AV-LEAD Managing Director Robin Auer in an interview about upcoming opportunities in new markets.
Sophie Schmidt: Mr. Auer, how have you experienced the current year in the expansion business and how do you see the current economic environment?
Robin Auer: It was a very eventful year. The first half of the year was characterized by strong growth, almost euphoria about the end of the Corona pandemic. Then the war in Ukraine came and the economic environment changed rapidly. The greatest burden on our partner companies is inflation, an issue that had been forgotten for years. Now we are seeing a stabilization of the economic situation again; from today's perspective, the bottom seems to have been overcome.
Do economic uncertainties affect the desire to go to another country with a company?
Auer: That varies greatly depending on the industry and the location of the company. But we are increasingly seeing two groups forming. One seems paralyzed by the bad economic news that reaches us every day. Although this is all relative, the gloomy mood is in fact only partly reflected in the economic data. In any case, it retreats, is afraid and does not take risks. The other group, on the other hand, sees the current situation as an opportunity and is preparing for the coming growth. In order to diversify risk and seize new opportunities, it is desperate to establish additional pillars in foreign markets and win contracts there. It is unnecessary to explain which of these two groups will succeed in business in the long term.
So you are expecting future economic growth?
Auer: Of course. Every crisis up to now has always been followed by a phase of growth. This typically lasts longer than the weak phase and more than compensates for the decline. Both Eastern and Western Europe will benefit from this. Our selected 5 target markets are predestined for above-average growth rates. We are currently expanding with customers into Austria, Germany, Switzerland, Czech Republic as well as Slovakia and are also procuring contracts in these countries.
What do you expect specifically for the next few years?
Auer: After a modest 2023, which will be characterized by stagnation, we expect the global economy to pick up again in the following year. This thesis is also supported by most economic experts. The key point, however, is that if you want to benefit from the upswing in 2024, you must expand now. If you only enter new markets with the masses, the competitive pressure will be much higher and the prospects of success lower. As in life, it is sometimes important in business to go against the tide and act anti-cyclically. The prerequisite for this is, of course, that solid management has been done in the past and that sufficient capital is available to be able to comfortably execute such an expansion project.
Does this also apply to Ukrainian and Russian companies?
Auer: We are currently not working with Russian companies. This is also because they are practically excluded from public tenders anyway, which severely restricts their chances of winning government contracts. We also see great reluctance on the part of private contracting authorities. This makes our work in contract brokerage more difficult. Since the beginning of the war, we have observed an even stronger urge among Ukrainian companies to move toward the West. We arrange contracts in the Central European region, i.e. in Austria, Germany, Switzerland, Czech Republic as well as Slovakia. Both public tenders and private contracts in all sectors. We also establish contacts with wholesalers and buyers in order to enable product distribution abroad. So we take care of export on B2B and sometimes also on B2C basis. Especially in the area of supply services, many lucrative deals have been made possible in this way. For these companies, we compensate for the massive drop in orders in their home country, so that their continued existence is made possible. Of course, we do this for companies from everywhere.
You mentioned the area of contract brokerage. Is this a topic that is becoming increasingly important?
Auer: Definitely, yes. We are seeing strong interest in exporting products to German-speaking countries in particular. This is especially interesting for companies from Eastern Europe thanks to the high price level. Better prices can be achieved than in the home country, which increases profits. Another advantage is that no separate subsidiary is built up abroad, but only exports to the foreign country. This reduces costs and risk. We arrange for our customers the suitable contract, advise them strategically, remove legal and administrative barriers and also translate the complete communication between client and contracting authority.
What is the situation like for private individuals, are they also increasingly orienting themselves towards the West?
Auer: We are still seeing a strong, ongoing trend among private individuals, especially from Eastern Europe, to emigrate to the West and start a new life there. This is not surprising, as we know that the economic situation in Eastern Europe is still somewhat more difficult than here. For emigrants to Germany, Austria and Switzerland, this means above all a much higher salary and many financial benefits. Even with little knowledge of German, we can find people a job in German-speaking countries. Especially in the logistics industry, our partner companies are currently experiencing a severe shortage of personnel for office jobs and a high demand for foreign workers. So, as always, there are plenty of opportunities, you just have to grab them.
What advice would you give to companies that are now looking to expand into Germany, Austria, Switzerland, Czech Republic or Slovakia?
Auer: Plan carefully and work out a strategy. So prepare yourself for expanding. This includes knowing the target market inside and out and really understanding the local consumers. Calculate realistically. Build up networks in advance and perhaps find your first customers already. Make sure you have excellent staff and don't just hire people you already know from your home market. And the most important thing with all this work: Have fun with it. Discover something new and seize opportunities. If you need support in doing so, get in touch with us. We will be happy to help you and make sure that you will be successful in the new market and that you have not wasted your money.
The interview was held on October 10, 2022 by Sophie Schmidt in German and translated into several languages.
Robin Auer was born and raised in Vienna. With a degree in business administration, he has worked professionally for various financial institutions and in the field of equity analysis. Thanks to his activities in politics, he is very well networked. Together with his partner Aneta Vrabelova he founded the consulting company AV-LEAD . This company supports firms and individuals in expanding to Eastern and Central Europe and in winning contracts there.