August 16, 2022 • 32 mins
This episode is about expansion to the Estonian market.
My guest this time is a local Estonian expert with decades of experience in sales in Estonia and Eastern Europe.
From the episode you’ll learn:
- What you should do before talking to potential Estonian customers
- Some pages from the Estonian history
- Why Estonia it is a good idea to make Estonia as an entry point to the European Union
- Where and how you can get insights from your potential customers in Estonia
- Why Estonia can benefit from existence of Ukraine
- That establishing the relations with Estonians will take time
- Who might be a good source of information about Estonian market
This podcast is made in a partnership with Do Business With Ukrainians, the platform of Ukrainian business teams you can work with now Work with verified teams.
Access the best, trustworthy small and medium businesses. You may request cooperation with Ukrainian business here: https://www.dobizwithua.com/
Create your international expansion strategy with Start Global, your guide to foreign markets. https://www.start-global.biz/
The host of the podcast is Dmytro Shvets, the director of Start Global LLC, Dmytro has more than 18 years experience of international expansion consulting
Dmytro on LinkedIn https://www.linkedin.com/in/dshvets/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to the Start Global Insights, the podcast for businesses looking to expand globally.
(00:09):
On this show, we interview experts from different countries to get insights about local business
culture and help you to enter new global markets.
My guest today is Eero Erastus, entrepreneur, consultant, and venture investor from Estonia.
(00:30):
Ero has decades of sales and business development experience in Estonia and Eastern Europe for
dozens of projects as managing partner of consulting company East Partners.
And for the last six years, he acts as an advisor for European Bank of Reconstruction
and Development.
And I hope that today we will have an interesting conversation about the Estonian market.
(00:51):
Tere Ero, welcome to the show.
Tere, nice to meet you.
Let's talk.
Let's have a look what we can do.
Yeah, let's start from the general approach.
And imagine that there is a company that is willing to sell, for example, construction
materials from Ukraine to Estonia.
(01:14):
And what should be like their roadmap?
What would you suggest to start with?
Yeah, it is always a dream of a producer of some kind of certain products to sell also
to other countries.
And Estonia has a target market for Ukrainian companies.
First of all, we have to understand the size of the Estonian market.
(01:40):
And it is a relatively small country and with a million and 300,000 inhabitants, I guess
it is half of the Kiev city in a way of a population.
And someone considering Estonia as a target market should probably also think at the same
time other Baltic countries as a whole.
(02:04):
So Latvia and Lithuania together, so-called Baltic states would be kind of about five
to six million people, already considerable, quite a big market altogether.
So someone going to Estonia should have also the vision or understanding of so-called pan-Baltic
(02:25):
strategy, which I would suggest strongly.
How do you think?
Is it worthwhile to enter first Estonia and then other Baltic countries or it is better
to start with Lithuania, for example, or Latvia?
Yeah, in a way it is from logically taken, Lithuania is much closer to Ukraine.
(02:48):
And starting from Lithuania would be more easy in a way of distances is shorter for
delivery of goods.
But when you go to the Baltic states and consider the simplicity of making business, so it might
be also that Estonia is the most easiest country to make business in a way.
(03:10):
But as Estonia is a very small, there are some other also limitations with Estonia,
because Estonia is part of the very strongly integrated business of bi-culturally and also
in many other ways with Finland.
And when you go to Lithuania, Lithuania is very heavily integrated to business with Poland.
(03:35):
And there is no borders between Lithuania and Poland, no borders between, well, there
is a sea between.
You have to take a ferry to go to Finland, but no borders in European Union.
So one starting a business in Baltic countries or we're talking now entering the Estonian
market should consider the geopolitical kind of situation around those countries.
(03:59):
And the influence of the Polish companies selling products to Lithuania is something
you should immediately consider as a big threat for Ukrainian companies entering Lithuania.
So influence of Polish companies in Estonia is not that big.
It's smaller, but it is still easy.
Poland is very strong economy, very big producer of different kind of products.
(04:23):
And I have now heard very interesting samples of even private people traveling with their
own car to Poland to pick up construction materials for their needs.
So it's the price level and everything in Poland seems to be very beneficial for buyers
because there is a big market, big local market.
(04:46):
And in Estonia, yeah, you are asking about the roadmap.
I guess at first you need to make a proper market analysis to understand the situation
in your product group and what you want to sell, what is your products and what is the
situation in target market.
Like in Estonia, who are the major players in that segment?
(05:09):
To understand their business logic and most important is to understand their sales channels.
So how they actually produce and sell those products in Estonia.
So we are quite developed economy now, so we have been like making good progress from
the after the collapse of Soviet Union, which happened.
(05:31):
We are in a list of developed countries.
So even with a small economy, there is definitely niches and opportunities to other players.
And when you analyze a market or target market, for example, Estonia in particular segment,
try to understand who are the major players and what are the winning business concepts
(05:53):
in that market.
Who is a market leader and what they are doing?
And that's the question is that what we can offer to this market to Estonians, what we
can offer to them and where are our kind of competitive advantages.
So it's a good word that you can't sell your products or services if you do not offer something
(06:19):
which is high demand in the market.
So analyze the situation first and then plan your steps like wisely.
How you can reach the target customers or who are your customers and how you could establish
your import and distribution in the country and how you can utilize existing distribution
(06:42):
networks.
Is it difficult to analyze the market from abroad?
How to understand what is going on on the market or the players?
I assume that there are a lot of information available online for that.
But how difficult it is to contact local companies, how to start understanding these players?
(07:03):
What would you need to start to sell to them?
Yeah, it is a good question.
How you have to start?
So going out from the building, you first have to open a door.
And the question is that how you open a door to go to the new market.
Obviously, you need a contact in that country first.
(07:25):
And my simple advice is use your current network and try to find the local people in Estonia.
Who knows this business?
So quite often, there is a lot of information available in the web.
Make this job first.
Analyze information available in the internet and then try to find local people from that
(07:48):
industry who knows exactly what's going on in that industry and how does this specific
industry or business area is functioning.
And finding those people is a key question to success.
We could call them market experts.
And in many ways, it is good to talk to the people who know something about this market
(08:14):
already.
This is not like finding the person who will sell instead of you, but this is more for
getting the real information from the market.
Exactly.
And then, of course, the question is that why should they share information which they
have in their mind to you?
And this is, I don't know, the answer.
The answers are that maybe because you are from Ukraine, maybe.
(08:38):
Or maybe you have to compensate this time somehow.
But definitely, it would be good to talk with the people who are close to that industry
and know something before you start to knock the doors of potential kind of cooperation
partners or importers or distributors.
(08:58):
Because when you are starting to contact potential buyers, you should actually be aware of the
market situation and conditions, the sales conditions, price level, delivery terms, also
specific issues which you should know before you start approaching the potential buyers.
(09:23):
And maybe it is a good plan is to have first a long list of all companies or enterprises
who are in a certain business area and then to shorten it to a short list which you can
contact in later phases.
But yes, well.
So it looks like there are a lot of homework need to be done before doing any steps in
(09:48):
real sales.
I would recommend this.
And second is to try to talk also to end consumers of those products.
For example, if you talk like, okay, construction material industry, then the end consumers
(10:09):
are in a way are private families or property developers or construction companies are not
end users, but they are very, very interesting kind of information source of what's going
on in the market.
So let's try to imagine that, for example, window producer in Ukraine wants to enter
(10:31):
to the Estonian market.
So talking to the construction company or key people in some construction companies
installing windows would be very beneficial because they will tell you what are the problems
in, for example, in Estonia, in that business area.
Maybe the window, the business area production of windows is not actually the easiest business
(10:56):
area to enter because we have so many producers of high quality windows.
But then there might be options that there is an issue for some kind of different kind
of products, lower priced, simple, more simple solutions.
And talking about this context for getting this information, how?
So you said that the best way is to find the local expert through your contacts.
(11:21):
Just think who are you connected to and then who is this person connected to this series
of six handshakes.
Yeah, so when you can reach any person on the planet.
I'm just imagine business from Ukraine that is now thinking, do I have a contact in Estonia?
How should I find it?
I don't have anybody there.
(11:42):
And the one way is to think through the contacts that you have.
But the other thing is to contact them in a cold way.
And how it is in Estonia from the point of view of business culture or communication
culture, how easy it is to get the contact or to reach out to a person in some company
in a cold way.
Yeah, you mean like a cold call to…
(12:04):
Cold call or LinkedIn or email.
So we Estonians, we are quite not easy to be approached.
This is my general kind of understanding about the culture we have here.
When someone is calling from Ukraine and I guess now due to these times of geopolitical
(12:26):
disaster we have, I guess this would support very much now Ukrainian person who is calling
in a way that who is receiving a call, Estonian company secretary or Twitch async manager
or general manager, who definitely listen very carefully now what you have to say.
What is your message?
(12:48):
And people are usually very in positive way hoping to help also Ukraine.
So I guess that cold call would work now quite well.
But then it goes to the business logic that even with the full support of Estonian nation
to Ukraine, they are not going to buy any products if it's not beneficial.
(13:12):
So there should be still attractive business logic behind this future cooperation.
And I would suggest that with a phone call, very first seconds you have to create trust
that you are a normal person you can talk with.
And second is that there is really behind is something that, wow, I have to spend my
(13:35):
time to listen what this fellow has to tell.
So just be brave, take your phone and start calling, but analyze the situation in the
market first.
So your phone call should go in a way that, hello, I'm calling from Ukraine, that we
have analyzed your market.
(13:56):
And in our opinion, there is a business opportunity for you with our products.
Can we talk this?
And this is something which at the first like very first or second sentence, I would without
any small talks tell to you Estonian person that, wow, this is a message.
(14:16):
And then you can talk about what is the geopolitics or what is the weather like in Odessa.
Is there any need to go to the country?
I mean, how important it is to meet in offline and to have this contact, personal contact
to the people before starting the sales?
We live in modern life and we can talk in through over internet.
(14:42):
But still, business is made between people and the long term business relations are established
between some people who know each other quite well.
And if there is opportunity to travel and meet, then this is quite small actually investment.
So country visit, when you call to someone and say that I'm looking to visit Estonia,
(15:07):
for example, in a couple of months time, can we meet and visit your company?
And we are coming from Ukraine.
I guess definitely you would get warm welcome from Estonian entrepreneurs to listen to you.
But you can offer.
So because of a country visit, you can meet, you can plan your country visit in a way that
(15:28):
you would meet with very different people.
So you could meet with some of the end customers, some influencers of the market.
So for example, construction material producers can meet architects.
Architects are independent players who can share very interesting information about construction
(15:49):
materials because they are deeply involved in the process of creation.
And they face and see problems in the delivery part when the construction is in a process
and which companies deliver products and which companies are good and which fail.
(16:12):
And also there are some kind of influencers are quite a good source for information.
So in fact, you should talk not only to your client, but to all stakeholders that are in
the market to get information from different angles and understand the picture.
Exactly.
Because the picture from the angle of client might be not the very clear picture about
(16:35):
the market.
That's true.
So more to talk with different groups involved in the stages of delivery or sales channel
stages, better it is.
For example, if someone knows some kind of country city officials involved in a planning
(16:56):
or municipality kind of construction permits, people who are talking, giving construction
permits, for example, in city councils.
If you can approach those people, why not also share a very interesting source of information.
So plan, analyze, call and plan your country visit very, very well.
(17:20):
So talk as many people as you can.
Are there any places where you can meet the most stakeholders, maybe some conferences
or exhibitions?
So to plan your visit in the way that you are not just visiting companies at their address,
but some place where they are gathered together already.
(17:41):
If you can try to visit the country, a target market, when there is an exhibition of this
particular industry, this is probably the best place to gather also information, make
contacts and easy to make contacts when you see and meet the people who are involved in
that industry.
So if there is a construction exhibition coming in, let's say in the middle of May, better
(18:04):
make a target country visit exactly the same week, not week before or after.
When I'm talking with many exporters, they are saying that exhibitions are dying already.
So this is not like a source of sales, maybe because they have false expectations from
that.
So they should not expect expo as a sales channel, but as an intelligence visit.
(18:28):
So the goal of the expo should be not to sell your product, but to make these contacts and
get more information from the local players.
That's true.
Actually, they are very right because companies taking part of the exhibition, they are selling
their products on exhibition and there are people who are kind of sales targeted.
(18:50):
So it's very not easy to go to salespeople and start to explain that now you have to
start sell my products as well.
So they are absolutely right.
But for understanding of the full picture, it would be really helpful for business intelligence
kind of, as you nicely said, point of view.
(19:12):
I think that you should use the wish of salespeople to talk because usually they would like to
talk about their product, about their company as a salespeople.
And then starting with that point, you can reframe the negotiation or conversation to
the market or to the competitors and start to use this opportunity of talking with people
(19:38):
who love to talk about what you would like to talk.
Yes, I absolutely agree.
In terms of negotiations with Estonians, how do you think we are both born in Soviet Union
still?
And you have seen how the business culture of Estonians also changed during these decades.
(20:05):
How it is now?
Is the culture of business negotiation in Estonia closer to East or to West?
What are the peculiarities or what you should pay attention to when you are negotiating
with Estonians?
I would put it in a way that in some ways we are hanging between in a triangle of Finnish,
(20:30):
German and also Russian business culture.
Dangerous mix.
It is very dangerous mix because of the...
What we have in Germans have been landlords in Estonia for 800 years.
And then we were part of the Kingdom of Sweden for a couple of hundreds of years.
Then we were part of the Russian Empire and even the Soviet Union, which didn't last that
(20:55):
long.
So when you talk with the people, it's probably a big difference by generations that this
is businessman, like 25 years old, young international kind of IT entrepreneur or is like owner of
(21:15):
a factory with the age of 64.
With the older generation, I would say from older than 40 and 45 years currently, people
speak all fluent Russian also.
So that would help the communication in a way that is not a very popular now the language,
but still would help the communication.
(21:37):
When you go to Latvia, there is Russian is a different...
It's a second business language actually.
So it is definitely good to know Russian when you make business in Latvia, but not that
much in Estonia.
So the younger generation is not speaking anymore fluent Russian.
So they are all English speaking.
(21:59):
This older generation, do they speak English mostly as well?
Might be that even some people do not, that they would rather be better speaking in Russian
actually.
I have seen in many, many, many times that older generation even in Estonia, people don't
speak fluent English.
But when you go younger than 40 years, so like they are all mostly all speak good English
(22:25):
also.
So the communication is quite easy.
So I would say that the business culture is actually quite straightforward in my opinion
still.
So when you call to someone in Estonia and he might respond to you and say, who you are
and what you want.
So prepare to tell shortly who you are and what you want.
(22:50):
So the feedback would come quite quickly that they are not interested in case they are not
interested.
I guess in our business culture, people don't waste much time of keeping kind of communication
ongoing.
So it seems like too complex, complex idea.
Sorry, let's talk after one year.
(23:12):
So you can be also straightforward from the seller perspective when you are asking direct
questions.
It would be okay to do.
Absolutely.
And direct questions would be also reasonable direct questions.
Yeah, like we have studied the market.
We understood that you are the major player and we think that our product would be interesting
(23:35):
in this and this direction because we have this and this data.
Is it correct or not?
Yeah.
And can we talk about this?
Yes.
Yeah.
So this is something which you should open immediately, I guess, when you talk to Estonian.
Usually the products are sold to someone when you with your product and service, you help
(24:02):
this particular cooperation partner in a way that he can benefit out of it.
There should be some kind of clear opportunities where there is, for example, lack of this
kind of products or raw materials or low competition in that field or very high prices or very
(24:23):
unbeneficial kind of terms of making business.
So from Ukrainian companies from the field of production of steel, metals, chemical products,
compounding, chemical compounding and any other this kind of products which are not produced
(24:45):
in the country as raw material should be interesting, I would say at first glance.
But then we would see the problem is that many times also companies can say that I'm
interested to buy.
Can I buy small quantities first?
And then it is for a Ukrainian company is a good question that how you can offer a good
(25:08):
service with a small quantities from long distance.
Ukrainian entrepreneur is probably asking that you have to buy a full truck of my goods
and the Estonian company is saying that no, I would like to buy like one euro pallet.
So it is important to first and to see to test it and then it is very important in my
(25:31):
opinion when you want to enter the new market, create the beneficial conditions for the deliveries
of small quantities first.
So this is and consider this like your entry cost or your entry investment or your market
entry that when you calculate per sold product and you deliver only a euro pallet, it might
(25:55):
be quite expensive.
So tell to the clients that well, I'm delivering you one euro pallet of my products, for example,
and the first two deliveries or three deliveries, we send it without any freight cost, for example.
So like beginning start with a small steps and then you can get the leg between the door.
(26:20):
So in fact, this is like agreement between two parties that this is a test.
So the buyer should also understand that this is not the normal price and this is exception
just to show how the product works and to establish this first connection between buyer
and seller.
(26:40):
So I think this is important to show that when you will buy more or it will be your
decision to cooperate in the long term with us, the terms would change.
So these terms are for the first deliveries only.
Exactly.
That is something which I'm quite sure will be the obstacle from the very beginning.
(27:04):
They might be interested, but they want to have kind of very careful beginning, let's
say, of cooperation.
Eero, I had also a question about the idea.
I know that Estonia is very expert-oriented country.
You have 10 times more export per capita than Ukraine.
And how good it would be to use this information as a sales point to Estonian exporters that
(27:31):
you export more, you don't have such resources, people and production in Estonia.
And it might be a good idea to extend this production to Ukraine, meaning that you will
buy these goods and then add some value, your package or whatever, and then resell it to
the European market.
(27:52):
And then in this way, Estonia may act as a gate to the whole Europe.
Very good and very important point, actually.
Yes, Estonian economy, as we, from the beginning of our conversation mentioned already, is
very small.
And one who wants to establish a proper factory or business, you just have to sell to other
(28:15):
countries from Estonia.
So your production capacity would be anyway bigger than your market, local market demand.
Export activity is definitely a big part of many, many local companies, and some of them
working like 70, 80, even 90% of their products go to export.
(28:38):
We have one particular very interesting industry, which is very big in Estonia.
Actually we are one of the biggest in Europe and in world level, is the house factories.
So companies producing residential and industrial facilities for living and other purposes are
(29:01):
selling like 100% of their products to export.
And I know some of the companies, for example, selling their house factory products like
huge quantities to west Europe.
Market market is, for example, Norway is the biggest market for them.
(29:21):
So your idea that for those companies who are selling a lot of export should benefit
from the existence of Ukraine in a way that Ukraine would support them to partly produce
or outsource, produce some components, for example, for Estonian producers sounds like
(29:42):
a very logical idea.
When talking about government, how open governmental officials are to public?
Is it easy to contact some municipality, I don't know, some governmental officials?
I guess that we are quite, in our country the government people are working to serve
(30:05):
the nation.
So at some moment we started to build this so-called air government, which would mean
that every citizen should have access to all information electronically.
And it's something which we have, we have the electronic signature and Estonian IT card,
which actually is easy to apply and get this air residency in case you want to make real
(30:32):
business in Estonia.
I would say it's my experience, I don't know how it's from the foreign point of view, foreigners
are contacting our state employees, but I have quite, let's say, positive experiences.
I hope that there are not a much corruption also.
So it's quite mostly honestly hardworking people.
(30:53):
Okay.
Maybe the last question to you is what would you advise or wish to Ukrainian exporters
looking at Baltic countries, Baltic markets, especially Estonia?
Before I answer to this question, I will shortly also say that there is this Estonian Chamber
Commerce and Industry is actually very reasonable kind of place to get the information.
(31:19):
In every city and every town, they have a representative also, very good people who
are very well linked to the local business life.
But well, maybe you should be still a bit patient to make friends in Estonia, the long-term
friends, it takes time, be patient and time to time if Estonian people are a bit behaving
(31:42):
like awkwardly or kind of strangely.
Forgive them this because they are very calm.
They have always in a way establishing of relations, they take time.
So it is the old saying in Estonian is that you can't buy old friends by money.
(32:04):
So maybe this is good to end our conversation.
Thank you.
Thank you, Eero, for this advice.
And I think that this Estonian saying is correct, not only for Estonia, but for the whole world.
Yes, absolutely.
Thank you for being with me at this show and thank you for sharing your experience and
(32:26):
information.
Thank you, Dmitri, and wish you all the best and Slava Ukraina!
Eeroem Slava!
Welcome to the Start Global Insights, the podcast for businesses looking to expand globally.
(00:09):
On this show, we interview experts from different countries to get insights about local business
culture and help you to enter new global markets.
My guest today is Eero Erastus, entrepreneur, consultant, and venture investor from Estonia.
(00:30):
Ero has decades of sales and business development experience in Estonia and Eastern Europe for
dozens of projects as managing partner of consulting company East Partners.
And for the last six years, he acts as an advisor for European Bank of Reconstruction
and Development.
And I hope that today we will have an interesting conversation about the Estonian market.
(00:51):
Tere Ero, welcome to the show.
Tere, nice to meet you.
Let's talk.
Let's have a look what we can do.
Yeah, let's start from the general approach.
And imagine that there is a company that is willing to sell, for example, construction
materials from Ukraine to Estonia.
(01:14):
And what should be like their roadmap?
What would you suggest to start with?
Yeah, it is always a dream of a producer of some kind of certain products to sell also
to other countries.
And Estonia has a target market for Ukrainian companies.
First of all, we have to understand the size of the Estonian market.
(01:40):
And it is a relatively small country and with a million and 300,000 inhabitants, I guess
it is half of the Kiev city in a way of a population.
And someone considering Estonia as a target market should probably also think at the same
time other Baltic countries as a whole.
(02:04):
So Latvia and Lithuania together, so-called Baltic states would be kind of about five
to six million people, already considerable, quite a big market altogether.
So someone going to Estonia should have also the vision or understanding of so-called pan-Baltic
(02:25):
strategy, which I would suggest strongly.
How do you think?
Is it worthwhile to enter first Estonia and then other Baltic countries or it is better
to start with Lithuania, for example, or Latvia?
Yeah, in a way it is from logically taken, Lithuania is much closer to Ukraine.
(02:48):
And starting from Lithuania would be more easy in a way of distances is shorter for
delivery of goods.
But when you go to the Baltic states and consider the simplicity of making business, so it might
be also that Estonia is the most easiest country to make business in a way.
(03:10):
But as Estonia is a very small, there are some other also limitations with Estonia,
because Estonia is part of the very strongly integrated business of bi-culturally and also
in many other ways with Finland.
And when you go to Lithuania, Lithuania is very heavily integrated to business with Poland.
(03:35):
And there is no borders between Lithuania and Poland, no borders between, well, there
is a sea between.
You have to take a ferry to go to Finland, but no borders in European Union.
So one starting a business in Baltic countries or we're talking now entering the Estonian
market should consider the geopolitical kind of situation around those countries.
(03:59):
And the influence of the Polish companies selling products to Lithuania is something
you should immediately consider as a big threat for Ukrainian companies entering Lithuania.
So influence of Polish companies in Estonia is not that big.
It's smaller, but it is still easy.
Poland is very strong economy, very big producer of different kind of products.
(04:23):
And I have now heard very interesting samples of even private people traveling with their
own car to Poland to pick up construction materials for their needs.
So it's the price level and everything in Poland seems to be very beneficial for buyers
because there is a big market, big local market.
(04:46):
And in Estonia, yeah, you are asking about the roadmap.
I guess at first you need to make a proper market analysis to understand the situation
in your product group and what you want to sell, what is your products and what is the
situation in target market.
Like in Estonia, who are the major players in that segment?
(05:09):
To understand their business logic and most important is to understand their sales channels.
So how they actually produce and sell those products in Estonia.
So we are quite developed economy now, so we have been like making good progress from
the after the collapse of Soviet Union, which happened.
(05:31):
We are in a list of developed countries.
So even with a small economy, there is definitely niches and opportunities to other players.
And when you analyze a market or target market, for example, Estonia in particular segment,
try to understand who are the major players and what are the winning business concepts
(05:53):
in that market.
Who is a market leader and what they are doing?
And that's the question is that what we can offer to this market to Estonians, what we
can offer to them and where are our kind of competitive advantages.
So it's a good word that you can't sell your products or services if you do not offer something
(06:19):
which is high demand in the market.
So analyze the situation first and then plan your steps like wisely.
How you can reach the target customers or who are your customers and how you could establish
your import and distribution in the country and how you can utilize existing distribution
(06:42):
networks.
Is it difficult to analyze the market from abroad?
How to understand what is going on on the market or the players?
I assume that there are a lot of information available online for that.
But how difficult it is to contact local companies, how to start understanding these players?
(07:03):
What would you need to start to sell to them?
Yeah, it is a good question.
How you have to start?
So going out from the building, you first have to open a door.
And the question is that how you open a door to go to the new market.
Obviously, you need a contact in that country first.
(07:25):
And my simple advice is use your current network and try to find the local people in Estonia.
Who knows this business?
So quite often, there is a lot of information available in the web.
Make this job first.
Analyze information available in the internet and then try to find local people from that
(07:48):
industry who knows exactly what's going on in that industry and how does this specific
industry or business area is functioning.
And finding those people is a key question to success.
We could call them market experts.
And in many ways, it is good to talk to the people who know something about this market
(08:14):
already.
This is not like finding the person who will sell instead of you, but this is more for
getting the real information from the market.
Exactly.
And then, of course, the question is that why should they share information which they
have in their mind to you?
And this is, I don't know, the answer.
The answers are that maybe because you are from Ukraine, maybe.
(08:38):
Or maybe you have to compensate this time somehow.
But definitely, it would be good to talk with the people who are close to that industry
and know something before you start to knock the doors of potential kind of cooperation
partners or importers or distributors.
(08:58):
Because when you are starting to contact potential buyers, you should actually be aware of the
market situation and conditions, the sales conditions, price level, delivery terms, also
specific issues which you should know before you start approaching the potential buyers.
(09:23):
And maybe it is a good plan is to have first a long list of all companies or enterprises
who are in a certain business area and then to shorten it to a short list which you can
contact in later phases.
But yes, well.
So it looks like there are a lot of homework need to be done before doing any steps in
(09:48):
real sales.
I would recommend this.
And second is to try to talk also to end consumers of those products.
For example, if you talk like, okay, construction material industry, then the end consumers
(10:09):
are in a way are private families or property developers or construction companies are not
end users, but they are very, very interesting kind of information source of what's going
on in the market.
So let's try to imagine that, for example, window producer in Ukraine wants to enter
(10:31):
to the Estonian market.
So talking to the construction company or key people in some construction companies
installing windows would be very beneficial because they will tell you what are the problems
in, for example, in Estonia, in that business area.
Maybe the window, the business area production of windows is not actually the easiest business
(10:56):
area to enter because we have so many producers of high quality windows.
But then there might be options that there is an issue for some kind of different kind
of products, lower priced, simple, more simple solutions.
And talking about this context for getting this information, how?
So you said that the best way is to find the local expert through your contacts.
(11:21):
Just think who are you connected to and then who is this person connected to this series
of six handshakes.
Yeah, so when you can reach any person on the planet.
I'm just imagine business from Ukraine that is now thinking, do I have a contact in Estonia?
How should I find it?
I don't have anybody there.
(11:42):
And the one way is to think through the contacts that you have.
But the other thing is to contact them in a cold way.
And how it is in Estonia from the point of view of business culture or communication
culture, how easy it is to get the contact or to reach out to a person in some company
in a cold way.
Yeah, you mean like a cold call to…
(12:04):
Cold call or LinkedIn or email.
So we Estonians, we are quite not easy to be approached.
This is my general kind of understanding about the culture we have here.
When someone is calling from Ukraine and I guess now due to these times of geopolitical
(12:26):
disaster we have, I guess this would support very much now Ukrainian person who is calling
in a way that who is receiving a call, Estonian company secretary or Twitch async manager
or general manager, who definitely listen very carefully now what you have to say.
What is your message?
(12:48):
And people are usually very in positive way hoping to help also Ukraine.
So I guess that cold call would work now quite well.
But then it goes to the business logic that even with the full support of Estonian nation
to Ukraine, they are not going to buy any products if it's not beneficial.
(13:12):
So there should be still attractive business logic behind this future cooperation.
And I would suggest that with a phone call, very first seconds you have to create trust
that you are a normal person you can talk with.
And second is that there is really behind is something that, wow, I have to spend my
(13:35):
time to listen what this fellow has to tell.
So just be brave, take your phone and start calling, but analyze the situation in the
market first.
So your phone call should go in a way that, hello, I'm calling from Ukraine, that we
have analyzed your market.
(13:56):
And in our opinion, there is a business opportunity for you with our products.
Can we talk this?
And this is something which at the first like very first or second sentence, I would without
any small talks tell to you Estonian person that, wow, this is a message.
(14:16):
And then you can talk about what is the geopolitics or what is the weather like in Odessa.
Is there any need to go to the country?
I mean, how important it is to meet in offline and to have this contact, personal contact
to the people before starting the sales?
We live in modern life and we can talk in through over internet.
(14:42):
But still, business is made between people and the long term business relations are established
between some people who know each other quite well.
And if there is opportunity to travel and meet, then this is quite small actually investment.
So country visit, when you call to someone and say that I'm looking to visit Estonia,
(15:07):
for example, in a couple of months time, can we meet and visit your company?
And we are coming from Ukraine.
I guess definitely you would get warm welcome from Estonian entrepreneurs to listen to you.
But you can offer.
So because of a country visit, you can meet, you can plan your country visit in a way that
(15:28):
you would meet with very different people.
So you could meet with some of the end customers, some influencers of the market.
So for example, construction material producers can meet architects.
Architects are independent players who can share very interesting information about construction
(15:49):
materials because they are deeply involved in the process of creation.
And they face and see problems in the delivery part when the construction is in a process
and which companies deliver products and which companies are good and which fail.
(16:12):
And also there are some kind of influencers are quite a good source for information.
So in fact, you should talk not only to your client, but to all stakeholders that are in
the market to get information from different angles and understand the picture.
Exactly.
Because the picture from the angle of client might be not the very clear picture about
(16:35):
the market.
That's true.
So more to talk with different groups involved in the stages of delivery or sales channel
stages, better it is.
For example, if someone knows some kind of country city officials involved in a planning
(16:56):
or municipality kind of construction permits, people who are talking, giving construction
permits, for example, in city councils.
If you can approach those people, why not also share a very interesting source of information.
So plan, analyze, call and plan your country visit very, very well.
(17:20):
So talk as many people as you can.
Are there any places where you can meet the most stakeholders, maybe some conferences
or exhibitions?
So to plan your visit in the way that you are not just visiting companies at their address,
but some place where they are gathered together already.
(17:41):
If you can try to visit the country, a target market, when there is an exhibition of this
particular industry, this is probably the best place to gather also information, make
contacts and easy to make contacts when you see and meet the people who are involved in
that industry.
So if there is a construction exhibition coming in, let's say in the middle of May, better
(18:04):
make a target country visit exactly the same week, not week before or after.
When I'm talking with many exporters, they are saying that exhibitions are dying already.
So this is not like a source of sales, maybe because they have false expectations from
that.
So they should not expect expo as a sales channel, but as an intelligence visit.
(18:28):
So the goal of the expo should be not to sell your product, but to make these contacts and
get more information from the local players.
That's true.
Actually, they are very right because companies taking part of the exhibition, they are selling
their products on exhibition and there are people who are kind of sales targeted.
(18:50):
So it's very not easy to go to salespeople and start to explain that now you have to
start sell my products as well.
So they are absolutely right.
But for understanding of the full picture, it would be really helpful for business intelligence
kind of, as you nicely said, point of view.
(19:12):
I think that you should use the wish of salespeople to talk because usually they would like to
talk about their product, about their company as a salespeople.
And then starting with that point, you can reframe the negotiation or conversation to
the market or to the competitors and start to use this opportunity of talking with people
(19:38):
who love to talk about what you would like to talk.
Yes, I absolutely agree.
In terms of negotiations with Estonians, how do you think we are both born in Soviet Union
still?
And you have seen how the business culture of Estonians also changed during these decades.
(20:05):
How it is now?
Is the culture of business negotiation in Estonia closer to East or to West?
What are the peculiarities or what you should pay attention to when you are negotiating
with Estonians?
I would put it in a way that in some ways we are hanging between in a triangle of Finnish,
(20:30):
German and also Russian business culture.
Dangerous mix.
It is very dangerous mix because of the...
What we have in Germans have been landlords in Estonia for 800 years.
And then we were part of the Kingdom of Sweden for a couple of hundreds of years.
Then we were part of the Russian Empire and even the Soviet Union, which didn't last that
(20:55):
long.
So when you talk with the people, it's probably a big difference by generations that this
is businessman, like 25 years old, young international kind of IT entrepreneur or is like owner of
(21:15):
a factory with the age of 64.
With the older generation, I would say from older than 40 and 45 years currently, people
speak all fluent Russian also.
So that would help the communication in a way that is not a very popular now the language,
but still would help the communication.
(21:37):
When you go to Latvia, there is Russian is a different...
It's a second business language actually.
So it is definitely good to know Russian when you make business in Latvia, but not that
much in Estonia.
So the younger generation is not speaking anymore fluent Russian.
So they are all English speaking.
(21:59):
This older generation, do they speak English mostly as well?
Might be that even some people do not, that they would rather be better speaking in Russian
actually.
I have seen in many, many, many times that older generation even in Estonia, people don't
speak fluent English.
But when you go younger than 40 years, so like they are all mostly all speak good English
(22:25):
also.
So the communication is quite easy.
So I would say that the business culture is actually quite straightforward in my opinion
still.
So when you call to someone in Estonia and he might respond to you and say, who you are
and what you want.
So prepare to tell shortly who you are and what you want.
(22:50):
So the feedback would come quite quickly that they are not interested in case they are not
interested.
I guess in our business culture, people don't waste much time of keeping kind of communication
ongoing.
So it seems like too complex, complex idea.
Sorry, let's talk after one year.
(23:12):
So you can be also straightforward from the seller perspective when you are asking direct
questions.
It would be okay to do.
Absolutely.
And direct questions would be also reasonable direct questions.
Yeah, like we have studied the market.
We understood that you are the major player and we think that our product would be interesting
(23:35):
in this and this direction because we have this and this data.
Is it correct or not?
Yeah.
And can we talk about this?
Yes.
Yeah.
So this is something which you should open immediately, I guess, when you talk to Estonian.
Usually the products are sold to someone when you with your product and service, you help
(24:02):
this particular cooperation partner in a way that he can benefit out of it.
There should be some kind of clear opportunities where there is, for example, lack of this
kind of products or raw materials or low competition in that field or very high prices or very
(24:23):
unbeneficial kind of terms of making business.
So from Ukrainian companies from the field of production of steel, metals, chemical products,
compounding, chemical compounding and any other this kind of products which are not produced
(24:45):
in the country as raw material should be interesting, I would say at first glance.
But then we would see the problem is that many times also companies can say that I'm
interested to buy.
Can I buy small quantities first?
And then it is for a Ukrainian company is a good question that how you can offer a good
(25:08):
service with a small quantities from long distance.
Ukrainian entrepreneur is probably asking that you have to buy a full truck of my goods
and the Estonian company is saying that no, I would like to buy like one euro pallet.
So it is important to first and to see to test it and then it is very important in my
(25:31):
opinion when you want to enter the new market, create the beneficial conditions for the deliveries
of small quantities first.
So this is and consider this like your entry cost or your entry investment or your market
entry that when you calculate per sold product and you deliver only a euro pallet, it might
(25:55):
be quite expensive.
So tell to the clients that well, I'm delivering you one euro pallet of my products, for example,
and the first two deliveries or three deliveries, we send it without any freight cost, for example.
So like beginning start with a small steps and then you can get the leg between the door.
(26:20):
So in fact, this is like agreement between two parties that this is a test.
So the buyer should also understand that this is not the normal price and this is exception
just to show how the product works and to establish this first connection between buyer
and seller.
(26:40):
So I think this is important to show that when you will buy more or it will be your
decision to cooperate in the long term with us, the terms would change.
So these terms are for the first deliveries only.
Exactly.
That is something which I'm quite sure will be the obstacle from the very beginning.
(27:04):
They might be interested, but they want to have kind of very careful beginning, let's
say, of cooperation.
Eero, I had also a question about the idea.
I know that Estonia is very expert-oriented country.
You have 10 times more export per capita than Ukraine.
And how good it would be to use this information as a sales point to Estonian exporters that
(27:31):
you export more, you don't have such resources, people and production in Estonia.
And it might be a good idea to extend this production to Ukraine, meaning that you will
buy these goods and then add some value, your package or whatever, and then resell it to
the European market.
(27:52):
And then in this way, Estonia may act as a gate to the whole Europe.
Very good and very important point, actually.
Yes, Estonian economy, as we, from the beginning of our conversation mentioned already, is
very small.
And one who wants to establish a proper factory or business, you just have to sell to other
(28:15):
countries from Estonia.
So your production capacity would be anyway bigger than your market, local market demand.
Export activity is definitely a big part of many, many local companies, and some of them
working like 70, 80, even 90% of their products go to export.
(28:38):
We have one particular very interesting industry, which is very big in Estonia.
Actually we are one of the biggest in Europe and in world level, is the house factories.
So companies producing residential and industrial facilities for living and other purposes are
(29:01):
selling like 100% of their products to export.
And I know some of the companies, for example, selling their house factory products like
huge quantities to west Europe.
Market market is, for example, Norway is the biggest market for them.
(29:21):
So your idea that for those companies who are selling a lot of export should benefit
from the existence of Ukraine in a way that Ukraine would support them to partly produce
or outsource, produce some components, for example, for Estonian producers sounds like
(29:42):
a very logical idea.
When talking about government, how open governmental officials are to public?
Is it easy to contact some municipality, I don't know, some governmental officials?
I guess that we are quite, in our country the government people are working to serve
(30:05):
the nation.
So at some moment we started to build this so-called air government, which would mean
that every citizen should have access to all information electronically.
And it's something which we have, we have the electronic signature and Estonian IT card,
which actually is easy to apply and get this air residency in case you want to make real
(30:32):
business in Estonia.
I would say it's my experience, I don't know how it's from the foreign point of view, foreigners
are contacting our state employees, but I have quite, let's say, positive experiences.
I hope that there are not a much corruption also.
So it's quite mostly honestly hardworking people.
(30:53):
Okay.
Maybe the last question to you is what would you advise or wish to Ukrainian exporters
looking at Baltic countries, Baltic markets, especially Estonia?
Before I answer to this question, I will shortly also say that there is this Estonian Chamber
Commerce and Industry is actually very reasonable kind of place to get the information.
(31:19):
In every city and every town, they have a representative also, very good people who
are very well linked to the local business life.
But well, maybe you should be still a bit patient to make friends in Estonia, the long-term
friends, it takes time, be patient and time to time if Estonian people are a bit behaving
(31:42):
like awkwardly or kind of strangely.
Forgive them this because they are very calm.
They have always in a way establishing of relations, they take time.
So it is the old saying in Estonian is that you can't buy old friends by money.
(32:04):
So maybe this is good to end our conversation.
Thank you.
Thank you, Eero, for this advice.
And I think that this Estonian saying is correct, not only for Estonia, but for the whole world.
Yes, absolutely.
Thank you for being with me at this show and thank you for sharing your experience and
(32:26):
information.
Thank you, Dmitri, and wish you all the best and Slava Ukraina!
Eeroem Slava!
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