Romanian managers and entrepreneurs focus on export and internationalization, with easier access to regional and global markets being one of the opportunities they see in the coming period. Whether talking about direct export, greenfield investments, or opening foreign subsidiaries, local companies could take more tangible steps from strategic purpose to real internationalization. And this is where the Magurele Science Park team intervenes and aids through the PROSME project, through which entrepreneurs are helped to prepare for internationalization.
Data show the optimism of managers based on the resilience and maturity developed in recent years: managers are worried about things happening today but optimistic about the future and have more confidence in their strengths. And internationalization is based precisely on this trust in the company’s resources, both at the management level and from the perspective of the available operational resources.
It is essential to distinguish between “tapped target markets” and “target markets into which a company is tactically expanding.” Often, companies publicly announce a global expansion in the media without actually starting the internationalization process. This is a good strategy. A company thus announces either the addition of a first client to its portfolio, a signed partnership, or that the company’s founder made a business visit or the fact that he participated in an international fair, but this does not translate into an internationalization project of his own – said.
When a local company (startup or scaleup) internationalizes directly (as opposed to a simple prospecting/groping), it expands its operations and involvement in foreign markets outside of our country. That usually involves more than just selling your products or services abroad. The internationalization process can include the following tactics recently embraced by Romanian entrepreneurs.
1. Exporting: Exporting is the activity by which a company sells goods and services to customers in other countries. Exporting is the first phase in the internationalization of a business. The company produces goods or offers services in the Romanian market and delivers them to customers in other countries. What we have noticed as a good business case in the last months in direct exports: the dynamics and confidence of Romanian furniture producers who export 2.6 billion euros annually stand out. Particularly, eight local furniture manufacturers were attending the International Contemporary Furniture Fair New York (ICFF), which drew over 400 brands from 25 countries. Carel Woodworks, CARO Jibou, KA&MA Trading, M-Oliver design, MONTANA Campeni, Rivethel Guild, SZEL MOB, and Wood & Furniture Contract are Romanian firms, furniture manufacturers, very active on the export side.
2. Foreign Direct Investment (FDI): the company may decide to expand its operations internationally through direct investment in other countries. This may involve purchasing foreign land, buildings, or companies or building production facilities abroad. The company becomes actively engaged in the respective country’s economy through foreign direct investment. It is already known here that Romania ranks one of the last places in the EU according to greenfield investments abroad. The process is in the opposite direction: local companies abandon investments abroad. An example of this is the move by which the Spanish fish and seafood factory Thenaisie Provote, the first foreign acquisition of the Romanian company Scandia Food, the player in the meat-based cans market, was sold against the background of problems and tensions that generated including employees going out on the street.
3. Opening of Subsidiaries and Branches: The company may set up subsidiaries or branches abroad to expand its operations. The parent company may wholly or partially own these subsidiaries and carry out various activities such as production, sales, marketing, or support services. Romanian entrepreneurs informed two examples of this type of internationalization in recent weeks: the software development company Codezilla went public with information about starting a process of global expansion by opening an office in Chicago, Illinois, and the software developer OVES Enterprise from Cluj invests 250,000 euros and opens the first office in Washington DC and the second in the USA. The company expects that in 2023 approximately 30-40% of the turnover will be generated in the American market.
These case studies make us optimistic. The number of companies doing business in foreign markets could continue to grow. The direct international presence of Romanian companies is modest, and our country’s trade deficit is deepening (34 billion euros annually). Multiple enterprises have great potential and can provide high-quality products and services to foreign markets. Even if the companies’ exports suffer now (they only grow by 9%), the economy of many countries will recover quickly, and the international development of Romanian firms will be an essential basis of economic growth.
Whether we are talking about 1. Direct Exporting, 2. Foreign Direct Investment, or 3. Foreign Direct Investment, the Magurele Science Park team, through the PROSME project, helps entrepreneurs equip for internationalization and attract funding.
Claudiu Vrînceanu – EEN adviser
