This article looks into the first steps you can readily take in formulating a strategy to target Francophone markets.

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The Exporters Toolkit: Your Preliminary Analysis
June 2010
As highlighted in a recent article published in the Wall Street Journal Online
(http://online.wsj.com/ad/france) , it would appear that France is faring better than its
European peers in emerging from the recession. For most industries France has attractive
export prospects, but before you take the leap there are a number of questions you should
ask yourself.
It comes as little surprise that an increasing number of ambitious and successful firms are
looking to France to export their business. The clients we encounter tend to fall into two
broad categories; those that intend to set up an in-country base either by hiring one or two
local representatives, or by tapping into a local distributor; and those that wish to transact
directly from their country of origin. The former can require a large investment and up to
a year to set up from start to finish; the latter is more cost efficient but can lead to
insensitivity to the local market, both in terms of the attractiveness of your proposals and
in your reaction time when in project delivery.
Experience would suggest that the right formula of either can be commercially viable,
however the choice depends upon a variety of factors ranging from your home sector and
industry, to your capital structure through to your scope of operations. Having read this
article, I hope you will have a clearer idea firstly of whether the French export market is
for you, and secondly how you may go about instigating entry.
At this stage I stress that the questions that follow in themselves may be obvious, but are
justified on two grounds. Firstly it is useful to have an exhaustive checklist. Secondly if the
questions are obvious, the answers may be harder to come by.
Why are you targeting the French market?
It is surprising how many companies I have come across that wish to target France as an
export market as part of an all-encompassing export strategy for Europe or further afield.
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While this makes sense for a select few industries, for the majority of would-be exporters it
is imperative to gauge the attractiveness of your operating market, principally in terms of
size, growth, barriers to entry, and competition. Industry regulation is also a key trend to
watch as France is beginning to emerge from an operating environment that has
traditionally been tightly regulated; we need look no further than the opportunities
generated by the deregulation of energy and telecommunications markets, or for a more
recent example the legalisation of online betting in June 2010.
Does your product exist in the same form in France and does it follow the same route to market?
You need to understand whether the market for your product exists in the same form in
France, and whether the routes to market are the same. Essential commodities such as
clothing and apparel tend to be fairly standardised across the globe for example, whereas
fast evolving industries such as software may experience a certain lag with regard to
demand in export markets, and even if present may not be procured in the same way. A
simple example from the construction industry follows,
A manufacturer of rooftop photovoltaic kits exists and is looking to export into France.
The category of rooftop power generation is a large, growing market in France fuelled by
state subsidies and elevated feed-in tariffs.
However the target buyer in France is a PV installer who – owing to their existing
commitments , procures panels, cables and inverters as individual items from individual
suppliers. The manufacturer could physically provide just panels, but it doesn't make any
sense for them to do so since their operation is configured to supply all three items as a kit.
At this stage we tend to reach an impasse and if the manufacturer hasn't thought this
question through beforehand, it could well waste money needlessly finding this out.
Do you know who the target buyers are?
Finding answers to the previous question will dovetail into this question. Target buyers
means two things; firstly who are the major industry players? In high-end fashion we
would immediately think of Printemps or Galéries Lafayette and we could subsequently
enquire after their market position. But we need also to understand the route by which
they procure. Taking the software example once more, in a lot of cases the end-user will go
through a prescribing intermediary rather than going direct to the software manufacturer.
Does this mean that approaches are skewed towards the end-user IT department, or more
towards the prescribing entity? Fortunately we do not need an exact answer to this in the
preliminary stage and the name and tier position of target companies are sufficient at this
stage.
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Do you know exactly why you have not received any enquiries to date?
A lot of online businesses are necessarily open to enquiries from all over the world; Google
will sort by country relevance however there are a sufficient number of international trade
websites to warrant a minimum of traffic from overseas. With this in mind, you should
look to determine whether there are any metrics you can extract from your website for
example that indicate the number of hits or enquiries originating from overseas. If this is
greater than zero can this be used as a proxy for market potential as a percentage of total
hits on your website? If this is a big zero, you should examine your communications
strategy to understand why you are not getting the exposure you need.
A recurring theme can be the lack of a webpage in French. Personal experience would
suggest that any stereotype regarding a lack of ability to speak and understand English by
French natives is overdone. What can make a difference however is having a contact
section relevant to France, with a dedicated email address and if possible a French
telephone number.
Could the target buyer already be aware of your brand?
In a number of industries, the buying dynamic is such that buyers as an industry group
rely on one another for remaining up to date on the principle players in the market.
Computer virus protection is a good example where a lot of us would be able to name
most of the principle players in the market.
If you do not think that your target buyer could be aware of your brand, then it is the
moment to survey how your category of buyer goes about information gathering.
LinkedIn Q&A and polls are great ways of examining questions like this. Once you have
an idea of how your buyer accesses new information on industry developments, this must
become part of your communciation channels in anticipation of your market entry.
Who are the incumbent players in the market?
It pays to know who ones competition is in any market and to know each competitor well.
One of the advantages of looking at the domestic competition in France is to gain some
idea as to what buyers are looking for, and to what scope of product and service they are
accustomed. Credit reports are also a valuable source of information on your competitors
as to their financial strength and their profitabily over the past few years.
It is important to acknowledge and respect your competitors but never to be discouraged
by them. Once more from experience, there are few completely closed markets in France
and always remember that the buyer's elixir is competition. All too often a buyer may be
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dealing with a supplier base weary of tender consultations without contract award, which
as a result bears fewer and fewer offers with each tender. This is a classic example of
where an ambitious exporter could make a disruptive entry into the market.
What would it take to convince the buyer to buy from you instead of their incumbent supplier?
I must highlight at this stage that one of the roles in buying is risk minimisation. I choose
my words exactly as we are not mitigating risk, it is being minimised. This translates more
often than not to a tendency to buy from the local supplier base rather than from the other
side of the world. Why? To eliminate the supply risk associated with transport, customs
and lead time.
This is not to say that no-one ever undertakes to import into France. What it does mean is
that there is a risk premium - psychological or real (depending on your track record!), to
be paid to the buyer if they are to buy from you. Essentially this will mean some form of
discount vis-à-vis the local competition, which in 99% of cases is accomplished by default
as you are already more competitive than the local supplier base. To get to this stage
however, it is essential that you give the impression of a seamless logistics operation to the
point where, on paper, you are directly comparable to a local supplier save perhaps for the
lead time.
If you feel you have convincing answers after reading this article you should probably talk
to us. Please click here to connect.
SCA Conseils France is a tender consultancy specialised in the French market. We are here to provide timely
and astute advice from the moment you receive an enquiry relating to an export project in French-speaking
markets. For more information on how we can help, please click here.
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