Governmental, environmental and cultural matters are distinctly different from country to country. For the near future, probably the single most important and unpredictable thing that will happen in Europe is its emerging common currency.
Historically there have been many monetary unions, but nothing like the European Economic and Monetary Union.
If it works well, this union should be a strong competitor against the U.S. dollar. A new European Central Bank will try to provide a stable monetary policy. The cost of exchanging one currency for another will be eliminated, and price comparisons will be easier.
However, for every action in favor, there is a downside. Unless the European countries agree at one point to a closer harmonization of taxes, labor costs, welfare systems and working hours, Europe's declining competitiveness could be perpetuated.
The single currency must bring economic progress and fiscal integration so that the EC and Euro succeed. Otherwise, at this point of the game, they might just be condemned.
We are certain that Europe presents an enormous potential for U.S. companies wanting to export, go into joint ventures and set up local subsidiaries.
Any company wanting to enter this game will have to adapt to the European market mentality, languages, and business and cultural differences.
Two years ago International Business Consultants had an experience in France that serves as an example of how not to do things.
It involved a client of ours, a U.S. maker of dosing and metering equipment for plastic processing machinery with annual sales of more than $110 million. Our client asked us to do a basic market study for their equipment within Western Europe. Although there is enough competition in this area in Europe, our study showed that our client's capabilities gave it good sales potential in Germany, France and Italy.
Our client's sales manager was very decisive in advocating France as the company's European base, and he decided that we would look for one company to import and sell our client's products, first in France, then in other countries.
We argued that this is OK in France, but why would an Italian company buy an American product from a French distributor? However, the customer is always right and we started to look for a suitable partner.
We decided on a company I had worked with for many years. A very good, family-owned French company.
The sales manager arrived in France to sign the exclusive distribution contracts, discuss business aspects, lay down a plan of action and visit a couple of French prospects.
At the companies' first meeting, the U.S. sales manager addressed the French director by his first name, and told him how he should attack sales, make reports and prepare a forecast for the three years ahead.
Three days after the sales manager returned to the United States, the French director called me and said he did not care to associate or work with the U.S. company. It took a lot of talking on both sides of the Atlantic to sort things out.
Today, this particular U.S. company is selling well in France, Germany and Italy, but, as originally suggested, through local partners in each country. The whole episode shows how much can be ruined by lack of understanding of a different culture and not being in tune with local sensibilities. Although such cases are not the rule, they have happened and continue to happen in similar ways.
There is most probably a market in Europe for your products — a market that can give satisfaction and profit. But, however close the European countries get through union and common markets, you'll still have to deal with cultural and language differences.
Raumann is managing director of International Business Consultants of Madison, Ohio.