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iBanFirst study: The 5 critical challenges of CEE companies expanding globally based on insights from the region’s pioneering global businesses

May 23, 2024

-   IMF projecting a 2.8% GDP growth for Romania, and 3.1% GDP growth for Emerging and Developing Europe overall - surpassing the 1.7% of advanced economies, CEE is becoming a critical region for international business expansion.   -  As pioneering global businesses in CEE mature, they share challenges such as managing regional brand perceptions, accessing capital, managing local talent, understanding diverse consumer behavior, and navigating financial risks.   -  The third edition of the CEE Business Summit organised in April highlighted strategies for globalizing CEE companies, with iBanFirst outlining the 5 key challenges and mentoring opportunities for mature businesses to support the next generation.   With the IMF projecting a 2.8% GDP[1] growth for Romania, and 3.1% for Emerging and Developing Europe overall—surpassing advanced economies at 1.7%—Central and Eastern Europe (CEE) is rapidly becoming a pivotal area for international business expansion. As the region's pioneering global businesses mature, they are uniquely positioned to mentor the next generation. Insights from the third edition of the CEE Business Summit this Spring highlight a strategic approach to globalization that leverages regional strengths and turns challenges into expansion opportunities. The global payments provider iBanFirst, who powered the Summit, has synthesized these insights into the top 5 critical challenges CEE companies face as they go global, offering strategies to navigate them effectively.   Negative regional brand image: The region often faces perceptions of increased risk and lower quality due to more affordable product pricing. By prioritizing and showcasing high-quality offerings, companies can correct these misconceptions, improve their global reputation, and enhance their prospects for international expansion.   Access to capital and funding: Liquidity is key, capital is at risk and securing funding can be challenging. While there are opportunities with angel investors, venture capital, and private equity funds, accessing them requires solid business proposals, an ability to navigate the international financial landscape.   Talent acquisition and management: As companies expand, finding and retaining the right talent to support growth in new markets is crucial. This includes not only recruiting local experts who understand the market but also managing a diverse workforce across different countries, while flexibility remains key.   Client acquisition: This requires a deep understanding of local consumer behavior and preferences. This involves tailoring marketing strategies and product offerings specifically to meet the unique demands of each market, ensuring that customer engagement and service are both culturally resonant and linguistically accessible.   Financial and currency management: Companies need to handle fluctuations in exchange rates, which can affect profitability and cash flow. The integration of fintech solutions has made some aspects of this easier, but the complexity of financial management in diverse markets remains a high barrier so finding the right partner is imperative.   As Johan Gabriels, Regional Director at iBanFirst, underlined, the core ingredients for success include the ability to resist and adapt to changing conditions, harness human creativity, and maintain agility in decision-making and strategic planning. These elements are fundamental in navigating the unpredictable waters of global trade and technological advancement. By fostering strong customer relationships and remaining committed to innovative solutions, businesses can thrive despite the complexities of expanding into new markets.   The Romanian pioneers   In Romania, companies like Scandia Food and Frisbo illustrate the dynamic strategies required for successful market expansion.   Scandia Food, leader on the canned food market in Romania, aims to export their products through different channels and partnerships with players in Europe. Andrei Ursulescu, CEO, Scandia Food said that "expansion through mergers and acquisitions may be a shortcut, but it is much riskier. Going to a new country with new legislation, new people, new language, new culture, new consumer habits. Everything is new and you have to learn very quickly and be very sure of what you want to achieve. Integration is a much more important process than the acquisition itself."   Frisbo is a Romanian e-fulfillment platform which takes care of the storage, packaging and delivery of online orders. Bogdan Colceriu, Founder & CEO, Frisbo believes that a Go-to-Market (GTM) strategy will need funds and time to integrate local operations into the larger business.   „Over the years, we've tried all sorts of strategies to enter other markets, the most successful by far was partnering with an authority in the field. We used existing clients as an anchor for further expansion. Once you have a customer in a country, you have a case study, you have experience, etc”, he said.   West vs. East: the two sides of successful business stories in Europe   Pierre-Antoine Dusoulier Founder & CEO at iBanFirst emphasized the need to think beyond geographical limitations: "As an entrepreneur, I never liked boundaries, especially the mental ones. It’s difficult for a company to grow in its country of origin, especially if the country is small, like many of the countries in the CEE region. This is also the reason why I founded iBanFirst, providing FX services, which is actually the passport to do international business”.   Meanwhile, Radu Georgescu, Chairman of the Board at SeedBlink, confronted the stereotype that Eastern European products are inferior due to lower costs, stating, "We have to get over this idea that if products from Eastern Europe are cheaper, then they are even lower in quality." His approach focuses on delivering quality to transform his ventures into successful European entities.   Both leaders underscored the significance of strategic market focus and visionary thinking to transcend traditional business boundaries and achieve expansion success, which is the foundation to growing market share locally, regionally and globally, irrespective of the business origins.    

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