Establishing a presence in a foreign market can often bring about unexpected diff iculties stemming from cultural and linguistic differences, divergent business cultures or lack of specif ic knowledge about market conditions. Hungary’s Export Promotion Agency offers decades of knowhow and expertise to businesses seeking to venture outside Hungary, even to far-flung countries like China, says Balázs Hendrich, the Agency’s Chief Executive Off icer.
Despite Hungary’s relatively modest size, the country is an exporting powerhouse, due to the open nature of its economy. Hungarian exports have set a record every year since 2014. The overall export volume amounted to USD 110 billion last year, placing Hungary among the top 35 exporters worldwide, Hendrich notes. The Hungarian Export Promotion Agency (HEPA), operating under the supervision of the Ministry of Foreign Affairs and Trade, supports international trade relations through market research, business consultancy and export-oriented training. In addition to market-specific information, HEPA provides clients with intercultural knowledge necessary for successful business operations, and helps in the identification, development and support of internationally competitive Hungarian companies, products and services. Hendrich also highlighted that businesses seeking to establish a presence in a foreign market can request financial assistance from the state-owned Eximbank.
“China is a strategic market for our exporters, therefore we have a regional partner office in Shanghai, which is one of our most significant and biggest partner offices,” Hendrich says. Hungary’s foreign trade volume with China exceeded USD 8.74 billion in 2018, representing a 9.9% increase from the previous year. China is Hungary’s 10th largest foreign trade partner and the most important outside Europe, based on 2018 data. Hungarian exports to China amounted to USD 2.37 billion last year, consisting mostly of high value-added machinery and equipment manufactured by multinational companies in Hungary. Currently, only a smaller portion of export goods is produced by the SME sector and Hendrich states that it is one of HEPA's main objectives to increase the proportional contribution of SMEs to overall exports in the long run. “When it comes to Chinese exports, food and agricultural products are on top of our priority list. We are pushing hard in a positive sense to have more and more quality products present in China. Hungary is a GMOfree country and our agriculture and food sector is the source of a wide range of topquality products. We are also very keen on supporting players from the ICT and software industries,” according to the executive. Most SMEs turning to HEPA for assistance come from the agricultural sector for support in speeding up import licensing procedures and faster market access. China's extreme need for innovation and modern technology often motivates the desire for adventure of ICT companies, making them frequent guests at the Agency’s target market events.
Partnerships are key
Hendrich notes that the country's huge size and the challenges of Hungarian firms in finding an approach to successfully compete make China a difficult market to enter. “Luckily, we are quite successful in China, thanks to a variety of reasons, most importantly because of the outstanding political and cultural relations with China. This year marks the 70th anniversary of diplomatic relations and we celebrate this – similarly to other organizations and the Hungarian government – on many occasions and at many events, which always gives us the opportunity to talk about business,” Hendrich says. For a business to succeed in the Chinese market, finding local partners is of key importance, Hendrich observes, adding that foreign businesses need to be present in China because building personal relations is crucial. “Chinese language skills are also a huge advantage as they help bypass many communication hurdles. We have Chinese speaking colleagues in HEPA, who are at the disposal of companies turning to us for assistance,” the executive says. HEPA is preparing for the Shanghai Expo held in November, where Hungary will have two stands: one for general country promotion and one exhibiting agricultural and food products. Companies interested in the event have the chance to join HEPA at the Expo where the Agency’s experts will organize B2B meetings for them. “We are also dealing with a new initiative of the government: the support of capital exports, or outbound investments. The importance of capital exports is best exemplified by China, as Chinese outbound investments exceed the amount of inbound investments. Of course, Hungary is not at that level, but hopefully investing in China will become an option for Hungarian companies soon,” Hendrich says.
Wide range of services
“Promoting the export capacity of Hungarian companies means that we provide assistance to businesses that wish to penetrate a given market in a more efficient manner by reducing time and costs. We have a very strong advisory team that makes the initial interview with candidate companies to assess the product, the level of readiness for market entry and export readiness. This requires no investment on the side of the company as we are a nonprofit organization and provide these services free of charge. We can share know-how and expertise accumulated in the course of several decades. Based on these interviews, we can draft a plan on how to develop the company to be export ready,” Hendrich notes. HEPA, which also operates partner offices in Tokyo and Istanbul and plans to open one in Moscow in the near future, helps companies take part in business delegations, attend exhibitions, trade fairs, B2B meetings, and other events that raise overall awareness of Hungary as a country and of individual companies.
HEPA CASE STUDIES
Within the framework of the Preferred Exporters Partner Program, HEPA has built a long-term partnership with Naturtex Wool & Feather Processing Ltd., which has attended several major Chinese trade fairs in recent years with the support of the Agency. The most significant of these fairs is the China International Import Expo, which will be organized for the second time this year. Graboplast Zrt., which has received market expansion support from HEPA's Shanghai partner office since the beginning of the year, is another example of successful cooperation between a domestic company and the institution. A successful market entry and expansion in China requires companies to have a long-term strategy, commitment and consistent cooperation, which these partners have already demonstrated.