On August 18, 2017, Shakir Shamiliov presented his report “Penetrating the markets of the Middle East and North Africa” at the Second agricultural conference “Marketing of agrarian products”, which was organized in Kyiv by the company “ProAgro”. We prepared a compilation of the main talking points.
How “Kusto Agro Trading” started a business of export supplies
“Kusto Agro Trading” is a young company with Kazakh investments. The work on the international market penetration began in 2013 from shipments at the ports. Further, in 2016, when the stuffing equipment for the Zhmerynka elevator was installed, we started to make shipments independently. The first supplies were organized to Pakistan, India, Vietnam, Taiwan, Bangladesh, and Nepal. At the same time, we worked on entering the Middle East market.
The main aspect is a volume of supplies
The main thing needed for organizing export supplies is securing necessary volumes of supplies at the common rate. Surely, these volumes should definitely correspond to the export quality.
We engaged in negotiations with many people to develop a client base. We got acquainted with people at forums and conferences and looked for business contacts. Now, looking backward, I realize that the grain market works differently than, for example, the market for electrical equipment where a client needs arguments why he or she should buy your product, where you need to make allowances and defer payments, provide aftersales service, etc., but in our field, it’s important to have a decent volume of good grain, and you already have a queue of clients.
Necessity of taking into account the peculiarities of the market and cultural traditions
Each country has its regional and national special characteristics. There are a lot of mental, cultural, and professional differences. That’s why before starting the cooperation, it’s vital to study distinctness of a market that you’re planning to enter.
Cultural traditions sometimes play more decisive role than financial guarantees. The clan hierarchy is still preserved in countries of the Arabian Peninsula. Final decision often depends on recommendations from influential clans: words of such families’ representatives will be weightier than financial guarantees and willingness for cooperation.
A high percentage of customers, particularly, representatives of Southeast Asia and the Middle East confidently believe that they can impose their terms and lower prices on Ukrainian companies. They get accustomed to perceiving Ukrainian entrepreneurs as not smart people who can be easily taken advantage of. Don’t allow such situations to happen.
Meanwhile, don’t believe in stereotypes about the Middle East. Iran is different than an inexperienced trader may find it. It is necessary to be vigilant and very careful.
Readiness to additional talks at any time
The government’s representatives often tell Ukrainian traders that they have to take care of national agrarians’ reputation on the international market. However, in most cases, there are no problems on our part. However, negotiators on the part of a buyer often do not worry about their reputation and fail to their liabilities. They can order a delivery, and when it’s processed, they start to reconsider conditions and demand discounts and payment deferment.
There can be different situations. There was a case when it was necessary to have an urgent flight to Nepal and then to India to conduct additional negotiations. For this reason, commercial agreements with countries in Southeast Asia should be concluded with particular attention. And you need to be ready that at a certain point you will step aboard and fly to a buyer to wheedle money out of him; this is the peculiarity of such cooperation.
Special aspects of cooperation with African countries
Different regions of Africa have their own special features. So, if you have a shipment to Algeria and Morocco, there are risks of attacks by gangsters and blackmails. Egypt has certain conditions, and additional certificates are required; it is also difficult to work through the mediation of physical parties but public institutions are similarly corrupt.
Shipments to East Africa are a dangerous step because there is a threat of pirate seizures of ships. On the other side, such states as Kenya are the high-potential direction for cooperation; it’s kind of a hub that allows spreading production to regional African centers.
To start a business in Angola and Benin, you need to have a trusted man there; many issues may arise, and they should be solved as soon as possible. Otherwise, it’s dangerous to enter these markets.
Setting right priorities
Concentration on the development of one direction for shipments is better than simultaneous work in different directions. Such approach gives an opportunity to examine the peculiarities of one region and become a serious specialist there.