 404 2231 2491 2951 795 703 1495 1470 1735 264 1488 14706 190 1073 367 1555 4561 2139 886 2716 430 613 2926 3188 4670 1219 1028 1708 1794 2326 303 1899 19368 228 1165 482 2336 6231 2815 711 3380 534 1030 4120 3669 5669 1789 1269 2272 2117 2760 435 2504 23181 298 1243 621 2901 7476 3273 805 4797 692 2035 5175 4511 6805 2456 1619 3080 1478 1822 304 1887 15237 245 985 480 1632 5658 2572 802 3023 629 1298 2536 2838 6047 1663 1408 1461 Table 6.6 2.6 40.1 1.3 53.5 5.2 8.4 1.7 2007 136.7 6.7 2. fur and articles there of wood.4 16.4 0.8 4.8 0.
5. High-quality products and services are in great demand in Russia.2 percent. Russia's relatively low-cost and generally highly skilled workers are one of the main attractions for investors. financial services. local importers of EU products admitted that opportunities and benefits of doing business in Russia exceed problems and high market entry costs.). Revenues are higher than market entry and business operation costs due to bureaucracy and corruption. Besides. The reason is that.7% of Russia's population receive income below the minimum subsistence level. An emerging middle class with disposable income is fuelling demand for automotive products. The chances for EU SMEs in Russia are reasonably good. Although an estimated 14. before the 2008-2009 crisis. There is also demand for innovative products. use advice and support from chambers of commerce. it should be taken into account that Russia's private sector. Russia presents opportunities for many products and services. take their time to learn about the local situation. as compared to EU countries. valueadded services. The key to success is to find the right Russian partner. 75% of household income is spent on consumption. 2. Russia's economy demonstrated positive developments. extraction of mineral resources and large enterprises. local foreign trade offices of EU countries. local EU businesses. Nevertheless. Russia is attractive for foreign companies because returns in Russia are relatively very high. Russia's well-educated workforce is an important asset for long-term growth.3 Opportunities for EU SMEs in Russia Historically. such as output recovery and growth of domestic demand both for consumer and industrial goods. both EU and Russia are two important regions in terms of the global geopolitical dimension. including operating and potential partners of EU SMEs. Russia 's s economy regained momentum with the real GDP expanding by 5. household goods. with stronger domestic demand. as a fast developing market. Specifically. All the interviewed representatives of the EU Delegation.6. Currently a large number of European countries consider the Russian market to be attractive for starting and developing business. modern equipment and technologies. a major construction boom is creating a need for equipment and materials. 3. Nowadays. chambers of commerce. part of which are SMEs. opportunities for EU SMEs in Russia are listed below: 1. historically. commercial counsellors of embassies of EU countries. EU SMEs are highly likely to succeed if they come prepared. Soviet economy was based on heavy industry. while light industry. In 2010. only slightly over 20-years old. local foreign trade offices of EU countries. income lev- 132 . particularly. The domestic consumer market in Russia is large due to the number of population (142 mln. and high energy prices are driving demand for oil and gas field equipment and services. However. opportunities for services and equipment for infr astructure upgrades in power generation and telecommunications are growing. is young. retail products and a healthcare system. EU Member States and Russia have been maintaining close commercial relations. commercial counsellors of embassies of EU countries. franchise businesses are growing in both the food and non-food sectors. In 2010. 4. Russia's SME sector demonstrated quite a strong potential for growth and development. services were underdeveloped. catering and hospitality.
manufacture and distribution of household goods. tax authorities. e. such as Moscow. have very good opportunities in Russia. Russia is working on harmonization of technical regulations in order to approach European standards. footwear.g. 10. South Russia. EU SMEs. In 2010. 133 . 13% personal income tax is a big achievement and an attractive feature of the Russian taxation. Urals and Siberia.els in big cities approach those in Central and Eastern Europe. Open and Closed Joint Stock Companies. The income of senior and middle management in Moscow and St Petersburg almost reaches that of their counterparts in developed countries1. meat and potato. Specifically. cross-border economic cooperation and SME development in such regions as Leningrad Region. Prices for agricultural products in Russia are higher than western products. Visa regulations for highly qualified foreign specialists in Russia were eased in February 2011. 9. or as individual entrepreneurs. recently a new law has been adopted on simplifying getting work permits. contributing to higher food prices.pwc. including foreign investment and trade. because Russian equipment is not reliable and of poor quality. First-entry vehicles to enter the Russian market are representative offices of EU companies. food. Pskov. 6. the number of inspections by public bodies (militia. The harsh weather has destroyed close to 40 percent of crops in the affected regions producing grains. finequality clothes. EU SMEs can occupy market niches in which big companies are not interested. hospitality and catering. Some of these have been implemented as a response to the global economic crisis. The lack of rainfall in Central Russia and in the West along the Volga river caused a massive drought affecting many food items. sanitary and fire inspections) at SMEs was reduced. Russia has experienced the worst drought in decades. Tatarstan. 7. although EU SMEs can be also registered as Russian legal entities . Although the business climate in Russia is still far from being favourable for SME development and foreign investment. Petrozavodsk. 11. The Russian authorities acknowledge that responding to the needs of business is essential for the country to move forward economically. especially. Kaliningrad regions in recent years have been supported by both local governments and by the federal government under the EU-Russia Cooperation Programme. Novgorod. In these areas regional governments are proactive and support promotion of commercial and economic cooperation.ru. retail products.LLCs. Russia is working on the improvement of business environment. textiles.-Petersburg as well as large cities and their oblasts (regions) in some advanced regions – North-West Russia. 8. there have been significant improvements in Russian corporate law during 2008-2009. Besides. whilst some are part of the ongoing development of Russian business law. Besides. manufacturers or distributors of high quality equipment for agriculture. St. 1 www. Opportunities in the regions: particularly attractive for doing business in Russia are large cities with a high purchasing power of the population and income concentration. consulting services. SMEs are more flexible and client-oriented than large companies.
764 million persons which is 50% more than in 1999. etc. it had existed in public administration. The overwhelming majority of public officers consider their positions as high-revenue ones owing to bribes and paybacks which are recognized as almost indispensable and normal. in actual fact. ii.g. the number of public officers in 2009 was 1. etc. Byelorussia. however. registration requirements. ministries as institutions which develop relevant policies. Russia is considered to be a reliable partner. and other government controls increase opportunities for corruption. required for establishing and operating a company.. Source: www. education. July 21. Lack of stability in Russian laws and regulations. E. Complicated regulatory framework: The Russian legislative system is complicated and unstable. Perceived corruption in some regions.4 Bottlenecks of doing business in Russia. According to one of the interviewees.g. they make SMEs follow every rule". bureaucracy: All Western companies are aware about corruption. Bureaucracy makes the completion of administrative procedures. but none have an idea about the real scale of corruption and the amount of money to be spent on bribes. Russia can become a gateway for EU SMEs to other huge markets: CIS countries (Kazakhstan. but when new laws are 1 As a result of the reform. Excessive bureaucratic regulations. Although the Russian President d eclared the fight with corruption a priority. although there is still lack of practical follow-up to what is said on SME support and improvement of business climate by the Government. an average bribe is 25-30 thousand rbls. no positive results have been achieved. Corruption in Russia is a systemic problem. costly and time-consuming process. and a law on fighting with corruption has been adopted recently. for centuries and deteriorated after the 20062008 administrative reform which resulted in a significant increase in the number of public institutions and officers working in them 1. Thus.12. "Russian public agencies responsible for bureaucratic procedures are focused rather on form than on substance. Corruption and bureaucracy are the most discouraging problems and major disadvantages for EU SMEs. use a practical approach.ru. supervision services which are responsible for supervision and control. their current practice is understanding that corruption is part of the market in the form of payment for services. 6. In Ukraine corruption seems even to be larger. Some EU SMEs and business support agencies and institutions. e. as well as China. the former one-tier system of ministries was replaced by a three-tier system of i. The level of corruption is growing. especially for EU SMEs Corruption at every level. health care. South Korea and Japan. discussions of the Federal Law on SME support 2007 which is the main law governing SME development policy took over 5 years. agencies which implement there policies and iii. Corruption significantly increases market entry and business operation costs and is linked with bureaucracy.kommersant. 2010.. (around 750 euro). 13. Discussions of draft laws in the State Duma take months or even years 2.). 2 134 . in Tatarstan is less than in others. a complicated.
etc. E-declaration is not working. although this company is well known and its product is already well known in Russia. sanitary inspections. for the purposes of export-import arrangements. etc. Taxation: In Russia taxation is very burdensome. while in Moscow only a few cases of using the system were reported. Small companies sometimes have to use the services of the so-called "grey" customs brokers. or they can do what they like. Inspections and control by Russian authorities: Russia's economy is not free of excessive state involvement. The costs of professional legal advice from KPMG. during the interviews some evidence was supplied about inspections conducted at a European company. or visits to businesses by public officers or servants. currently 30% of customs operations in North West-Russia are using the new electronic management system for handling customs clearance related processes. Few customs officers are trained in using the forms. To improve laws. but very few SME can use them now. especially in connection with the introduction of electronic customs forms. The new customs union . or experienced lawyers who guarantee resolution of any legal problem. Therefore. businesses need professional advice from lawyers on reducing these difficulties. VAT. There are some improvements. which make understanding laws even more difficult. The recent decision to move customs terminals from large cities to the border has deteriorated the situation. mineral resources extraction tax.. Electronic customs forms are cheaper.. while the requirements are burdensome: customs procedures are too long and require a lot of papers.adopted many of them turn out to be ambiguous of imperfect. Customs officers lack professionalism. especially for manufacturers. Interpretation of dispute cases concerning business establishment and operation. to avoid fines and penalties which can be imposed owing to ambiguous Russian laws. i. has been recently reduced.also complicates the customs procedures and introduces new requirements for exporters. payroll-related taxes. Transportation and customs services are very expensive for SMEs. The implementation of new requirements of handling electronic documents for customs clearance processes is poor. Inspections and control by Russian authorities of manufacturers in EU Member States are even stricter: e. water tax. customs fees are high. fire inspections. PWC. Large companies have more resources and for them transportation and customs fees are not a big problem. as well as interpretation of relevant laws can be arbitrary. excise taxes. Business and financial information is poorly protected in export/import operations.. The goal of the inspection was to check every stage of product manufacturing at the enterprise. Customs requirements have deteriorated during the crisis. Electronic signature has not been recognized in Russia widely.RussiaBelorussia-Kazakhstan . militia. payments for the use of natural resources. The wording of the laws is difficult to understand even for Russian native speakers. 135 . Complicated customs procedures. More difficulties are anticipated in the so-called procedure of advance electronic customs declaration. the overall number of inspections.e.g. The tax system comprises: − Federal taxes: corporate profits tax. Yet SMEs have to pay bribes or informal presents to public officers. state duties. dozens of amendments or instructions to them are issued afterwards. For example. personal income tax. strict customs requirements: Customs administration is poor. SMEs cannot afford them. are high.
Besides. do not speak English. particularly in the regions. The business support infrastructure is relatively young. which affects SMEs. many SME support institutions (centres or agencies) exist only on paper. The new law will cause many SMEs go to the "grey" sector. Business support services in Russia are expensive for SMEs. depending on the size and type of business. local specialists. But public officials. St. it was initiated about 15 years ago. − Local taxes: land tax. thus making travel costs an enormous burden for SMEs. Hardly any local SME has an English speaking person among its staff. Air and train fares to long distances are rally high. Some interviewees emphasized a low efficiency of national SME support measures and lack of adequate mechanisms of national programme evaluation or performance evaluation. as well as for several tax payments when an entity has branches in more than one Russian region. travel across the country to the Russian Far East takes 9-11 hours. instead of formerly paid taxes ranging from 6% to 26%. e. can to some extent read and understand texts. Size of the country: EU companies have an idea that Russia is vast..-Petersburg there is lack of affordable and good hotels. especially in the regions. A typical situation is the case when local SMEs – potential partners. Visits to Russian public offices where nobody speaks English or speaks little English are most discouraging or SMEs.-Petersburg and large cities young people are more fluent in English. A direct negative consequence of the new law is a higher price for products sold by SMEs. Language barrier. although in Moscow. An example of a negative change is a recently adopted new law on the so-called insurance payments. USAID or other technical assistance programmes. transportation within the country is problematic. some of them have become self-sustainable and provide business support services to SMEs. Some business support institutions were established under TACIS. transport tax. but when they come to Russia they find out that the country comprises 7 time zones. catering and hospitality sectors in the regions are even more underdeveloped. local electric power networks and water supply networks often fail. In home countries they are cheaper. Under this law SMEs have to pay 34% of their income as social insurance payments. Even in Moscow and St. Lack of infrastructure of any kind (physical and busi ness support): In Russia most of the roads are poor. The problem is to some extent resolved by hiring local interpreters. individual property tax This tax structure can result in tax burdens in different locations and may also cause a need for both federal and regional tax filings.g. Long distances and costs of flights for companies willing to operate in the regions are a problem. However. tax on gambling. In Russia very few people speak English. 136 .− Regional taxes: company property tax. but fail to speak with EU SMEs on the telephone or during trade missions when they have face-to-face meetings. there are frequent (weekly!) changes in taxation regulation and rules.
6. Only big companies can afford translation. in courts. as well as on their flexibility and entrepreneurial 137 . because most of the databases are out-dated and in Russian. exist only in Russian.Besides. This issue is particularly burdensome for British and Irish companies. poor on-line services as compared to other countries. local specific features. Crosscomparisons of data from different sources often reveal mistakes and create a vague picture. most SMEs cannot. inconsistent and incomplete. difficulties in finding good local SME managers. Lack of reliable. vague. they are poor and outdated. Data from various sources turn out to be incompatible or controversial. such as local markets. Migration. tremendous effort. whose citizens. which is a New Russian Silicon Valley to be created in Moscow suburbs with the participation of the leading Western innovative and ICT companies. visas regulations: practically all the interviewers complained about visa regulations and requirements. poor IPR protection. market and economic fundamentals. while SMEs cannot afford it. In Russia there is no existing institution to find partners. As a result. Market data available in Russia are scarce. by a local private consultant. hardly any texts of important relevant laws and bilateral contracts exist in the English version. because UK and Ireland are not included into the scope of EU countries. Even important contracts with companies to be involved in the establishment of Skolkovo. definitions of financial or economic indicators of company operation) differ from internationally accepted definitions. enjoy simplified visa procedures for business visits. usually for fee. EU SMEs need precise and exhaustive information about the market. Search for partner and matchmaking can be organized. poor law enforcement. Most of the databases are in Russian. and big money. awareness about business environment in Russia and availability of SME support. market entry/exit rules and problems. consistent and up-to-date information in English or leads to basic information about Russia and its regions. particularly sector specific information. Getting more precise and more detailed information requires a lot of time. Other bottlenecks mentioned by the interviewees were: costly certification. besides. lack of transparency in banking and financial system as well as in tendering procedures. etc. Large companies can buy high-quality market data and market surveys from expensive consulting companies. They cannot judge about the local market. business association or a national chamber of commerce. Part of the problem is incompatibility of Russian and Western standards and definitions. sanctions against European products. relevant statistics. according to the new EU-Russia agreement on the facilitation of visa issuance. key players.5 Overcoming bottlenecks The degree of success of EU SMEs in overcoming the bottlenecks depends on their former experience. infrastru cture. business environment. western companies feel "blind" when they enter the Russian market. This cannot be done by SMEs by way of using databases or registries of companies. Some important Russian definitions (for example.
E Operating in regions where regional governments are proactive. Austrian or Dutch companies are better positioned in Russia because the SME support systems of these countries both at the national level and in Russia are more developed (including support from business associations and commercial chambers). getting at their home countries basic contacts of local trace offices and chambers of commerce. Companies are first established as representative offices in Moscow and SPB. The country origin also matters: e. regions. business associations. commercial counsellors of embassies confirm that the benefits of doing business in Russia are. where there is only one or two persons responsible for trade and commerce. At such seminars SMEs can learn more specific information about customs. D Finding the right Russian partner which has good linkages with local government and business community. SMEs from East European countries or Baltic countries such as Lithuania.-Petersburg and the regions. according to the interviewees. then go to the regions. EU Delegation to Russia. German. chambers or business associations in Russia. Leningrad Region. B Approaching existing institutions and agents which provide practical advice and policy recommendations to EU SMEs (both at their home country and in Russia): EU chambers.. Nevertheless. commonly used the following techniques of entering the Russian market: A Better preparing. who can provide only basic data. attending training and coordination seminars organized by embassies. following their advice and developing useful contacts provided by these institutions. have retained former connections with Russian counterparts or partners and they can benefit from the knowledge of the Russian language and landscape. C Participating in trade missions. business associations or trade offices. IKEA) which organize for their SMEs training 138 .Petersburg. At the same time. higher than the anticipated and perceived problems and bottlenecks. migration regulations. St. support and attitude is vital. The best approach for EU SMEs is to trust the Russian partner and local administration. networking events and business visits to the regions. and it well positioned in the local market. learning basic information about Russia's geography. e. Individual meetings with local business community and governments organized by embassies and trade offices were also very useful. In Russian regions the Governor's standpoint. As reported during the interviews. local private consultants in Moscow. British. the primary point of contact for SMEs from East European countries usually are commercial departments of their embassies. etc.. Latvia and Estonia which formerly were part of the Soviet Union. local foreign trade offices of EU countries.g. The lessons learned from the practical experience of existing EU SMEs in Russia as well as from the feedback from the interviewed chambers of commerce. embassies. law. local consultants prior to going to Russia. sector-specific markets. Those EU SMEs which were patient enough not to make hasty decisions and were not redundantly scrupulous towards minor issues in relations with their Russian partners. with support from local private consultants. nevertheless.g. French.g. while SME support by other EU Member States is less developed. the overall level of support to SMEs from East-European countries is perceived to be insufficient. Tatarstan.skills. trade offices. the group Auchan International. St. F Entering the Russian market under the auspices of larger companies (e.
IPR. The lobbying of EU SMEs interests is done at the high level with the involvement of the European Commission. provide visa support. − advice on law and customs regulations. as well as practical advice and assistance in networking with business community and local government. Ministry of Economic Development. facilitate getting work permits and provide support in company's location. business visits. resolving problems with customs and support in litigation. − liaison with local governments and business service providers. co mmercial counsellors of embassies of EU countries. how to establish and operate a company. on the EU part. business associations. provision of specific services. Enterprise Europe Network partners in Russia. contribute to regional development. statistics. support in neg otiations. products and services. advice in accounting. − organization of trade missions. influential business associations. embassies. Specific services to EU SMEs in Russia are provided by support institutions and agents: chambers of commerce. simplifying visa and migration regulations. taxation. − events. harmonization of Russian and European standards in certification. provision of up-to-date and accurate information about the market. − advice on business establishment and operation. These support institutions and agents help EU SMEs in doing b usiness in Russia by providing advice. for free and for fee. accounting. publications about doing business in Russia. individual meetings with local business community. including key ministries such as the Ministry of Finance. promotion of SMEs' brands. 139 . standardization. depending on the amount and scope of information and services provided. offering a product which is unknown or difficult to understand. promotion of SMEs products and services. − B2B. 6. Ministry of Industry and Trade. including HR. the EU Delegation to Russia. local foreign trade offices of EU countries. matchmaking. The scope of offered support and services usually comprises: − information support. − market research/surveys. national chambers. An essential component of the lobbying is the development of long-standing relations with the Russian government and national business associations and convincing the Russian counterparts that support to EU companies is also beneficial for Russia because these companies are bringing to Russia jobs and investments. taxation. and the Russian Government. HR and recruitment. audit. networking. G Finding a narrow niche in the market. legislative regulations.6 Policy support offered to EU SMEs The key SME needs in Russia include high-level support by means of political lobbying of SMEs' interests. on the Russia's part.in marketing and business orientation. The lobbying is aimed at creating a more enabling environment for EU SMEs in Rus sia by means of pushing the Russian government to implement the declared policy initiatives in SME support and development of innovation. so that there are fewer incentives for the local authorities to do burdensome inspections and interfere into business. information and services. tradeshows. local private consultants. technical regulations.
some issues are included into the agenda of the new bilateral Cooperation Agreement. business associations. etc. Information exchange between the EU Delegation and the public authorities is important for introducing new laws and regulations. Meetings with trade sections are conducted monthly. it's institutions and its programmes. while more d etailed or sector-specific information. Ministry for Regional Development. EU Delegation maintains a dialogue with the Russian Government. In Annex IV an overview 1 is presented of support offered by organisations interviewed in Russia. All the issues which are barriers and problems for SMEs are being discussed with the Russian side. EU Delegation has recently completed a project on Internationalization of Russian SMEs. The EU Delegation does not provide specific assistance to SMEs. key ministries .B r i t i s h C h a m b e r o f C o m m e r c e ( R B C C ) The RBCC has had a permanent presence in Moscow since 1987. Russian government. companies are sharing information. certification. − advice and assistance in certification. T h e D e l e g at i o n o f t h e E u r o p e a n C o m m i s s i o n t o R u s s i a The EU Delegation to Russia was opened in Moscow in 1991.− some institutions (not all) produce and make available for free on their Website sector-specific reports and statistics base on their own market research. matchmaking. The Delegation's mandate is to promote the political and economic relations between Russia and the EU by maintaining extensive relations with governmental institutions and by increasing awareness of the EU. to inform the public of the development of the EU and to explain and defend individual EU policies. to participate in the implementation of the European Union's assistance programmes. IPR. multilateral and bilateral organizations. professional advice are provided for fee. WTO accession. T h e R u s s o. however. not their names. Since then the Chamber has been actively engaged in supporting its member companies in their 1 As only a selection of all organisations providing support to EU SMEs have been interviewed in the target countries. Ministry of Finance. trade sections of embassies and consulates. standardization. The offered support and services from particular key players are discussed in more detail below. this overview cannot be considered a ‘mapping’ of support to EU SMEs in the selected countries 140 . for example IPR.Ministry of Economy. aimed at finding means of facilitating Russian SMEs access to western markets. to monitor the implementation of the Partnership and Cooperation Agreement between the EU and Russia. The Delegation has the status of a diplomatic mission and officially represents the European Union in Russia. contacts. National representations are delegating to the EU Delegation the lobbying of EU business and SME interests in Russia. benchmarking. Basic or fundamental information is usually provided for free. The EU Delegation cooperates with national delegations. The EU Delegation receives signals from companies about the business environment.
RBCC is strongly placed in Russia. lawyers). automobile manufacturers. AEB membership is made up of enterprises and entrepreneurs from EU member states and the European Free Trade Association (EFTA). RBCC is a two-way company. customs and transport. In Russia it comprises > 600 companies. The AEB was established in 1995 on the initiative of several European companies registered in the Russian Federation. it is also representing Russia's interests in EU. AEB addresses current issues and influences drafting legislation through a dialogue with Russia's political and business leaders at federal and regional levels.. the RBCC Bulletin.) and industry committees (e. seminars. statistics.g. etc. RBCC cooperates with the UK Embassy. networking events which are most popular among SMEs because they help finding partners. RBCC is valuable as a stepping stone for British member companies to develop their export business to Russia. which determines the overall strategy and policies of the association. RBCC supports the idea of sharing experiences with the other chambers. AEB has its headquarters in Moscow and a fully operational Steering Committee in Krasnodarsky Krai. RBCC standpoint is to reasonably quickly provide practical assistance for companies exporting to Russia. RBCC Moscow is also the home of the Chamber's regular publications. banking. Ambassadors of EU member states and the Head of the EU Delegation to Russia. regional trade missions.-Petersburg. has long-standing contacts with business circles. programme of meetings with potential trading partners). and has a unique continuously updated contact data base.. assistance in finding trading partners and representing the interests of its member companies of all sizes. advertising. RBCC encourages people to do business in Russia. AEB is well positioned and influential. It consists of crosssectoral committees (e. advice and business support for their ongoing activities. With over 500 members. briefings and round tables. research and marketentry support (to Russia and to UK). agribusiness. These members form the AEB General Assembly (GA). Support services comprise advice (including advice on legislation. key ministries. 141 . an office is to be established in St. The RBCC organizes market-scoping missions for individual companies (including market research. According to the interviewees. the weekly RBCC Observer Newsletter and the monthly members' magazine. investment conferences. The RBCC's Moscow office continues to be a valuable port of call for members seeking information. ex: specific market studies. the RBCC organizes regular trade missions to the UK for Russian member companies.g. 50% AEB members are large companies. 50% . the Russian Government asks for AEB opinion.SMEs. etc. surveys. which have business activities with and in the Russian Federation.). Association of European Business (AEB) The AEB is an independent non-commercial association funded by membership and sponsorship. RF CCI. energy efficiency.daily business activities. working in Russia's interests. RBCC has strong contacts and long-standing relations with Russian government. consultancy and services of a fee basis. as it represents foreign investment: 80% investments come to Russia from Europe. In addition to organising a series of high-quality business events for members throughout the year. As a bilateral organisation. reviews. publications and information support. AEB exists in other EU countries.
AEB offers the following support and services: lobbying Russian authorities to solve immediate business issues and influence future legislative change. stuff search. business networking through committee meetings and social events. trade missions and visits to the regions. statistical publications. N e t h e r l a n d s B u s i n e s s S u p p o r t O f f i c e ( N B S O ) . 90% are SMEs. accreditation of representative offices. The NBSO mission is to provide free support to Dutch SMEs looking for business opportunities in Yekaterinburg and willing to find trade 142 . training for AEB members. embassies and consulates) the AHKs officially represent the interests of Germany's industry and commerce in respect of political and administration authorities in their host countries. German Chamber Network Abroad (AHK) The AHKs are the most important partners abroad of the Federal German Ministry for Economics and Technology in terms of promotion of business in other countries. As a result. AHK in Russia helps German SMEs to make the first steps to the market on cost basis by providing advice. AHK is well positioned in Russia. offices in advanced Russia's regions. Many of them are industrial companies. other chambers. organisation of business trips and presentations. Ministry of Labour. AEB does not interact with Russian SME support infrastructure.e. AHK encourages networking. Ministry of Industry and Trade. is member of a number of EU associations. bulletins. AHK is influential in Russia. Together with Germany's missions abroad (i. consulting and help for participants in fairs. business briefings. AHK is the biggest business community. also companies providing services. AHK exists in other EU countries and is well represented globally. new contacts are developed. with EU Chambers. organizes in-house consultations with companies. disseminates promotional materials at Embassy receptions. providing marketing opportunities for all companies. AEB publishes an Annual Membership Directory with company descriptions and advertising opportunities. In Russia AEB cooperates with main ministries: Ministry of Economy. registration of Russian Ltd. AEB cooperates with the EU Delegation to Russia. They are increasingly active in the marketing of Germany as a business location for inte rested companies in the host country. market research. providing quality information through events. as a cost free inquiry service for simple inquiries. AHK members are grouped by sectors. Regional chambers organize events. AEB Newsletter and Website introduce new members to existing members. etc. information and services: search for addresses and business partners. chamber practice. Ministry of Natural Resources. AHKs support the market interests of German companies in Russia and provide services to local companies involved in bilateral business. companies. the problems and questions get solutions. with a well-developed global network. it is a regional office within a global network established by the Government of the Netherlands (the Ministries of Foreign Affairs and Economic Affairs) to support Dutch companies in their activities on the local market. President's Administration. round tables and publications. Ye k a t e ri n b u r g NBSO in Yekaterinburg exists since 2007. AHKs are customer oriented. ensures company visibility through events and publications. AHK has its headquarters in Moscow and regional offices. AHK has a strong home base. In Russia it comprises > 740 member companies.
by providing funding to start-ups and through venture 143 . UKTI offers advice and business support services: overseas market introduction services (OMIS). including the city of Yekaterinburg and Sverdlovsk oblast. E n t e r p r i s e I re l a n d Enterprise Ireland (EI) is the government organisation responsible for the development and growth of Irish enterprises in world markets. The main support mechanism is assisting SMEs using know-how of starting-up. The Dutch companies themselves approach the NBSO. Kurgan Oblast. contact lists. resolving problems with customs arrangements. it has strong long-existing linkages with influential Russian public agencies. Orenburg Oblast. provision of event venue for companies which do not have appropriate premises. performs market research for companies. matchmaking. U K E m b a s s y i n R u s s i a UK Trade & Investment (UKTI) works with UK-based businesses to ensure their success in international markets.partners in the Ural region. UKTI particularly encourages small innovative companies. UKTI has enough potential and resources to encourage more SMEs come to the Russian market and support them. The NBSO in Yekaterinburg provides advice and business support services: B2B assists in establishing contacts with local companies. EI supports sustainable economic growth. in high demand. key methods of doing business. programme arranging for individual companies. event management/hosting dinners and other support. advice on specific regions and regional markets. regional development and secure employment. sector reports. general opportunities. lobbying on behalf of individual companies in relevant ministries or influential local business associations. and encourage the best overseas companies to look to the UK as their global partner of choice. or companies in Yekaterinburg. a few are small companies. matching. ministries and business associations. provides advice and support to companies with presence in the UK – if they have an office and employees in the UK. market research tailored to the customer's request or needs. consultancy. market research/surveys. tradeshows. support. Udmurt Republic. U K T r a d e & I n v e s t m e n t ( U K TI ) . UK Embassy is well-established in Russia. assists in resolving problems with customs. innovate and win export sales on global markets. organizing meetings with relevant managers of local companies. and some are international. advice or mentoring in-market. EI works in partnership with Irish enterprises to help them start. some are currently freely available and contain an overview of the market. Regional coverage: Urals economic region: Republic of Bashkortostan. grow. events. particularly innovative and ICT SMEs (Skolkovo) and companies for the Sochi Olympics. on challenges for SMEs. most of them are mid-sized or large. characteristics of the market. UKTI. Sverdlovsk Oblast. UKTI in Russia. "Fixes" – setting up meetings for businesses. B2B. facilitates companies' contacts with business service providers and public institutions. publications. provides a variety of tailor made services and support to SMEs. trade missions. The most important and useful NBSO services. B2B. Perm Krai. trade missions. are: assistance in advice on customs regulations. The outcome of support provided by UKTI are contracts concluded with other well-established companies. more detailed sector reports. Chelyabinsk Oblast. financed by UK government. answers trade requests within two days.
individual itineraries. introductions to experts. access to contacts (from heads of government to end customers). expansion plans. export assistance . In Austria there are no specific SME support measures for Russia. Austrian companies specialised in export and international business relations use this platform to post business opportunities for potential foreign partners. trade missions. for start-ups. intermediation of business contacts between Austrian and local companies. Some clients come first to the EI office in Ireland. can be called "speeddating". Support and services offered to SMEs comprise: trade missions. market group visits. Enterprise Ireland is linked with other embassies. IE organizes International Market week in Dublin (>10 years). leads to potential partners (matchmaking). Companies engaged in Food and Drinks are assisted by another body – the Ministry of Agriculture. including number of deals. some – to Moscow office directly. Advantage Austria supports an official portal of the Austrian economy abroad which provides basic information about Russia. Support and services offered to SMEs comprise: dealing with inquiries of local companies concerning supplies from Austria. which is a networking event for potential coming companies. Advantage Austria participates in monthly meetings with other trade committees and commercial sections of embassies of EU Member States. based on its own surveys. buyers and potential customers. funding support . events. 144 . organization of trade fairs and events. provision of information about the local market. Cooperation with Russian ministries and the government is performed by means of written communication. except sectororiented initiatives in food/drinks. A d v a n t a g e A u s t ri a Advantage Austria is the official Austrian Foreign Trade Promotion Organisation. assistance with R&D collaboration. number of companies. forestry. contacts with private networks. and R&D business plans. an official representative of the Austrian Federal Economic Chamber in Moscow. EI produces its own statistics. official letters. EI is also a commercial sector of the e mbassy. promotion of Irish products in Russia. Advantage Austria has an advantage: they start engines to find partners in Russia. local market information and the facilities of our international office network. The main data about these international initiatives and reports for member companies are available on the Web-site. which is outside Enterprise Ireland. market research (which is not available in Russia).a range of supports.including the provision of in-market services.capital mechanism. promotion and PR for Austrian companies and products. automobile. Advantage Austria also provides comprehensive information about the Austrian market and the services available for specific countries.
not from EU budget. consulting. standardization. checking reliability of local potential partners (SMEs): years in operation.. investors and other parties wishing to trade. non-governmental business support institution and independent professional business consultancy established in 1995 under EU TACIS Programme and with the assistance of the Government of St. identifying actual costs of doing business. The Centre staff attends seminars and workshops organized by Customs Service. Khakassiya. St. 75% of its assistance is provided to Russian companies. turnover. availability and quality of a Web-site. . business matching. market assessment.-Petersburg. The portal content is updated regularly. assisting in preparing for exhibitions. Paris. St . Some regional CCIs are very strong and supportive in business matching and information support about local markets: CCI of Tomsk. following EU standards. E n t e r p r i s e E u r o p e N e t w o rk p a r t n e r . invest and start business in St. the RF Chamber of Commerce. using own database of Russian companies.P e te r s bu r g ( S t . arranging invitations to businessmen for getting visas. but it is not funded by EU. 145 . outsource. EU and Russian consulting agencies. All the Centre services to SMEs are free. marketing (e. Petersburg (Russia) for international SMEs . B2B. EICC stakeholders are Moscow Government. preparing business profiles of companies – potential partners.g. finding interpreters. EICC has 40 branches in Russia 's regions operating on the basis of local business support organizations. including processing requests. FAQs on the portal on establishing and running a business. It was created as a Russian Partner of the Enterprise Europe Network. business matching.-Petersburg (Foundation) is a not-forprofit. in automotive industry).E n t e r p r i s e E u r o p e N e t w o rk p a r t n e r ( E u r o I n f o Co r r e s p o n d e n c e C e n t r e s network) EuroInfoCorrespondence Centre (EICC) in Moscow exists for 3 years.to EU companies. 25% .P e te r s b u r g Foundation for SME Development) The Enterprise Europe Network partner. counselling. . therefore. including legal advice. cooperate with the Ministry of Economy. OPORa. The foundation also supports Russian SMEs entering the EU market. It is an entry point to St. they provide the funding. advice. B2B. The Centre facilitates business matching both to Russian SMEs interested in entering western markets and vice versa. Support and services offered to EU SMEs comprise: market research. funded from local or regional budgets. The Foundation-Enterprise Europe Network partner is supported from the federal and regional budget. The Foundation is an Enterprise Europe Network partner which supports the "Doing business" Web-portal in St. and Yaroslavl. Its mission is to provide high quality consulting. Kaluga.-Petersburg. federal bodies (the Ministry of Economy). The most useful service is search for partners (B2B). the Russian Union of Industrialists and Entrepreneurs. benchmarking. training and information services to Russian exportoriented SMEs and western SMEs operating in North-West Russia. providing information about large and important exhibitions in Russia. CCI of France. advice on certification.-Petersburg. Support and services offered to EU SMEs comprise: business matching. customs procedures. assistance in certification. liaison with the local government. (in English as well).
visits or SME researches conducting surveys. targeted help and advice. accounting. taxation) assistance and advice in certification. customs. commercial counsellors of embassies of EU cou ntries. up-to-date and specific reliable information about business environment. even with the intermediation of the local chambers. Ten SMEs were contacted via the Enterprise Europe Network partner. law. including projects funded by EU. information about Russia and its regions. they were scared to share any data about their company. three of them insisted on their anony mity. therefore. The Foundation had gained many years of experience in implementing international projects. b practical assistance. Ireland. recruitment of local staff training. statistics in English – both sector. In Russia there is no existing institution or facility to find partners. advertising and promotion of products and services professional legal advice on taxation. in Russia an overwhelming majority of SMEs have had a lot of trouble from redundant public inspections. but did not keep their promise to come. Germany. Eventually. particularly in the regions. about fairs and exhibitions. business community. and Enterprise Europe Network partners. up-to-date databases of companies in English. IPR 146 . but they refused to meet. as well as local governments in the NorthWest Russia (about 10 regions).7 Policy support used by EU SMEs In Russia there were difficulties in organizing interviews with companies. was provided by business support providers . support on migration issues matchmaking. private consultants.g. workshops organized by some embassies (on customs. with an exception of SMEs coming from UK. Support in local orientation networking events support in marketing. institutions and Enterprise Europe Network partners.The Enterprise Europe Network partner-Foundation has very close contacts with the local city and oblast government. 6. in English visa support. universities and business service providers. In fact. four SMEs were interviewed. c d e f g h i j k up-to-date information about legislative regulations. France.and product-specific statistics. B2B.the chambers of commerce. Some said they were too busy or refused to meet because they did not see any benefit in it. finding an intermediary with strong contacts with the local business community and the local government. Most of the information of the support used by SMEs. as they said. specific markets. The support and services which are used by EU SMEs and which are in most demand are: a information support in English: e. market research reports. because. local foreign trade offices of EU countries. Some SMEs confirmed the appointments. Judging by the feedback from the business service providers. not so many SMEs are aware about available support in their home countries or in Russia. contacts to potential partners and business intermediaries. that is why they usually refuse to talk to people they do not know. and Austria.
8 A What support is missing? First and foremost. only commercial departments of embassies and the EU-Delegation regularly meet on a monthly basis. provide access to reliable and consistent statistics (in English). B It is highly desirable to make the SME support systemic. while there is no coordination mechanism for other agents and institutions. Regular meetings. business associations. Such a portal could. including information support. to share experiences. but these data need to be refined and double-checked when companies come to Russia. serve as a coordination mechanism for the key players providing support to EU SMEs. knowledge and practices sharing. The portal should provide a forum for discussion or helpdesk. lobbying of SME policy initiatives should be supported by targeted practical assistance to SMEs. private consultants. that is. regularly updated and professionally translated from Russian into Western languages. on regulatory framework markets (in English).l on-line support. if available from business service providers Some companies get basic information support and initial contacts in their home countries. Currently most of the information about Russia. such as chambers. 147 . support the FAQs service. such as one-day workshops bringing together opposite members (other chambers and SME support organisations operating in Russia). 6. to some extent. The existing support programmes or measures offered by individual countries are not balanced: SMEs originating from more developed countries with a more efficient support system have better chances to get support and advice. Such information resource could be organized as a large Web-portal about Russia's market. business climate and business opportunities is scattered. providing essential up-to-date information in English and several Western languages. publish and disseminate relevant news and events announcements. could be helpful. According to interviewees. development and implementation of a systemic approach to SME support in Russia should be done by the EU. Better coordination is needed between the existing SME support organizations: today. clear. C Poor on-line services. including affordable and consistent information on trade and investment. advice. effective and efficient coordination of support to EU SMEs in Russia is missing. lack of a high-quality comprehensive information resource in English for EU SMEs as well as for business support providers. Russian market. support a market research library. allow sharing advice and knowledge. According to interviewees. relevant Russian government and efficient national business support organisations. training. All the information should be easy to access. covering all the essential aspects of doing business. coordination of support should be organized by the European Commission in collaboration with individual countries. trade offices. while SMEs coming from other countries have very limited chances and are at a disadvantage.
Business matching programmes could be bilateral. Currently the lobbying is done by the European Commission. F Lack of programmes for SMEs coming to Russia under the auspices of large companies. Sugge stions: 148 . embassies. Concrete help should include practical assistance. There is shortage of concrete help to specific SMEs. This is the most important kind of support.9 1 Which role could the EU play in stimulating EU SMEs to do more business in Russia? Intensify political lobbying of EU SMEs interests and SME support policy This activity was strongly supported by all workshop participants and interviewees. There should be different support programmes for SMEs-investors and SMEsdistributors. Or. Specific assistance programmes should envisage subsidizing. Some interviewees recommended that the best way is to use the money allocated for specific support in the home country. starting and operating a business. selecting market niches. D Lack of targeted support programmes for EU SMEs. business visits or fairs in the regions. at least partially. Currently business matching is done on a case-by-case basis and requires a lot of efforts and resources of the key SME support players.This kind of support should be organized by the EU in collaboration with individual countries and Russia. Independent evaluation mechanisms should be organized by individual countries and the EU. These kinds of support could be organized by the EU in collaboration with individual countries and Russia. 6. while others recommended the EU level. market entry and in establishing trust with local government and business community (in attractive regions). not in the EU. Lack of support/training programmes for SMEs in local orientation. AEB and other business associations. it should be centred around training. It is also expensive for SMEs. subsidizing these expenses to the SME support organisations which will organize these events for free. SMEs' costs to cover participation on trade missions. depending on the big companies. alternatively. Such programmes could be organized at national or multinational level. E Lack of effective business matching programmes. G Lack of appraisal and/or evaluation mechanisms of the efficiency and effectiveness of implementation of current and future national and EU programmes for SME support in Russia. the EC Delegation in Russia. advice on analyzing market opportunities. Bilateral matchmaking programmes could be preceded by pilot programmes with the involvement of relevant interested regional governments. chambers.
making banking and financial system transparent. 149 .1 The lobbying should be long-term and at all levels: EU . stimulating and supporting innovation and competitiveness by launching new programmes for competitiveness and innovation. Task Force) could conduct quarterly working meetings. In between the annual conference the Coordination Unit (Facility. Organise annual conferences for all the SME support network members in order to share practices and develop policies for future.) and vice versa. market studies. Such information exchange will be organized via an information sharing and dissemination system (a dedicated server2) which allows regional network members to upload/download the data). significant simplification of v isa arrangements or visa cancelling (on the mutual EU-Russia basis). chambers of commerce. practices.1. local foreign trade offices of EU countries. having a Web-portal 1 and join the Coordination Unit with the existing Moscow and regional keypayers (see above) into a network. facilitating certification requirements and procedures and reducing cert ification costs.Russia. EU-member states embassies. reducing customs fees and tariffs. 1 2 On Web portal see below. 2. simplification of customs regulations and making them more transparent. lobbying protecting SMEs interests in connection with WTO accession how to decrease the number of arbitrary inspections at EU SMEs. business associations. See also below. as well as Enterprise Europe Network partners in Russia. etc. Create an EU SME support network for SMEs from all EU Member States. This activity was supported by all workshop participants. without SME support modernization is likely to fail. 1. promoting greater transparency and efficiency in court system and law enforcement.2 The lobbying should cover all the practical issues. Create a central hub in Moscow – a Coordination Unit or Coordin ation Facility or a Task Force for EU SME Support. harmonization of Russia's technical regulations with EU standards. chambers of commerce – their Russian counterparts and executive authorities. lobbying SME support as an essential key to modernization in Russia. stabilizing taxation legislation and requirements. 2 Expand coordination between existing key players (EU Delegation. agreeing with Russia about certain international standards in business environment and regulations. factual information. EU Member States –Russia.1 Option 1. commercial counsellors of embassies of EU countries) and engage existing proactive private consultants and business service providers. including: − − − − − − − − − − − − − First and foremost: encouraging Russian public executive bodies to fulfil the declared SME support initiatives. contacts. Regional network members will provide the Coordination Unit with their information (statistics.
which for such a large country as Russia seems to be indispensable. v. The SME Centre may facilitate development and implementation of future EU-Russia SME support initiatives and programmes under 150 . co-organiser of networking events. national small business portals in EU Member States). Ensure that the information in the Web-site is up-to-date and reliable. iii. Make the Centre visible. knowledge and information dissemination resource for EU SMEs and key players of EU SMEs support (see 1. a key to the Russia's regions. 2.1. a HQ for other regions. Establishment of an SME centre as a coordination hub is essential for creating a network of EU SME support organisations and agents. Same as above. sharing knowledge. FAQs. dissemination of market research reports. success stories. but use the AEB SME Committee as the basis for creating the Coordination Unit. Setting up an EU SME Centre. vii. ii. European Small Business Portal. practices. a lobbying agent. events. above). in Moscow. iii. experts with a good knowledge of local environment. promotion of SMEs products and services. thus allowing the existing key players concentrate on more specific support to EU SMEs. contacts of key players in business community and local governments. Link it (via Internet links) to the major relevant EU SME support Web-portals (e. The added value of creating SME support network will be coordination of activities of network members. a resource of information using which EU and Russian SMEs can find each other.g. Pros and cons: Pros: i. case studies. The Centre will ensure provision of fundamental information. Services provided to SMEs from all EU Member States: general and sector/market-specific information about Russia and regions. facilitating B2B and matchmaking. Ensure that the Coordination Unit and network is well advertised and wellknown (visible) in EU Member States. with a database of useful contacts of other key players and companies. Role of the Centre: i. vi. Create an SME Centre on the basis of the existing institution: business association (AEB) or a private support business for businesses − Create an SME Support Web-site – a helpdesk. a knowledge resource.2 Option 2. an institutional unit. a coordinating unit (see above). initial steps in B2B &matchmaking. a helpdesk for SU SMEs. Options: a b Establish an absolutely new SME Centre. support and advice. advice on solutions of typical problems.Invite Russian Government and embassies of the new EU Member States to such annual conferences. ii. This issue had about 50-50% pros and contras among the workshop participants. iv. Terms: the services should be free or for affordable fee. Link the Web-site to the existing stakeholders. Link the Coordination Unit Web-portal with the Market Access Database and engage the Market Access Teams in the network. synergy and avoiding duplication of efforts. Engage business consultants.
SME data dissemination system by subscription. geographical names or a map search tool. in English and/or other European languages. − generation (formation and downloading) of reference-books and guides from the knowledge library and databases.) and a FAQ service. retrieval and dissemination of statistical. The server will also function as the project information hub and a knowledge database. the EU should take into account the risks and potential conflict of interest. should be allowed to go for tender.. fairs. SME support organizations. a legal entity. contacts. references. Funding: According to interviewees. without constant EU-funding such a centre will not survive (similar to business support centres established in Russia formerly under EU or USAID programmes). − creation and support of a discussion forum for EU SMEs. as well as on the quality and efficiency of the provided support. employing full-time experienced highly qualified bilingual staff.the new EU-Russia Cooperation Agreement and in view of the anticipated WTO accession. − events calendar (announcements and reports of exhibitions. accounting. etc. experts on taxation. their Russian partners. legislative and taxation-related documents. certification. marketing. trade missions. − feedback from SMEs and business support organization on their needs. including lawyers. How to create the Centre: The EU SME Support Centre could be created under a special EU project or a series of projects. The added value of creating an SME support Centre will be coordination of activities of network members. an on-line help-desk. conferences). 3 SME Support Web-portal The Information Resource (Web-portal) in English and/or other European languages could be based on a dedicated Internet-server which will ensure information dissemination and knowledge exchange for EU SMEs and key SME support agents. Or. When planning the establishment of such a centre. customs. including market research reports in English and/or other European languages (a library of market reports. including associations like AEB. analytical materials. − storage and dissemination of information about business climate. or as an institution. The Centre should also support an SME support Web-portal (see below). − e-mail-subscription to news and events. including laws. synergy and avoiding duplication of efforts. Or that it may become a bureaucratic institution. The information resource will ensure: − storage. that strengthening an existing institution may strengthen the state behind it. creation of a protected member area with access via login/password (as needed). Cons: there were concerns that a new centre will distort the market and collide with the private sector. 151 . Currently existing key players. migration. − search for SME support data/contacts and services using keywords. guides.
11.13.00 . EIM Introduction of participants Introduction to the study Preliminary findings of the study Opportunities for the Internationalisation of EU SMEs by Rob van der Horst Questions for clarification Coffee break Presentation by Mr.15 . See for instance PUM: https://www. eventually.45 09. Japan? − An SME IPR Helpdesk like the one in China? − What about extension of the Market Access Database and strengthening the Market Access Teams? 152 .09.10. 6 Programmes for sending out managers. about their Following the presentation of the preliminary findings of the study.09.40 . 6. Japan? − the Executive Training Programme Korea. Alberto de Paoli. What should be done to increase the number of EU SMEs doing business in Russia? By whom: individual Member States. role to support EU businesses Discussion: How to facilitate access to the Russian market? Concluding remarks Gruppo SISI.00 11. 2.30 10.nl/ The development and implementation of these initiatives and programmes will create a more favourable business climate for EU SMEs. Envisage subsidising high travel costs for SMEs participating in business visits.11.15 11.10 Workshop agenda 09. Or subsidize relevant costs to the key players which organize these events.35 09.30 .40 Registration.10. coffee Welcome by Rob van der Horst. 3.00 . trade missions.35 .30 . 5 Organizing effective business matching programmes.pum. encourage more SMEs to operate on the Russian market. which were of much interest to the workshop participants.40 10.13. in home countries. especially to the regions.45 .30 09. and/or private consultants? How could support be improved? The discussion points were as follows: − Is there a need for more coordination between services offered by Member States and services offered by the European Commission? − What could be the role of the EIC's of the Enterprise Europe Network? − Could the assistance be improved by introducing specific programmes like: − the Gateway Programme Korea.00 10.09.10. bridge the gaps in the existing arrangement of EU SME support.30 . European Commission.00 .30 13.4 Organizing targeted support programmes for EU SMEs centred around training and advice. the agenda included the discussion of key issues: 1. reduce the entry costs for EU SMEs coming to the Russian market and.
The outcomes of the discussion are incorporated into the suggestions outlined in parts 8 and 9 of the report.11 Major conclusions The interviews and workshop demonstrated a variety of opinions concerning improvement of the EU SME support in Russia. Opinions about the idea of setting up an SME Centre differed: some participants supported this idea. Specific recommendations on these issues are incorporated into parts 8 and 9 of the report.− What about setting up an EU SME Centre? − How to service businesses from ('new') EU Member States that don't have a commercial counsellor or a foreign trade office in Russia? A need for more coordination between the key players providing support to EU SMEs and for more intensive lobbying of EU SMEs' interests with Russian government were recognized by the workshop participants. creating an enabling framework. The Russian government should be part of the process of improving business climate for SMEs. the need to improve coordination among the key players providing support to SMEs. The lobbying should be aimed at creation of conditions for SMEs in Russia which would be similar to those in EU: changing visa regime. With an account of the opinion of interviewees from the regions who were unable to attend the workshop. anyway. some activities were practically unanimously supported by the interviewees and workshop participants: the need to intensify lobbying of SMEs interests at all levels. 6. If created. 153 . stimulating electronic certification. the need to improve information support to EU SMEs and the need to improve specific support to concrete companies. However. such a Centre should not collide with the private sector. or become a bureaucratic organisation. facilitating cross-border transfer. the share of pros and cons is about 50-50%. while others were against it. harmonizing certification requirements and regulations.
Alberto de Paoli Mr. Alexander Kopasov Delegation of the European Union to Russia. Stephen Dalziel Mr. Trade and Agriculture section Project Officer. Events Director Board Chairman Mr. Yekaterinburg Partner Gruppo SISI. Moscow Trade office of an EU Member State Trade office of an EU Member State Netherlands Business Support Office (NBSO). Mercedes Bonnet Ms. Anna Brzozowska Mr. Moscow Mr. Moscow Austrian Embassy. Kazakhstan and CIS Trade Affairs Manager Trade Affairs Manager. Moscow Alinga Consulting Group. Mark Orlosky 154 .Annex I List of interviewees Name Dr. Moscow Enterprise Ireland's overseas office in Russia. Moscow Delegation of the European Union to Russia Delegation of the European Union to Russia Position Chief Executive Officer Adviser on EU Affairs. Marie Rondelez Name of Organization Association of European Business (AEB). Moscow Association of European Business (AEB). Mike Hogan Ms. RBCC. Frank Schauff Ms. Moscow German Chamber Network Abroad (AHK). Moscow German Chamber Network Abroad (AHK). Chris Gilbert Russia Director Ms. Commercial Section. Chet Bowling Mr. RBCC. Michael Harms Mr. Cornelia ReibachStambolija Requested anonymity Requested anonymity Mr. Moscow Alinga Consulting Group. Moscow Russo-British Chamber of Commerce. EU-Russian Cooperation Programme Executive Director Mr. Ukraine. London Russo-British Chamber of Commerce. Alexander Markus Chief Operation Officer Director Russia. Evgeny Gaidyshev Commercial Attaché Deputy Representative Partner Managing Partner Chief Operating Officer Mr. Economics.
Name Ms. Julia Seina Ms. Antonina Mikhailova
Name of Organization ELSEAGENCY, Moscow "National Electronics" Interregional Association of SMEs, Zelenograd EuroInfoCentre, Partner Enterprise Europe Network, Moscow EuroInfoCentre, Partner Enterprise Europe Networkoscow ICU (Innovative Community Unterschleissheim) Representation Office Rossia/Zelenograd Angtrade, Zelenograd Association of Kuban Exporters, Krasnodar office CMS, Moscow office CMS, Moscow office SME, Moscow Enterprise Europe Network partner (partner, St.-Petersburg office St.-Petersburg Foundation for SME Development) SME in Russia SME in Russia
Position Managing Partner President
Ms. Olga Ermakova
Ms. Julia Afanasieva
Mr. Wolodja Geogriev
Mr. Vladimir Travnitsky Mr. Roman Onishchenko Mr. Jean-François Marquaire Mr. Leonid Zubarev Requested anonymity Mr. Maxim Balanev
General Director General Director Managing Partner Partner Business Development Manager Deputy Director
Requested anonymity Requested anonymity
Managing Partner PR Manager
List of workshop participants
The Workshop was held February 8, at Swissotel Red Hills, Moscow Name Mr. Edward Tersmette Ms. Mercedes Bonnet Position Policy Officer - Russia Trade and Economic Section Chief Executive Officer Adviser on EU Affairs, Events Director Russia Director Commercial Attaché Development Advisory Partner Managing Partner Chief Operating Officer Director of the company Lighthouse Marketing Executive President Director Name of Organization DG Enterprise, European Commission Trade and Economic Section Delegation of the European Union to Russia Association of European Businesses Association of European Businesses
Dr. Frank Schauff Ms. Marie Rondelez
Mr. Chris Gilbert Ms. Cornelia ReibachStambolija Mr.Franz Esercizio Mr. Alberto de Paoli Mr. Chet Bowling Mr. Mark Orlosky Mr. Jeroen Ketting
Russo-British Chamber of Commerce, RBCC Austrian Embassy, Commercial Section GRUPPO SISI/Finanza Futuro Legal Partner Gruppo SISI, Moscow Alinga Consulting Group, Moscow Alinga Consulting Group Association of European Businesses AEB Enterprise Ireland's overseas office in Russia, Moscow National Electronics Interregional Association ICU (Innovative Community Unterschleissheim) Representation Office Rossia/Zelenograd EuroInfoCentre, Moscow EuroInfoCentre, Moscow RLC (Russian Linguistic Centre), Moscow Russian SME Resource Centre, Country Partner of the project Russian SME Resource Centre, Country Partner of the project EIM Business & Policy Research
Ms. Olesya Chaplinska Ms. Antonina Mikhailova Mr. Wolodja Geogriev
Ms. Olga Ermakova Ms. Julia Afanasieva Ms. Natalia Sheina
Director Deputy Director Director Russian Studies Country Partner Project coordinator Country Coordinator Russia of the Project
Ms. Irina Alexeeva Ms. Elena Lapshina Mr. Rob van der Horst
Annex III List of acronyms
AHK AEB CIS CCI EI EICC ETRI EU NBSO IP ICT OPORa RBCC Rosstat SMEs UKTI WTO Auslandshandelskammern, Chamber of Commerce Abroad, Germany Association of European Business Community of Independent States Chamber of Commerce and Industry Enterprise Ireland EuroInfoCorrespondence Centre Electronics and Telecommunications Research Institute (South Korea) European Union Netherlands Business Support Office Intellectual Property Information and Communication Technologies All-Russian Non-Governmental Organisation of Small and Medium Businesses Russo-British Chamber of Commerce Russian Federal Statistical Service Small and Medium-size Enterprises UK Trade & Investment World Trade Organization
Profile of South Korea
7.1.1 Key data
1. 2. 3. Number of inhabitants Size (square kilometres) GDP (at official exchange rate in 2010 USD) and GDP/cap (PPP, in 2010 USD) 4. Total imports and share of EU in total imports $417.9 billion (2010 est.) rank 10 in the world Goods: machinery, electronics and ele ctronic equipment, oil, steel, transport equip ment, organic chemicals, plastics Partners: China 16.8%, Japan 15.3%, US 9%, Saudi Arabia 6.1%, Australia 4.6% (2009 est.) 6. Total exports and share of EU in total exports $466.3 billion (2010 est.); rank 7 in the world Goods: se miconductors, wireless telecommunications equip ment, motor vehicle s, computers, steel, ships, petroche micals Partners: China 23.2%, US 10.1%, Japan 5.8%, Hong Kong 5.3% (2009 e st.)
Source: World fact book CIA (//www.cia.gov/library/publications/the-world-factbook/geos/ks.html; 28-5-11)
48,754,657 (July 2011 est.); rank 26 in the world 99,720 sq. km; rank 108 in the world $986.3 billion (2010 est.), $30,200 (2010 est.); rank 44 in the world
7.1.2 Economy 1 Since the 1960s, South Korea has achieved an incredible record of growth and global integration to become a high-tech industrialized economy. Four decades ago, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion dollar club of world economies, and currently is among the world's 20 largest economies. Initially, a system of close government and business ties, including directed credit and import restrictions, made this success possible. The government promoted the import of raw materials and technology at the expense of consumer goods, and encouraged savings and investment over consumption. The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South Korea's development model including high debt/equity ratios and massive short-term foreign borrowing. GDP plunged by 6.9% in 1998, and then recovered by 9% in 1999-2000. South Korea adopted numerous economic reforms following the crisis, including greater openness to foreign investment and imports. Growth moderated to about 4-5% annually between 2003 and 2007. With the global economic downturn in late 2008, South Korean GDP growth
World fact book CIA (//www.cia.gov/library/publications/the-world-factbook/geos/ks.html; 28-511)
For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research. EU27’s export to South Korea compared to EU27’s total exports 200 180 160 140 2000 = index 100 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to S. In the third quarter of 2009. The South Korean economy's long term challenges include a rapidly aging population.1 shows that the EU27 export volume for SME and for non SME sectors shows broadly the same development for South Korea as for the world as a whole but SME exports to South Korea are doing better than non SME exports.slowed to 0. De nmark. in large part due to export growth. and growth exceeded 6% in 2010. Figure 7.4 Findings from the surveys South Korea is among the 7 key targets markets the country with the lowest share of internationalised EU SMEs active (5% in period 2007-2009. and an expansionary fiscal policy. the economy began to recover. Korea SME total export Non-SME total export Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”. 7. Korea Non-SME export to S. low interest rates. Figure 7. 3 F i n d i n g s o f t h e t r a d e a n a l y si s Figure 7.1.1 Development in exports 2000-2010 (value). 160 . and overdependence on manufacturing exports to drive economic growth. 1 . inflexible labour market.2). 7 .2% in 2009.
N=6649).2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% 2% 4% 6% 8% 10% 12% 14% South Korea Russia China Ukraine Japan Brazil India Source: Survey 2009-2010. 161 . lack of finance and especially payment risks score much lower than average. Knowledge of foreign languages is nearly twice as often noted.3)./serv. percentage of SMEs Conformity of prod. The barriers seen for South Korea show a different pattern that the barriers seen for the seven key target markets on average (Figure 7. Opportunities Internationalisation SMEs. bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% 40% South Korea Average 7 key markets Source: Survey 2009-2010. whereas lack of adequate support. Especially for provision of information differences are large as shown in Figure 7. Opportunities Internationalisation SMEs.4. SME expects support of all different kinds less often to be effective than on average.Figure 7.3 Major barriers for South Korea. EIM/GDCC (EU27. EIM/GDCC (EU27. N=6649). For South Korea. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. Figure 7.
EIM/GDCC (EU27. N=6649). ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% 30% 40% 50% 60% 70% S. 162 .4 Anticipated effect of possible public support measures for South Korea. Opportunities Internationalisation SMEs.Figure 7. Korea Average 7 key target markets Source: Survey 2009-2010. percentage of SMEs expecting the instrument to be effective or very effective.
9 123 7.932.007.581.51 26.852 86.6 938 31.448.691.2 Trade with and investment from the European Union 7 .240 18.6 2.442 50.2 626 18.41 26.738 37.4 129 3.182 66.2 shows that about 50% of FDI originates from the EU.297 46.067.2 939 32. 1 I m p o r t .1 620 14.462.1 393 21.3 3.68 27.081.821 150.42 24.767 24.2 3. 2000-2010 Unit: $'000 2000 Total IM Total EX EU IM EU EX EU IM (%) EU EX (%) 160.539 56.486 12.912 423.289 Annual 1.6 2.7.6 2.489.1 Trade between South Korea and the EU.9 539 12.743 51.687 253.464.28 19.018 172.443 36.711 2009 1Q 358 21.8 5.374 39.339 54.035 18.832 3Q 254 8.238.91 26.2 Change in Foreign Direct Investment inflow by origin.817.3 590 32.95 21.631 20.337.221 35.526 19.677 2Q 247 8.510 29.484 163 .48 2007 356.88 2002 152.632 325.480.126.80 2004 224.7 1.458 21." Korea Trade Statistics Seoul: Korea.13 2009 323.481.470.4 1. Notes: IM=Import.635.845.264 78.3 1.465 Annual 1.874 4Q 381 8. Table 7.439.9 484 14. 2008-2009 Unit: $mil('000.178.672 44.086 69.62 24.3 1.561 61.566.382. EX=Export.328 75.3 1.848 56.040 101.218.750 79.430.710 48.374 4Q 741 21.373 19.53 24.1 2.17 2008 435.621 22. EU IM=Imports from the EU.506 68.3 661 39.844.423 12. Table 7.264 284. EU EX= Exports to the EU.1 2.533.196.082 19.265 42.733 371.42 25.970 17.430 82.749 64.257 17.062.97 24.3 517 17.7 1.1 11.967 3Q 141 4.826.90 2005 261.737 422.716 2Q 240 13.097.123 62.466 97.4 2.328 11.58 2001 141.5 4.4 11.4 609 33.878.820.153 162.954.7 252 9.649 41.4 535 31.740. e x p o rt a n d F D I In Table 7. 2 .267.871 42.9 1934 16.8 239 8.2 1.998 19.806.273.71 2010 (01-11) 385.521 363.418.084.657 193.423.144 28.557. Table 7.3 1.58 2003 178.1 data about import from and export to the EU are presented for the period 2000-2010.528 32.7 2.49 Source: Korea International Trade Association (2010) "Export and Import by Country.928 18.2 6.274.7 472 17.94 2006 Total IM Total EX EU IM EU EX EU IM (%) EU EX (%) 309.000) 2008 1Q USA (%) Japan (%) EU (%) Others (%) Total 453 16.214.
498 4.9 74.500 cc 5 6 271121 880240 Natural gas in gaseous state Aeroplanes and other powered aircraft of an of an unladen weight exceeding 15. such as medical and surgical instruments as well as shirts. The agreement is the second largest free trade agreement. machineries. etc. 2 .352 181.976.757. Press Release.500 cc but not exceeding 2.6 29. 2008-2009.2 EU-KOR FTA The EU and South Korea agreed on the creation of a free trade area on goods. It will provide duty free access to the Korean market for European goods and services and introduces important clauses on the respect of intellectual property rights.669.729 19. crude 2 300490 Other medicaments consisting of mixed or unmixed products 3 271019 Medium oils and preparations.406.Source: The Government of Korea (2010) "Trend of Foreign Direct Investment Inflow by R egion.6 77.842.5 28.880.981.644 98.312 13.406. Table 7. However. 16 January 2010. of a cylinder capacity exceeding 1. the Top 50 EU export also includes a number of traditional SME products.8 24.535.944 17. of petroleum or bituminous minerals 4 870332 Motor cars and other motor vehicles principally designed for the transport of persons.094.2 Total Import from the EU (1-50 only): 1 270900 Petroleum oils and oils obtained from bituminous minerals.069 -23.619 -8 22.454 -32. plastic materials.9 54.845. Code EU Export to South Korea Description of Goods Amount 2009 Change -20. regulatory issues as well as on sensitive social and environmental matters. motor vehicles and parts.209 -9.925.4 39. 3 O r i e n t at i o n o f E U e x p o r t t o S o u t h K o r e a The EU export to South Korea includes mainly petroleum products. 7 .100. etc.910.830 25.9 2010 (Jan-Sep) Amount 2. and establishment and associated rules on 06 October 2010.865 -12.133.7 37.3 Seq.853.7 -39.673 17. Ministry of Knowledge Eco nomy.3).306.5 48.544 37.015 Change 18.278.816 -39 29.436 0. services.2.396. The FTA is left only with ratification of the Parliament/National Assembly in the EU and South Korea.942 -3.1 75.8 33.635.991 6.6 164 . 7. second only to the North American Free Trade Agreement..000 kg 7 847130 Portable automatic dataprocessing machines 8 27SSS3 Confidential trade of chapter 27and SITC group 3 9 851712 Telephones for cellular networks or for other 3.3 63.881. The Korea FTA is one of the most ambitious and complete commercial deals ever negotiated by the EU.600. in general.933 181.3 23. not SME products (Table 7. which are.3 44.
798 45.792 27.611 -26.431.9 18.880.907.050.227 -2.880.7 13.2 11.206 -5. including switching and routing apparatus 20 844399 Other parts and accessories of printing machinery 21 852872 Other monitors and projectors.886 -12.788 7.059.424.446 26.3 20.262 -25.674 23.5 14.973 21.821.108.5 11.4 Total Import from the EU (1-50 only): wireless networks 10 854140 Photosensitive semiconductor devices 11 12 271011 870322 Light oils and preparations Motor cars and other motor vehicles principally designed for the transport of persons.9 -5.467.4 23.3 7.213 8.333 17.370.814 -6.667 -21.4 13.535.397.942 -1.452.7 21.759 31.112 125.6 14. motor vehicles 17 880330 Other parts of aeroplanes or helicopters 18 300210 Antisera and other blood fractions and modified immunological products 19 851762 Machines for the reception.492. Code Description of Goods Amount 2009 Change -20.2 165 .500 cc 15 847330 Parts and accessories of automatic data-processing machines 16 870899 Parts and accessories of tractors.934.7 22.548 30.000 cc but not exceeding 1.543.5 22. with spark-ignition internal combustion reciprocating piston engine.190.623 -2.172 22 13.763 16.352 16.236. not incorporating television reception apparatus 22 852990 Parts suitable for use solely or principally with the television.1 15.505 35.676.Seq.5 12.487.306.492.6 11.276.842 -21.800.343.4 15. images or other data.600 119. radio and radar apparatus 23 870829 Parts and accessories of tractors and motor vehicles 24 84MMM0 Trade broken down at chapter level only 25 890190 Other vessels for the transport of goods and other vessels for the transport of both persons and goods 26 271111 Natural gas.853.7 17.809.5 18.6 15.355 -7.600.789 6.081 -28.9 21.933 Change 18.6 16. liquefied 3.091 -25.653.214 15 16.969.7 2010 (Jan-Sep) Amount 2.8 12.026.8 14. and of a cylinder capacity exceeding 1.531. conversion and transmission or regeneration of voice.4 20.7 20.218.
919.799 -25.183 9.7 -12.7 10.098. chemical products and preparations of the chemical or allied industries 39 870333 Motor cars and other motor vehicles principally designed for the transport of persons.170 -13.3 8.805 -39.299 -28.1 8.498 18.335 30.7 8.933 11.411.2 11.244 10.2 8.600.821.474.901 -26.771.1 39.480 -25.831.739 -23 -11.813.1 Total Import from the EU (1-50 only): 27 854231 Electronic integrated circuits.398.2 2010 (Jan-Sep) Amount 2.316.5 21 6.359 10.092. motor vehicles for the transport of persons and goods 44 840999 Parts suitable for use solely or principally with spark-ignition reciprocating or rotary internal 3.8 11.809 -33.2 12. dental or veterinary sciences 38 382490 Other prepared binders for foundry molds or cores.471 10.213.392 -9.014 11.836 63.260.168.1 2.306.974.011.140.500 cc 40 870331 Motor cars and other motor vehicles principally designed for the transport of persons.598 14 12.535.438.239 0.430 -13.998 18.796.2 8. surgical.292.502.785 29.499.658.872 27.7 -11.6 8.Seq.4 9.846.9 166 .4 10.5 10.353.438. Code Description of Goods Amount 2009 Change -20.961 Change 18.789 -11.7 9.7 4.5 9.4 30.140 9.951.2 9.810.9 10.299.480 12.795.7 10.515 -2.957.055 13. other parts thereof 34 401110 New pneumatic tires.880.300.3 -45. not exceeding 5 metric tonnes 31 32 270112 85MMM0 Bituminous coal Trade broken down at chapter level only 33 854239 Electronic integrated circuits.595.807 9.109 16.341.533 16.4 9.098 22. of a cylinder capacity exceeding 2.7 7. of rubber of a kind used on motor cars 35 36 37 851770 392690 901890 Parts of telephone sets Other articles of plastics Other instruments and appliances used in medical.8 7.216.1 9.894 4.3 10.156 10.951 13.500 cc 41 841191 Parts of turbo-jets or turbopropellers 42 847150 Processing units for automatic data processing machines 43 870840 Gear boxes for tractors.3 7. of a cylinder capacity not exceeding 1. parts thereof: processors and controllers 28 847170 Storage units for digital automatic data-processing machines 29 30 271600 870421 Electrical energy Motor vehicles for the transport of goods.352 11.413.
Furthermore.604 -10 -34. South Korea is located in the middle of the largest markets-the Chinese." EU Trade Statistics. as they can reap the benefits of other FTAs that South Korea entered with (e.270 -33.933 Change 18. other ASEAN. is big enough to take business risks.4 Total Import from the EU (1-50 only): combustion piston engines.508 25.3 5. the APEC markets in addition to the fact that the local market in South Korea.326.6 7. leather or composition leather and uppers of leather 3. and compression-ignition internal combustion piston engines 45 740311 Refined copper in the form of cathodes and sections of cathodes 46 610910 T-shirts.990.1 8.1 7.7 7.073 8. interviewees enumerated numerous opportunities that exist for European SMEs in South Korea.515. Code Description of Goods Amount 2009 Change -20.2 -10.803.352 6.587 68.492. 167 . the Japanese.814 -5.632 -42.2 7. singlets. the US-KOR FTA).880.182. tank tops and similar garments. Recent EU-KOR FTA poses opportunities for EU SMEs.387.9 8. Geo-economic advantage is one of them.4 -3.306.168 6.600.592 67.2 7.722. as a member of the OECD.535. The magnitude of competition is relatively lower in South Korea than that in China and Japan.181 7.g.772 7.645 44.231.828 -45.157. cleaved or bruted 50 51 760120 640399 Unwrought aluminium alloys Other footwear with outer soles of rubber. plastics. the infra-structure to conduct business is outstanding and is developing further.6 Source: KITA (2010) "Export and Import with the EU. 7.206.Seq.7 2010 (Jan-Sep) Amount 2.369.113. knitted or crocheted of cotton 47 840820 Compression-ignition internal combustion piston engines used for the propulsion of vehicles other than railway or tramway rolling-stock 48 49 850440 710231 Static converters Non-industrial diamonds unworked or simply sawn.9 7.5 58.374.636 3.3 Opportunities for EU SMEs In general.
4 Bottlenecks and key issues and challenges for European SMEs in South Korea A positive business environment for European companies will foster new enterprise development and overall economic growth for South Korea. legal services. Recent economic developments have enabled European firms to seize opportunities in the Korean market. exclusive contracts with one agent are not recommended as the Korean market is diversified. On the positive side. Agents are important..2 Access to commercial credit Access to finance is reported by many interviewees to be a serious challenge. since the priorities are different from those of Europeans. The interviewees emphasised that the Korean market is not well known to the European business community. including Europeans. not an easy market to enter and operate in. and understand what Koreans think. 7.4. in order to maximise the potential of this market. Establishing cost in total is approximately € 8. and that this undermines the opportunities that the Korean market offers. whereas Europeans in general focus more individual matters. Concern was expressed that foreign entrepreneurs. In support of this. In addition to credit. however. prior to entry. however. The factors contributing to bottlenecks and key issues as well as the challenges for European companies operating in the Korean business environment are listed by the various topics enumerated by the interviews. is instable.1 The South Korean Market There is consensus amongst interviewees that the Korean market is dynamic with modest competition. firms are not ready to enter the Korean market. etc. 168 . The majority of interviewees stated that the use of good professional local sources (accountants.000 or KRW100 million registered-assets are required.000 to € 10. societal structure. Won (KRW).4. Collective experiences revealed that companies entering the market need to garner an understanding of it. 7. especially compared to the Chinese and Japanese. Foreigners must learn how. etc) and the development of a strong network within the country make it much easier. The priorities of Koreans are societal-focused. It was further emphasised that it is very important to take the time and study the market thoroughly. Determining what constitutes a positive business environment for these firms can depend widely on factors often outside the influence of the average company. the development of a niche entry strategy is an important first step. and that in some cases. but this can be drawn once the registration is completed. establishing a firm in South Korea is relatively easy: about € 70. however interviewees report that there are numerous bottlenecks and key challenges to overcome.7. often complain about market conditions without taking the time to understand such idiosyncratic factor as culture. the interviewees stated that they feel the exchange rate of the Korean currency. one European entrepreneur operating in South Korea stated that the annual gross revenue of his company is € 1 million and that local banks still have refused to extend credit to the company.000.
this is a paucity of information available in English that is required to establish a business in the country. some interviewees suggested that it is important to work with the appropriate local professionals such as accountants. 7 . In addition. 169 . This is problematic for a non-Korean shareholder when the business relationship ends. language is not a serious problem since most local staff are able to converse in English. which this is exacerbated with different interpretations of the laws. one of which is the lack of equality in decision-making practices in South Korea. For companies who co nsider this to be a challenge. and omission of some information in error can result in fines. English versions. 3 C u l t u r a l b a r r ie r s In general. legal-aid offices etc. The lack of knowledge in these areas can be a big impediment when conducting business negotiations. 7. some do not recommend joint ventures for several reasons. Koreans do not tend to employ the practice of paying dividends and profits are used to build up retained earnings. In addition. 4 T h e l e g al a n d r e g u l a t o ry e n v i r o n m e n t Although "red tape" implications have become less of a burden in recent years. as the profits remain in the company and the parting shareholder is not fairly compensated for what would have been their share of retained earnings. permits and licenses.. wording of the regulations are not clear. such as product and liability acts have become available. very tough and were reported to change with short notice. Mandatory inspections for European exporters to South Korea in meat packing and poultry sectors are said to take up to two years to complete. as Koreans rejected synthesised magnesium for human consumption. Regulations specific to industries unknown by Korean authorities were reported to have caused over-protection in the market. On the one hand. 4 . SMES do not know the Korean business culture and business ecosystems. An example of this is that of magnesium. as stated by a few European entrepreneurs. This includes information on local tax requirements. On the other hand. For certain interviewees.4. there are contrasting views concerning joint ventures. An interesting point to note is that in many cases. Therefore. Regulations in South Korea were found to be overly-specific.7 . Transparency was also reported to be a problem. it was reported that regulatory barriers do in fact exist. Import procedures were reported to be tedious and difficult. such as seniority and hierarchy within the Korean society. who will undertake complicated work at reasonable fees. Europeans have the potential to face cultural barriers.5 Business structures As far as the business structure is concerned. one of which is the language barrier. 4 . Concerns regarding tariff and non-tariff barriers were expressed and paper work is onerous for some industries. it is suggested that it is important to establish a local network. there were some positively recommend joint ventures to incoming expatriates that Korean partners with sufficient incentives will bear the responsibilities of addressing all the local challenges that are beyond the capabilities of the expatriates.
Avenues to important networks include membership in business associations. The second most communicate strategy has been to develop networks.7 . strategic preparation and a tailored search for business contacts. 4 .5 Overcoming bottlenecks Overcoming bottlenecks is an ongoing process for EU SMEs operating in the Korean environment.a. causing the shortfall of required human resources. European entrepreneurs in the study. Besides the two Chambers introduced previously. etc.und Handelskammer (German Chamber of Commerce and Industry in Korea. AHK) are good examples. 170 . Approximately 1. a. such as accountants. the Deutsch-Koreanische Industrie. Associations include: − Asia Ireland Chamber of Commerce − British Chamber of Commerce in Korea − Dutch Business Club of Korea − Cercle des Entrepreneurs Francophones de Corée − French Korean Chamber of Commerce and Industry − Italian Chamber of Commerce in Korea − Korea-Finland Business Council − Korean Swedish Association − Swiss-Korean Business Council 7.k. The single and most beneficial strategy has been to recruit the professional services required. Assistance for EU SMEs in their attempts to work through bottlenecks is widespread. 6 O t h e r c h a l l e ng e s Korean laws pertaining to working visas are problematic. they support the creation and management of EU SMEs in South Korea. such as Chambers of Commerce and business clubs and councils. lawyers.6. Through their various ma ndates. 7.6 Policy support offered to EU SMEs There are various programmes sponsored by the EU that provide support for European SMEs in South Korea.1 EU Gateway EU Gateway is designed to open new business horizons for companies in Korea. As situations arise. Although the impact of their respective interventions is unknown. The programme offers financial and logistical support. there are numerous other chambers and organisations providing support.350 locally-based businesses take advantage of the services and programmes offered by some European Chambers of Commerce-the EU Chamber of Commerce in Korea (EUCCK) and. Interviews disclosed that the European Business Community in Korea is partly aware of this support programme. have been successful in dealing with issues but not without external support. it is anticipated that they provide valuable services to the European business community at large. for the most part. 7.
5 Structure of the Enterprise Europe Network Korea 7 . Nevertheless. 6 . eager to succeed in the Korean market. 3 T h e E x e c u t i ve T r a i ni n g P r o g r a m m e The Executive Training Programme (ETP) facilitates professional development programmes for EU executives. are for technology transfer. including innovation support and transnational technology transfer services. the programme objectives are designed to transfer knowledge of the Korean language. to appreciate their cultures and to successfully develop business (exports. The Small Business Corporation (SBC) is responsible for trade and business co-operation while DeltaTech and edReserach. There is an agent of the Network in South Korea. EU executives will learn to communicate. 6 . Going through the ETP cycle. Figure 7. 2 T h e E n t e r p r i s e E u r o p e N e t w o rk The Enterprise Europe Network provides a wide range of services to SMEs and entrepreneurs. The operation of the Network in South Korea is financed and supervised by the Ministry of Knowledge Economy (MoKE) of the Korean government and is managed by the Korea Institute of Advanced Technology (KIAT). The ETP targets companies who want the next generation of EU business leaders to be part of their team-executives working for dynamic EU companies who want to broaden their horizons and enhance the prospects of their firms in the Korean market. Electronics and Telecommunications Research Institute (ETRI) conducts research for the Enterprise Europe Network Korea. joint ventures). The network is comprised of approximately 600 partners in 44 countries. which is a network of five renowned institutions (Figure 7. Although Enterprise Europe Network Korea came to be fully operational in 2009.7 . While building the participant's network of business contacts. society and the business culture. it has yielded noticeable results working with foreign offices of the Enterprise Europe Network. private enterprises. helping them to access market information. investments. and distinctive and specialised markets. overcome legal obstacles and identify potential business partners across Europe. 171 . the existence of the Enterprise Europe Network in South Korea does not seem to be known to the European entrepreneurs operating in Korea at all.5). they help to increase the competitiveness of EU businesses. With a staffing complement of about 4 000 experienced staff.
and but none of these have has developed into a business relationship. An interviewee expressed that ETP is not highly needed. an interviewee responded with an interesting input-that is.7 Policy support used by EU SMEs The interviewees were invited to comment on the use and effectiveness of various support initiatives. Enterprise Europe network agents are well acquainted with one another. Furthermore. When asked any suggestions for the area of improvement. 7. It was noted that both programmes are targeting the same group. this is not the case with the SBC. rather than a "one-time" event such as Gateway. The programme is perceived to be the best platform to fill in the missing link for new EU member countries if they wanted to expand to the Korean market. and the service sector seems to be overlooked. European and Korean SMEs want to grow into each other's market place. One interviewee asserted that the business delegations are more effective than the Gateway. The following represents a summary of their contributions: There is a perception that a policy conflict exists between the mandates of Gateway and the Enterprise Europe Network. An interviewee stated from his experience that the Enterprise Europe Network is more effective in supporting SMEs due to the fact that it is a "constant" support measure. 172 .Seemingly. which is principally an on-line based system. The Gateway programme permits externalities and is preferred over the ETP. The objective of EU SMEs' in joining in the Enterprise Europe Network and that of the Korean SMEs are not aligned. as the Enterprise Europe Network has evolved from the Euro Info Centres. It was pointed out that the Gateway has the potential to yield a synergetic effect with the Enterprise Europe Network. and these relationships serve to make business matching much easier. However. "Usually. The instances of business matching occur more frequently as a result of off-line experiences. for example. But. there were only four to five cases of business matching in 2010. can be supplemented by an off-line programme such as Gateway. such as a face-to-face meeting. the Gateway programme presently appears to be more oriented to the manufacturing sector. as a few European entrepreneurs operating in South Korea are stated to be the beneficiaries of this support programme. As a result. this programme has brought some successful results. It is therefore recommended that the selecting of participants from the service sector would improve the likelihood of success of the programme. as the Enterprise Europe network South Korea is new to the network. Module A of the Enterprise Europe Network represents trade and business co-operation. the Enterprise Europe Network. Some pointed out that the contents of the Gateway programme should be revamped as to focus more on Korea and the Korean market.
5. they are mostly focusing on large enterprises and macro agendas at the national level. 6. this could take the shape of an incubator or cluster facility. Disseminate the finding of the research to the various stakeholders.20 10. coffee Welcome and introduction Congratulatory remarks by Mr. Lee Coffee break Discussion: How to facilitate access to the Korean market? What (additional) role could the European Commission play? 173 .30 09. 3. Strengthen existing support measures and let European SMEs know the measures. 7. This.7.20 . Ambassador of the EU to the Republic of Korea 09. Provide market studies.10. Tomasz Koslowski.10.10 Workshop agenda 09.30 . 4. Rob van der Horst and Dr.20 Preliminary findings of the study by Mr. Other recommendations include: 1. 7. 7.12. Conduct research on market entry and business matchmaking for small member states of the EU. in turn. Amid the advent of the EU-KOR FTA. particularly focused on the channel of distribution in South Korea as it is quite complex. There is a need to develop and implement privatised trade support and service programmes. even if only with a symbolic amount.50 .8 What support is missing? It is stated that the Chambers of Commerce from various member states do not represent the interest of SMEs. Provide assistance to European SMEs that will enable them to obtain the required human resources from Europe (the immigration visa processes).E. would create a sense of belonging.50 Registration. including European chambers and business associations. And house this in a facility that would also provide office space for European SMEs newly expanding to South Korea. Implement programmes that will provide access to capital for credit-worthy European SMEs. Mr.30 10.40 .30 . Xavier Coget on behalf of H. The EU should make a financial contribution to finance the operation of the Enterprise Europe Network Korea. similar to those provided by EUCCK. Create a one-stop-shop for EU SMEs.09. Jae H.09. the EU should communicate more information about South Korea in Europe.09. 2.9 Which role could the EC play in stimulating EU SMEs to do more business in South Korea? The following provides a recapitulation of inputs provided by interviewees: There was a general consensus that there is a need to increase awareness of the Korean market among European firms and to develop and implement an awareness campaign on the benefits of the EU-KOR FTA and the Korean market.40 09.00 .
However.12. The presence of German SMEs in the Korean market appears to be increasing. European Commission." Obviously. a participant who owns and operates a si zable manufacturing facility in South Korea cautioned that there is a limit in growth if firms do not possess manufacturing capacity in the Korean market. as the Korean Government continues to promote the "Green Growth Development Plan.12. 500-800 German businesses in the manufacturing and sales areas have started business operations in Korea recently. it posed a question as to who would organise and facilitate the mentoring for newly-coming SMEs. The participants agreed that mentoring may be an effective means to facilitate EU SMEs' expanding to the Korean market. the participants concluded that EU SMEs should be informed of the country and its business potential and that the EC's business support should make it a priority to address this issue. Enterprise Europe Network − Better co-ordination between services offered? By whom? − How to serve businesses from new EU Member States? − Which (additional) role for the European Commission? − Coordination? − Market studies. statistics? − IPR Helpdesk (like in China)? − SME Coordination Centre (like in Japan)? − EU SME Centre (like in India and China)? − Servicing businesses from new Member States? The workshop participants stated that it was obvious that the Korean market was not known well to EU SMEs in spite of market opportunities therein. 7. Approximately 20 participants. annually 40-60 of the number of German SMEs including those that operate in the renewable energy sector where they have a competitive edge expand to the Korean market. however. for example. To this 174 .20 .11 Major results from the workshop discussions The following questions were discussed: − How to facilitate access to the Korean market for EU SMEs? − How to improve the support to EU SMEs? − Role of different players in the field: chambers.13. and private. On average. It is also a common approach that German businesses firstly seek local representatives or distributors for their products and services before they set up manufacturing facilities in Korea. numerous German SMEs in the renewable energy sector will take advantage of the opportunities created by the government policies.30 12. Gateway. individual EU Member States. To this end.30 Concluding remarks Business lunch discussions The workshop was organised in Seoul on 25 January 2011. Contrary to the general level of European knowledge about South Korea and the Korean market. − EU programmes: ETP. commercial consultants.30 . including the 20 interviewees and representatives of stakeholder groups attended the event. German businesses seem to aggressively expand to the Korean market.
implying that it is perhaps possible for AHK to accommodate SMEs from new member states. In relation to this issue. as it has been doing to non-German businesses (e.g.g. China-as the rental practices in South Korea are not only complicated but also quite different from those of Europe." For those SMEs from new EU member states that need assistance.question. etc. the AHK and the EUCCK were reluctant to assume the organising role because of their organisational objectives and mandate (e.). Enterprise Europe Network. such as the need for the "key money. 175 . An interesting suggestion was put forth by some participants: the introduction of incubators for EU SMEs in South Korea-something analogous to the German Business Centre in Shanghai. it could not be determined who could assume this role. the participants advised that some operation processes of the programmes have to change. the AHK was basically established to assist German businesses). the participants agreed that a certain institution at the EU level is needed. AHK stated that it never denied extending its services to non-German firms. Italy. Nonetheless. For the mean time. As for the EC support policies and measures. The Enterprise Europe Network Korea volunteered that it was capable of assuming such a role but it would need appropriate resources and a new mandate should be given. the participants stated that it would be more effective if three programmes-ETP. Switzerland. and the Gateway-are combined and integrated into one comprehensive programme.
" http://www. World Bank (2010)." Korea Trade Statistics." Enterprise and Industry." http://www. 06 December 2010 . EU Gateway Programme (2011) "Opportunities for EU Companies in Japan and Korea. Korea: KITA." Press Release. Korea International Trade Association (2010) "Export and Import with the EU.ahk." EU Trade Statistics.References European Commission (2011) "Small and medium-sized enterprises (SMEs) Enterprise Europe Network.worldbank.eu/go. Various institutions and individuals. Ministry of Knowledge Economy.php?nID=22&page=Home (Accessed date: 12 January 2011).htm (Access date: 12 January 2011). Seoul.eucck.eu-gateway. "The World Data Bank"." http://korea.eu/enterprise/policies/sme/market-access/enterprise-europenetwork/index_en.europa. http://ec. Korea.de/about-us/ (Access date: 12 January 2010). 176 . 2008-2009. Seoul. Korea: KITA.htm (Access date: 08 December 2010).org (Accessed date: 10 January 2011). Personal Interviews.15 January 2011. The Government of (2010) "Trend of Foreign Direct Investment Inflow by Region. EUCCK (2010) "About Us.org/site/about_us/message. http://databank. 16 January 2010 Korea International Trade Association (2010) "Export and Import by Country. KGCCI (2010) "About AHK Korea: AHK Korea-Member of the world-wide German Chamber Network.
Ltd. Embassy of Poland Trade and Investment Promote Section.. CEO Enterprise Europe Network Korea Lee Jewon ed Research Senior Researcher Enterprise Europe Network Korea Jean-Jacque Grauhar Jun Suk Lee Xavier Coget Dianne Rhee Kim Heesang Choi Dayoun Ahn Yoo-Seok Olivier Mouroux Leo Akkila Karim Khouider Karol Peczak Lee Hyun Min Lee Sunyoug Noh Sharon Yoon-Kyung Yang Ji-Ae European Chamber of Commerce in Korea (EUCCK) European Chamber of Commerce in Korea (EUCCK) The Delegation the EU to Korea Enterprise Ireland Ministry of Foreign Affairs and Trade of the Republic of Korea Ministry of Foreign Affairs and Trade of the Republic of Korea Korea Trade and Investment Promotion Agency (KOTRA) Asiance. Embassy of Poland Hana Tax Management Corp. GK Optical Ltd. Fibox. Trade and Investment Promote Section. Ltd. Noh Yoon-Kyung Coaching Boutique Small Business Corporation (SBC) Deputy Director Enterprise Europe Network Korea Maria Mackay Gavin's Sausage Managing Director CPA Owner-Operator Trade Officer CEO Managing Director CEO Second Secretary Manager Second Secretary Director for SME Support Chief of the Trade Section Director Director Secretary General Position Secretary General Reference 177 . Co.Annex I List of interviewees Name Jürgen Wöhler Lim Ji-hyun Organisation German Chamber of Commerce and Industry in Korea (AHK) Korea Institute of Advanced Technology (KIAT) Researcher Enterprise Europe Network Korea Lee Seung-ho Delta Tech-Korea Ltd.
KIAT EUCCK Delegation of the EU Delegation of the EU GK Optical Noh Youn Kyoung Coaching Boutique Korean-German Chamber of Commerce and Industry . Ji Hyun Jun Suk Xavier Pedro Karim Sharon Carsten Yoon Kyung Jiae Jaehoon Kyu-Yoong Youn Joon Jung Hee No Young Hyung Ah Organisation Embassy of Poland Embassy of Poland MOFAT DeltaTech-Korea Ltd.Annex II List of workshop participants Last Name Peczak Lee Choi Lee Lim Lee Coget Santos Khouider Noh Lienemann Noh Yang Lee Yon Park Baek Park Ahn First Name Karol Hyun Min Dayoun Ho S.KGCCI Noh Youn Kyoung Coaching Boutique SBC MERI MERI MERI SBC SBC SBC 178 .
Chamber of Commerce Abroad Deutscher Industrie. DeutschKoreanische Industrie.Annex III List of acronyms AHK DIHK ETP ETRI EU EU-KOR FTA EUCCK IP KGCCI KIAT KITA KRW MoKE ROK SBC SMEs Auslandshandelskammern.und Handelskammertag.und Handelskammer Korea Institute of Advanced Technology Korea International Trade Association Korean Won (currency unit) Ministry of Knowledge Economy (Korea) Republic of Korea Small Business Corporation (Korea) Small and Medium-size Enterprises 179 . German Industry and Commerce Executive Training Programme Electronics and Telecommunications Research Institute (Korea) European Union European Union–Korea Free Trade Agreement European Union Chamber of Commerce in Korea Intellectual Property German Chamber of Commerce and Industry in Korea .
4.550 sq km. rank 28 in the world 603. Shortly after independence in August 1991.6%.6 billion (2010 est.000. 2.71 billion (2010 est.000 2010 est.1.) $6.cia. Number of inhabitants Size (square kilometres) GDP and GDP/cap Total imports and share of EU in total imports $136. China 6. rank 45 in the world 8. After a two-week dispute that saw gas supplies cutoff to Europe. 28-5-11) 45.1. Ukraine agreed to 10-year gas supply and transit contracts with Russia in January 2009 that brought gas prices to "world" levels. rank 48 in the world Goods: energy. the Ukrainian republic was far and away the most important economic component of the former Soviet Union. che micals. grain. chemicals Partners: Russia 28%.8% (2009 est. Total exports and share of EU in total exports $49. machinery and equipment.) Goods: ferrous and nonferrous metals.html.700 (2010 est. producing about four times the output of the next-ranking republic. its diversified heavy industry supplied the unique equipment (for example.) Source: World fact book CIA (//www. The 1 World fact book CIA (//www. Its fertile black soil generated more than one-fourth of Soviet agricultural output.2 Economy 1 After Russia.540.3%.707 (July 2011 est.gov/library/publications/the-world-factbook/geos/ks.1 Profile of Ukraine 8.134.9%.html.1%. fuel and petroleum products.gov/library/publications/the-world-factbook/geos/ks. food products Partners: Russia 21.cia. China 3. Germany 8. large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR.9% (2009 est. machinery and transport equipment. 28-511) 181 . and its farms provided substantial quantities of meat. but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Ukraine's dependence on Russia for energy supplies and the lack of significant structural reform have made the Ukrainian economy vulnerable to external shocks. Ukraine depends on imports to meet about three-fourths of its annual oil and natural gas requirements and 100% of its nuclear fuel needs. 3.1%. Output by 1999 had fallen to less than 40% of the 1991 level.) 6.8 Ukraine 8. rank 133 $ 53.). Kazakhstan 4. Poland 4.1 Key data 1. the Ukrainian Government liberalized most prices and erected a legal framework for privatization. Likewise. milk. and vegetables to other republics. Turkey 5.).
particularly the IMF have encouraged Ukraine to quicken the pace and scope of reforms. 3 F i n d i n g s o f t h e t r a d e a n a l y si s Also the EU27 export to the Ukraine has increased much more than the overall EU27 export in the period 2000-2008. De nmark. spurred by rising pensions and wages. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law. Naftohaz.4 billion Stand-By Arrangement in November 2008 to deal with the economic crisis. The drop in steel prices and Ukraine's exposure to the global financial crisis due to aggressive foreign borrowing lowered growth in 2008 and the economy contracted more than 15% in 2009. 8 . Ukraine's economy was buoyant despite political turmoil between the prime minister and president until mid-2008. but more improvements are needed. but especially the non-SME sectors show already a significant recovery in 2009-2010. fuelled by high global prices for steel . growth resumed in 2010. External conditions are likely to hamper efforts for economic recovery in 2011.strict terms of the contracts have further hobbled Ukraine's cash-strapped state gas company. but the Ukrainian Government's lack of progress in implementing reforms has twice delayed the release of IMF assistance funds. among the worst economic performances in the world. Figure 8. EU27’s export to Ukraine compared to EU27’s total exports 600 500 400 2000 = index 100 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SME export to Ukraine Non-SME export to Ukraine SME total export Non-SME total export Source: Oxford Research and Eurostat Note: Manufacturing sectors where SMEs account for more than 50% of total value added have been named “SME sectors”.and by strong domestic consumption.1 Development in exports 2000-2010 (value). including fighting corruption. bringing more economic activity out of Ukraine's large shadow economy. developing capital markets. The decrease after 2008 was again very steep. Outside institutions . and improving the legislative framework. For more details see Background Document 1 International Trade Flows and Economic Development in Target Countries as prepared by Oxford Research. 1 . both for SME and for non SME sectors (Figure 8. Ukraine reached an agreement with the IMF for a $16. 182 . Real GDP growth exceeded 7% in 2006-07.Ukraine's top export .1). buoyed by exports.
As with all seven key target markets except South Korea.2 The percentage of internationalised EU SMEs that have business activities in the 7 target countries 0% 2% 4% 6% 8% 10% 12% 14% Ukraine Russia China Japan Brazil India South Korea Source: Survey 2009-2010. EIM/GDCC (EU27. Figure 8.3 Major barriers for Ukraine. Opportunities Internationalisation SMEs. Opportunities Internationalisation SMEs. bureaucratic procedures Lack of adequate market information Transport costs Knowledge of foreign languages 0% 5% 10% 15% 20% 25% 30% 35% Ukraine Average 7 key markets Source: Survey 2009-2010. Also for lack of adequate market information and for difficult paperwork. N=6649). bureaucratic procedures the score is much higher. N=6649)./serv.8. EIM/GDCC (EU27.4 Findings of the surveys With 8% of internationalised EU SMEs having business activities in Ukraine in the period 2007-2009. With regards to barriers seen by SMEs active on the Ukraine market there are some large deviation form the average position. the Ukraine has a median position as shown in Figure 8. percentage of SMEs Conformity of prod.1. the pattern of the percentage of SMEs that expect different support measures to be effective is rather 183 .2. to national standards Quality of our products and/or services Political risks Price of our products and/or services Lack of adequate public support Tariffs or quota for foreign markets Lack of sufficiently qualified personnel Payment risks Other laws and regulations in foreign countries Lack of financing Different business cultures in foreign markets Difficult paperwork. The payment risk is judged to be a major barrier twice as often as on average for the 7 key target markets. Figure 8.
e. business cooperation and networking and provision of information (Figure 8. ranked by average Other non financial services Temporary office facilities in target market Dealing with Intellectual Property Rights Staff training Trade missions Dealing with national technical standards Auxiliary services in target market Business or professional advice Exhibiting in international trade fairs One-to-one meetings with partners Business cooperation and networking Information on rules and regulations Information on market opportunities Assistance with identifying partners 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Ukraine Average 7 key target markets Source: Survey 2009-2010. EIM/GDCC (EU27. percen tage of SMEs expecting the instrument to be effective or very effective. Opportunities Internationalisation SMEs. business or professional advice.g.similar to the average. Figure 8.4 Anticipated effect of possible public support measures for Ukraine. 184 .4). However for most types of support expectations are higher with regard to the Ukraine. N=6649).
9 11.3 200829. From 2007 to 2008.836.0 200721. USD) Total Export 2006 2007 2008 2009 Import 2006 2007 2008 2009 3.0 7. energy.8 billion.038.3 6. chemicals.3 9.3 2. Foreign direct investment observation has being carried out since 1994.890.066.europa.eu/trade/creating-opportunities/bilateral-relations/countries/ukraine/ 185 . chemicals.596.7 4.980.3 3.4 201040. includes data from National Bank and State Property Fund of Ukraine (as for difference between market and nominal value of shares.6 6. Foreign Direct Investment − EU investment stocks in Ukraine as of 2007: €13.616.173.741.203. and agricultural products.542..020.5 EU countries Foreign direct investment1 ) (at the beginning of the year.8 1) Direct Ukrainian in- 219.979.1 6. FDI outward stocks from EU 27 countries grew by more than 75% in Ukraine.8 2.223. EU exports to Ukraine are dominated by machinery.5 243.8 3. transport equipment. Data on investment of external economic activity during the two years in accordance with international methodology used to conduct statistical observations may be revised. mln.8.09 billion − EU imports from Ukraine 2009: €7.5 1.5 9.196.2 Orientation of trade with and FDI in Ukraine Table 8.1 Export.3 2.6 6.042. textile and clothing.719.794.505.271. and steel. unrecorded in statistical reporting of some enterprises) SSC of Ukraine.1998-2010 Date of the Last modifications: 19/02/2010 Trade in goods − EU exports to Ukraine 2009: €13.4 4. 1998-2010 Date of the Last modifications: 2/06/2010 Data are calculated on an accrual basis from the beginning of investment. USD) Foreign direct investment in Ukraine2) vestment abroad 2) 200616.598. Source: http://ec.3 SSC of Ukraine.0 5.5 3. iron.7 200935. etc. 2) Direct investment to Ukraine and from Ukraine. import and FDI Ukraine-EU Structure export/import of services (mln.9 billion Ukraine's primary exports to the EU are agricultural products.026.5 billion FDI flows to Ukraine have been rising rapidly in the last couple of years and have the potential to sufficiently foster further economic growth in the country.468.607. In 2008 EU investments into Ukraine amounted to €4. property.
1% 2.Fuels and mining products 2000 .5% 80.5 2.Other manufactures 3000 . but could be facing some technical and organisational difficulties regarding implementation.0% 6.2 364. Next important step in strengthening the external economic activities and expansion of foreign trade is the negotiations on Free Trade Area (FTA) with the European Union.902.5% 9.Other products 13.ua/files/documents/FTA_Position_paper_150808_ENG.644. if the Parties find it necessary and appropriate.3 1. Ukrainian authorities might be agreeing to these principles.0 283.726.6% 2.200.3% 1.0% 1.com.pdf 186 .246. professional training programme and step-by-step implementation plan.0% 19.Other machinery 2500 .012. by product Millions euro %.453.eu/doclib/docs/2006/september/tradoc_113459.2 Exports from the EU to Ukraine 2009.0% 1.0% 6. Hence the negotiation on a new enhanced agreement (to fo llow up the existent PCA) including FTA as the core issue will help make the EUUkraine ties even stronger and reciprocally benefit both Parties".europa.0% 19.Machinery and transport equi pment 2410 . http://trade. This work will have to be mostly performed on the Ukrainian side.6% 1.3% 1.3% 1.0% 10.1 1.7% 1.421.Total 1000 .Iron and steel 2200 .Chemicals 2 2300 .6% 2.Table 8.611. Source EBA: http://www.4% 0. The FTA is a core part of the New Enhanced Agreement being negotiated between Ukraine and the EU.0% 1.0% 11.6% 32. Share of total EU exports 2008 0000 .0 837.3 765.3 4.8% 2.7 11.Office and telecommunication equipment 2420 .6% 3.pdf In 2008 Ukraine fulfilled its obligations aimed at accessing the World Trade Organization and creation of the necessary domestic economic infrastructure.6% 0.7 412.2% 1. given the volume of work to perform.6 2.9% 1.7 100. Statistical regime 4) DG TRADE.9 185.3% 1. On 16 May 2008 Ukraine became the 152nd member of the WTO.ec. The FTA may include the EU technical assistance.4 837.5 2.3 1.Agricultural products 1200 .Transport equipment 2430 .eba. According to European Business Association (EBA) "Position Paper to EU-Ukraine FTA Negotiations": "Extending the common EU trade regime and single market rules to Ukraine will require much more work on harmonising and simplifying regulations and standards between the EU and Ukraine.3% 0.Other semi-manufactures 2400 .Clothing 2700 .Textiles 2600 .4% 2.0% 14.0% 5. Nonetheless it can result in setting up a trade area with free circulation of goods and services.Primary products 1100 .Manufactures 2100 .5% Source: EUROSTAT (Comext.
costs cheaper. The EU embassies in Ukraine often assist both EU and Ukrainian SMEs.8. EU SMEs but not all of them use this opport unity. increase of profit is bigger than in Europe (although the risks are bigger in Ukraine). in sectors with potential for EU business development in Ukraine). deal with contracts.but very profitable when you are in.g. a lot of people (work force). − Ukraine is interesting because it looks both to the East (Russia) and to the West (EU). − European companies consider Ukrainian market as how to buy raw materials and how to sell production. − Some embassies carry our market surveys (usually. As a rule.org/data/exploreeconomies/ukraine. − Local personal in Ukraine is well-educated. explain Ukrainian legislation. A s p e r c e i v e d by t h e i n t er v ie w e e s : − It is difficult to come to Ukraine .there are not so much investors. − EU SMEs want to enter Ukrainian market: as it has good potential. technical expert) will cost a good value. it is attractive for EU SMEs. − As a rule the embassies do not: approach juridical system. − To enter the market it is necessary to understand own advantage over local companies operating on this market. growth potential. − Ukraine has a good location for EU.3 Ranking of Ukraine in the Doing Business study Economy Overview Topic Rankings Starting a Business Dealing with Construction Permits Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business 118 179 164 32 109 181 139 43 150 136 181 160 30 108 181 139 43 145 18 2 -4 -2 -1 No change No change No change -5 DB 2011 Rank DB 2010 Rank Change in Rank Source: http://www. provide specific commercial information.doingbusiness. partnerships. especially after crisis time.3 Opportunities for EU SMEs Table 8. EU SMEs operating in Ukraine are registered as Ukrainian companies. that is why. in accordance with the Ukrainian legislation. 187 . having 100 % foreign capital or as joint-stock ventures. EU SMEs are primarily traders . − Ukrainian market is not saturated yet for many goods in comparison with Europe. local manager. − Embassies cooperate with regional and local authorities and find the solutions for SMEs when the problems arise. buy-sell etc. although high qualified personal (e. − Important task of EU embassies in Ukraine is to help SMEs with day-to-day problems.
cattle breeding (note: only with appropriate legal regulation of the land rent for investors) − Innovation technologies − Information technologies − Banking (130 banks in Ukraine) − Logistics − Services sector and consultancy − Small-scale production of various goods. contacts and business support services to facilitate new investment. 3. especially for SMEs 8 .4 Bottlenecks of doing business. − EU Business Support schemes and programmes for EU SMEs implemented by particular EU country (See Policy support offered to EU SMEs).− Two biggest lobbying groups representing hundreds of foreign companies operating in Ukraine as European Business Association (www. remaining a major stumbling block in establishing proper legislative framework. − The most attractive markets for the EU SMEs contribution in the coming five years: − Retail sector growth (Auchan. Land reform . Fighting corruption .ua) and American Chamber of Commerce (www. 1 A s p e r c e i v e d by t h e i n t er v ie w e e s Seven key business areas proposed by EBA that the business community today considers being the most problematic: 1. resources. 188 . 2. Billa) − Resource-saving and energy-saving technologies. Judiciary reform .eba.withdrawal of operational funds under an extremely difficult financial and economic situation in the country endangers business operation of many companies with both domestic and foreign investments.the underdeveloped legislation base regulating Ukraine's land market is one of the most essential barriers to investment in our country. VAT refund . − Bilateral associations of entrepreneurs as additional instrument of business protection and networking. Currency regulation . 5. infrastructure − Agrarian market has a big potential: agricultural production processing. − Approach to EU will create new business opportunities. Free Trade Agreement is important.com.chamber.the judiciary in Ukraine remains weak and lacks independence. milk industry. 4 .ua) as well as other bilateral Chambers of Commerce are effective platforms for networking. governed by the fair and transparent application of the rule of law to enable private enterprises to flourish. They provide access to information. will make the public sector less vulnerable to corruption and red tape and will improve the country's international image.the issue of country's attractiveness to foreign investment is always related to the possibility for foreign investors to freely invest in Ukraine as well as make transfer their investments and profits resulting from such investments outside Ukraine. 4. information sharing and achieving common goals aimed at advocating for a business environment. 8. alternative energy.successful implementation of the public administration system reform will help the government to quickly implement other reforms.
− Legal system is the main barrier: favouritism.very Soviet like (even food-products approved in the EU need to pass tests again in Ukraine). 189 . It takes a lot of time for companies to establish business without adequate legal information. − New tax-code: When large companies buy goods from SMEs costs are not deductable in tax . how to keep it. as a result.administrative barriers are the most important ones to SMEs.50 EUR for all) + percentage of profit + broaden tax-base. 8 . − Bureaucracy: business procedures change quite often. Jurisprudence does not function: cl ients take goods and do not pay. − A lot of notaries have to be visited for each business operation. Lump sum (40 . VAT-refund etc and. 2 A s p e r c e i v e d by i n t e rv i ew e e s − Ukraine is a difficult country to work in. as it is still relatively closed. − Changing legislation all the time that causes high level of insecurity for investors in terms of taxes.existence of technical barriers to international trade creates obstacles not only for domestic products entering European and international markets but also for domestic consumers interested in foreign products of high quality. − In majority of cases corruption schemes. − Lots of products need license . In other words. The law exists but reality is different. 4 . Tax authorities can do tax inspection every day. The new Tax Code is against international suppliers. The state of play is not very clear. European brands sold for +50% of prices in Western Europe. there are "let-outs" do not pay money for ordered goods. More inspection rights to tax authorities. technical standards. − Also custom rules discourage investors and traders to work in Ukraine (difficulties with how to value staff. the entrepreneur is not protected by the Government. − New tax-reform is very complicated. − Registration as one-stop-shop: agreed but not executed as intended.clearance. 7. − Accounting standards totally different from EU . custom value etc).and buying power in big cities is high. Corruption prevails also in courts. National monopolies on stamps.current system of customs clearance and control in Ukraine is over-bureaucratised impeding development of the foreign economic activity and creating grounds for possible abuses by public officers. economy. high custom tariffs. as a result poor investment climate. − Lack of protection of ownership. the partial implication of laws. how to avoid bribes.sounds strange. − Great demand for everything . Simplification of customs procedures .6. − Taxation inspection has illegal rules and local authority bodies always have "unwritten laws". Technical barriers in trade . − Lack of information about Ukrainian legislation. − Closing of companies: 3 month notification in local newspap ers. custom procedures . transaction costs huge amount of money. − Permit documents: source of income for local authorities. registration procedure.
Polish companies arrived and left the country).not investment.g. IMF requirements as condition for loan. business associations. 5 . etc. 1 O v e r c o m i n g b o t tl e n e c k s a t s t r a te g i c l e v el : − Stable Government is important. It is cheap to pay people (salary is relatively low) but it is expensive to work. Politicians should pay more and real attention to investors. − In terms of entrepreneurial culture. − Local business networks are important: active work of embassies. buy-sell etc. civil servants. 190 . on export promotion.only when you know the market very well start investing. training of judges. Foreign investors are not treated well by Ukrainian partners (Ukrainians often do not follow obligations). − Strong political will of the Government: laws must be adopted for long-term prospects. No appropriate institutional support programmes. − The cost of doing business is very high. corruption and bureaucracy are at all levels (examples: IKEA came and left Ukraine. − Liberalization and de-bureaucratisation are the most important. − To get Ukraine closer to the EU the European Business Association and the American Chamber of Commerce do effective lobbying at the strategic level. − Ukrainian market is very lucrative: prices for brands are 50-70% more expensive than in EU (as also an example. it is not easy sometimes to find good employees. 8 .5 How did EU SMEs overcome the bottlenecks? As perceived by majority of interviewees. business clubs etc. price for pig meat is higher than in some EU countries). 5 .− Because the business culture is low. The State Committee of Ukraine for Regulatory Policy and Entrepreneurships (SCURPE) operated mainly as registration agency. − Important task of embassies is to help SMEs with day-to-day problems. 5 . − Follow legal rules. 8. 3 O v e r c o m i n g b o t tl e n e c k s a t c o m p a n y l e ve l : W h at E U S M E s s h o u l d d o t o overcome the bottlenecks? − Most EU SMEs do trade . partnerships. 8 . − Find importers/distributors who believe in your product. − Own 100% of business and get good Ukrainian CEO. The EU embassies often work for both EU and Ukrainian SMEs. bilateral Chambers of Commerce. − Practical information how to start business and how to operate on the market is very important. in order to overcome bottlenecks the most important will be to work at three levels: 8 . There are no strategic programmes for investors. No equal rules for foreign investors. customs. − 100% advance payment in the beginning (later you can compromise). do not follow illegal instructions (do not pay bribes). rather declarations. − Start by exporting . 2 O v e r c o m i n g b o t tl e n e c k s a t p r a c ti c a l l e v el : − Capacity building is important e.
additional training of local staff will be required). EBA. − European financing system is cheaper and more transparent. − Good to have own office. when you enter the Ukrainian market. − Register with the embassy in the beginning.6 Policy support offered to EU SMEs 8.but they take time.1 National support Ukraine received a very low ranking in the latest "Doing Business" report. 191 . − It is good to assess the market: economic situation. That is why they need to know all legislative rules and to calculate all possible taxes/expenses.6. The more you fight the more you gain. more income. The Government in Ukraine stated that one of its major goals is to improve the business climate and Ukraine's international ratings. start up capital and initial customers. Audit services for this would be helpful. It is important to develop the model of doing business in order to avoid/minimize communication with juridical structures. − Barriers are manageable when you find the right. SMEs must cover expenses from the very beginning. − SMEs cannot afford to make losses (in comparison to big companies entering Ukraine. Ukraine was rated 145th out of 183 counties in terms of an analysis of conditions that produce a favourable business climate for small and medium-sized companies. to receive necessary support. Statute capital should be taken from mother (European) company. information about competitors studied.− EU SMEs must pay all taxes not to be in a "black list". Ukraine badly needs business investments. and economic growth. Effective State". Judicial system does not work in Ukraine. − EU SME must understand that no support will be supplied by Ukrainian banking structures. The embassies cooperate with local authorities and will assist to find solutions. more jobs. − Dialogue actually helps. The low rankings mean Ukraine is only partially open for business. which can have losses but to work for future perspective). 8. In June 2010 the Government developed a major business climate Program of Economic Reforms for 2010-2014 "Wealthy Society. Competitive Economy. Be prepared to fight. reliable partner. − Also important to have a reliable financial partner (as EU bank). − Be prepared: involve embassies. Ukraine is actually easier than Russia. and have a plan B. There are even legal ways to overcome corruption . Ukraine needs to be fully open for domestic and international business. advisors etc. − EU SME must understand its business in Ukraine: qualified personnel will be needed (the situation with personnel is not bad: work force is relatively cheap but good specialist costs the same as in EU. market research done. − To start up business the business plan needs to be developed.
192 . which state tax administration officials could use to their advantage.6. experts say. Commercial Section. will come partially into force at the beginning of next year.com/news/business/bus_general/detail/87884/ Hasty Ukraine tax reform may scare off investors 8. while several more months will be granted before other changes envisioned in the recently adopted tax code take effect.onwards only electronic documents − No more Stamps needed − Annual inspection of cars made easier − Reduced number of Ministries.kyivpost. http://www. The president and government say it is vital to entice entrepreneurs out of this "shadow economy" if it is going to boost revenues. which overall purpose is to support deregulation of entrepreneurial activity on both national and regional level mentioned (during the interview) the following Committee's achievements for improving business climate environment: − Reduction of permits required from 257 to 91 − Simplified Land procedures − Licensing procedure shortened − Delegation of responsibility to state enterprises − Simplified procedures to start and to close enterprises − Paper documents stopped . This all means that two tax systems will be working side-by-side for a while.in operation − World Bank indicators of "Doing business…"not really objective. 1 State Committee of Ukraine for Regulatory Policy and Entrepreneurship. In agriculture alone: cut-down of 8. Austrian Embassy in Ukraine: Go International Programme www. adopted by parliament and signed into law by President Viktor Yanukovych this month. Businesses will have three months to adjust to rules that take effect immediately. inspection fields and staff.no dynamics. 1085/2010 of 09 December 2010 "On Optimisation of the System of Central Executive Bodies" SCURPE 1 is liquidated and regulatory policy functions will become a part of the new Ministry of Economy and Trade (before the Ministry of Economy of Ukraine). could lead to confusion. This transitional period.at Joint programme of the Austrian Federal Economic Chamber and the Ministry of Economy worth EUR 25 Mio annually. whereas registration functions would be the responsibility of the Ministry of Justice of Ukraine. The new tax code.2 EU Support for EU SMEs in Ukraine Some EU countries but not all of them have EU Support programmes/measures for SMEs who want to go internationally.000 inspectors − One-stop-shop for investors . Among them there are some examples: Office of Advantage Austria. Absolute indicators . Ukraine's tax system is ranked the third worst in the world after Belarus and Venezuela. The SCURPE.go-international.In accordance with the Order of the Cabinet of Ministers of Ukraine No.
gr/en-US/Economic+Diplomacy/AGORA/ Majority of EU embassies.to plans and budgets − Matching partners according to targets − Planning. market researches and studies.g. weekly or a monthly newsletter.dk reach about 50% SMEs for their participation in trade missions. Export promotion Denmark (trade association) http://www. trade fairs.on time . trade.evaluation . investment and other matters.gr/www. provides information on economic. in particular. − From idea .to concept . services. overall caps apply. staff training. visitors can subscribe to a Newsletter. project management of events . By promoting the internationalisation of Greek businesses. visiting this country) − Outgoing trade missions (from this country. trade. information on the institutional and investment framework as well as the institutions and services in foreign countries. which might be useful to Greek businessmen in their effort to export products and services to foreign markets.gr).: office rent. which provides information on products. business missions and exhibitions. including Ukraine. Finally. and the latest developments in their countries of interest. e. matchmaking events. technical logistics. developments in bilateral relations.ees. AGORA portal offers information to the Greek business community. Subscribers can choose to receive a daily.mfa. developments relating to economic and trade matters. EPD adapts concept ideas and company needs to local conditions and provide a one-stop service including planning and implementation services.matching the ever changing environment of international business.mfa. Co-funding of direct market entry costs of up to 50%. advertising material. coordination and production in Denmark and abroad − Budget control of sub-suppliers and partners − On-site delivery . public competitions-procurements. http://www.to budget and specifications − Follow-up services . Export Promotion Denmark is a specialized service provider within International Business Promotion. The primary objective of this portal is to provide reliable and updated information to the Greek business community with regard to offers/demands for business cooperation.Support Austrian companies in their internationalisation efforts. which displays daily feeds from 60 Economic and Trade Affairs Bureaus in 49 countries around the world. commercial and economic departments. The services cover event and logistics management. visiting Europe) − Informing EU SMEs on rules and regulations in this country − Providing information on market opportunities for EU SMEs in this country − Identifying potential business partners for EU SMEs in this country 193 . legal and business consulting. representation at trade shows. through the AGORA portal. provide non-financial services used by EU SMEs in Ukraine: − Incoming trade missions (from Europe.reporting and auditing Our services are developed through active dialogue with international businesses and organisations.mfa. the Secretariat General for International Economic Relations and Development Cooperation created the AGORA portal (http://agora. This portal. and general information.
Moldova. and Georgia from November 2010 to November 2013. Azerbaijan. guides.75 million contract for the implementation of the East-Invest Project a new regional investment and trade facilitation initiative for the economic development of the Eastern Neighbourhood region. East-Invest: a new regional tool for the economic development of the Eastern Neighbourhood region The European Commission and the Eurochambres (European Association of Chambers of Commerce and Industry) have signed an €8. European Small Business Portal http://ec. etc. Working through local business organisations Enterprise Europe Network can help to: − Develop own business in new markets − Source or license new technologies − Access EU finance and EU funding 194 . The EU will contribute with €7 million to this project which covers the countries of Ukraine. East-Invest will help in developing business networking between EU and Eastern Neighbourhood Region public and private organisations.g. e. WB. according to a press release from EuropeAid. − Developing the capacity of Eastern Neighbourhood SME support organisations.php?id_type=1&id=23158&lang_id=450 15-11-2010 EU Programmes of technical Assistance for Ukraine relate multi-sectors. − Facilitating exchange of best-practices and supporting creation of partnerships between EU and Eastern Neighbourhood companies. interpretation.europa.htm Other institutional donors working on EU SMEs development initiatives: SIDA and CIDA.− Matchmaking events.europa. − Main activities will focus on Technical Assistance for SMEs and for Business Support Organisations from the beneficiary countries.htm Enterprise Europe Network: The Enterprise Europe Network helps small business to make the most of the European marketplace. East-Invest aims to contribute to the economic development of the Eastern Neighbourhood region and to the improvement of its business environment.eu/delegations/ukraine/projects/list_of_projects/projects_en.eu/small-business/most-of-market/international-businessoutside-europe/index_en. (ENPI Info Centre) Source: http://www. IFC. secretarial support. Armenia. Belarus. UNDP. one-to-one meetings between EU SMEs and enterprises (buyers) in this country − Exhibiting by EU SMEs in international trade fairs in this country − Dealing with national technical standards − Dealing with Intellectual Property Rights (IPR) − Business cooperation and networking − Auxiliary services in this country. EBRD. Building on the southern neighbourhood experience of the Invest in Med Programme.enpi-info. through: − Encouraging public-private dialogue in order to promote participation of private sector in decision making. More specifically. trade and regional integration http://ec.eu/maineast.
Local staff training in the EU Universities − Exchange visits in EU and in Ukraine − EU grants. They usually address the embassy when the problems arise (such as: non-payment. Predictability of power is important. about economic sectors − Networking with bilateral associations − As far as juridical. friends or previous contracts realized by the mother company in Ukraine. not reliable partner. implementation of the Programme of Economic Reforms in Ukraine for 2010-2014 and fulfilment by 2014 one of its major goals . customs problems. As a rule. in Holland it took 10 years for drafting the Tax Code and 5 years for its implementation. as risks are very big). − The legislation must be clearer for investors: the problem for SMEs is to find relevant legislation and to interpret it. As was mentioned by the representative of the Embassy of the Kingdom of the Netherlands in Ukraine (See Minutes of the Workshop below): there are four types of SMEs and corresponding problems: − Ukrainian SMEs who work in The Netherlands (trade barriers). EU SMEs start to enter the market independently. − SMEs investing from The Netherlands to Ukraine (small amount of them. As example. SMEs use from EU embassies and EU national agencies the following support: − Assistance in visa-acquirement − Influence with non-payers (Embassy cooperate with local authorities and try to find solutions) − Participation in trade fairs. matchmaking events − Business partners search − Information as market surveys. consultancy services. as rules change very often without transition period. having partners in home country who work in Ukraine.8 What support is missing? − Real EU SMEs support from the National Government is missing: if Ukraine wants to have investors. the Tax Code in Ukraine became different in few weeks. corruption etc). trade missions. Not all SMEs register with the embassy at the beginning stage.g. relatives. Support from the EU used by SMEs: − Partial financial assistance from EU banks to start business − Know-how in technology. The system of law is complicated in 195 . Conditions of investment should remain stable. funds and programmes.e.Improving Business Climate and Attraction Investment. − Dutch SMEs who traditionally trade with Ukraine successfully. 8. − Dutch people who live in Ukraine and set up Ukrainian SMEs (problems as new Tax Code).8. the Embassy direct SMEs to reliable firms (using own database) to provide the service required. VAT refund. some steps also should be undertaken .7 Policy support used by EU SMEs As was stated before in "How SMEs overcome bottlenecks" section.
− juridical and taxation accompanying. − A central organization. − EU support programmes for EU SMEs of all 27 Member States to enter the Ukrainian marker are missing (examples could be taken to some extent from Austria. measures and actions which could be implemented to make it possible to do business better in Ukraine. One-stop-shop system. − It would be good for EU SMEs to get the information from the embassies about: − big suppliers in Ukraine. advice of reliable partner. − state business support programmes. about state purchase tenders to participate in them. cooperation. as National Export Promotion Agency identifying and taking care of SME needs is missing in Ukraine. for example. − risk assessment.9 Which role could the EU play in stimulating EU SMEs to do (more) business in Ukraine? The lack of knowledge about the situation on the third country (Ukrainian) market and about existing support programmes leads to the EU SME being not fully ready to go international. Support programmes with focus on the Ukrainian market inviting SMEs to look beyond their natural borders for imports. to have contacts for marketing. there are a lot of additional directions. Companies ask about the translated legislation. In July the European Commission revised the Work Programme for the period 2011-2012 and published new Terms of References. Attention needs to be focused on the range of active policies. infrastructure etc). Legislative change is not a prerequisite for the application of other policies and measures which could facilitate improvement in economic development in Ukraine. − EU SMEs need a Practical Guide with step-by-step explanation how to enter the Ukrainian market. − Ideally would be. orders and explanatory notes to it). − Approaching Ukraine to EU accession and FTA. SMEs could address first to the embassy to receive necessary consultation. exports. − transparent picture of all control bodies. Germany.Ukraine (if there is a law. with a strong and effective communication to SMEs should be initiated. Luxembourg). etc. Denmark. 8. − Complementary support to EU SMEs through EU-funded projects of technical assistance would be expedient (on private sector development. − Not enough focus on SMEs' opportunities in Eastern Europe Partnership Programme. Greece. − Complicated Schengen visa procedures in Ukraine. Expecting a successful outcome of the evaluation Ukraine can be a member of the Enterprise Europe Network in the beginning of 2011. This will enable Ukraine to be connected to 46 countries and more than 572 members that are specialist 196 . could be effective for SMEs taking their first steps towards internationalisation. innovation. in particular. sales of the production. trade and regional integration. if before to start doing business in Ukraine.
in particular. 1 A s p e r c e i v e d by t h e i n t er v ie w s : − Coordination between EU and Ukraine: Coordination Group on private sector development. including visa support etc). which enables them to keep abreast of EU policies and to feed small companies' views on them back to Brussels. 8 . such as political. − To work more on information about Ukraine. customs.eu/trade/creating-opportunities/bilateral-relations/countries/ukraine/ There have been 15 rounds of negotiation since February 2008. − Governmental political freedom and support. Source: http://ec. Ukraine. but European farmers already know.europa. energy-related issues. As member of the Enterprise Europe Network. − See also major results from the Workshop discussions. methodical guidance "How Business Works in Ukraine" and consolidated rules for EU SMEs "How to Work on the Market" would be very important for EU SMEs. Source http://innoenterprise. But Ukraine will also closely be linked with the European Commission. To set up one-stop-shop for EU enterprises who want to enter the Ukrainian market (in order to establish direct contacts with EU SMEs.in supporting SMEs across the EU and beyond. et cetera) and also tackling the so-called "beyond the border" obstacles through deep regulatory approximation with the trade-related EU acquis. sharing their knowledge and sourcing technologies and business partners across all Network countries. public procurement. machinery equipment from Austria are not used in the same way effectively in Ukraine in comparison to Austria or other EU countries. Ukraine will be linked up through powerful databases. The Free Trade Area (FTA) will be embedded in the new Association Agreement as an integral element alongside others. In March 2007 the EU and Ukraine launched bilateral negotiations of a new Association Agreement that will replace the present Partnership and Cooperation Agreement that dates from 1998. intellectual property rights. competition. 197 . social. It will be the first of a new generation of deep and comprehensive FTA. 9 .ua/en/archives/1092 The FTA has the potential of bringing Ukraine closer to the EU. To have EU portal with database with description about Ukraine and to produce ABC practical guide about what EU SMES need to enter the Ukrainian market. − Seminars and. and sectoral cooperation. − Know how and transfer technologies are important (as example.com. As an example the German Agrarian Centre was set up in Cherkassy city of Ukraine to train personnel). For EU Delegation: to work more on political level. Ukrainians do not know how to use effectively this equipment. covering all trade-related areas (including services. The last round took place in February 2011 in Kyiv. Donors know what is going on.
10. Project Country Coordinator for Ukraine. Ukraine.30 Business lunch The workshop was held on 13 December 2010 in "Opera hotel" Conference hall "Symphony 3". Kim Møller 12.10 .50 Second case example: PEM Ukraine Ltd / Dr.11. Gregor Postl.50 .11.11.35 .a subsidiary company Pöttinger Ukraine Ltd.40 . 13.8.20 . Director 10. 15 .10 .11 Major results from the workshop discussions Dr.10 The role of national embassies: Advantage Austria / Mr.20 .13. In 2010: 10 employees. Vadym Andrushak. The first case example was presented by Mr. Bohdana Khmelnytskogo Street. Kim Møller. was founded with 4 employees. Director 10.30 Tour de Table: How to facilitate access to the Ukrainian market? Role of individual EU member states versus an EU desk.10. Each participant introduced himself/herself.30 . 8. Pöttinger Ukraine Ltd.00 Registration.13. Managing Director. Country Coordinator for Ukraine greeted participants and gave brief information about the Project.00 . Austrian Embassy in Ukraine 11.10 . Vadym Andrushak.00 . Director of Pöttinger Ukraine Ltd.40 Concluding remarks 13. coffee in business lounge 10.10 Welcome and introduction to the workshop / Dr.20% share of the market in its own segment Started business inn Ukraine with: − Own assets − Local personnel with European education.40 Break 11. Kim Møller. Oxford Group Denmark 10. Commercial Counsellor Commercial Section.35 First case example: Pöttinger Ukraine Ltd / Mr. Kyiv.40 .20 Introductions of participants 10.10 Preliminary findings of study on internationalization of SMEs / Dr.may not always be the example − The right choice of partners in legal and accounting field − Direct contacts to the end-user 198 .10.14. − The Embassy of Austria in Ukraine (trade department) − Raiffeisen Bank Aval Experience in doing business in Ukraine: − The western experience of running a business .12. Oleksandr Martyniuk.10. 53.10.10 Workshop agenda 09. In 2007 . works on the market of agricultural machinery in Ukraine: the section of grassland and tillage machines.20 Questions and answers 11.
engineering work. − Contacts to the governmental institutions (tenders. Company business: Building. currency. Additional documents / costs.. Director of PEM Ukraine Ltd. certification . Unofficial rules. statistics Financial Analysis: Plan: Start cost. Tax revision) Customs: Bill of entry overvaluation. labour permit. tax institutions.the most expensive point To hire Ukrainian personnel: good local manager or technical expert will not be cheap. Branch control. other (e. Salary taxes.. versatility. − The possibility for Ukrainian farmers of experience-exchange-visits in EU The most useful support to create more successful business operations by European SMEs would be: − Influence on establishing of European standards of running business.the most important point Market analysis (partners. Expenses not considerable in declaration. unpredictability of incoming payments. insufficient effectiveness of enterprising in Ukraine − Institutions: customs. laws / courts. languages. construction supervision). policy / economy. EU personnel in Ukraine will need: salary and taxes. VAT processing. received from EU embassies and EU National Export Promotion Agencies support in: − Assistance with visa-acquirement − Influence with non-payers Support from the EU: − Partial financial assistance (Controlling Bank of Austria) − Know-how in technology. Manual management Ukrainian banks Credit: Bail / Turnover. project design. visas. the present way of sharing the market.and wall constructions. − Know-how and investments in processing. unofficial rules Marketing instruments: PR. legato-arched roof constructions.− The implementation of the western technology and its arrangement Difficulties/risks: − Market/clients: unpredictability of sales. Terms of processing Other government bodies: Certification. customers) Tax inspections (VAT refund. support programmes). prices) Ukrainian attributes: location. PEM Ukraine . The second presentation was made by Dr. The University of Gumpenstein. residence costs. travel expenses. customers. planning of erection.g. − Assisting in contacts to the big companies. professionalism. Terms of processing Finance 199 . Currency exchange Personnel .decision making Marketing . competitors. delivery logistics. Other financial instruments. Delivery and erection of steel structures (roof. Tax pressing. Languages Risks: Court (government bodies. Operating cost. Profit tax processing. educability. Taxes. Oleksandr Martyniuk.) Pöttinger Ukraine Ltd. − Effective lobbying of non-unilateral decisions of Ukrainian government.
200 . e. assistance with debt collection. basic legal/tax/customs advice. SME) flexible.Gregor Postl. staff training.g.EU: Regular meetings of EU Commercial Sections under the auspices of the local EU Delegation. Support Austrian companies in their internationalisation efforts Co-funding of direct market entry costs of up to 50%. legal and business consulting. European Business Unions (EUROCHAMBRES. advertising material. Through Austrian Head Office: Initiatives of the Austrian Federal Economic Chamber. Strengths for SMEs: Challenges for SMEs: Weaknesses for SMEs: Support programmes: 120 Advantage Austria offices worldwide: search for clients/distribution partners.go-international. Go International Programme www. overall caps apply. interventions at local authorities economic missions. DG SANCO. Joint programme of the Austrian Federal Economic Chamber and the Ministry of Economy worth EUR 25 Mio annually.: office rent. Office of Advantage Austria. e. representing Austrian companies at exhibitions. legal framework/security bureaucracy political stability skilled personnel language barrier underestimate legal situation and red tape to compare Ukraine with Russia or Poland internal company structure. representation at trade shows. Private initiatives such as the European Business Association (EBA). Veterinary Certificates for Meat Exports. Austrian Embassy in Ukraine made a presentation about "The role of national embassies: Advantage Austria" Chances for SMEs: FTA-negotiations EU-UA alternative energy / energy efficiency environment EURO 2012. close to market/mentality 5th biggest investor in UA good image in UA Austrian companies (esp. Informal contacts to important trade and political partners.at: Coordination EU Member States . SME Union).g. Commercial Counsellor. DG Trade. Commercial Section. customer oriented. fact finding missions. Joint initiatives of Austrian Federal Economic Chamber and Austrian Government. individual trips. European Commission and Parliament.
Project Country Coordinator for Ukraine. − Main advice: be very well prepared. European Parliament and Governments of EU-member states. have a plan B. information. matchmaking. banking. renewable energy. WB) 201 . presented the findings of study on internationalization of SMEs (Ukraine Component). trade missions. − Historic market growth − 2 points up in World Bank Index/Ease of doing business − Most recent progress in "Starting Business" (18 points up from 2010) − Natural Resources − Low labour cost − High market prices for brands As a result of interviews conducted. The scope of the study: − Market potential for EU SMEs in third country markets − Options to connect EU SMEs to the third country markets − Evaluate and propose country and sector specific measures to facilitate access of EU SMEs to third country markets As outcome of this study. Oxford Group Denmark. Managing Director. − EU export help desks − EU export database − EU technical assistance projects − Business associations − Institutional donors (UNDP. Existing promotion structures: − National embassies (staff training. and expect long term market penetration. agriculture. energy efficiency. EBRD. technical barriers. logistics. sanitary measures. taxation − Corruption − Juridical system − Currency regulation − Land reform − Trade barriers. in particular. retail. also aimed at How to facilitate access of EU SMEs to Ukrainian market to? will be presented as recommendations to the European Commission. individual support ) − National export credit schemes etc. Findings of the Study: − Market potential for EU SMEs − Large market: Population 46 mio. labelling Implications for EU SMEs: − Many SMEs moved from FDI to trade − Trade: major advance payment − Investment: 100 per cent ownership and EU management − Lucrative market once you get in − Promising sectors: IT.Kim Møller. Ukraine is perceived as a difficult market: − World Bank Doing Business 2011 Rank: Ukraine number 145 out of 183 − Custom procedures − VAT refund. IFC.
attitude of business partners should be prevailed. Russia or to Belarus as the business climate is more predictable there). on European Entrepreneurship Network implementation in Ukraine in cooperation with SCURPE (now the SCURPE will become the Part of the Ministry of Economy). That is why. What more can be done by the EU? The EU Delegation to Ukraine pointed out that all presentations were very interesting. General economic information should be at 202 . Discussion notes The main problem remains as follows: what will be the cost for SMEs to do business in Ukraine? We can assess tariffs. licensing services). The second problem: during the last years Ukraine is losing its competitive advantage for doing business by foreign companies (for instance. and this capital is limited on financial markets. But there is also an expansion to Ukraine of EU SMEs operating in other former CIS countries. well prepared. requirements to open business. and the government should pay attention to it. but discusses with them different issues (as VAT refund etc). Of course. there is no cheap capital. Petersburg. Trust in partner is very important. − EU SMEs need more information about the Ukrainian market. The government should understand that presently. To have a real picture about the Ukrainian market a cost benefit analysis would be very useful for SMEs. The EU Delegation does not work directly with SMEs. after the crisis. companies move to St. Besides of drafting the laws civil servants should also have good quality of work (in all aspects as tax. as in reality very often SMEs are not able to pay for different market analyses to assess all risks in advance. SMEs have to be precise while concluding contracts). but we cannot assess the real "transactions costs" for EU SME to enter the Ukrainian market. Non-material aspects: business spirit.After the presentations the "Tour de Table" was conducted with the main messages: How to facilitate access to the Ukrainian market? Role of individual EU member states versus an EU desk. and all attendees are familiar with the business environment climate and EU SMEs problems. Costs are very high in Ukraine (notaries everywhere. who want to extend their businesses to Ukraine. The EU Delegation does not (has no possibility to) provide services to SMEs. It is a very painful subject for SMEs. Of course. O t h e r o p i n i o n s a n d r e m a r k s o f p a r t i ci p a n t s d u r in g t h e W o r k s h o p : − The EU Delegation to Ukraine initiated EU Technical Assistance programmes: on FTA Project priorities. Some sectors in Ukraine are not developed yet and are not competitive like in Europe. consumers will pay for this (prices in Ukraine for brands are 50-70% higher than in Europe). The tendency of losing competitive advantage by Ukraine should be measured. as a result. Administrative reform in Ukraine: regulatory acts should be applied by people. premises expenses etc. there is a big potential of business development and potential to have a profit for EU SMEs in Ukraine. customs. It would be good to consult the EU website and to know how to do business in Ukraine (not only using the sources of embassies). Ukraine has a good location to move forward to other countries for business development.
− Whatever market you want to enter you collect the information. there is not enough of relevant and fresh statistical information available online on the official websites.that is why. work with government. − Experience of other countries would be very important (Asian market. Small enterprises must think how to minimize their costs and how to obtain profit (As an example. to give perspective of membership. − EU Delegation remark relevant to this topic: It is good to have a portal for companies where to address. step by step. But as a rule SME consists of few persons. and in addition to its main mission and task in Ukraine. Especially it is important for new EU Member States how they can enter Ukrainian market. they do everything: management. Brussels: to move to give Ukraine prospects to access the EU. FTA is important. accountancy. there are four types of SMEs and problems: Ukrainian SMEs who work in the EU country (trade barriers). There is no official information about the number of SMEs in total and by sector in Ukraine. that this meeting will create better conditions for EU SMEs. − The ways of minimization of risks for EU SMEs operat ing in Ukrainian market: to work with EU customers in Ukraine (to sale services for EU investors). SMEs should be the active target of the government's attention. − Remark relevant to this topic: At Custom Service there is a sort of one-stopshop. Statistics and open information are very important.the EU site (EU Delegation). the EU country's SMEs who tradi- 203 . but how to write about illegal rules on the market (if you cannot guarantee implementation of such rules)? The role of such portal is fulfilled by paid local consultants who also cannot identify all risks. If Ukraine accepts EU standards it becomes more competitive. − SMEs mean people: people move the progress. Hope. It would be good if EU embassies could organise meetings between enterprises of different EU countries (for example. Agreed that enterprises should come earlier to the embassy. to be well prepared. Commercial problems are the same as anywhere in the world. Enterprise cannot see the picture . There is no open information from the State Committee of Statistics. − As far as the EU portal for EU SMEs who want to enter the (Ukrainian) market is concerned: it is very good. post soviet countries etc). etc.). FTA is political question. − Remark: Responsibilities lay on SMEs themselves. Integration of Ukraine into the EU is to give better profitable conditions for EU SMEs. certificates etc. administration. − As an example. Ukraine does not support properly its own SMEs. prepaid service for using mobile phones is a good sol ution). One-stop-shop for EU companies where they can receive full package how to start business would be important (there are a lot of licenses. Solution: to have negotiations with European institutions. But also competitiveness between countries should be taken into account. Presently. SMEs come to the embassy when the problem has already arisen. − It would be practical to coordinate information about market studies. Austrian-Dutch meeting to get acquainted to each other). as well as the Practical Guide how to do business in Ukraine. Existing conditions should not prevent enterprises from doing their main job. that is why it is important to do preliminary work before entering the market. it is difficult to discuss how to facilitate access. EUROSTAT gives open information.
possibility of support such register. they have difficulties with visa.as a result. − Remark about visa: visa procedure is humiliating for Ukrainians. but if to consider the EU country (the participant spoke about) it took 10 years to draft the Tax Code and 5 years to implement it. − Remark about the visa: our Embassy's Instrument . It would be good to have electronic or simplified procedure to obtain or to prolong visa (general organisation that should assist in visa for SMEs). SMEs. The EU Delegation’s role should not be to serve individual companies. Conditions of investment should remain stable. 204 . Portal: Practical level: how to do business in Ukraine. The Embassy is informed by such enterprises about their activities. accessibility to EU. SMEs investing from the EU country to Ukraine (small amount of them. as rules change very often without transition period. where to address. EU country 's people who live in Ukraine and set up Ukrainian SMEs (problems as new Tax Code). supporting of institutional infrastructures. Learning from other countries is important: outcomes from other countries on EU SMEs internationalisation. the enterprises receive support letter from us to get visa. Capacity building: register of companies. EU-Ukraine cooperation. The Embassy stays in cooperation with SMEs who entered the Ukrainian market and set up joint-ventures in Ukraine. as risks are very big). As such. − Visa is a big issue: sometimes SMEs have no documents required (as financial documents about profit. An example: within a few weeks the Ukrainian Tax Code was changed. That is unfair for other businessmen. commercial attaches. turnover). EBA is trying to keep base.opportunity for the trade mission to assist with visa. or not officially registered in database.tionally trade with Ukraine successfully. has good experience. Predictability of power is important. Comments are of three different levels: Political: necessity to send a message to have more cooperation with EU. Kim Møller thanked for the presentations and the "Tour de Table" discussion. − It would be good to have a register of companies that carry out legal activities with basic economic or financial indices. or did not declare information . That is the role of embassies. difficult to prove. There could be more cooperation b etween them on this subject (division of roles and responsibilities).
Annex I List of interviewees Organisation Office of Advantage Austria. Economic and Commercial Affairs Director Embassy of the Kingdom of the Netherlands in Ukraine Italian Embassy in Ukraine Hungarian Embassy in Ukraine The British Embassy in Ukraine UK Trade & Investment (UKTI) office Lyudmyla Bychek Sviatnenko Vadym State Committee of Ukraine for Regulatory Policy and Entrepreneurship (SCURPE) Blue Ribbon Analytical and Advisory Center Embassy of Denmark to Ukraine Embassy of the Republic of Poland to Ukraine Delegation of German Economy in Ukraine European Union Delegation to Ukraine PLASTICS. Department of Economy and Trade PEM Ukraine Ltd (Building) Vadym Andrushak Leonidas Paparonstantinidis Dr.Ukraine Yatsyshyna Halyna Kostikov Denys Marchin Swiecicki Valentyn Povroznyuk Soren Egelbrecht Hansen Micha• FALE•CZYK Karin Rau Sergiy Lisnitschenko Michal Gorzynski Ireneusz Derek Pöttinger Ukraine Ltd (Agricultural Machinery) Embassy of Greece in Ukraine. Oleksandr Martyniuk 205 . Private Sector Development/ Innovative Economy Director Mr. the official Austrian Foreign Trade Promotion Organisation. Derek is also Head of International Association of Polish Entrepreneurs in Ukraine Director Counsellor. Austrian Embassy in Ukraine European Business Association Name Hansen Mauer Position Deputy Commercial Counsellor Olga Valchuk Svetlana Mikhaylovska Rogier van Tooren Nicola Carbone Capitany Sandor Duncan Allen Niall Cullens EBA Deputy Director EBA Regulatory Affairs and Committee Manager Second Secretary Addetto Commerciale Head of international Trade Department Head/Policy Delivery Team 1st Secretary Energy Policy and Head of Commercial Section Trade Development Advisor Trade Development Advisor First Deputy Head Head of Department on Foreign-Economic Activity Director Analyst Head of Trade Department First Secretary in the Trade and Investment Promotion Section Delegate of German Economy in Ukraine Sector Manager.
Pöttinger Ukraine Ltd Addetto Commerciale. Economic and Commercial Affairs. Embassy of Greece in Ukraine Commercial Counsellor Office of Advantage Austria. Oleksandr Maurer. Nicola Ekiert. State Committee of Ukraine for Regulatory Policy and Entrepreneurship (SCURPE) Martynenko. Austrian Embassy in Ukraine Povroznyuk. Oxford Group Denmark Counsellor. Director. Organisation Director. Private Sector Development/ Innovative Economy. Austrian Embassy in Ukraine Project Country Coordinator for Ukraine. Commercial Section. Rogier Analyst. Leonidas Postl. European Business Association PEM Ukraine Ltd. Managing Director. Vadym Carbone. Denys Head of Department on Foreign-Economic Activity. Kim Papakonstantinidis. Zbigniev Position. Embassy of Denmark in Ukraine 206 . Michal Kobchenko. Volodymyr van Tooren. Hannes Møller. Office of Advantage Austria. "Study &Assessment" Ltd Sector Manager. "Study &Assessment" Ltd Second Secretary Embassy of the Kingdom of the Netherlands in Ukraine Sviatnenko. Director Project Expert. Vadym Tymyniuk. Iryna Trade Development Advisor. Trade and Investment Promotion Section of the Embassy of the Republic of Poland to Ukraine Gorzynski.Annex II List of workshop participants 17 participants took part in the Workshop. Tetyana Kostikov. EU Delegation to Ukraine Commercial Advisor. who represented the following organisations: − EU Delegation to Ukraine − Embassies of EU Member States to Ukraine − European Business Association − Analytical Advisory Centre − SCURPE − Enterprises List of participants: Name Andrushak. Valentyn Pyzhov. Gregor Commercial Attaché. Italian Embassy in Ukraine First Secretary. Nataliia Martyniuk. the British Embassy in Ukraine Committee Coordinator. Blue Ribbon Analytical and Advisory Center Expert.
personnel identification. it does represent a good illustration of the type of services that are commonly offered. e. identifying suitable locations). India. about half provide support services to EU SMEs. South Korea.9 Overview of support provided by interviewed organisations in the seven countries In each of the seven key target markets Brazil. SME lobbying. Ukraine. guides. Various types of informants with relevant knowledge and experience were interviewed. Organising incoming trade missions. identification and training of local staff). 9.g. Japan. These organisations established in the seven key target markets have been asked which of the following 26 services they provide: 1 Pre-market entry advice and information (basic research and market intelligence. China. secretarial support interpretation. China. Organising international trade fairs. Providing information on market opportunities (general orientation. Business intelligence/ market watch. e. 11 Organising local business events (networking). South Korea and Ukraine an interview programme has been initiated. representative offices of national agencies such as UKTI or Advantage Austria. local enterprises that have business relations with European SMEs and local commercial or governmental organisations. 17 Offering auxiliary services in target market. India. Approximately 20 interviews were made in each of the seven key target markets. 2 3 4 5 6 7 8 9 Providing staff training (initial orientation of management. 13 Giving advice how to deal with Intellectual Property Rights (IPR). finance planning. 16 Offering temporary office facilities. understanding local business culture. The picture achieved cannot be considered a completely comprehensive ‘mapping’ of support to EU SMEs in the selected countries. 9. 15 Providing business or professional advice (e. for example the EU Delegations and other EU institutions in the seven target countries. 10 Organising matchmaking events.g. From those 150 organisations interviewed. 11. European SMEs established in the target market. 1 The organisations were distributed as follows: Brazil. Japan. as well as European business support providers from various Member States. 12. 7. from lawyers. etc. 14. . 14 Stimulating and facilitating business cooperation and networking. accountants). However. training of EU staff. including consulates with commercial sections. and from 69 of these organisations detailed information on the type of services provided has been made available 1. bilateral chambers of commerce. Russia. 6. Identifying potential foreign business partners. Providing information on rules and regulations. one-to-one meetings with enterprises. Russia. 12 Giving advice how to deal with national technical standards. first approach).g.
etc. 26 Reporting trade barriers to EU Delegation and/or local authorities. 14. − Ukraine. 16%. 208 . − Japan.g. Figure 9.). Other services are offered by only a small minority. identifying suitable locations etc. 9.). technology transfer). 25% and easing access to local finance. 25 Easing access to local finance. mentoring. innovation support. 6. incubation. 33%. − South Korea. 12. accountants.18 Assistance post-market entry in different stages of market development (e. 96% and business cooperation and networking. e.e. − India. press releases. Details by target country are presented in the Annexes I to VII. coaching. distributed as follows: − Brazil. Information from 69 organisations has become available. 22 Signposting (referring to other trade support service providers).1 shows the type of services that are offered and provides an indication of the extent of the provision. negotiation skills). 11. − China. 19 Helping to understand local business topics / practices / culture. referring SMEs to local lawyers.g. e. 9. − Russia. 8. 21 Signposting (i. information on rules and regulations.g.g. identifying financial support. 24 Mentoring. understanding local business culture. 97%. 91%. 23 Coaching (e. pre-market entry advice and information (basic research. Some services are offered by nearly all service providers. 20 Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…').
local office facilities and organising international trade fairs. negotiation skills) Mentoring Easing access to local finance Source: Source EIM 2011.1 The percentage of all 69 organisations providing each of 26 types of services (average across 7 key target markets) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Local business topics/practices/culture Information on rules & regulations Information on market opportunities Business cooperation and networking Incoming trade missions Organising matchmaking events Pre-market entry advice & information Organising local business events Signposting to other support services Identify potential business partners Signposting (to local lawyers etc. Relatively little supply of: information on market opportunities.1 shows that the situation varies from target market to target market1. Presenting all details per target market in Table 9. coaching and mentoring. assistance in post-market entry and office facilities. Brazil Relatively often provided: mentoring.Figure 9. Japan In Japan relatively often the service providers offer information on market opportunities and many income trade missions are organised. 1 In the overview we highlight services that are offered by at least 20 percentage points more than the average across the seven key target markets. . advice on technical standards. India India only shows services that are offered by a relatively low number of service providers: information portals. or at least 20 percentage points less.) Business intelligence/market watch Reporting trade barriers to EU Delegation SME lobbying Information portal for EU SMEs Advice on technical standards Assistance post-market entry Organising international trade fairs Advice on IPR Providing business or professional advice Offering auxiliary services Providing staff training Offering temporary office facilities Coaching (e. advice on IPR and business and professional advice. Services offered below the average include signposting.g. China In China only two services are provided by relatively few providers: organising international trade fairs and mentoring.
pre-market entry advice and information.g.1 Percentage of 69 organisations that provided the specific type of service in the seven key target markets (ranked by overall average) Type of support measures Local business topics / practices / culture Information on rules & regulations Information on market opportunities Business cooperation and networking Incoming trade missions Organising matchmaking events Pre-market entry advice & information Organising local business events Signposting to other trade support services Identify potential business partners Signposting to local lawyers etc. and signposting to local lawyers and accountants. Ukraine In Ukraine service providers offer relatively often: SME lobbying. SME lobbying. post market entry services. business or professional advice. SME lobbying. information portal. signposting to other service providers. information on market opportunities.Russia Russia only shows services that are supplied relatively often: reporting trade barriers to European delegation. 2011. Table 9. advice on technical standards. Business intelligence/market watch Reporting trade barriers to EU Delegation SME lobbying Information portal for EU SMEs Advice on technical standards Assistance post-market entry Organising international trade fairs Advice on IPR Providing business or professional advice Offering auxiliary services Providing staff training Offering temporary office facilities Coaching (e. negotiation skills) Mentoring Easing access to local finance Total Number of observations Source: EIM. organising international trade fairs and mentoring. organising local business events. South Korea In South Korea a wide range of services are offered by relatively a few service providers: business cooperation and networking. advice on technical standards. Brazil 100% 100% 78% 89% 89% 78% 78% 78% 89% 78% 89% 67% 56% 67% 67% 33% 78% 78% 33% 22% 67% 44% 67% 44% 44% 33% 100% 9 China 93% 100% 93% 93% 86% 93% 86% 93% 86% 79% 86% 79% 57% 64% 57% 50% 50% 36% 57% 57% 57% 43% 43% 14% 0% 14% 100% 14 India 100% 83% 100% 92% 83% 83% 92% 92% 100% 92% 100% 75% 58% 50% 33% 33% 67% 58% 50% 58% 42% 25% 42% 17% 17% 17% 100% 12 Japan 100% 100% 100% 100% 100% 75% 75% 88% 63% 75% 63% 88% 63% 50% 75% 75% 25% 38% 63% 50% 25% 63% 25% 50% 25% 13% 100% 8 Russia 100% 100% 100% 100% 89% 89% 89% 89% 89% 89% 89% 89% 100% 100% 100% 89% 44% 56% 56% 89% 44% 33% 22% 56% 33% 0% 100% 9 South Korea 83% 83% 67% 50% 67% 83% 67% 50% 67% 83% 50% 67% 83% 17% 50% 50% 50% 50% 50% 0% 33% 33% 50% 17% 0% 0% 100% 6 Ukraine 100% 100% 91% 100% 91% 100% 100% 91% 91% 91% 91% 91% 91% 91% 55% 91% 82% 82% 82% 82% 64% 55% 36% 45% 55% 27% 100% 11 Total 97% 96% 91% 91% 87% 87% 86% 86% 86% 84% 84% 80% 71% 65% 61% 59% 58% 57% 57% 55% 49% 42% 41% 33% 25% 16% 100% 69 210 . business and professional advice and coaching. business and professional advice and mentoring. advice on IPR issues.
ANNEX I Support provided by interviewed organisations in Brazil Table 1 of 2 Names of providers of support measures EU Delegation APEX Brazil Chambers of Commerce and Industry 1 General Consulate Denmark British Consulate Business Center 2 Economic & Commercial Office Spain (ICEX programme) Yes Yes Yes Pre-market entry advice and information (basic research and market intelligence.... Chamber of Spain.. SwedCham 2 UKTI ." has not been implemented in Brazil and in the opinion of UKTI officers will not be impl emented at all. We called and sent enquiries to UKTI in the UK have not been answered. The UKTI´s program recommended to be examined by the Commission "Soft Landing Zone Programme" which stated "New locations are currently being developed in Brazil. understanding local business culture.... Mexico. 211 . Dutcham. No Yes Yes 1 Chambers of Commerce and Industry interviewed: o o o Britcham Chamber Brazil – Germany Eurochambres: representing Chamber Brazil – Germany. personnel identification.. Belgalux. Malta . This measure has been fully analyzed. Chamber Brazil – Portugal.OMIS Program: Overseas Market Information Service. finance planning.
Names of providers of support measures EU Delegation APEX Brazil Chambers of Commerce and Industry 1 General Consulate Denmark British Consulate Business Center 2 Economic & Commercial Office Spain (ICEX programme) identifying suitable locations ) Providing staff training (initial orientation of management. identification and training of local staff) Organising incoming trade missions Providing information on rules and regulations Providing information on market opportunities (general orientation. first approach) SME lobbying Yes No Yes Yes only for Danish SMEs Business intelligence/ market watch Identifying potential foreign business partners No No Yes Yes Yes only for British SMEs Yes Yes only for Spanish SMEs Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes Yes No No No No Yes Yes Yes Yes 212 . training of EU staff.
ac- No Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes No Yes Yes No No No No Yes Yes No No No Yes Yes Yes Yes Yes Yes No No Yes/No 1 No No No 1 Some do. e.g. others don’t. from lawyers.Names of providers of support measures EU Delegation APEX Brazil Chambers of Commerce and Industry 1 General Consulate Denmark British Consulate Business Center 2 Economic & Commercial Office Spain (ICEX programme) Yes Yes Yes Organising international trade fairs Organising matchmaking events. one-to-one meetings with enterprises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e.g. 213 .
press releases. referring SMEs to local lawyers. etc. secretarial support interpretation.e.) Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes/No Yes Yes Yes No No No No Yes/No Yes/No Yes Yes Yes Yes Yes Yes 214 .g. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i. incubation.g. guides. e. Assistance post-market entry in different stages of market development (e. accountants. innovation support. identifying financial support.Names of providers of support measures EU Delegation APEX Brazil Chambers of Commerce and Industry 1 General Consulate Denmark British Consulate Business Center 2 Economic & Commercial Office Spain (ICEX programme) countants) Offering temporary office facilities Offering auxiliary services in target market.
thus this programme doesn't support EU SMEs any more. negotiation skills) Mentoring Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities Other. namely …………….Names of providers of support measures EU Delegation APEX Brazil Chambers of Commerce and Industry 1 General Consulate Denmark British Consulate Business Center 2 Economic & Commercial Office Spain (ICEX programme) Yes Yes Yes Signposting (referring to other trade support service providers) Coaching (e. at the CNI (National Confederation of Industries) Office in Brasilia was interviewed. 215 . Chile and Venezuela. but the Latin American SMEs.g. the Coordinator of the Al-Invest programme for Mercosur.. Yes Yes Yes No No No Yes No No No No No No No Yes Yes Yes No Yes Yes Yes No Yes No No No Yes Maintaining relations with Brazilian governmental institutions Promotion of investments from abroad not specially SMEs Specially incubation AL-INVEST: on recommendation of the Commission. This Coordinator pointed out that the focus of this programme is not the European.
identifying suitable locations ) Providing staff training (initial orientation of management. CIATEC is starting to support European High Tec SMEs. SEBRAE is conscious of the fact that for the development of Brazilian companies and for future competitiveness. Such an event was held last year). CIATEC confirmed this personally. identification and training of local staff) Yes Yes No Yes Yes No 1 SEBRAE’s mission is exclusively focused on Brazilian micro and small businesses. Italy. personnel identification. however. Interviewees of SEBRAE in Sao Paulo and in Rio de Janeiro as well stated this ((in Rio during the FIRJAN interview. training of EU staff. as the proper organization has scarce financial resources . It offers orientation and other services for up to 4 years. as FIRJAN (Federation of Industries of Rio de Janeiro) joints in the same space and works closely together with SEBRAE and 4 CCIs (Germany. a third one is being planned. understanding local business culture. France)). finance planning. Information and Communication. Because of the tight rel ations Brazil – Europe they think that future contacts with European companies would be very instructive. 216 . They helped constructing 2 High Tec Indu strial Parks. the contact with external companies is of upmost importance. ac- cepting all nationalities looking for interaction.Table 2 of 2 Names of providers of support measures SEBRAE1 CIATEC2 INVESTE SP NOSSACAIXA SP Pre-market entry advice and information (basic research and market intelligence. Opinion of highest level of SEBRAE. but alerted that for organizing events abroad sponsors are needed. an industrial Centre at a distance of 100 km from Sao Paulo) is an incubator for companies TIC: high Technology. Port ugal. 2 CIATEC (in Campinas.
g. e.Names of providers of support measures SEBRAE1 CIATEC2 INVESTE SP NOSSACAIXA SP Organising incoming trade missions Yes Yes No Providing information on rules and regulations Providing information on market opportunities (general orientation. first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Organising international trade fairs Organising matchmaking events. one-to-one meetings with enterprises Organising local business events (networking) Giving advice how to deal with national technical standards Yes Yes Yes Yes Yes No No Yes Yes Yes Yes Yes No No Yes Yes Yes Yes Yes No No Yes Yes No No Yes No 217 .
incubation. press releases. e. innovation support.g.Names of providers of support measures SEBRAE1 CIATEC2 INVESTE SP NOSSACAIXA SP Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e. Assistance post-market entry in different stages of market development (e. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up No Yes No Yes Yes No No Yes No Yes Yes Yes Yes No No Yes Yes Yes financial support Yes Yes Yes No Yes No 218 . secretarial support interpretation. identifying financial support.g. guides.g. accountants) Offering temporary office facilities Offering auxiliary services in target market. from lawyers.
e. referring SMEs to local lawyers. etc. negotiation skills) Mentoring Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities CIATEC2 INVESTE SP NOSSACAIXA SP Yes Yes No Yes Yes No Yes Yes Yes No Yes Yes Yes No No No Yes No 219 . accountants.Names of providers of support measures SEBRAE1 to date and consistent information on 'Doing Business In…') Signposting (i.g.) Signposting (referring to other trade support service providers) Coaching (e.
although some of their projects do. training of EU staff.ANNEX II Support provided by interviewed organisations in China Table 1 of 2: Beijing Names of providers of support measures Type of support measures Embassy of the Republic of Slovenia. finance planning. identifying suitable locations ) Providing staff training (initial orientation of management. Beijing Yes No Yes EU Delegation 1 EU SME Centre Yes 1 The EU Delegation is an extension of EU institutions and does not serve companies directly. personnel identification. Beijing Pre-market entry advice and information (basic research and market intelligence. but only pan-EU and if No No Yes No No Yes Yes Embassy of the Republic of Hungary German Centre for Industry and Trade. understanding local business culture. 220 . identification and training of local staff) Organising incoming trade missions Yes Yes Yes on request Yes.
Beijing they come as part of a business delegation of a high-level EU official Providing information on rules and regulations Providing information on market opportunities (general orientation. Beijing Embassy of the Republic of Hungary German Centre for Industry and Trade. within limits Yes Yes Yes EU Delegation 1 EU SME Centre Yes Yes No Yes 221 .Names of providers of support measures Type of support measures Embassy of the Republic of Slovenia. first approach) SME lobbying Yes Yes For Germans yes but not a main function Business intelligence/ market watch Identifying potential foreign busiYes Yes No Yes No No No No Yes Yes No No Yes Yes Yes.
from lawyers. one-to-one meetings with enterprises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e.g. Beijing EU Delegation 1 EU SME Centre Yes Yes Yes No Yes Yes Yes – general advice then referred to No No Yes 222 .Names of providers of support measures Type of support measures Embassy of the Republic of Slovenia. e.g. Beijing ness partners Organising international trade fairs Organising matchmaking events. accountants) Yes No Yes Yes Yes Yes Yes No No No Yes Yes No No Yes Yes Yes Yes No Yes Yes Yes No No No Embassy of the Republic of Hungary German Centre for Industry and Trade.
secretarial support interpretation. e. Beijing Embassy of the Republic of Hungary German Centre for Industry and Trade.Names of providers of support measures Type of support measures Embassy of the Republic of Slovenia.g. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent informaYes Yes No No Yes Yes Yes Yes No Yes Currently no but from 2012 yes Yes No No No Yes Yes No No No Yes No Yes 223 . incubation. press releases. guides. Currently only translation support but from 2012 yes Assistance post-market entry in different stages of market development (e.g. innovation support. Beijing EU Delegation 1 EU SME Centre specialists Offering temporary office facilities Currently no but from 2012 yes Offering auxiliary services in target market. identifying financial support.
mainly for SMEs 224 . negotiation skills) Mentoring Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities Other No No No Yes No No No Yes No No No Yes No No No n/a No No No Yes Yes Yes Yes No Yes Embassy of the Republic of Hungary German Centre for Industry and Trade. etc. referring SMEs to local lawyers.g. accountants.) Signposting (referring to other trade support service providers) Coaching (e. Beijing EU Delegation 1 EU SME Centre Yes Yes Yes No Yes Yes.Names of providers of support measures Type of support measures Embassy of the Republic of Slovenia. Beijing tion on 'Doing Business In…') Signposting (i. credit rating of Chinese companies.e.
finance planning. Netherlands Business Support Offices. personnel identification. 225 .Table 2 of 2: Shanghai Names of providers of support measures Type of support measures ChinaBritain Business Council (CBBC) Shanghai Rotterdam Commer cial Representative Office (RCRO) Shanghai 1 Yes Netherlands Business Support Offices (NBSO) 2. Agency for Economic and Scientific Cooperation. Baden Württemberg International Economic and Scientific Cooperation (Nanjing) Co. understanding local business culture. part of the worldwide network of German Chambers. Ltd. training of EU staff. Nanjing Yes Baden Württenberg International. identification and training of local staff) Yes Yes Yes No No Yes No Yes Yes No No 1 2 3 RCRO only supports Dutch businesses. initiated by Netherland Government. A representative office of the State of Bade n-Württemberg in Southwest Germany. AHK. Baden-Württemberg International. identifying suitable locations ) Providing staff training (initial orientation of management. Nanjing Yes Royal Danish Consulate General. Shanghai Yes Yes Advantage Austria – Austrian Consulate General Pre-market entry advice and information (basic research and market intelligence. 4 Delegation of German Industry & Commerce Shanghai. office Nanjing. Shanghai European Union Chamber of Commerce in China (EUCCC). Shanghai No Yes The German Chamber Network. bwi 3. SDI. 4 Shanghai Scottish Development International.
Nanjing Yes Baden Württenberg International. Shanghai European Union Chamber of Commerce in China (EUCCC). first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Organising international trade fairs Organising matchmaking events.Names of providers of support measures Type of support measures ChinaBritain Business Council (CBBC) Shanghai Rotterdam Commer cial Representative Office (RCRO) Shanghai 1 Yes Netherlands Business Support Offices (NBSO) 2.g. one-to-one meetings with en- Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes - Yes Yes Yes No No Yes No No No Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes 226 . 4 Shanghai Scottish Development International. Nanjing Yes Royal Danish Consulate General. Shanghai Yes Yes The German Chamber Network. bwi 3. AHK. SDI. e. Shanghai Yes Yes Advantage Austria – Austrian Consulate General Organising incoming trade missions Providing information on rules and regulations Providing information on market opportunities (general orientation.
g. SDI. than referral Yes Yes No Yes No No Yes Yes No Yes No No Yes Yes No No No No Yes No Yes Yes No Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes No No No Yes Yes Yes Offering temporary office facilities Offering auxiliary services in target market. Shanghai European Union Chamber of Commerce in China (EUCCC). Shanghai Advantage Austria – Austrian Consulate General terprises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e.Names of providers of support measures Type of support measures ChinaBritain Business Council (CBBC) Shanghai Rotterdam Commer cial Representative Office (RCRO) Shanghai 1 Netherlands Business Support Offices (NBSO) 2. e. secretarial sup- 227 . from lawyers.g. AHK. 4 Shanghai Scottish Development International. accountants) General advise yes. Shanghai The German Chamber Network. bwi 3. Nanjing Baden Württenberg International. Nanjing Royal Danish Consulate General.
Names of providers of support measures Type of support measures ChinaBritain Business Council (CBBC) Shanghai Rotterdam Commer cial Representative Office (RCRO) Shanghai 1 Netherlands Business Support Offices (NBSO) 2, Nanjing Baden Württenberg International, bwi 3, Nanjing Royal Danish Consulate General, Shanghai European Union Chamber of Commerce in China (EUCCC), Shanghai The German Chamber Network, AHK, 4 Shanghai Scottish Development International, SDI, Shanghai Advantage Austria – Austrian Consulate General
port interpretation, guides. Assistance post-market entry in different stages of market development (e.g. incubation, identifying financial support, press releases, innovation support, technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i.e. referring SMEs to local lawyers, accountants, etc.) Signposting (referring to other trade support service providers) Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes No Yes No Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Yes (limited) No Yes
Names of providers of support measures Type of support measures ChinaBritain Business Council (CBBC) Shanghai Rotterdam Commer cial Representative Office (RCRO) Shanghai 1 No No No Netherlands Business Support Offices (NBSO) 2, Nanjing No No No Baden Württenberg International, bwi 3, Nanjing No No No Royal Danish Consulate General, Shanghai European Union Chamber of Commerce in China (EUCCC), Shanghai Yes No No Yes No Yes (limited to signposting) Reporting trade barriers to EU Delegation and/or local authorities Other Yes, sourcing No No No No No Yes Yes Yes Yes The German Chamber Network, AHK, 4 Shanghai Scottish Development International, SDI, Shanghai No No Yes No No No Advantage Austria – Austrian Consulate General
Coaching (e.g. negotiation skills) Mentoring Easing access to local finance
No No No
No No No
Support provided by interviewed organisations in India
Table 1 of 2
Names of providers of support measures Type of Support Measures Advantage India, Austrian Embassy, Delhi Scottish Development International, SDI, Delhi UKTI, British Trade Office, Pune German Centre for Industry & Trade, DelhiGurgaon IndoFrench Chamber of Com. & Industry, Mumbai Yes Yes Yes Embassy of Ireland, Delhi Consulate General of Spain, Mumbai
Pre-market entry advice and information (basic research and market intelligence, finance planning, personnel identification, understanding local business culture, identifying suitable locations ) Providing staff training (initial orientation of management, training of EU staff, identification and training of local staff) Organising incoming trade missions Providing information on rules
No, too broad
Yes, but basic
Names of providers of support measures Type of Support Measures Advantage India, Austrian Embassy, Delhi Scottish Development International, SDI, Delhi UKTI, British Trade Office, Pune German Centre for Industry & Trade, DelhiGurgaon IndoFrench Chamber of Com. & Industry, Mumbai Embassy of Ireland, Delhi Consulate General of Spain, Mumbai
and regulations Providing information on market opportunities (general orientation, first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Organising international trade fairs Yes Yes, facilitate participation of Scottish companies Organising matchmaking events, e.g. one-to-one meetings with enterprises Organising local business events Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes
only Yes Yes Yes Yes
Names of providers of support measures Type of Support Measures Advantage India, Austrian Embassy, Delhi Scottish Development International, SDI, Delhi UKTI, British Trade Office, Pune German Centre for Industry & Trade, DelhiGurgaon IndoFrench Chamber of Com. & Industry, Mumbai Embassy of Ireland, Delhi Consulate General of Spain, Mumbai
(networking) Giving advice how to deal with national technical standards No Yes, broad overview Yes No No No Yes
Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e.g. from lawyers, accountants) Offering temporary office facilities Offering auxiliary services in target market, e.g. secretarial support interpretation, guides.
Yes, broad overview
No, provide references only
SDI.e. accountants. identifying financial support.Names of providers of support measures Type of Support Measures Advantage India. etc. referring SMEs to local lawyers. British Trade Office. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i. Delhi Scottish Development International. Delhi Consulate General of Spain. Austrian Embassy. Delhi UKTI. Pune German Centre for Industry & Trade. incubation.) Signposting (referring to other trade support service providers) Yes No Yes No Yes Yes Yes Yes Yes Yes Yes No No Yes No No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 233 .g. Mumbai Assistance post-market entry in different stages of market development (e. & Industry. innovation support. Mumbai Yes Yes Yes Embassy of Ireland. press releases. DelhiGurgaon IndoFrench Chamber of Com.
- - Other. No No No No - Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities Other. Delhi Consulate General of Spain. negotiation skills) No Yes.Names of providers of support measures Type of Support Measures Advantage India. namely : - - conference area & event packages - - 234 . Austrian Embassy. Mumbai Coaching (e. SDI. British Trade Office. Mumbai No No No Embassy of Ireland. DelhiGurgaon IndoFrench Chamber of Com. in Scotland. meeting rooms. Delhi Scottish Development International. namely: No No No No Yes Yes No No No No Yes Yes - - - Yes: office space.g. Delhi UKTI. Pune German Centre for Industry & Trade. No No Mentoring Yes Yes. coaching for export related activities in Scotland. & Industry.
finance planning. identifying suitable locations ) Providing staff training (initial orientation of management. identification and training of local staff) Organising incoming trade missions Providing information on rules and regulations Providing information on market opportunities (general orientation. Mumbai Yes Yes Yes Pre-market entry advice and information (basic research and market intelligence. Mumbai Embassy of The Netherlands. Delhi Consulate General of Republic of Poland. Delhi Indo German Chamber of Commerce. personnel identification. EBTC. first approach) Yes Yes No Yes.Table 2 of 2 Names of providers of support measures Type of Support Measures European Business and Technology Centre. understanding local business culture. Pune Rabo Bank The Netherlands. but to a limited extent only No No No Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 235 . training of EU staff.
Delhi Consulate General of Republic of Poland. EBTC. Mumbai Embassy of The Netherlands. Delhi Indo German Chamber of Commerce. Mumbai No Yes Yes No Yes Yes SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Organising international trade fairs Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes through our associates in Germany. Pune Rabo Bank The Netherlands. No No No Organising matchmaking events. e. based with us.Names of providers of support measures Type of Support Measures European Business and Technology Centre.g. in a limited sort of way No No No 236 . one-to-one meetings with enterprises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights Yes Yes No Yes Yes Yes Yes No Yes Yes (Yes) No No No No Yes Yes.
Delhi Consulate General of Republic of Poland. identifying financial support. accountants) Offering temporary office facilities Offering auxiliary services in target market.g. EBTC. e.Names of providers of support measures Type of Support Measures European Business and Technology Centre. Mumbai (IPR) through associates Yes Yes Yes Yes No Stimulating and facilitating business cooperation and networking Providing business or professional advice (e. Delhi Indo German Chamber of Commerce. Mumbai Embassy of The Netherlands. Assistance post-market entry in different stages of market development (e.g. press releases. Pune Rabo Bank The Netherlands.g. technology transfer) No Yes Yes No Yes Yes Yes No No No No Yes No No No Yes Yes Yes No No 237 . secretarial support interpretation. from lawyers. guides. innovation support. incubation.
etc. negotiation skills) Yes Yes Yes Yes. referring SMEs to local lawyers. Mumbai Yes Yes Yes Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i. through our Training Centre Executive courses No No No Mentoring Easing access to local finance No No No No No Yes No No No No 238 . Pune Rabo Bank The Netherlands. EBTC. Delhi Indo German Chamber of Commerce. accountants.Names of providers of support measures Type of Support Measures European Business and Technology Centre. Mumbai Embassy of The Netherlands. Delhi Consulate General of Republic of Poland. in a limited manner Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes.g.e.) Signposting (referring to other trade support service providers) Coaching (e.
reorientation services for inbound foreign associates - - - 239 . Mumbai No Yes Yes Reporting trade barriers to EU Delegation and/or local authorities Other. Pune Rabo Bank The Netherlands. Delhi Indo German Chamber of Commerce. Delhi Consulate General of Republic of Poland. EBTC. HR & recruitment Services - - - Other. namely: Yes Yes Identifying Indian projects requiring European technologies Yes. namely : - Yes.Names of providers of support measures Type of Support Measures European Business and Technology Centre. Mumbai Embassy of The Netherlands.
British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) Yes Yes Yes Yes Yes Yes. personnel identification. identifying suitable locations ) Providing staff training (initial orientation of management. understanding local business culture. finance planning. training of EU staff. identification and training of local staff) Organising incoming trade missions Yes •(Gateway)• Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes (initial orientation of management only) No Yes No Yes European Business Council in Japan EBC No Yes Yes German CCI (AHK) Advantage Austria UKTI and SI. but not strictly “trade” but “investment” or “training” Yes Providing information on 240 .ANNEX IV Support provided by interviewed organisations in Japan Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation Pre-market entry advice and information (basic research and market intelligence.
e. first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Yes (Gateway) No No No Yes Yes Yes No No Yes Yes Yes Yes Yes.Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation rules and regulations Providing information on market opportunities (general orientation.g. one-to-one meetings with enterprises Organising local business events (networking) No Yes (Gateway) Yes (Gateway) No No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes. policy seminars 241 . British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No Yes Organising international trade fairs Organising matchmaking events. through HRTP programme (Gateway) Yes (Gateway) Yes Yes Yes Yes Yes Yes Yes European Business Council in Japan EBC German CCI (AHK) Advantage Austria UKTI and SI.
British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) Yes Yes Yes No No No No No Yes Yes No 242 .g.g. trough seminars No Yes No Yes Yes Yes Yes No No Yes European Business Council in Japan EBC No Yes Yes German CCI (AHK) Advantage Austria UKTI and SI. guides. e.Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Providing business or professional advice (e. from lawyers. Assistance post-market entry in different stages of market No No No Yes Yes No No No No No No No Yes Yes Yes (Gateway/ETP) No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes. accountants) Offering temporary office facilities Offering auxiliary services in target market. secretarial support interpretation.
incubation.) Signposting (referring to other trade support service providers) Coaching (e.e.Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation development (e. press releases. British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) 243 . news Yes Yes Yes Yes Yes Yes Yes.g. innovation support. accountants. news Website. for Austrian SMEs.g. through HRTP European Business Council in Japan EBC German CCI (AHK) Advantage Austria UKTI and SI. but usually not necessary Yes Yes Yes Yes Yes Yes No No No Yes Yes (Gateway) No Website. identifying financial support. referring SMEs to local lawyers. negotiation No Yes No No No No No Yes Yes. etc. magazine whitepaper Website Yes. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on ‘Doing Business In…’) Signposting (i. web-site. on demand Yes Yes. in German language Yes Yes Yes Yes.
eu Other. trade Clusters help desk. Clusters help desk and matching: information services N. http://www. namely ………. namely …………….Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation skills) Mentoring Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities Other. Gateway Programme.. ETP. EU-Japan Business Round Table: private sector dialogue and recommendations to improve the business environment between the EU and Japan. British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) 244 .. information ser2. trade missions.A.eujapan-brt. Yes Yes Yes Yes Yes No No No No Yes No No No No No No Yes No No No Yes No European Business Council in Japan EBC German CCI (AHK) Advantage Austria UKTI and SI. very committed training programme for managers including internship in Japan EU-Japan Business Round Table 1.
Organisation of internship: placements for students in 2 science programmes: Vulcanus in Japan and Vulcanus in Europe 245 .Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation fairs. J-BILAT: Promoting cooperation in innovation and R&D under the EU Framework Programme http://www. matching and follow up advice vices for local clusters to identify partners European Business Council in Japan EBC German CCI (AHK) Advantage Austria UKTI and SI. British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) for local clusters to identify partners 3.eu/ 4.jbilat.
Names of providers of support measures Type of support measures EU Delegation EU-Japan Centre for Industrial Cooperation European Business Council in Japan EBC German CCI (AHK) Advantage Austria UKTI and SI. British Embassy JETRO EU-Japan Centre for Industrial Cooperation (CIC) 5. Organisation of short missions to learn about Japanese Manufacturing and Distribution: 2 programmes: World Class Manufacturing and Distribution and Business Practices 246 .
More detailed data on the charge for UKTI services can be provided by UKTI (hourly rate). Moscow German Chamber Network Abroad (AHK). Commercial Section. There is a service cost attached to UKT I support. UKTI offer support service to UK companies or those with a strong presence in the UK (offices and employees there). finance planning. Moscow Austrian Embassy. Moscow Enterprise Ireland's overseas office in Russia. Moscow/ Advantage Austria Yes Yes (OMISoverseas market introduction services) Yes Yes UKTI. Also. RBCC. some – for fee. 3 Partner of the Enterprise Europe Network. 247 . Moscow 2 Netherlands Business Support Office (NBSO). Yekaterinburg EuroInfoCentre (Moscow) 3 Pre-market entry advice and information (basic research and market intelligence.ANNEX V Support provided by interviewed organisations in Russia Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). personnel identifi- No Yes Yes Yes Yes 1 2 Some services are provided by the organizations for free. Moscow RussoBritish Chamber of Commerce.
g. office management No No No Yes No No 248 . identification and training of local staff) Organising incoming trade missions Providing inYes. training of EU staff. at least training of local staff in e. Moscow RussoBritish Chamber of Commerce. Moscow 2 Netherlands Business Support Office (NBSO). basic Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes. Moscow/ Advantage Austria UKTI. Moscow Austrian Embassy. Commercial Section. understanding local business culture.Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). Moscow German Chamber Network Abroad (AHK). identifying suitable locations) Providing staff training (initial orientation of management. Yekaterinburg EuroInfoCentre (Moscow) 3 cation. Moscow Enterprise Ireland's overseas office in Russia. RBCC.
Moscow Enterprise Ireland's overseas office in Russia.Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). Commercial Section. Moscow 2 Netherlands Business Support Office (NBSO). Moscow/ Advantage Austria UKTI. Moscow Austrian Embassy. RBCC. first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners No Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 249 . Yekaterinburg EuroInfoCentre (Moscow) 3 formation on rules and regulations Providing information on market opportunities (general orientation. Moscow RussoBritish Chamber of Commerce. Moscow German Chamber Network Abroad (AHK).
Yekaterinburg EuroInfoCentre (Moscow) 3 Organising international trade fairs No Yes No Yes No Organising local No Yes Yes Yes Yes Yes Yes Yes Yes 250 . Moscow German Chamber Network Abroad (AHK). Moscow/ Advantage Austria Yes Yes No No. Moscow 2 Netherlands Business Support Office (NBSO). do not organize themselves but participate in organizing + can organize business missions in the framework of trade fairs Organising matchmaking events. Moscow RussoBritish Chamber of Commerce. e. Commercial Section. Moscow Austrian Embassy. RBCC.Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). one-to-one meetings with enterprises No Yes Yes Yes Yes Yes Yes Yes Yes UKTI. Moscow Enterprise Ireland's overseas office in Russia.g.
Commercial Section. Moscow RussoBritish Chamber of Commerce. Moscow 2 Netherlands Business Support Office (NBSO). Yekaterinburg EuroInfoCentre (Moscow) 3 business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) No Yes Yes Yes No Yes Yes No No This service is provided by partners gate2rubin Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Stimulating and facilitating business cooperation and networking 251 . Moscow German Chamber Network Abroad (AHK).Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). Moscow/ Advantage Austria UKTI. Moscow Austrian Embassy. Moscow Enterprise Ireland's overseas office in Russia. RBCC.
No No Yes Yes Yes No No No Yes 252 . Moscow 2 Netherlands Business Support Office (NBSO). Yekaterinburg EuroInfoCentre (Moscow) 3 Providing business or professional advice (e. now no Yes Offering auxiliary services in target market. accountants) Offering temporary office facilities No Yes Yes Yes Yes No No Yes: officein-office or virtual office No No No Providing event venue. RBCC. Commercial Section. Moscow RussoBritish Chamber of Commerce. Moscow Enterprise Ireland's overseas office in Russia. from lawyers. secretarial support interpretation. hosting dinners Yes.Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). Moscow Austrian Embassy. Moscow/ Advantage Austria Yes Yes Yes Yes UKTI.g. e. before November 2010. Moscow German Chamber Network Abroad (AHK). guides.g.
some of this Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Web-site Web-site Web-site. identifying financial support. incubation. Bi-monthly Web-site 253 .Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB). technology transfer) Helping to understand local business topics / practices / culture Maintaining an online informa- No No Yes. press releases. publications Web-site Web-site Web-site Web-site Web-site.g. Moscow Enterprise Ireland's overseas office in Russia. innovation support. Yekaterinburg EuroInfoCentre (Moscow) 3 Assistance postmarket entry in different stages of market development (e. Moscow Austrian Embassy. Moscow 2 Netherlands Business Support Office (NBSO). to some extent No No UKTI. Moscow German Chamber Network Abroad (AHK). Commercial Section. Moscow/ Advantage Austria No Yes. Moscow RussoBritish Chamber of Commerce. RBCC.
Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB), Moscow German Chamber Network Abroad (AHK), Moscow Enterprise Ireland's overseas office in Russia, Moscow RussoBritish Chamber of Commerce, RBCC, Moscow Austrian Embassy, Commercial Section, Moscow/ Advantage Austria Newsletters UKTI, Moscow 2 Netherlands Business Support Office (NBSO), Yekaterinburg EuroInfoCentre (Moscow) 3
tion portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i.e. referring SMEs to local lawyers, accountants, etc.) Signposting (referring to other trade support service providers) Coaching (e.g. negotiation No Yes through trainings No Yes (Dublin office) Yes No Yes No Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes
Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB), Moscow German Chamber Network Abroad (AHK), Moscow Enterprise Ireland's overseas office in Russia, Moscow RussoBritish Chamber of Commerce, RBCC, Moscow Austrian Embassy, Commercial Section, Moscow/ Advantage Austria UKTI, Moscow 2 Netherlands Business Support Office (NBSO), Yekaterinburg EuroInfoCentre (Moscow) 3
skills) Mentoring No No No Yes (Dublin office) No No Yes Yes No No
Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities Other, namely:
Yes (to the Dutch authorities)
Promotion of EU-Russian economic cooperation via consultations and liaison with the Russian Govern-
Information support: Advertising, conference room for rent. Business statistics. Advice
Accreditation of representative offices.
Visa support to Russian partners and official invitations for Irish visitors
Interactive on-line membership directory.
Promotion and PR for Austrian companies and products
"Fixes"setting up meetings for businesses. Event management
Visa support (official invitation for Dutch visitors: business and officials)
Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB), Moscow German Chamber Network Abroad (AHK), Moscow Enterprise Ireland's overseas office in Russia, Moscow RussoBritish Chamber of Commerce, RBCC, Moscow Austrian Embassy, Commercial Section, Moscow/ Advantage Austria UKTI, Moscow 2 Netherlands Business Support Office (NBSO), Yekaterinburg EuroInfoCentre (Moscow) 3
ment. Analyzing SMEs feedback and signals about problems and gaps in business climate. EU Delegation does not provide specific assistance to companies. Other, namely: EU Delegation implements projects and programmes aimed at SME support and regional de-
on access to regions. Facilitating visa and work permits issuance.
Visa assistance and work permits.
Organization of business trips and presentations
Identification, formulation appraisal and support to bilateral projects being implemented in the
Names of providers of support measures 1 Type of support measures EU Delegation Association of European Business (AEB), Moscow German Chamber Network Abroad (AHK), Moscow Enterprise Ireland's overseas office in Russia, Moscow RussoBritish Chamber of Commerce, RBCC, Moscow Austrian Embassy, Commercial Section, Moscow/ Advantage Austria geographical area of the NBSO responsibility UKTI, Moscow 2 Netherlands Business Support Office (NBSO), Yekaterinburg EuroInfoCentre (Moscow) 3
velopment, promotion of cooperation (e.g. Cooperation programme in the Baltic Sea region 2003 support for the private sector) Other, namely: Organising monthly meetings with trade sections of embassies of EU Member States in Russia.
ANNEX VI Support provided by interviewed organisations in South Korea Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 Yes Yes Pre-market entry advice and information (basic research and market intelligence. HR Training Course for EU companies based in Korea in cooperation with Seoul National University (SNU). personnel identification. understanding local business culture. finance planning. identifying suitable locations ) Providing staff training (initial ori- No Yes No Yes No Yes/No 4 No Yes 5 No No 1 Serves basically local businesses but members of other European nationalities. 2 3 4 5 Serves Irish enterprises only. three-months and receipt of EUCCK-SNU certificate 259 . Serves to promote Polish businesses in Korea only. The KGCCI institutes a human resource service: Identification "Yes" but trai ning "No".
first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign busiNo Yes Yes Yes Yes Yes No No No Yes No No Yes Yes No Yes No Yes No Yes No Yes Yes Yes No Yes No Yes Yes Yes Yes Yes No Yes Yes Yes 260 . training of EU staff. identification and training of local staff) Organising incoming trade missions Providing information on rules and regulations Providing information on market opportunities (general orientation.Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 entation of management.
one-to-one meetings with enterprises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating busiNo Yes No Yes No Yes No Yes No Yes Yes No No Yes No Yes Yes No No Yes Yes Yes 2 No No No Yes No Yes Yes No No Yes Yes 1 Yes Yes Yes 1 2 Via the EEN programme.g. 261 .Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 ness partners Organising international trade fairs Organising matchmaking events. EUCCK network events take place on a monthly basis in Seoul and Busan. e.
accountants) Offering temporary office facilities Offering auxiliary services in target market. Marketing assistance through EUCCK monthly business magazine.g. the EU-Korea Foundation has published a "Newcomer’s and Visitor’s Guide Guide to Korea (last updated 2007)". guides. e. identifyNo Yes No Yes/No 3 No Yes No No Yes Yes No No Yes 1 Yes/No 2 No No Yes No No No No No No No 1 2 3 Two business incubators within EUCCK premises available. Assistance post-market entry in different stages of market development (e. EUCCK also provides market entry studies for EU companies not yet established in Korea. incubation service. Upon request. from lawyers.g. EUCCK’s charity arm. incubation. secretarial support interpretation. 262 . and EUCCK’s Busan office has pub- lished "Busan Life – Newcomer’s Guide to Gyeongsan Provice (published June 2010).g.Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 ness cooperation and networking Providing business or professional advice (e.
) Signposting (referring to other trade support service providers) Coaching (e. etc. innovation support.g. referring SMEs to local lawyers. press releases. negotiation skills) No No No Yes 1 No No Yes Yes No Yes Yes No No Yes No Yes Yes No Yes Yes No Yes Yes Yes No Yes No Yes No Yes 1 HR Training Course 263 .Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 ing financial support. accountants. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i.e.
cefcseoul. 264 . 2 Not the execution of the programmes. but rather the monitoring. etc.com) with logistical support (Use of 1 Identifying trade barriers for EUCCK’s own use. 2 .Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 No No Yes No No Yes Mentoring Easing access to local finance Reporting trade barriers to EU Delegation and/or local authorities EU Business Development Programmes such as: Other support: No No Yes No No Yes No No No No No Yes 1 ETP Korea and EUVP.Providing French SME Association (www. not for reporting to any authorities.
Energy and Environmental Technologies. Construction & Building Technologies.Providing market study updates (Doing business in Korea.Names of providers of support measures Type of support measures EU Delegation KGCCI (KoreaGerman Chamber of Commerce and Industry) 1 Enterprise Europe Network Korea EUCCK (European Union Chamber of Commerce in Korea) Enterprise Ireland 2 Trade and Investment Promotion Section Embassy of Poland 3 EUCCK conference room for bi-monthly meetings free of charge) . Medical Devices) 265 .
266 . finance planning. understanding local business culture. identifying suitable locaYes* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine. Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department .UKTI 1 If "Yes*": Not directly by the EU Delegation but only within the framework of thematic EU-funded Projects. Trade and Investment Promotion Office Pre-market entry advice and information (basic research and market intelligence. Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine.ANNEX VII Support provided by interviewed organisations in Ukraine Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria. personnel identification.
Trade and Investment Promotion Office tions ) Providing staff training (initial orientation of management. Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine.UKTI 267 . Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department . training of EU staff. identification and training of local staff) Organising incoming trade missions Providing information on rules and regulations Providing information on market opportunities No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes* Yes Yes Yes Yes Yes No No No No No Delegation of German Economy in Ukraine Embassy of Greece in Ukraine.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria.
one-to-one meetings with enterYes* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes* Yes No Yes Yes Yes No Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine.UKTI 268 . first approach) SME lobbying Business intelligence/ market watch Identifying potential foreign business partners Organising international trade fairs Organising matchmaking events.g.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria. Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine. e. Trade and Investment Promotion Office (general orientation. Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department .
Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department . Trade and Investment Promotion Office prises Organising local business events (networking) Giving advice how to deal with national technical standards Giving advice how to deal with Intellectual Property Rights (IPR) Stimulating and facilitating business cooperation and networking Yes* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes* Yes Yes Yes Yes No Yes No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria.UKTI Yes* Yes Yes Yes Yes Yes Yes Yes Yes Yes No 269 . Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine.
Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine.g.g. Assistance post-market entry in different stages of market development (e.g. Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department .UKTI 270 . e. accountants) Offering temporary office facilities Offering auxiliary services in target market. incubation.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria. guides. Trade and Investment Promotion Office Providing business or professional advice (e. from lawyers. identifyNo Yes Yes Yes yes Yes No Yes Yes Yes Yes No Yes Yes No Yes Yes No Yes Yes Yes No No No Yes No Yes Yes No No Yes No No No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine. secretarial support interpretation.
Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine. innovation support.e.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria. Trade and Investment Promotion Office ing financial support. referNo Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes N/a N/a Yes Yes No Yes N/a Yes Yes* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine. press releases. technology transfer) Helping to understand local business topics / practices / culture Maintaining an online information portal for EU SMEs (provision of up to date and consistent information on 'Doing Business In…') Signposting (i.UKTI 271 . Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department .
Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine. etc.g. Trade and Investment Promotion Office ring SMEs to local lawyers. accountants. Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department . negotiation skills) Mentoring Easing access to local finance 1 No No Yes Yes** Yes No Yes Yes** Yes Yes** Yes N/a No No No No N/a N/a N/a N/a Yes N/a No Yes Yes N/a Yes Yes No No Yes N/a N/a N/a Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine.Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria.) Signposting (referring to other trade support service providers) Coaching (e.UKTI 1 If "Yes**": Financial services are covered by financial schemes organised from EU country 272 .
Trade and Investment Promotion Office Reporting trade barriers to EU Delegation and/or local authorities N/A Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Delegation of German Economy in Ukraine Embassy of Greece in Ukraine. Austrian Embassy in Ukraine European Business Association Embassy of the Kingdom of the Netherlands in Ukraine Italian EmHungarian The British Royal Danish Embassy of the Republic of Poland to Ukraine.UKTI 273 . Department of Economy and Trade bassy in EmEmEmbassy Ukraine bassy in bassy in in Ukraine Ukraine Ukraine International Trade Department .Names of providers of support measures Type of support measures EU Delegation to Ukraine 1 Office of Advantage Austria.
240-8501. A. 23020 230 .com. Japan Tel/Fax +81 45 339 3593 E-mail: email@example.com Japan CSEG (Center for Corporate Strategy and Economic Growth) Professor Itsutomo Mitsui Yokohama National University Tokiwadai 79-4.com India Dr. B-3.cn Wuxi National Hi-Tech Industrial Development Zone . People's Republic of China E-mail: ceo@newst. Guaratiba. +55 2124101303 interjan@terra. Brazil Tel. Hodogaya-ku Yokohama City. Ghosh. UK Office Mrs.P.Rio de Janeiro. Jade Xu 40 Clarendon Place Glasgow. Wan Tong New World B.2 FuWai Street.jp 275 .. Management Consulant Sylvan Retreat. 3527.br China Beijing Newst Secretary-Accounting Co. India Phone: +91 120 25537554 E-mail: ghoshap@gmail. No. Li Baojie 24th floor.. Business Consultants Estrada da Ilha.ac. Jan van Uden Consultoria Empresarial Ltda. United Kingdom Phone: +44 141 3328181 E-mail: jade1963@163. G20 7PZ. Ltd Mr.ANNEX VIII National researchers Brazil INTERCONSULT Mr.com. XiCheng District 100037 Beijing.Workstation for Overseas Talents Introduction. Range Hills Road Pune 411020.
03150. off 23. Ukraine Phone/Fax +380 44 528 00 52 E-mail : ecorys_kyiv@voliacable. Jae-Hoon Lee 4th Fl. Yeoksam-dong..Russia The Russian SME Resource Centre. MPA 102.. +7 916 649-07-97 (mobile). Gorkogo St.or. KDN Bldg. Ms. 14 block 2.com.com 276 . Irina Alexeeva Office address: Nametkina str.ru. Republic of Korea Phone: +82 2 3288 1974 E-mail: jhlee@meri. office 502 Moscow 117420. Ms.kr Ukraine Study and Assessment Ltd.. Kangnam-gu Seoul 135-914. www. Nataliia Martynenko. firstname.lastname@example.org South Korea Market Economy Research Institute Dr. 5 floor Kyiv. E-mail email@example.com. vpyzhov@voliacable. Russia Phone/Fax: +7 495 332-00-34 (office).rcsme.
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