Since the collapse of communism in 1989, Eastern Europe has struggled to catch up with western levels of economic development. Its efforts have paid off, and today many countries in the region are now members of NATO and the WTO, and 10 have joined the European Union (EU). Politics have gradually stabilized, investment has flooded in, private businesses have flourished and living standards have soared. As a result, Eastern Europe has become increasingly attractive for a variety of development opportunities.
While the top four global markets for the Canadian food and beverage sector absorb four-fifths of its exports, emerging markets such as Eastern Europe are growing in weight, says Uliana Haras, associate economist for agri-food, emerging Europe and central Asia, Export Development Canada (EDC). Consumers in the region have more disposable income and an appetite for a variety of food products they haven’t been exposed to in the past. “Eastern Europe presents a suite of opportunities for exporters looking to diversify out of traditional, slower-growing markets, such as the U.S. and Japan,” says Haras. “On average, Canada’s food and beverage exports to emerging Europe have grown seven per cent annually in the last five years, compared with flat growth in all global markets combined.”
Given the current turmoil in world markets, in particular the sharp contraction of credit, Haras adds that the nearer term outlook for the region is more conservative than previous growth rates suggest. “Over the longer term, recovery will occur,” she says. “It becomes a matter of patience and close monitoring as these economies burn off some accumulated excess and arrive at a more sustainable growth rate.”
Canadian firms considering doing business in Eastern Europe should start by conducting thorough research and preparing a detailed business plan, says industry consultant Douglas Hart of Toronto-based Hart & Associates Management Consultants Ltd. “Instead of just deciding ‘I want to sell product X to country Y,’ step back and plan carefully. It’s not daunting, but there’s a checklist of items to go through. Expect about a two-year planning period.”
Plan, Plan, Plan
Start by pinpointing what you hope to gain by exporting and assess whether your aims are realistic. Accessing new markets is a valid goal, but too general to serve as more than a starting point, says a February 2007 PriceWaterhouseCoopers report on business opportunities in Central and Eastern Europe. Instead, probe beyond the big picture to clarify your company’s individual goals.