Will the ‘Rising Star’ of Vietnam Keep Shining Above the Rest of Asia?

The ravages of war, internal strife and regional conflict have formed the greater part of Vietnam’s political history and taken a toll on its people. But 40 years after the last great conflict, the country has rebounded – and it is now seen as the rising star of South-East Asia

In 1986, the government made a decision to move from a centrally planned economy to a decentralised model promoting the private sector as the prime engine of growth.

The policy, known as Doi Moi (which translates as ‘renovation’) has seen the government adopt a pragmatic approach to business; including the divestment of state-owned enterprises, paving the way for more public-private partnerships.

Strong economic fundamentals – GDP growth at 6%, unemployment at 2%; inflation at 4%, along with over €20 billion of Foreign Direct Investment last year and a shift of production bases from other lower-cost countries into Vietnam – have made the country a rising star in ASEAN.

Vietnam is one of the 10 member states in the ASEAN Economic Community (AEC) and a party to several free trade agreements including the EU-Vietnam FTA (EVFTA). The EVFTA creates great opportunity for Irish exporters, particularly in agri-business. It is also party to trade agreements with China, India and South Korea. This has given it much-needed economic integration internationally.

With its population of 95 million (and growing by a million every year), Vietnam is an exciting, rapidly developing nation and one of the most dynamic emerging markets in ASEAN. Consumer retail spending is also on the rise as a growing middle class with increasing disposable incomes shop for higher-priced products and services.

With over 200 malls and counting, retail spending continues to grow. There is a growing demand for iPhones, high-quality infant formula, luxury brands and international schools for children. Approximately 100,000 Vietnamese students study overseas every year.

Connectivity and travel within Asia has become more accessible thanks to low-cost carriers such as Vietjet Air and Jetstar Pacific. These are customers for Irish companies such as Inflight Dublin, Botany Weaving and CAE Parc Aviation, who provide technologies and services such as inflight entertainment, aircraft interiors and crew training.

Irish medtech, health IT, consumer health and pharmaceutical industries have spotted openings and Irish firms like Chanelle Veterinary, Kora Healthcare, Escher Group, Brandtone and Glandore are already active here. Enterprise Ireland regularly conducts trade missions and events which continue to create further opportunity for Irish businesses.

Doing Business in Vietnam

Business in Vietnam is all about building relationships and connections. In order to do business, you must be willing to visit regularly or have someone on the ground to represent the company. It requires long-term relationships and getting people to commit and trust you before contracts can be signed.

Setting up a firm is relatively simple and takes about a month. The regulations are quite accommodating to foreign companies with several options for structuring entry into the market. Work through a lawyer or a business advisor, as the paperwork can be cumbersome and documentation needs to be translated into Vietnamese.

Growing affluence has also enabled tech uptake – half of the population is using the internet today. Vietnam has great potential in adopting digital technology but progress has been slow because of a lack of digital readiness, providing opportunities for foreign companies that can deliver solutions.

Economic reforms in Vietnam are still a work in progress but the government is intent on being internationally competitive. The economy is expected to sustain growth, driven by robust private consumption and investment growth.

Ireland’s Polish Community Helps Make Poland a Great SME Target

It may be a bold claim, but Ireland’s trade relationship with Poland is unique among non-English-speaking countries.

While other EU markets may be richer and more populous, strong personal and professional ties between the two countries makes Poland easily accessible to Irish businesses.

People generate contacts and Ireland has few rivals with Poland in terms of people connectivity. Approximately 3% of the Irish population is Polish, spread across the country. Irish companies have seized the opportunity this offers, using their Polish staff to access this market, represent them and set up offices. For example, of the 42 companies participating in Enterprise Ireland’s 2015 Trade Mission to Poland, over 50% were represented by Polish staff.

The Polish economy has come a long way in the past decade. It did not suffer as badly as other countries during the recession, with continuous GDP growth due to large EU transfers and Poland’s growing attraction for foreign direct investment (FDI) and manufacturing migration.

EU funds have built out the transport infrastructure, meaning companies such as Amazon now effectively service Germany from Poland. Conglomerates such as LG, Samsung, Merloni and Philips have been attracted here too.

The country is also a leading market player for ICT (cloud, ecommerce and enterprise solutions) and business process outsourcing. Over 50 Irish companies have operations in Poland, with many such as CRH, Steripack, Kingspan, Smurfit Kappa and ABP having production facilities.

Many Enterprise Ireland clients export directly into Poland. The fastest growing export sector is the sub-supply of goods and services to multinationals with operations in Poland. This is simply business expansion where Irish companies with existing relationships with FDI in Ireland, extend their export footprint to Poland. But there is opportunity for firms of all sizes.

Other key exports include smart farm goods and services (agricultural technology, veterinary products and animal nutrition), materials handling equipment, pharmaceuticals and medical devices and construction services.

Ecommerce is a particularly easy way to access the Polish market with the sector growing 20% year-on-year and worth nearly €10 billion. And it may also be about to get a bit easier. Allegro, Poland’s equivalent to Ebay or AliBaba, is the dominant player in the online sales market. It engages with small and medium enterprises who want to expand their online offering to Poland, and is ready to provide sales, logistics and payments support to Irish online businesses. Allegro transacts over 150,000 purchases daily with clothing and babyware being the most popular exports from Ireland. Often this is just simple re-selling by individual entrepreneurs – so if they can do it, there is no reason SMEs in sectors like dry food, giftware and clothing could not follow suit.

Conducting business in Poland is, for Irish firms, about as easy as it comes. There are 11 direct-flight destinations, the country ranks ahead of Germany and France for English speakers and Irish and Polish business culture is broadly similar.

However, it is not all good news. Poland is a notoriously price-sensitive market with corporate buyers feeling more comfortable making a decision on the basis of lowest price. This is an issue for Irish companies because we tend to sell on quality and value-added criteria.

As a former member of the Communist bloc, it should also come as no surprise that the country is quite bureaucratic – but this only really affects in-country operations and has little impact on exporters. Remember, Ireland is unusual in our low level of bureaucracy. Nonetheless, compared to other markets, Poland ranks as a particularly strong export opportunity for Irish firms of all sizes.

Australian Dream Up for Grabs for Fintech, ICT and Construction Firms

Aborigines believe the world was created during the dream time. And from the latter part of the 20th century onwards, the same term could be used for the Australian economy.

When Australia’s dollar was floated in 1983 as part of an economic liberalisation strategy, it led to investments and trading relationships that turned open the spigot on the country’s unrealised wealth. Since then, Australia has confidently ridden economic headwinds to become the 12th largest economy in the world, boasting 24 years of uninterrupted growth averaging 3.3pc. A considerable feat considering its relatively small 23m population.

Australia offers a powerful combination of a highly-skilled workforce, legal and political stability, efficient and transparent regulation, sound legal and governance frameworks and close ties to the fast-growing markets of Asia. It is, and will continue to be, a dynamic and dependable market for Irish exporters. Its high rating in ease of doing business is a key differentiator from its Asian neighbours.

Key sectors in Australia

Many sectors are enjoying growth – including financial services, telecoms, IT for health, enterprise software, HR solutions and consumer products – but the burgeoning fintech sector is particularly noteworthy. Australia is on the verge of becoming the fintech centre of Asia driven by changes in government, the rise of fintech innovation hubs such as Stone & Chalk and an increased national focus on the sector.

While focal points for the fintech industry have popped up around the world, there’s yet to be a major player in Asia, and this is where Australia’s opportunity lies. Irish companies such as CurrencyFair, FEXCO and Fenergo have been seizing this opportunity over the past number of years.

Further opportunity lies in the increased construction and engineering activity to meet the demands of the oil and gas boom in Western Australia and Queensland. Australia will become the largest LNG producer in the world by 2017 following investment of around €179bn over the last seven years.

Combilift, Suretank, Chemstore, and Abcon among others supply the operation and maintenance of these facilities. While the economy has slowed as the mining boom wanes, be assured that end-users will buy, though it means buying cycles are often longer and negotiations harder to secure significant contracts.

Last year, prime minister Malcolm Turnbull pledged AU$1bn (€640m) to promote business-based research, development and innovation. This “innovation agenda” means businesses will have easier access to the €3bn spent by the government on IT each year via a new digital marketplace.

Since 2005, the Commonwealth, States and Territories have also been investing (through the Digital Health Agency) in key building blocks for a national e-health platform. These initiatives are boosting IT investment in the sector and delivering opportunities for Irish enterprises to provide solutions. This March, medical software company Oneview became the first Irish company to list on the Australian Securities Exchange due to their success in the healthcare sector here.

Advice for Exporting to Australia

When evaluating the Australia export opportunity, be aware of the vastness of the country. Larger companies who take on agencies often have an office in each of the major cities, while smaller partners tend to operate only in their local states.

Exporters should also be aware that given the distance from Ireland, many companies feel that by simply appointing a partner they have satisfied their market-entry requirements; however, agents and distributors in Australia often require as much servicing as direct sales teams.

The Irish diaspora is always willing to assist with market knowledge and introductions so help is at hand when choosing the best approach.

Mary Kinnane is Enterprise Ireland director for Australia/New Zealand

This article originally appeared in the Sunday Independent

Mid-Life Dilemma: Time To Sell Out or Stock Up?

An upswing in market momentum in 2015 pushed IPOs into the spotlight for strong-growth companies. Gordon Smith asks if they are right for every business.

Positive signs from the Irish Stock Exchange during 2015 helped to push IPOs (initial public offerings) back to prominence as a viable option for businesses. Hostelworld floated in Dublin and London raising €245 million while another Enterprise Ireland-supported company, Mainstay Medical, had a successful joint listing on the Paris Euronext and Dublin’s ESM, raising €18 million. Other prominent and well-received listings included Applegreen, Malin Corporation, Permanent TSB and Cairn Homes.

So, will we see a flurry of flotations among Irish companies? For many, the idea of going public remains shrouded in mystique.

In a bid to address this, the Irish Stock Exchange launched its ‘#IPOready’ initiative. A secondary aim of the #IPOready initiative was to nudge Irish businesses away from the traditional exit of a trade sale – a trend that has seen promising companies snapped up early– like the UCD spinout LogEntries, which was acquired by US outfit Rapid7 for $68 million.

“There have been some high-profile trade sales where the owners got an offer and went for it, but I’d love to see more people accessing capital markets to raise that funding,” says Orla O’Gorman, head of equity at the Irish Stock Exchange. “An IPO gives a business permanent strategic capital. It’s not like a loan that will need to be repaid, and it enables you to grow your business.”

Missed Opportunity

“If you’re on your first company and you get the chance to sell out for a personally significant sum, but the company did have the potential to scale and potentially IPO, it is a missed opportunity,” agrees Cronan McNamara, CEO of Crème Global and chair of the Irish Software Association (ISA).

“Some founders don’t go into business to build and sell, but when that offer comes along, they can’t refuse because they have no other way to de-risk their financial structure. They might be heavily taxed on their income, so there’s not a lot of incentive to keep plugging away. And perhaps it’s a more straightforward transaction compared to the reporting burden of going public.”

The ISA supports the IPOready programme, especially as Ireland’s software scene has few active participants who have been through the experience of life in a public company. However, an IPO may not be the only valid option for a growth-minded company. On a personal level, Mr McNamara says the greater availability of private investment is an attractive alternative. “You see Michael Dell taking Dell private because he felt they were undervalued on the market. As a business, you need a lot of structures in place to IPO, and there are a lot of very successful companies, like Mars, Bosch and Deloitte that are all private.”

Enterprise Ireland also supports the #IPOready programme. “We have a variety of funding options so that companies can grow and scale, such as the Seed and Venture Capital schemes, the Development Capital Fund and the Innovation Fund Ireland programme,” explains senior policy adviser Garrett Mooney.

“An IPO is one strategy within that mix, and we believe a certain cohort of Enterprise Ireland-supported companies should look at it.”

The Decision to Float

In weighing up that decision, John Casey, partner in PwC’s deals practice, says companies don’t necessarily need to be at a particular size or scale to consider an IPO. “The requirements for the Enterprise Securities Market in terms of the startup track record are pretty generous. It’s a question of whether investors would be willing to back the management team and back the story. Let’s say you’re a pre-revenue startup: an IPO will be a hard sell to raise money, so you tend to see that people will get funding from other sources until they build critical mass.”
Business owners have to see the value in bringing external equity into play, adds Michael Neary, a corporate finance partner with Grant Thornton. Even to embrace the concept, they’ve got to accept that sharing the pie and owning a smaller share in a bigger business is more worthwhile than owning a larger share in a smaller business.

The decision to go public may be also affected by factors beyond the business itself. A good adviser can help the business make a decision about whether or not to press ahead with a public listing if external conditions are less than favourable. “You can be just at the wrong stage, and there have been public examples of IPOs that have been pulled. Digicel were quite public about not getting the valuations they had hoped for, so they decided to hold it over. There’s no loss of face in pulling out of an IPO at the right stage, if you as a founder say ‘I think my business is worth more than that’,” he says.

Some businesses keep their options open by undergoing a vendor due diligence process that prepares them either for flotation or for a trade sale. Casey says an IPO process requires more detailed preparation in terms of due diligence. An IPO exit shouldn’t be equated with a trade sale for founders, he adds. “With an IPO, investors are backing the management team, which will likely include the founders. This may or may not be the case in a trade sale, depending on the buyer. An IPO is a method of introducing liquidity to the shareholder base and taking some money off the table. But don’t forget, the majority of funds raised in an IPO tends to be for the benefit of the company, to fund expansion, debt-reduction or both.”

 Irrespective of a company’s decision whether or where to float, the rigour of preparing the business will stand it in good stead no matter what funding route it ultimately chooses, says Mooney. “In looking at the IPO journey, you are also preparing yourself for other investment options that may arise. Governance isn’t unique to IPO. We wanted to make sure that even if entrepreneurs come out from the IPO ready programme and decide they don’t want to IPO, they will still have learned from it.”

Linesight gains from Enterprise Ireland’s networking supports

Enterprise Ireland’s contribution in relation to knowledge-sharing, market information and access to key contacts has been invaluable to Linesight. Having built up a strong domestic presence since 1974, professional services provider to the construction industry Linesight needed to grow its business in overseas markets when the recession hit in 2008.

Linesight director, Paul Butler

The company found a series of workshops on data centres, organised by Enterprise Ireland, particularly valuable – an area which Linesight wanted to focus more on, according to director Paul Butler.

“Enterprise Ireland brought all the leading consultants and contractors together in one location to discuss the pros and cons of doing business with data centres and how to attract further data centre providers to Ireland,” he says. “All the relevant information was shared with everyone involved afterwards.”

Linesight went about sourcing and training people dedicated to providing professional services to data centre projects, which are very mechanical and technically driven. It now has a designated team which looks after a number of data centre clients in Ireland, the UK and the Netherlands.

Once Linesight decided it wanted to explore opportunities in the Netherlands five years ago, it benefited greatly from several introductions to the market, and with local providers organised by Enterprise Ireland in Amsterdam, according to Butler.

“We were very keen to get local information and find out from others who had tried the market before, the lessons they had learned,” he says.

“Enterprise Ireland put us in touch with key contacts and set up face-to-face meetings with other contractors and consultants in the sector. The support in terms of local knowledge and getting to grips with how things are done there has been excellent.”

International collaboration the zeitgeist in Berlin tech scene

The Berlin landscape today is very different to what it was in 1989, when the wall fell. Back then there were no cranes crowding the skyline, and the now-ubiquitous tech company logos outside offices were almost non-existent.

After reunification, a short boom was followed by a lengthy recession that left the city trying to carve out a new identity in the world. During this time, artists, creative media types and techno music disciples flocked to Berlin, giving it a public image it retains today.

Strolling around back then, the graffiti-covered squats served as an unapologetic symbol of the post-reunification liberal culture. In 2004, Berlin’s flamboyant mayor, Klaus Wowereit, described the city as “poor but sexy”.

In recent years, Berlin’s story has become something of a rags-to-riches tale. Bucking the German demographic trend, its population is increasing – largely due to EU and US immigrants attracted by the informal lifestyle and lower cost of living compared to London, New York and San Francisco. Many are highly educated and have the software development skills craved by tech companies worldwide.

Berlin is now one of Europe’s hotspots for private tech investors

Consequently, Berlin has become one of Europe’s hotspots for private tech investors. According to Dow Jones, €1.97bn in venture capital was raised here, more than most tech locations worldwide. The trend is set to continue. New tech companies are establishing here at a rate of 10 a week.

In contrast to tech in Ireland – with our mix of home-grown start-ups, major US tech companies and closely-connected infrastructure – the Berlin cluster is anchored by a small number of home-grown companies. Soundcloud, 6Wunderkind, Zalando, Onefootball and Rocket Internet are leading names among the 2,500 tech companies here.

Traditional German firms are getting in on the act. Household names with start-up incubators, accelerators or VC arms include: Google (through the Factory), Deutsche Telekom Innovation Laboratories, BASF, Bosch, Daimler, Microsoft and the Deutsche Bahn Mindbox.

Irish Tech meets Berlin Tech

Enterprise Ireland recently hosted ‘Irish Tech meets Berlin Tech’, involving 35 CEOs and senior managers from Ireland taking part in expert panels on tech and finance, fintech and HR technology; as well as buyer meetings and a networking reception at the Irish Embassy. Some 120 executives from the Berlin tech and VC industry took part – a testament to Ireland’s growing reputation here.

Several key learnings arose that should be of strong interest in Ireland. For example, collaboration takes place at an earlier stage here, with Berlin-based companies looking to partner with the right company and grow with them.

Thus, fast-growing start-ups can become multinationals very quickly. For instance, the aforementioned Zalando, founded eight years ago, now employs 10,000 people with international operations, including a strategic development centre in Dublin.

A software firm founder told me he sources from two Irish companies, despite having fewer than 15 employees himself. He regards this as only the start of his international partnerships.

Our seminar also heard that funding is becoming more specialised and more open to cross-border investment. While Ireland has a strong background in seed and early-stage funding, Berlin is strong at later stages.

Opportunities for Irish companies

There are opportunities for Irish companies to take advantage, particularly in strategic investment from the VC arms of large German companies. This can open up ready access to the parent company. VCs in Europe are also more willing to invest abroad without requiring companies relocate nearby – ideal for Irish companies interested in scaling.

Another feature of the tech scene here that will please every entrepreneur is that SMEs generally make decisions faster than larger, traditional companies. One Irish company that took part in our programme last month signed a deal here within 10 days.

Those in the Berlin tech cluster recognise Ireland’s scene is different but complementary to their own. Government body Berlin Partner has launched a “start-up alliance” linking their cluster with others worldwide. The door is wide open here to the well-reputed Irish provided they are prepared to get with the philosophy of Vorsprung durch Kollaboration.

Innovation Islands: Building on Irish Success in Singapore

Like Ireland, Singapore has experienced dynamic growth and the opportunities and challenges that accompany it in recent years. In both countries, innovation has been used to overcome challenges that include upskilling a workforce and maintaining a world-class infrastructure. A focus on development has helped Ireland and Singapore to become known as ‘innovation Islands’ – hubs for world-class entrepreneurs and ecosystems that support the growth of multinationals.

Irish companies with disruptive, value-adding solutions are carving out business opportunities in Singapore. A trade and investment mission to the APAC region presented opportunities to appreciate the links that Irish-owned SMEs have developed in Singapore first hand. In total, 60 Enterprise Ireland client companies participated in the mission across two market legs – Singapore and Japan – with the goal of securing export business in the wider Asia region.

A tour of Singapore’s tallest building, the Tanjong Pagar Centre, was included on a tight schedule on the second day of the mission, giving delegates a chance to observe the impact of Irish innovation on the city. The energy-efficient technology of Tanjong Pagar Centre towers over Singapore’s Central Business District and is powered by the Dublin-headquartered company Cylon Controls. As the developer Guocoland explained with a smile, “the brains of this building are Irish”.

Opportunities in green tech are a particularly good fit for the capabilities of Irish companies. Singapore is driving an ambitious environmental agenda, with a target of 80% of buildings to be green by 2030 (currently at 33%) and to increase the number of green specialists from 15,000 to 20,000 by 2020. The government is providing a Zero Capital Partnership, enabling building owners to engage Energy Performance Contracting firms for energy retrofits with zero capital outlay.

Ireland’s green build cluster is supported by a sophisticated network of companies specialising in building energy management systems, green building materials, HVAC, lighting and energy technologies, as well as green architecture and engineering. Major names include Zutec and Kingspan Insulated Panels. Enterprise Ireland actively collaborates in this space, working with the Singapore Green Building Council to provide new solutions that help the markets to ‘go green together’.

The aerospace and aviation sector also presents opportunities for Irish companies considering Singapore. Over the next 20 years, Asia-Pacific will have the greatest demand for aircrafts, representing 39% of global requirements. The region’s global share of passenger traffic is also expected to rise from 31% to 42%. Ireland is viewed as a global centre of excellence for aviation, with a proud history of pioneering developments and dynamic innovation. Irish companies including CAE, Eirtech Aviation and Aero Inspection are leading the way, securing aviation opportunities in the wider APAC region from bases in Singapore, for example, in the Aviation Festival Asia in Singapore.

There are good reasons for Irish business to look to the Asia-Pacific region. It has delivered double-digit growth and an impressive year-on-year gain, making it one of the fastest growing regions for Enterprise Ireland clients. Many are already capitalising on that potential, with exports from Irish companies to Singapore and the wider ASEAN region on the rise and growing steadily year-on-year.

The trade mission raised the profile of Ireland as a key supply base offering high-value solutions and created a number of partnership opportunities between Irish and Singaporean companies throughout the ASEAN region. The ASEAN office hubbed in Singapore will expand resources over the coming months to further support Irish clients in their growth as they diversify through the region.

The Emerald Isle and Singapore, ‘the Garden City’, work well together because of what we have in common, a history of economic growth based on a trading perspective, investment in education and training, support for innovation and R&D, and an ability to succeed in the global marketplace. The vibrant export growth of both countries over the past ten years has positioned us both as trading nations, global players, and true innovation islands.

Iran: From Zero to Trading Hero?

With the lifting of economic sanctions, Iran could well be THE global market growth story of the coming year

It isn’t often that a large and mature economy opens for business with half the world in one fell swoop. But that’s exactly what occurred, following the lifting of sanctions, on the Islamic Republic of Iran.

Only the Saudi Arabian economy is currently bigger in the Middle East and North Africa (MENA) region, and Iran, with a population of some 80 million, almost two-thirds of whom are under 30, is poised to challenge for the number one spot in the coming years.

First Steps

Tehran Honorary Consul for Ireland in Iran Alireza Feizollahi says that a path is now being beaten to Iran’s door.

“Right now, if you want to book a hotel in Tehran, it’s almost impossible. Trade delegations are coming here every week from all over the world,” Feizollahi says. But he cautions that this is a highly regulated country and companies must carefully study the market to see how they can be successful.

Sean Davis, Enterprise Ireland’s Manager for the MENA region, has been closely following developments in Iran’s $400 billion economy. He points to a very real hunger in the Iranian business community for new technology and innovation to fuel economic development.

“Iran has been on the side lines of global growth for some time, and there is a huge appetite to redress that. All around, you get the sense of people driven to capitalise on the new opportunities.”

Given the closed nature of the economy in recent times, primary research, in the form of market visits and relationship building, is highly recommended. Davis stresses that preparation and planning are very important on every front, from securing the necessary business visa to identifying the best way to utilise your time there.

“Though English is commonly spoken, it doesn’t predominate. You won’t be able to use your ATM or credit cards, and Tehran is a very large and very busy city, and by no means cheap. Packing a short itinerary with meetings that criss-cross the city isn’t going to be a runner,” he warns.

Enterprise Ireland supported a number of exploratory visits, with sectors such as healthcare, aviation, agri-tech, education, ICT, financial services and fintech, all in the mix. Fintech is likely to be among the more immediate opportunities given that the country’s financial services sector requires considerable investment and upgrading as it reconnects with its peers across the globe.

For clients, Davis recommends the first step is to contact Enterprise Ireland itself. “We are building a contact base of people Irish companies can reach out to, who will help suggest meetings and allow them to hit the ground running.”

Search for Quality

Dr Amir Kordvani, a senior associate with international law firm Clyde & Co, advises on sectoral investments across the Middle East and recently undertook a detailed look at the potential Iran offers to companies across the business spectrum. “What Iranian businesses are looking for, and it will be a requirement to any procurement proposal, is to show that you are bringing the very latest know-how and technology to the country. They are not interested in something from 10 years ago,” he says.

Irish companies are frequently warned of long sales cycles when they enter a new market, but Kordvani’s view is that Iran could represent something of an exception. “It really depends on how strong you are in the area you are operating. However, generally, Iranians are very commercially minded, value strong relationships and are very frank and open, so it doesn’t take that long to build trust from that perspective.”

A final, but important, piece of advice is to recognise that, whatever field you operate in, the value of quality customer service as a differentiator cannot be overstated. “In the past, customer service has been very poor in Iran,” Dr Kordvani says.

“If you want to lead and exploit your opportunity, then you should prioritise your customer service and your after-sales support as much as the quality of your product. Companies that can do that will be very well rewarded in this market.”

Guest Blog: Ireland’s International Traders Remain Optimistic for 2016

Commenting on HSBC’s 2016 Trade Confidence Survey, CEO of HSBC Ireland, Alan Duffy, says that Irish businesses remain optimistic about trade prospects but have more confidence in the local than the global outlook.

It is a measure of how far we have come as an economy that HSBC’s 2016 Trade Confidence Survey of 24 global markets saw Ireland at the top end of the rankings for positivity around its local economic outlook.

We have all seen that the combination of wage restraint during the crisis years and the exchange rate effects of the ECB’s programme of Quantitative Easing have both provided a lift to Irish competitiveness.

Whilst the outlook was inevitably moderate as the value of the euro eventually normalised, an economic recovery in advanced economies across the world likely helped sustain a robust performance for Ireland’s export sector. In particular, Irish exporters are well positioned to benefit from solid performances by the UK and US.

Longer term, Irish exports will benefit from growing levels of disposable income in emerging markets, and China will likely become one of our top export destinations in decades to come. In the near term, the advanced economies of Western Europe and the United States continue to be our biggest sources of export demand. As such, Ireland is relatively well placed to withstand any headwinds coming from a slowdown in emerging markets.

Despite these positives, overall exporter optimism had actually eased somewhat in Ireland. This was reflective of reduced optimism in the performance of the global economy. Irish companies expected the global economy to worsen slightly during that period. This slip in confidence levels reflected the deterioration in the global trade environment. World trade growth had slowed sharply that year, with import volumes in leading emerging markets, such as China, Russia and Brazil, weakening significantly.

However, the recent downturn appeared more cyclical than structural in nature. As many of these economies benefit from strong economic fundamentals, they are likely to be an important driver of global economic growth and trade over the medium term.

Perhaps aligned to such caution over the global economy, currency and commodity price volatility had emerged as the top financial risks anticipated by Irish companies. With this in mind, many were looking at strategies to overcome these risks such as negotiating better terms with trade partners and internal cost cutting.

Across Europe, stronger competition is the single most dominant challenge for businesses trading internationally. In line with rising cost pressures and anecdotal reports that companies are reaching the limit on the amount of cost increases they are able to swallow before passing them onto consumers, the emergence of competitors who compete solely on price is outlined as the biggest challenge, with the majority of Irish firms also highlighting it as their main worry.

With such competition becoming a concern, differentiation becomes increasingly important. That is why many Irish corporates are focusing on improving customer satisfaction and employee skill sets as their main objectives for the next six months.

Starting To Export – How to Get Export Ready

The progression from mainly operating in the Irish market to exporting is one of the most transformative and challenging transitions many companies make. Here, co-founders of Monsoon Consulting, Dublin Bharat Sharma and Stephen Kenealy, explain how Enterprise Ireland’s Get Export Ready programme helped them embark on that journey.

What does the company do?

We are one of the leading digital agencies in Ireland offering content and ecommerce solutions that are built on the open source Drupal and Magento content management platforms.

How long have you been exporting?

We’ve been exporting since taking an office in the UK in February 2014.

What was the pivotal point that made you look at exporting?

We were looking at enterprise-level projects, and the Irish market was limited in size, so we decided early on we should attempt to break into the UK market.

What changes did the business have to make to become ‘export-ready’?

We needed to become certified solutions partners in the two technology stacks we work on so that when we were going into pitches against UK firms, we’d be operating on a level playing field. We achieved certification with Magento and are now one of just 17 partners at our level across the UK and Ireland, and the only one here with it. We also became an Acquia enterprise level partner [Acquia makes a popular version of Drupal] and are currently in the process of getting all our developers certified.

Are you targeting any other markets currently?

At the moment it’s just a case of trying the UK and It’s just been a case of trying the UK and seeing where it goes from there. Obviously, the European market would be a target for us on a more long-term basis but we need to get traction in the UK market first to demonstrate a capability there and then to go out further. In terms of the two technologies we focus on, most of the market for these is driven and controlled from the UK and so we need to expand our footprint there and can then hopefully scale from there elsewhere in Europe. In hindsight, focusing on the UK market early in the piece, has proved beneficial as the UK works its way towards Brexit.

What routes to market do you use?
We have channel partnerships that we’ve established with both Acquia and Magento, and they have been good lead generation providers. We’ve also become close allies with service providers who are not our direct competition, but who complement our solutions so there’s a good reference network with them. We also realised early on that opportunities wouldn’t just fall from trees simply because we’d opened up an office in the UK so we engaged with Enterprise Ireland on a sales mentoring programme and that’s been a really great help to us. We are also looking to partner with a company over in England for more lead generation opportunities and we’ve spent a lot of time ourselves flying in and out of London, which has helped us get traction there.

What changes did your business have to make to become export ready?

We invested in some areas such as expanding our team. To support this, we also signed a big lease for an office near Clonskeagh where people can more easily collaborate and together. With the help of Enterprise Ireland, we’ve also looked at how we can fundamentally improve the way we do business and have embraced lean principles in our processes, which has led to a performance and productivity boost of up to 50%.

What advice would you give other would-be exporters?

Don’t take your eye off cash flow or off your existing clients in Ireland.

Any mistakes you’ve made you’d care to share?

I think we charged into the UK expecting things to take off immediately on the basis that we’d been successful in Ireland. If you can get some key references from operational stuff you’re doing here before breaking into the UK and can establish a go-to-market strategy ahead of time, it will serve you well. We didn’t do enough of this early on and it made it difficult to get in the door.

How would you like to see the opportunity you have evolve?

We aim to be one of the largest and most successful e-commerce and content agencies in Europe.

Start-Up Story: Initiafy – Hitting the Big Time in The Big Apple

Having established in the UK, launching in the US was the next logical step for software start-up Initiafy. Its two founders share the company’s story to date with John Stanley.

After a number of years working in construction, mainly overseas, Seán Fennell return to Ireland some six years ago to join a company specialising in Health & Safety and online learning. There he met his future business partner, Julie Currid.

“We both saw the same problem repeated, over and over again,” Fennell recalls. “Using conventional approaches, organisations struggled when they tried to induct a large numbers of contractors or temporary staff in a short space of time.”

So in April 2012, the two took the plunge, setting up Induction Manager (since rebranded as Initiafy) to provide an online “employee onboarding” tool. This enables organisations to pre-induct employees online before they arrive for work. “We saw the opportunity to improve day one for the frequently overlooked workforce – contractors, temp staff, seasonal workers – and even for visitors,” Currid says.

Platform development was outsourced to a software company with offices in Ireland and Poland, and, within eight weeks, they had the designs they needed to begin selling. Their initial focus was on chasing the potential reference sites they would need to gain credibility and to stimulate investor interest.

Target Market

“Traction is the new IP,” Fennell says. “Our target market is medium to large companies, so while we do have some Irish customers, we put a huge amount of effort into the UK from the outset.”

Within 18 months, they had recruited over 30 customers, including such high profile ones as Pfizer and British Gas. Adobe adopted it for all its inductions in the Middle East and Europe, while Sodexo, ranked fifth in Fortune magazine’s list of ‘Most Admired Companies’, used it to induct thousands of event contractors for Royal Ascot Week.

On the back of this success, the founders raised €400,000 in October 2013 from Enterprise Ireland, private investors and the Cork-based Boole Investment Syndicate. This seed funding allowed it to move into an office in Dublin’s Temple Bar, hire its first staff and begin to drive revenues

The founders began looking seriously at the US market last year. In November 2014, they raised €1 million from ACT Venture Capital, Delta Partners and the well-known Irish businessman Leslie Buckley. This stage-two funding paved the way for the recruitment of a vice president of global sales and the opening of a New York office.

“We got some initial stage orders to validate our US growth plans, and 50 per cent of our business in Q1 this year came from the US,” Fennell says. “Deal sizes are so much bigger there, and it’s English speaking. It’s a natural step for a software company such as ours to go from the UK to the US.”

Having started out in an Enterprise Ireland incubation space in the New York office, Initiafy found WeWork, a company that provides office space in 14 different locations in that city as well as in other cities around the world. “There’s a strong collaborative culture within WeWork; it’s more like a community, and there’s huge flexibility – you can choose the amount of space you need and switch between locations from month to month. It’s a little more expensive that Regus, for example, but the benefits are absolutely huge,” Currid enthuses.

Lessons Learnt

One lesson from the first fundraising was that they hired too slow, she adds, which meant the full impact of those hires was not reflected in the second round valuation of the company. “So we hired our first three sales people a month before the second round funding, which was needed to pay their salaries, actually arrived. It was very much a bootstrapping approach, but effective.”

“We wanted people who would hit the ground running in the US. We felt that experienced US sales people might be more assertive than we’re used to here in Ireland, but in the US environment that’s what would be expected. Given the nature of our product, we looked for people who are as methodical and structured as they are good communicators. The results to date vindicate our decision to hire US people to sell to US customers.”

In other respects, the company has been successful in replicating its original ethos State-side. “We’ve managed to bring across the culture we have in Ireland to the US. Wherever they are, everyone’s involved in our sales meetings which are held on Google Hangouts. We also run competitions and celebrations across the group. We do everything we can to eliminate geographical barriers between team members.”

Fennell says that “As we build and develop out the product, we do need to continue to improve it, and we are investing a lot in R&D – and doing a lot of listening to our customers. We have plans for exciting further developments but they are all within the existing platform. There’s no unique custom building involved.”

How a Startup Can Sell to Corporates

Brightflag was started out of frustration. I was building and selling software to help law firms be more efficient, but something wasn’t right. I noticed that no matter how good we made the software, no matter how much implementation and training we would put in place, the law firms we were trying to help never seemed to see a significant difference.

What I came to realise was that there was something wrong with the large law firm model – it didn’t want to be efficient. And why would they when they charged by the hour?

My co-founder Alex also had experience of this problem but from the other side of the fence. He had spent years working in one of Ireland’s largest law firms and was experiencing the same frustrations from the inside.

We started Brightflag (formerly called Legalshine) to address this problem – not from the perspective of the law firms but for the large corporates who can spend hundreds of millions every year with these large firms.

We built a tool to help them analyse their legal costs and help them uncover the inefficiencies in their spending. It used new language technologies to ‘read’ the narrative on a legal bill, understand what the lawyers did and then employ market data to determine if the resources used were fair or not.

It’s been a difficult but rewarding journey, and we are only getting started. We’ve now got a number of large corporates as customers – which is unusual for a startup at our stage.

One of our first customers was a large bank, companies with which it typically takes a year or more to make a sale. What we are doing is hugely valuable to a bank, because they spend so much on legal fees every year.

Surprisingly Easy

Despite being a startup, we found that getting a foot in the door with a large organisation was surprisingly easy.

We mined our own networks to get introductions to senior people in large organisations, and when we couldn’t make a connection we simply approached them directly. I’ve found that as long as you have a clear and compelling proposition, they will always take the meeting.

We got initial meetings very readily because we told them they could reduce their legal spend by over 10% with our software. This was attractive and easily understood. The real trick, of course, is backing up the claims.

We went through rigorous initial trial periods with all our large clients to prove that the software really did what we said it would – and that it delivered value way beyond what it cost. Some of our clients are now saving hundreds of thousands of euro annually, a real sign there are huge inefficiencies in the legal system.

Keeping the Lights On

The other big challenge with a startup is keeping the lights on before the revenue starts coming in.

In November, we raised a large round of funding from Enterprise Ireland and other great investors in Dublin and the US. That’s allowed us to scale up our team and launch in New York.

Before that it was a constant battle to manage our cash and make sure we could deliver an excellent product for blue-chip customers with a very small team.

We now have 12 people between Dublin and New York, and we have tens of millions of legal spend going through our platform. We’re making a big dent in the industry and for us it’s only the start.

Now that we’re on solid ground, we’re moving to the next stage of growth and the challenges are different – growing the company in the US and the UK, hiring talented people and managing a larger team.

And still it all stems from those initial frustrations Alex and I saw from working in the industry – that’s what drives us on to keep going.

Ian Nolan is CEO of Brightflag, an Enterprise Ireland-supported high-potential startup.

Read the original article on www.fora.ie