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Success story: Ukrainian «Aisberg» for export

Success story: Ukrainian «Aisberg» for export

How to start export business? How do I know if my company is ready to export? To give practical insight concerning these persistent questions, we have the section «Success Stories» where experienced Ukrainian exporters will be sharing their experience in overcoming export-related concerns, dispelling some myths and telling about successful operations in the international market.

Please welcome our first guest – the Ukrainian company «Aisberg» that started importing and selling vending equipment and display cabinets 27 years ago. In 2004, the company launched its own production of cooling retail equipment and started to export in the turbulen 2013! That turned out to be the right decision. It took Aisberg only 4 years to reach 27 countries with its products; the customer base of Aisberg includes such companies as Carrefour, REWE Group (BILLA), Auchan, Sultan Center, Kaufland. The company is not going to stop. Its plans for 2017 include the increase of the production volume and the construction of a new production facility. Daria Antonenko, the operations manager of Aisberg, is telling us how the company started to export, what changes it had to implement and what myths it had to overcome.

-When did you feel that the Ukrainian market was too small for you? What were your first steps to start exporting?

-We actually started to export our own cooling equipment simultaneously with the launch of our production. The first display cabinets were shipped to Georgia just after the Revolution of Roses for the local retail network Populi. That was approximately 15 years ago. We exported a lot to the CIS market, especially to Kazakhstan and to Russia. Since 2008, we have participated in the EuroShop exhibition four times – this is the biggest global retail exhibition taking place in Germany every three years. Step by step, all our efforts and investments in marketing, exhibitions and commercial tours started to work out, and we found ourselves in the global market for retail equipment.

-Why, in your opinion, are your products sold abroad? What is the reason for this success? Is it the quality of your equipment, some unique features, your communication skills, your individual soft skills or some happy coincidence that served as a trigger, is it your team or something else?

-I think, there are several reasons. First, we can offer a very wide range of equipment that can suite even the most demanding retailers. Apart from our standard products, we can also offer customized solutions, which allows us to win in many tenders. Second, when engaging in tenders for big global retail companies, we work hard to improve the energy efficiency of our equipment, our energy efficiency values are now among the highest worldwide. The world demands energy-efficient equipment due to expensive energy.

-What is the share of the domestic market and export in your sales in per cent? What is more profitable?

-The share of exports in our total sales volume is between 60% and 80%, both exports and the domestic market are profitable for us. The free-trade agreement with the EU contributed to the growth of our exports quite significantly. The import duty for components is now 0%, which enables us to compete with European manufacturers.

When we had issues with the VAT refund, we had to limit our exports. Now, this issue does not exist anymore, the VAT refund works, we can export without any restrictions. Of course, when the Hryvnya exchange rate is volatile, we can achieve additional profit from our exports paid in hard currency.

-Is there any difference between the equipment bound for export and the equipment sold in Ukraine?

-Yes, there are some differences concerning the use of refrigerants. Cooling equipment in Europe operates with carbon dioxide or propane – this is much more expensive, but less harmful for the environment. The Ukrainian legislation allows the use of freons. Cooling equipment in Arabic countries operates with freons that are prohibited even in Ukraine.

-How significant were the production- and process-related changes you had to implement to establish your exports?

-We had to achieve certain energy consumption parameters and take measures to meet the technical requirements of European retail networks. Also, we had to obtain certificates for our products and to learn to prepare correct export documents (certificates of origin, certificates of conformity, etc.).

-Is it difficult to export?

-I cannot say that it is simple, but it is very interesting! It’s never boring! Each customer has its own requirements to the paperwork, certification and methods of payment. Arabic customers prefer CAD or LC, while it’s not so suitable for us due to expensive loans. We have to adjust ourselves and search for compromise. The key issue concerning exports is the timely and complete VAT refund. It is impossible to export without this.

-What changed, when you started to export? Please refer to your company’s plan: strategy, product, team. Please also mention individual skills like confidence/lack of confidence, expertise, new skills, languages, inspiration, etc.

Our export business entailed additional costs, including business trips, marketing, advertising catalogues, development, branding. Also, we had to invest in our personnel: we now have professionals who speak English, Turkish, German and Romanian. I myself learnt French to work with the French network Carrefour, our biggest customer, as well as with French-speaking African countries. Our strategy used to set the focus on the geography of our exports. We tried to cover as many countries as possible. We have a new goal now – we need funding to build a new production facility, since our capacities are not sufficient anymore and we are forced to decline requests from our customers.

-What would you recommend to companies that want, are not so sure, plan to start exporting?

-Don’t be afraid and go ahead.

-How can a company check if it is prepared for exports?

-Every business is ready to export, you just have to find your customer. There are no checking procedures in place. Some products may need certificates or sanitary permits for export. If this is mandatory, it is not a big deal to obtain such certificates.

-Do you need any personal skills to work in the international market? Are there any countries with some significant specifics that require some special knowledge/skills/attitude?

-Every day I communicate with people from different parts of the worlds who belong to different nationalities, have a different skin colour and belong to different religions and cultures. I needed to make some efforts to perceive all cultural differences in a proper way. As an example, I could mention the visit of our customers from Sudan to Ukraine. Sudan is a very religious Islamic country with lots of cultural subtlties. The citizens of Sudan eat with their hands and are not trained to use cutlery. They are not allowed to touch women, no handshake with female business partners is allowed. Of course, they do not eat pork. We invited our guests from Sudan to a fish restaurant at the seaside with stunning views. Unfortunately, the table next to us was taken by a couple where a girl had a mini skirt on. It is nothing special for us, but our guests stared into their dishes for the entire evening, because they are not allowed to look at naked women. You have to be flexible to respect and to understand such cultural specifics.

-Do you have any stories from your export business? Any interesting cases where you established contacts to your partners? How did the negotiations progress? Do you need to «dive» into the culture of the country your partners come from?

-I have quite a few stories concerning our export business, can share the funniest one.

When the sanctions against Iran were eased, we decided to participate in an exhibition taking place in Meshkhedi. I won’t go too much into details, how we obtained visas etc. It took us two weeks to read about the culture of this country in Google and to learn about the attitude of Iranians to women like what we have to wear, how we have to look and to behave. Women must cover their hair, hands and feet, socks are a must as well. We did try to be compliant, but our closed garments, of course, still were significantly different from what the local women wore – at least, our colours were much more vivid. Due to that, we often alerted the local policemen in the streets who check how women are dressed.

The Imam Reza shrine is located in Meshkhedi, the city itself is considered the centre of the Shia culture. Our dealers took us there for an excursion. Women from other countries are given white covers with a flower pattern at the entrance so they look different from local women in black clothes and do not get lost in the crowd. The crowd in the shrine was huge, it was very hot, and we were fully dressed (arms, feet, socks in the shoes). Moreover, we had received those covers made of a thick fabric. I was pregnant at the time, so it was very challenging for me to walk around dressed like that. We were walking around and my cover slid down at some point unveiling a bit of my hair. The crowd attacked me and was about to beat me!!! It was horrible, we had to escape from the shrine, while our dealer stayed there and had the words with the crowd.

All in all, export and business trips always give you a load of impressions. When visiting pyramids in Egypt, we were attacked by armed people who thought we were Americans. They might have been misled by our business suites, because we had come to the pyramids after business talks… I have a customer in Bishkek with whom we have been working for many years, but each contract signing goes through the phase of hard bargaining that can take 3 or 4 hours, just like in a bazaar. I had to cross the border between Kazakhstan and Kyrgyzstan on foot once. I was detained by the border police, because I looked quite different from other people who were dragging toilet papers and pampers in their huge bags. I had my business suite and high heels on. The border police asked me where and why I was travelling and kept me for several hours.

-What were your first steps in business?

-I graduated from a university in England, and it was important for me to return to Ukraine to make our homeland a bit better. First, I wanted to work in line with my field of study and went to the financial sector. I was trying to attract investments to Ukraine, that was the last year of Yanukovych’s term in office, and nobody cared about investments. The worse your business felt at that time, the safer it was.

That is why I left my job and agreed with my father that I would work for his company for a while, until I found a new job. This «for a while» was protracted for almost 5 years. In these 5 years we have managed to do quite a lot together! I am confident that I will use my degree in finance and will find investments for the new plant of Aisberg very soon.

-How well do you know the details of your business? Are there processes that you have delegated to professionals? For instance, production or development of new equipment? In what business fields are you competent in part, what do you delegate to professionals, and what areas do you control 100%?

First, I divide areas of responsibility with my father. He is in charge of technical issues, while I am responsible for commercial stuff. Some things, of course, I delegate to professionals, there is just no other way to make them feel responsible for their actions. On the other side, I retain control to some extent. However, I do not force anyone, it’s more about joint decision-making in important issues. How many hours do you work every day? Do you have free days? How long is your annual vacation?

I work 12-14 hours a day, 6-7 days a week. This schedule I have together with my son who is growing up at our plant and accompanies me on all my business trips. In 6 months, he has already visited Tiflis, Almaty and Astana. Next month he is flying on my side to Uralsk and Shymkent.

When I was single and had no children, I worked 14-18 hours a day without any holidays.

I can have a one-week vacation somewhere with my family in the course of the year, but I spend it with my laptop and mobile Internet, because I always have to be online.

But I like it, this is my life.

-Mechanical engineering and energy-saving technologies are traditionally not considered as female-friendly areas. Have you ever been confronted with any hurdles due to this stereotype; can you mention any concrete cases? How do you handle this?

I worked a lot to improve my competence. I have a degree in finance, but I had to learn a lot about cooling equipment, production management, production processes and international trade. That is why I rarely feel any stereotype-based attitude, I always feel respect from the men I work with, and I like it.

What Ukrainian products, in your opinion, could be competitive internationally? Please mention both specific areas and product features. I am confident that our IT startups will be a success. I also think that Ukraine does have potential in technologies. I am not getting tired to say that Ukraine is NOT the agrarian backyard of Europe! We can achieve more. Of course, business and government must work together for this. We have done a lot already, but more tasks are waiting for us. For instance, Polish and Turkish manufacturers have their exhibition costs covered by the government. They also enjoy tax credits for the customs clearance of components, until they have sold their ready-made equipments. This helps companies optimize their cash flow. Also, there are some tax quotas for export-oriented manufacturers. All in all, Ukraine still has to do its homework.

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