Practising What They Preach

“The Export Marketing Research Scheme is a cost effective way of researching an export market. It is very well-structured and you can gain valuable first-hand knowledge and experience of the market if you do the research yourself.”

Don Morris, Managing Director Nesaru

Nesaru is a consultancy that specialises in developing international markets for Small to Medium Enterprises (SMEs). It regards export marketing research as a key part of strategy planning, so when the company began to consider China as a potential market for its services, the natural first step was to carry out desk and field research.

Managing Director, Don Morris approached UK Trade & Investment, who introduced him to their Export Marketing Research Scheme, which offers advice and grant funding to eligible companies wishing to research potential export markets. Don explains: “The Scheme helped to fund a three week research trip to Shanghai, Beijing and Guangzhou. It was helpful to have a structured framework to follow and the guidance we received from Export Marketing Research Adviser, Anne Williams was very useful. We regard field research as a vital part of strategic planning. You need to understand the business environment, culture, infrastructure, market segmentation and so on. You just can’t get the same degree of insight from desk research alone.”

Nesaru drew up a research plan, alongside their Adviser, identifying suitable research methods and target organisations, which included potential customers, freight companies, import agents and representatives from the China British Business Council and British Consulate.

The research trip provided a clear and highly detailed picture of the opportunity. It revealed that there was a market for Nesaru’s services in China, but that its pricing structure would have to change. Chinese companies do not generally see the value of paying for consultancy (especially without a local track record) therefore fees would initially have to be weighted towards performance payments rather than retained services. The research identified that establishing a Joint Venture would be the most cost-effective way of entering the marketplace, as Don explains:

“At this stage, it would be cost-prohibitive for us to open a wholly foreign owned enterprise (WFOE) in China. Appointing an agent was another option we considered but it would be hard to control from a distance and, because agents tend to work on behalf of several different companies at the same time, they could not provide a dedicated resource. In order for us to get the level of commitment that we need, along with market and cultural understanding, we concluded that a Joint Venture would be the best option. The Chinese work on the basis of developing value relationships over long periods of time (known as guanxi). Our Chinese partners would give us a presence on the ground and could do the groundwork in preparation for regular visits to China by members of the Nesaru team here in the UK.”

Nesaru has since established an informal Joint Venture agreement with a company based in Guangzhou on a trial basis. It has adapted its pricing structure, although service delivery and marketing methods remain unchanged. Already, the Joint Venture has secured SME clients in China who are keen to develop export markets in Europe and the US and Nesaru have already successfully identified markets and developed sales for them.

Don concludes: “It was surprising to us how little experience many Chinese SMEs have of proactively marketing themselves overseas. This demonstrates one of the many benefits of doing your own face-to-face research – you get to know exactly what you are dealing with. In the current economic climate, we are aiming to achieve slow and steady growth in China, but the long-term prospects are good. We are grateful to the Export Marketing Research Scheme for its support and have already used the Scheme again, this time to research the US market.”