From USA to China – Markit's Global Reach

Let’s face it, China and USA are huge. Huge markets and logistically challenging too due to the massive distances involved. Even though we have experience of setting up operations in 33 countries already, China and USA are special cases and present unique challenges.

When our international clients push us for further expansion so they can save more on the IT purchasing globally we take note. We recently announced the next 4 countries in our expansion plans, but this post is about the need for friends when tackling China and USA plus we’d like to share what we have found out that could be of use to other companies, especially Estonian ones, looking to succeed in those markets. Yes, we already have Chinese and American clients e.g. TikTok and Western Union, but we have a long way to go to make a real impact and we need trusted partners on that journey.

Markit executives Pirje Raidma, Head of Operations, and Peeter Tamm, Head of Development, joined Estonian trade missions to China (Bejing) and USA (New York & Philidelphia). The goal of such trips, in our case, is not “finding clients”. It’s about understanding the customs & culture, the ways to do business (unique in every country) and how we can optimise and accelerate our footprint etc. In other words, business development. The missions were organised by Enterprise Estonia (EAS) who’s mission includes providing new opportunities for Estonian entrepreneurs -an important priority for the Estonian government. EAS is the largest public entrepreneurship-supporting organisation in Estonia and sits under the Ministry of Economic Affairs and Communications.

It’s not the first time we’ve been on EAS trade missions, nor the last. We can comfortably say that EAS are not just promoting exports from Estonia, they are actually helping our clients succeed (to reduce their total cost of IT purchasing) by feeding the growth of our international footprint which means faster access to real time-and-money savings for our clients active in those markets. It’s not win-win – it's win-win-win. So, on behalf of our clients, thank you EAS.

Image: Sigrid Harjo, Member of the Board at Enterprise Estonia speaking at the opening of EAS’s office in New York with Markit's Peeter Tamm, James York and the Estonian Prime Minister, Juri Ratas, in attendance amongst others from the business delegation.

We asked New York-based, James S. York, Director of US Business & Innovation at EAS to summarise what matters most, when tackling the USA. Here’s what he had to say:

“When looking towards the US market its extremely important to remember that the country is not a single market, but rather 50+ different markets comprised of States, cities, municipalities, and economic regions that all have different legislation, taxation and nuances to doing business. It’s also essential to realize that your entry here is not going to be a DIY experience. You will need, and in certain cases will be required to use, third-party assistance, in order to help you navigate the different legislative, tax and cultural layers you will find here.

So, to any (Estonian) company looking to enter the US, I would advise that the three must-do things on the road to successful market entry here are:

1. Find local and trustworthy partners that you can rely on. You can do this with the help of EAS foreign reps like myself, or through borrowed “trust networks” like the network of Honorary Consuls maintained by the Ministry of Foreign Affairs, or even the expat and foreign-born Estonian community, who are always happy to help Estonian companies and entrepreneurs.

2. Budget accordingly – your expansion here will take longer and cost more than you might initially think, and you don’t want to run out of runway before you’ve had a chance to take flight here.

3. Visit. Visit. And visit again. It is essential to get a feel for the local environment, the culture, the customs and the sheer scale of the place. It is a vastly different market to Estonia, and you won’t fully appreciate or understand it until you’ve stood here and looked around, talked with the people, and experienced it for yourself, first-hand.”

Peeter Tamm, Head of development, said he got a better understanding of the business customs and regulations in the USA, developed some useful contacts for potential partnerships and discovered that Philadelphia may be a good location for our operations there. Peeter’s packed agenda included various meetings and working lunches to understand key legal, financial and HR issues. Investment opportunities are potentially interesting to explore too. Along the way Peeter visited Philidelphia’s Science Center - the largest and oldest urban research park in the US, heart of the city’s tech cluster and the HQs of tech giants, Google and Comcast.

Across the (Pacific) pond, Pirje accompanied businesspeople and officials from Ministry of Economic Affairs and Communication visiting HQs of leading Chinese companies including Alibaba, JD.com, and DHGate and attended various matchmaking events.

Pirje said, “We certainly got some good contacts and hopefully it will lead to mutually beneficial co-operation. China is huge, full of very strong competitors and they like their own way of doing business, but I think we have a very good tool to succeed here. Companies doing business in China should note you always need a translator when dealing with government contacts, as many people do not speak English. With companies it is already easier as some of them speak English very well indeed. On top of that I’d say face time is critical and not just once. Face to face meetings build trust and confidence and thankfully Estonia is well respected in China because country-to-country relations matter more than they do in the west. Successful “foreign business in China” is built on strong connections made at personal, business and inter-governmental level.”

Ilaria Perla, Export Adviser at Enterprise Estonia and based in Bejing, reaffirmed some of these points and added:

“China's vast market attracts international companies eager to extend their business reach. Although China indeed offers plenty of opportunities, it is also true that China is a highly fragmented market, and if I had to summarise three steps to enter it, they would be:

Gather a robust understanding of the market and analyse the opportunities and main challenges to be able to minimise the risk;

Use the knowledge gathered to formulate a market access plan which includes: IPR protection, an adaptation of your products to client´s needs;

Implement your plan for long term profits, since China needs time and effort.”

Image: Markit's Pirje Raidma participates in discussions at the Economic Ministry in Bejing.

According to Sven Aulik, Head of EAS’s Export Advisory Team, in addition to the Trade Missions, there are other ways EAS Export Advisers and Trade Promotion Team help Estonian companies reach their export goals including:

• Pre-consultations to enter foreign markets (market requirements, special conditions, business etiquette etc.)

• Partner/supplier search and matching services

• Target market and export related trainings and seminars

• Events facilitation in foreign markets and international exhibition participation opportunities.

Estonian companies interested in EAS services can find out more here (Estonian language).

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From USA to China – Markit's Global Reach