At a glance:
- Each Benelux country's quirks and business expectations are broken down
- Local players give their frank assessments on the impact of Brexit
- How the Benelux can be used as a launch pad for France and Germany
"International vendors struggle to penetrate Europe… You can't just copy and paste your marketing material or even your sales pitches. [Otherwise], you're doomed to fail!"
Those are the blunt words of Frank Hoekstra, Benelux general manager for US-based VAR Insight.
Yet despite some newcomers struggling to make good on their business plans in the Benelux, it continues to be an attractive expansion play.
There is the pull factor of extremely large public sector tenders up for grabs thanks to the concentration of European institutions in Brussels and Luxembourg.
In the private sector, the Netherlands in particular boasts an impressive roster of large European companies headquartered there: WeTransfer, Office App, Interxion, ABN Amro and Philips, to name a few. Amid an atmosphere of Brexit jitters, that could look to increase as more UK firms follow Computacenter's recent Misco Netherlands purchase and expand into the Benelux via acquisition.
In terms of market value, in 2015, tech analyst Technavio forecast the region would grow to $51.8bn (€58.94bn) by 2019; broken down into 58.52 per cent in the Netherlands, 24.03 per cent in Belgium and 17.47 per cent in Luxembourg.
And for vendors and channel firms alike, the Benelux offers an ideal launching pad to take on the much larger neighbouring markets of Germany and France.
In this in-depth market overview, find out why newcomers struggle to hit the ground running in the Benelux, and what strategies they should employ instead.
'It's actually not one market'
At $1.3bn in revenues, Amsterdam-based Getronics is one of the biggest IT services firms in the region.
Its Benelux boss Irene Veldstra made clear the number-one misconception that international businesses often make.
"When you think of the Benelux, it's only the closeness of the three countries that makes up the name, but that's where any comparisons end. It's three completely different markets, with completely different people, cultures and ways of doing business.
"If any business thinks they can attack the Benelux in one way, I wouldn't be surprised if that didn't work at all."
It's a view that is strongly endorsed by the Benelux bosses of Dutch VAR giant BearingPoint, Eric Falque; and Insight's Hoekstra.
The Netherlands - Get to the point
"The Dutch market is a mature one, even though it suffered a lot two years ago when a lot of Dutch banks and retailers faced serious challenges. But all this being said, the Dutch market is fast paced and international," said BearingPoint's Eric Falque.
However, despite its international outlook, Falque said that he believes local leadership positions are still important in the Netherlands.
"Leader positions have to be tailored to local expectations…This is vital," he said. "Choosing a one-size-fits-all leadership role is setting up for failure. In my view it's the major mistake incomers make."
It's a lesson that was recently learned by the CEO of UK-based distributor Distology.
Hayley Roberts was candid that six months into her firm's expansion with Okta into Holland, her team needed to have a rethink.
"You need to be wary of assumption. Yes, in the Netherlands 90 per cent of people speak English; there are some similarities. But you can't assume that you can service it from the UK…We tried that, and we were told we had to change our approach," she said.
"We really listened to the local view, and were also told that we did actually need a Dutch speaker, for demos and pre-sales engagements…You need to build relationships A to B not A to Z.
"Six months further along the line and we have seen progress. It's not just been for better understanding technically, it's about giving a nod to their culture. That empathy will make an impact, and it has given us some gravitas in our operations in that market."
Roberts added that if you are in the business of emerging technology, it's worth assessing whether your target market is ready for adoption before making any hasty moves.
"I think cloud adoption is still on the up across Europe generally, so when it comes to some of the newer, disruptive technologies, some of the larger companies will eat them up but others perhaps won't," she said.
"And I think that's where you need the Dutch knowledge and representation so you're able to convince and evangelise a bit better."
In terms of management, Getronics' Veldstra said that you have to be prepared to be challenged perhaps more than you have been in the past.
"It's a very direct culture. They have a very direct way of communicating," she said. "It's also very non-hierarchical; if you are a manager in the Netherlands and make a decision, you'll often have your own team directly challenging it in a conversation with you…I think you have to be mindful that people will react differently when it comes to decisions or strategies that you set out, or contracts that you send out. It's because of their cultural background."
Belgium - Trust and multi-lingual business
While each exec agreed that English is the primary business language in the Netherlands, in Belgium language becomes a lot more complicated.
With Flemish, French and German being spoken, many customers have an expectation that companies address them in their own language.
"The Belgian market is a more challenging one," said BearingPoint's Eric Falque.
"You have the Walloon and the Flemish regions, which are actually two different cultures within the same country. And then you have a third market, which is the European Commission; it addresses European issues, not Belgian issues.
"You also have to remember that [the European Commission] accepts bids from all over Europe, and the cost of services from a UK firm may be higher than from a Greek one, for example."
Getronics' Veldstra added that this changes the way channel firms interact with each other.
"Doing business in managed services with European institutions creates a very interesting dynamic with other players. You participate in very large public tenders for very large organisations covering a lot of services for a lot of countries. So you nearly always have to co-operate in a temporary consortium with other providers," she said.
"Sometimes you're leading the consortium, sometimes you're a partner, or you're subcontracting. It's not uncommon that you are each other's competitor, partner, customer and supplier all at the same time. This is something very specific to Belgium."
Culturally, all execs agreed that the speed of business across each of Belgium's regions is significantly slower than it is in the Netherlands.
Insight's Hoekstra added that, as a Dutch man, even he has to change his business style when meeting Belgian executives.
"For us Dutch, we're known more for our directness, or bluntness. After drinking a cup of coffee for one minute, I'd put it in black and white and get straight to business. I want to see facts and figures and then come to a deal," he said.
"In Belgium it may take a couple of meetings before you even start discussing facts and figures. For them, they really need to ask: ‘do I trust you on a personal level? Are you the kind of person or company I want to do business with'?
"At my Belgium organisation, we have to approach the various language markets differently because of this difference in culture."
Another approach Hoekstra recommends is to make efficiencies in centralising back-of-house business operations.
"Your go-to-market has to be organised by country and region within countries. However, supporting functions, such as HR or finance…there's a benefit of having those put together because the Benelux territory is a small one. Supporting roles can move around efficiently."
More broadly, across the country, BearingPoint's Falque said that Belgium's "particularly high usage of internet - more than a lot of other European countries" means e-commerce is more developed there than in the other Benelux markets.
He added: "The likes of SAP and Salesforce are also doing very well in Belgium…Especially in context of the size of Belgium, I think their success is very significant."
Click through to page two to find out how Benelux firms are dealing with new international competition
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