Exports are a key element in the Norwegian economy, and can provide businesses with excellent growth opportunities. Nonetheless, many businesses are uncertain and hesitant about selling their products internationally.
Export Credit Norway provides export financing for foreign companies’ purchases of goods and services from Norwegian suppliers, thereby strengthening the competitiveness of the Norwegian export sector.
Using local experts gives you access to in-country contact
Marie Sørli, Export Credit Norway
Marie Sørli, Senior Vice President at Export Credit Norway, relates that many businesses find it difficult to make the first international step.
“Entering new markets with unknown counterparts can be challenging. That is why good groundwork – for example assessing country risk – is crucial. Although Norwegian exports go to Europe, some exporters are concentrating on markets which are further afield and in which additional precautions have to be taken,” says Sørli.
Sørli points out five important factors for international success:
1. Use local experts
Becoming familiar with a new market can be difficult. Potential exporters often lack contacts, language skills and knowledge of local customs. Sørli therefore recommends seeking out local experts in priority markets.
“Using local experts gives you access to in-country contacts, important language skills and knowledge and expertise that are difficult for outsiders to acquire,” she says.
Sørli recommends contacting Innovation Norway’s international offices and Norwegian embassies. They can help identify market opportunities and establish contact with authorities and local partners.
Export Credit Norway also has a wide network of international contacts, and can help sell financing to international customers.
2. Run background checks and check country risk
Many countries are less transparent than Norway, and necessitate more thorough information-gathering and risk assessment.
“Understanding your target market, customers and country allows you to avoid potential pitfalls and ensure that you recruit the right partners,” says Sørli.
Export Credit Norway therefore recommends conducting background checks on potential local partners.
The World Bank’s “Ease of Doing Business” reports and Transparency International’s evaluations are free, and provide a thorough introduction to different countries’ specific characteristics and known risk factors.
“When working on loan transactions, Export Credit Norway and GIEK conduct in-depth due diligence concentrating on legal, political, economic, environmental and social conditions that may affect the borrower and the financing arrangement,” she says.
3. Use export financing as a competitive advantage
“Competition for contracts abroad is fierce. You will often be competing with suppliers from nations with lower cost levels than Norway. However, many customers also have limited access to capital,” says Sørli.
Export Credit Norway lends to companies, projects and states that purchase goods and services from Norwegian exporters.
This gives Norwegian businesses an advantage, in that they can offer to arrange favourable financing. This can be the decisive factor in securing a deal.
“Such financing minimises the exporter’s risk, as it gives the customer a secure source of funds. At the same time, the exporter is not party to the loan agreement, which is entered into directly by the customer and Export Credit Norway,” she continues.
Loans made by Export Credit Norway are guaranteed by GIEK and/or banks.
4. Check the import rules in your target markets
Exporting goods and services can be a minefield if you are unfamiliar with the applicable rules.
Many countries have their own regulations on import restrictions, sale contracts, product requirements, customs and excise duties, export documentation, etc.
“Exporters should therefore familiarise themselves with applicable rules and restrictions at an early stage, before bidding for contracts,” says Sørli.
The advisers at Innovation Norway’s export centre can provide guidance in a wide range of areas.
5. Consider credit insurance to cover risk in connection with credit sales
Exporters can insure against losses linked to late or non-payment by customers.
Credit insurance and factoring can help secure timely payment and bolster working capital. These instruments also help reveal risks associated with a given delivery, project, individual customer contract or portfolio of credit sales.
GIEK Kredittforsikring, which is owned by the Ministry of Trade, Industry and Fisheries, is one provider of credit insurance solutions.