KPA Unicon opened an export window to Africa
KPA Unicon, a company based in Pieksämäki, Finland, opened an export window to South Africa and will deliver a boiler plant worth about ten million euros. Financial arrangements were very important for the success of the export Project.
KPA Unicon specialises in the delivery of tailored and modular boiler plants on a turnkey basis. In accordance with a recently signed contract, KPA Unicon will deliver a boiler plant to the South African subsidiary of ArcelorMittal, the world’s leading steel and mining company. KPA Unicon has about twenty years of experience of export projects. When trade with Russia began to wane, new markets had to be found. “We succeeded because we have a good product and can give a similar plant, delivered to the same global corporation, as a reference,” says Mikko Marttala, CFO of KPA Unicon.
According to Marttala, this deal will bring vast amounts of credibility for the future. He stresses that, when entering a developing market, it is worth hiring an agent who knows the local actors. The biggest fear of the locals is that the foreign operator comes in and does everything in the Western style. “To be able to enter a new market, a company must have a systematic approach and be tenacious in its development work. The very first thing to do is to go to a trade fair where new contacts can be made. Patience is needed: for each successful deal there are certainly twenty failures. Much time must also be spent on site, because no deal can be concluded from Finland.”
Customer financing opens doors
Selling equipment means engineers talking about screws and mechanical properties. Marttala has discovered that when financing is also discussed in the sales setting with the buyer, one gets a seat at the same table with the persons who actually decide on the deals. “A financing offer combined with sales opens doors and is really an important factor. At the same time the seller learns to understand the customer’s business better.”
For new potential customers, financiers should be contacted at once in order to determine what financial arrangements would be possible. “This is what we do, and at the same time we also take a closer look at customer risks. Anyone can learn export financing; the more pertinent question is perhaps whether one has the time to concentrate on it.”
Alongside selling, for some years KPA Unicon has offered its customers financing solutions worked out together with banks and Finnvera. “Today, financing begins to be a prerequisite for entering any competitive bidding at all. We often hear grumblings that Finnish companies cannot match, say, German companies. We can, but we just have to make a slight effort and learn to master this aspect of export trade as well.”
In recent years, Finnvera has paid special attention to financing expertise needed for the exports and internationalisation of SMEs. “For the third year in a row, we have arranged the SME Export Finance Programme where we cooperate with banks to provide information about financing options available for enterprises that engage in exports. The aim is to give companies tangible solutions that they can use when making tenders to customers abroad. It pays for the exporter to find out about financing in good time and to discuss the matter with banks and Finnvera. Before making our decision, we conduct background studies pertaining to the project, for instance, on country risks and the buyer’s creditworthiness,” Finance Manager Otto Lindstedt of Finnvera explains.
Exports as a precondition for existence
A couple of years ago, exports accounted for 99 per cent of KPA Unicon’s turnover, but now the figure is smaller. The company believes that imports to Russia and the rest of the CIS countries will revive.
“In terms of risks, our situation is now healthier because we had to start looking for new markets. Once the decision is made, results start to appear. Our future target is that one third of our turnover comes from Finland, one third from the CIS countries and one third from other export markets. A precondition for our existence is that we have exports,” Marttala sums up.
Marttala encourages exporters to discard the “I sell, you buy” thinking and contemplate what they could do together with the customer. “The more we see ourselves as partners, the better.”
Read about Finnvera’s SME Export Finance Programme