Can you briefly introduce your company and its international history?
I work for Grupo Cuñado, a family-owned multinational created in 1963. Our founder, Máximo Cuñado, had the vision that demand for high-quality industrial materials and components, aligned with international standards, would soon reach Europe and Spain. He began supplying these materials to different industries: energy, mining, agriculture, and industry. We are devoted to tailor-made supply chain solutions for our customers.
Our international journey was initially developed by accompanying our customers abroad. Today, we are present in more than 20 countries. We have 35 different nationalities across the group and provide solutions to more than 5,000 customers worldwide. We work with approximately 1,500 manufacturers worldwide, mainly in Asia, Europe, and the US, through long-term partnerships that, for us, truly mean collaboration.
What were the key milestones in your international development?
Three pillars define international expansion: market focus, people, and financial resources. You cannot be involved in everything, you have to set priorities. Our main markets are the US, the Middle East, and Asia. Without the right people, proper onboarding, and training, you will fail. Additionally, profitability and cash flows control and measurement are a must.
As for our history, there have been three distinct stages. With our founder, the starting focus was Spain, and from Spain developing international expansion along with our clients. With the second generation, our current president, we became very good at scaling the business model globally, as if the world were just one country. Procedures and ways of working are highly standardized even though we deliver tailor-made supply for each project. Whether it’s Mexico, China, or Thailand, it’s done exactly the same way. The third generation is currently committed to transforming and evolving the company in terms of talent, efficiency in execution, and the capacity to implement process transitions progressively through technology.
What was your most formative decision in your international development?
Two experiences come to mind. In India, everything moved quickly. Thanks to Altios, we set up a legally compliant work center without yet having a legal entity, they conducted market research and incubated employees before we had any legal ID, handled payments when we had no bank account, and helped us become increasingly autonomous as we grew. India was ultimately a very good experience.
In Chile, we had two business divisions: a distribution activity with a warehouse, and project-based material supply for mining, water treatment, energy and other industries. Distribution proved unprofitable, and we made the decision to reinforce project-based material supply last year and discontinue distribution activity. We went there, explained the background and the context to everyone, and ensured all staff were relocated with our suppliers, competitors and customers with reference letters.
When you are transparent and communicate properly with your team, you gain credibility and everything goes smoothly.
International presence in our group is synonym of business development, opportunities and growth, however sometimes you have to handle certain scenarios and choose between different options and alternative projects to invest resources, time and funds.
Which international success are you most proud of?
All of them. But probably the US. When I joined Grupo Cuñado in 2018, the US was not making money. We worked closely with the country manager, defined a 3-to-5-year business plan including a warehouse construction, and implementation of all the procedures we had in Spain. We reached record turnovers in 2022 and 2023. Now we need to revisit that plan to accelerate again.
Germany is another success. Since its acquisition in 2015, it was running at a loss. We removed the country manager and promoted the purchasing manager to general manager. After 12 months, the company became profitable. It is now fully integrated and improving year after year.
The difference is that in Germany the business already existed and needed organizational restructuring, while in the US we focused on building local culture and autonomy grounded in group procedures.
Is there a country or market that has been most important in your international development?
The Gulf countries in the Middle East. Most of our major worldwide EPC (Engineering, Procurement and Construction) clients have their key projects there, and those projects run for multiple years. When we start a project supply program there, we may be supplying material from two to four years. It’s significant in terms of time, volume, and financial value.
If we failed on a single project there, our + 30 years proven excellence execution reputation in the region could be affected.
What has been your biggest challenge internationally?
Probably our size as a group. In our business model, our two main resources are people and financing. With a turnover of around €700 million a year, you are not large enough for certain financial institutions, but too large for others. Some entities cap their financing at a level they’re comfortable with. But when you approach large banks like Citibank, JPMorgan or similar, they fix a + €1 billion turnover to be considered a potential and target client.
We have already doubled our turnover in the five years since the pandemic. We are now working toward reaching €1 billion, because that scale will allow us to grow faster.
Have you experienced any significant failures? What key lessons did you learn?
Of course we have experienced failures.
The world of internationalisation is a constant process of trial and error. The path is a continuous coexistence of moments of success and difficulty. Chile could be stated as a good example. We tried multiple strategies to revive our distribution activity there but failed at all of them. Why? Because we tried to extend practices from Europe or other Latam countries like Peru. However, Chile has a different market and context, and we failed to properly analyze what our competitors were doing. Their strategy was to integrate both downstream and upstream in the supply chain, while we tried to maintain the same business model without evolving. Additionally, most of the country managers we appointed were not local Chilean managers. The lesson: you really need to listen to the local market, understand it, and evolve with its trends.
How do you manage geopolitical risks in your international operations?
Since we don’t manufacture, we have flexibility in changing sourcing locations and adjusting conditions with customers. The most effective risk coverage instrument in our business is the application of our commercial GT&C.
In normal times, our contracts with clients mirror our general terms with suppliers. In force majeure situations, war, transport disruptions, supply breakdowns, we can legally notify the client and invoke the same clauses with our suppliers. Our most outstanding competitive advantage is to provide solutions to our customers including, when necessary, redirecting sourcing.
During the pandemic, when China was closed, we agreed with Chinese suppliers not to enforce penalties and redirected production to India, Europe, the US or elsewhere. When China recovered faster, we moved production back. This kind of flexibility is only possible if you have local teams capable of negotiating, communicating, and finding agreements.
What are the major changes that SMEs and mid-market companies need to integrate to adapt to the new international landscape?
It is also a challenge for us. Size matters, not only from the perspective of banks and external partners, but for the internal organization as well.
When we want to implement technology, we always hit the same wall: critical mass.
Short-, medium-, and long-term priorities get mixed up when resources are limited. The problem is not having the critical size to develop continuous, parallel processes for integrating new technologies and new standardization, which is what accelerates growth.
What will be the preferred model for international expansion in the future?
It depends on the situation.
Commercial partnerships bring you opportunities in new markets, partners who know the market, bring contacts, understand how to present offers, and navigate cultural practices. It’s a legal contract, and when it works, the results are outstanding.
Organic growth is how we’ve grown over 63 years. We have many local competitors, but very few companies worldwide share our business model. Organic growth lets you bring your own way of doing things and train people accordingly.
But we’re always alert to non-organic growth opportunities. Investment banks sometimes bring us companies for sale, we study most of them to learn and find potential fits. We also proactively search in markets like food industry or wires and cables. Acquiring a company with expertise in a new product range brings technical knowledge, market knowledge, and diversification. And if the match and integration is smooth, it helps to shorten the timelines.
None of the three approaches is better than the others.
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