For decades, dozens of Maltese companies had their focus on Libya as a gateway to North Africa but the country’s collapse left many of them looking for an alternative market. It is, therefore, no surprise that both the Prime Minister and the President have been there on official trips in the past year.
“Algeria is the largest country in Africa, with 40 million people compared with Libya’s six million – of which 45 per cent are under 35. So the potential is huge for a number of businesses, from food and beverage to retail operations and training,” Trade Malta chief executive officer Anton Buttigieg said.
Algeria is by no means the only destination in Trade Malta’s sights – trade missions have been organised to six emerging markets since it became operational a year ago – but it has certainly been given intense attention.
“The first day we started to operate, we found a box full of profiles from companies wanting to go to Algeria. There had already been an expression of interest and 30 chamber members had already applied,” Mr Buttigieg explained.
Trade Malta organised a pre-visit in October and the Prime Minister led the first trade mission in November, which attracted an impressive 300 Algerian companies, Trade Malta chief officer Joe Schembri explained. The President was then invited to go there in January and there was once again a good response. Trade Malta followed it up by inviting 50 Algerian companies to come here in April – matching them with 130 Maltese companies.
“People ask why we travel with the Prime Minister, President or even a minister. Our intervention in places like Europe is not required – companies can and do go to Europe on their own. So we are focusing on countries where governments still have a major stake in the economy and where businesses requires the intervention of a public agency,” Mr Buttigieg said.
“You could organise a meeting through the chambers of commerce – but it would not be as effective as it would be with government backing.”
Once contacts have been set up, Trade Malta encourages further visits – which Mr Buttigieg and Mr Schembri cannot stress enough.
“We encourage follow-ups as, in this country as in many places in the Middle East, you can’t go there once and then just send an e-mail. You won’t even get a reply. It is all about getting to know someone before you do business with them…” Mr Schembri said.
Malta had a special relationship with Libya which it could replicate in Algeria, Mr Buttigieg believes.
“Algeria – like Lebanon and Jordan – see Malta as a small but successful country that has integrated very well with the EU, a market that interests them a lot. They want to learn how Malta could help them get in line with EU standards and regulations and then use Malta as a launch pad,” he said.
Mr Schembri believes that Malta is also attractive for perhaps more abstract reasons, as larger member states might overwhelm them.
“As a developing country, they want to diversify away from oil, and want a partner they can trust. Maltese companies which had experience in Libya would adapt very easily to Algeria. Our companies are also SMEs and we can talk their language – not only because of our size but also literally because they even understand quite a bit of Maltese, which makes them feel much more at home with us,” Mr Schembri said.
We have an important role to play but it is the companies who do most of the work, developing products and services
They warned that building relationships takes time – anything from six months to a year at least – irrespective of whether it is an IT company or a manufacturer.
“If you are an IT company, it is even harder to get into a new market because you are selling an intangible good. So you need to prove yourself. Of course you can do videoconferencing but there is a limit. Face to face interaction is irreplaceable.
“And with manufacturing, there is a lot of competition. So distributors have a whole line up of brands so it is not easy to persuade them to take on a new one,” Mr Schembri said.
Trade Malta was set up last year as a 51/49 per cent joint venture between the government and the Chamber of Commerce, Enterprise and Industry. The idea was first mooted by the chamber two years ago by its president at the time, David Curmi, who is now Trade Malta’s chairman. For some time, local enterprises had been complaining about the emphasis at government level on attracting foreign direct investment – feeling that there was also considerable scope for established businesses to grow, whether they had foreign shareholding or not.
Trade Malta was hived off from Malta Enterprise with an operational budget from the government (via the Malta Enterprise Act) but a commitment for private funds to be generated. Its five staff are based in the clock tower at Tigné Point, administering a number of schemes and programmes on behalf of Malta Enterprise.
“Malta Enterprise used to do all this, of course. But it has been interesting to see how having an entity focused on the internationalisation of local companies has raised awareness. People are curious and they are approaching us more than before,” Mr Schembri said.
The timing is auspicious. Companies in Malta are being set up with a global DNA – and not just IT software ones, either. Mr Buttigieg said it was gratifying to find companies founded just two years ago which are already employing 40 people.
“Ten years ago, it would have taken much longer for these companies to grow. These were definitely not set up with an eye on the local market,” he said.
Trade Malta is sticking to tried and tested approaches: helping companies to attend trade fairs and exhibitions, and organising trade missions.
“Fairs and exhibitions remain a popular and effective instrument. In a lot of industries, irrespective of technology, people still meet a few times a year, and we have schemes which help to cover up to 50 per cent of the cost of participation,” Mr Schembri said, adding that companies could also get help with product-specific collateral.
“These fairs are effective – they keep on growing and space is very limited. You need to book two years in advance to get a stand,” Mr Buttigieg added.
Trade missions also have an impact but Trade Malta is trying to plan further in advance – up to six months when possible: “You would be surprised how many people simply cannot make it if we give them less notice… We are also trying to send information to our counterparts on the ground as it takes time to set up matchmaking opportunities. Finding the right partner is one of the biggest challenges to internationalisation,” Mr Buttigieg said.
The advantage of having government support is instrumental – but so is the presence of the chamber, which uses its network of counterpart chambers, and business and trade promotion associations. Trade Malta also uses other entities as a gateway, such as banks.
“We mobilise any network that will get us good meetings. At the end of the day, trade delegations measure success by the quality of the meetings,” Mr Schembri said.
Trade Malta is also working with other partners, such as HSBC, to offer its Global Growth programme, which is much more flexible when it comes to benefits. A number of companies chosen on the basis of a business plan competition are already getting considerable support.
Trade Malta is not taking the effectiveness of its strategy for granted, however, and is keeping a close eye to ensure that companies follow up the contacts made – and also gathering information and feedback to ensure that these are translating into actual orders. One way to do this is to have surveys.
“One of the first things we did was to identify a few key sectors which we wanted to help, then to identify the operators in each sector, which is not that hard to do in a small country! Then we tried to understand what that industry needed so we could develop a suite of services to help…
“The surveys are helping us to understand the current status within each sector and what the major obstacles are, which markets they are already exporting to and which ones they are looking at. It is an interesting exercise as we are building up information about how many people they employ, how many they expect to employ in the medium term, their turnover and how much of their turnover is export revenue.
“We want to do these on an annual basis so over a five-year period we can build up a much better picture of how that sector is evolving. And we will also be able to see whether the help and support we have given has had any impact…” Mr Buttigieg said.
The survey also helps to make companies aware of Trade Malta’s services and it is gradually building up its mailing list, for example.
The enthusiasm in the new offices is infectious: Mr Buttigieg and Mr Schembri finish each other’s sentence and nod excitedly as they discuss plans. They clearly believe that anything is possible for Maltese companies.
“We have an important role to play but it is the companies who do most of the work, developing products and services. They come to us seeking help with introductions and we help to open doors for them. But the amount of support we give them is a fraction of what they will need to develop that market.
“We meet a lot of companies which do not see immediate results and they lose heart. But after two or three years, the initial disappointing €10,000 order can easily grow to €500,000, quite a substantial amount for a Maltese company,” Mr Buttigieg said.
Mr Schembri once again chips in, to explain that HSBC also has a programme for early stage exporters who have some success – but need training to build internal systems.
“We assign an advisory firm to help… And we worked with the University to design a practical 10-session course to equip them with the skills that they will require to get out there. It will be accredited as from next year by the University. Two of the 10 sessions are based on a discussion with a panel of people who have experience in exporting.
“There is no single recipe for success. What works for one does not work for another…! It is so good to listen to different people who have been there, done that,” Mr Buttigieg said.
www.trademalta.org
Trade Malta in numbers
| SMEs participating in information meetings | + 300 |
| Companies participating in trade missions | 122 |
| SMEs assisted to exhibit in trade fairs abroad | 111 |
| SMEs in the early-stage exporters programme, Go Global | 20 |
| Companies assisted to implement export marketing plans, via Global Growth | 12 |
| Trade missions to emerging markets | 6 |
| Sector surveys done | 2 |
Note: The numbers refer to 2015, for part of which the programmes and schemes were administered by Malta Enterprise, before TradeMalta started operating in June 2015.