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Poland, a European hub for Healthcare innovation

Picture - Local Insight Poland: A European Hub for Healthcare Innovation
January 2024

Poland invests a lot in healthcare innovation, presenting a wealth of opportunities for international companies seeking to expand their businesses into this dynamic market. With a growing demand for medical services, increasing expenditure, and a strong focus on innovation, Poland is about to become a major hub for the Central and Eastern European (CEE) region.

In this article, ALTIOS’ experts share how foreign companies can take advantage from the healthcare sector in Poland.

What to know about the healthcare system in Poland

Infographic Healthcare in Poland

The Polish healthcare system is rapidly evolving, marked by significant developments in both the public and private sectors. Public expenditure on healthcare innovation is expected to reach 196 billion PLN (43.5 billion euros) in 2024, representing around 6.2% of the GDP. The projection for 2027 anticipates a further increase to 7%, reflecting the government’s commitment to improving healthcare access and quality.

The private healthcare market is also experiencing notable growth; expenditure on private medical services including spending on drugs and non-drug services exceeded 70 billion PLN (15.5 billion euros) in 2022. Between 2023 and 2028, it is expected to grow at an annual rate of 7%, as more and more Polish turn to private providers for faster and more personalized care. In the third quarter of 2023, around 4.7 million Polish opted for private health insurance, marking a 15% year-on-year increase. Health packages, a popular employee benefit, are a major driver of the subscription and medical insurance market, generating substantial revenues of 6.9 billion PLN (1.5 billion euros), with expectations of 15-20% annual growth until 2026.

Poland’s commercial clinical trials market is also thriving, valued at over $1.4 billion as of 2022. This segment represents about 15% of the country’s Research and Development (R&D) spending and has captured the attention of both foreign and domestic investors. Several acquisitions have been made in recent years, indicating the strong growth potential of this market.

Emerging trends in the Polish healthcare sector include a focus on cancer therapies, particularly on fast-track treatments for cancer patients. Additionally, there is a growing awareness of well-being topics, encompassing physical and mental health, in corporate and private contexts.

Healthcare innovation in Poland: What are the advantages?

The healthcare industry is progressively embracing digital solutions to enhance the efficiency of patient appointments and treatment processes. Since 2019, the country has mandated the use of electronic medical records (EMRs) and e-referrals, solidifying the sector’s commitment to digitalization. This digital transformation, however, needs robust cybersecurity solutions tailored specifically for the healthcare sector.

In addition to this keen appetite for new technologies, there is a high demand for medical services and growing expenditure on health. The sector is experiencing progressive consolidation, with major players such as LuxMed, Medicoer, and PZU leading the way.

The Polish healthcare sector has emerged as a leader in startup financing rounds in Poland, accounting for a significant 15% share of all startup transactions between 2020 and 2021. Top medical and healthcare startups include DEBN, StethoMe, and DocPlanner.

Picture - Healthcare in Poland

What challenges to face when exploring the Polish healthcare industry?

The Polish healthcare market is dynamic and growing, but it also presents challenges for global expansion.

  • One of the significant challenges in the Polish healthcare industry is the severe shortage of professionals, including doctors, nurses, and also specialized fields such as psychiatrists, geriatricians, and pediatricians. This scarcity poses a considerable barrier to recruitment efforts. Within the next decade, the number of nurses could potentially decrease by 80,000, significantly reducing the potential of the group by ¼. Also, although the number of places in medical faculties is rising by 7% each year, the number of places in specialized medical programs is not increasing.

  • The Polish healthcare system is also complex. It bifurcates into two distinct paths: the National Health Fund (NFZ) and private medical care. Private medical care offers faster and more comprehensive care, but it is paid for by the patient. The NFZ provides access to healthcare for all, but waiting times are often extended, and the system of refunds from public sources is very complicated and unclear.

Would you like to develop your business in Poland?

If you are interested in more insights on the Polish market, read our last article IT sector in Poland 2023: what opportunities for international companies or reach out to our experts.

What are the advantages of the Australian market?

Advantages of the Australian Market - Photo

December 2023

Australia has a stable and diversified economy, from robust mining and agricultural sectors to growing expertise in technology industries. Its strategic geographic position makes it a key player in international trade, with close commercial links with Asia-Pacific and the Middle East.

In this article, ALTIOS’ experts share how foreign companies can take advantage from what Australia has to offer.

Australia's Economic Excellence

Considered as a model of economic stability, Australia boasts a resilient economy, characterised by steady GDP growth and remarkably low inflation rates. Despite global economic challenges, Australia has maintained robust GDP growth, averaging an impressive 2-3% per year, renforcing its status as an attractive investment destination.

Australia is distinguished by the diversification of its economy, covering key sectors such as mining, agriculture, services and technology. This diversification not only promotes resilience, but also reduces dependence on any single sector. With services accounting for around 60% of Australia’s GDP, alongside significant contributions from mining, manufacturing and agriculture, Australia’s economic landscape offers a wealth of investment opportunities.

Australia’s stable and well-regulated financial sector, which accounts for more than 8% of GDP, is also a key pillar of this economic success. This strength enhances the overall attractiveness to international investors seeking a safe and prosperous market.

In navigating the global business landscape, Australia stands as a strategic partner, providing a stable platform for growth, diverse investment opportunities, and the assurance of a well-regulated financial environment.

A global innovation hotspot

Australia is swiftly solidifying its position as a global innovation hub, drawing substantial investments in research and development. With an annual allocation exceeding $10 billion, the nation is propelling technological advancements and fostering an environment conducive to innovation. This commitment, one of the big advantages of the Australian market, positions it as an ideal destination for businesses seeking to thrive on the forefront of cutting-edge technologies.

Complementing this innovation drive is Australia’s robust commitment to infrastructure development. Ongoing investments, exemplified by the $110 billion National Infrastructure Plan, are strategically enhancing connectivity across transport, energy, and digital sectors. These developments not only bolster economic growth but also streamline operations for companies, creating a seamless environment for international enterprises to operate efficiently and prosper. Australia’s fusion of innovation and infrastructure lays the groundwork for a dynamic and forward-looking business landscape.

A winning combination of good education and quality of life

Australia presents a compelling proposition for international expansion, combining a highly educated and skilled workforce with an exceptional quality of life. With approximately 40% of Australians aged 25-34 holding tertiary qualifications, the country stands as an ideal destination for companies in search of top-tier talent and expertise.

Beyond professional considerations, Australia offers an unparalleled quality of life, making it an attractive haven for professionals and their families. Renowned cities like Melbourne and Sydney consistently rank among the world’s most livable, contributing to an elevated quality of life that goes hand-in-hand with the opportunities for professional growth. The synergy of a skilled workforce and an exceptional quality of life positions Australia as a strategic choice for businesses aiming to expand internationally.

Advantages of the Australian Market - Melbourne

The "Land Down Under"

Australia emerges as a pivotal player for international expansion, strategically positioned as a gateway to the dynamic Asia-Pacific region. With a geographic location that provides unparalleled access to a market exceeding 4.5 billion people, businesses can capitalize on Australia’s unique position to tap into the vast and growing opportunities within the Asia-Pacific market.

In addition to these strategic advantages of the Australian market, Australia has an abundance of natural resources, a cornerstone of its economic strength. Boasting a leadership role as a global exporter of resources such as coal, iron ore, gold, and agricultural products, the country becomes not only a gateway to markets but also a source of valuable resources for industries worldwide. We therefore advise you to make the most of Australia’s strategic location and resource-rich landscape, unlocking the full spectrum of opportunities for your business.

Australia's Pillars of Trade and Stability

Australia emerges as an international business hub, underpinned by robust trade relationships and unwavering political stability. The country’s strong trade ties with global economic powerhouses, including China, Japan, and South Korea, are facilitated by free trade agreements, creating an advantageous environment for international business activities.

Beyond commerce, Australia is distinguished by its political stability and transparent governance, laying the foundation for a favorable business environment. Consistently ranking high in global indices for political stability and transparency, Australia provides businesses with the confidence and security needed to thrive in the international arena.

Would you like to go further and develop your business in Australia?

How to succeed your market entry in India

Image - How to succeed your market entry in India

December 2023

Considered one of the world’s oldest civilizations, India is a land of diversity and contrasts. With its vast market and growing economy, it is an attractive destination for businesses worldwide. However, the Indian market is a complex business landscape that requires careful planning and understanding of the culture.

In this article, ALTIOS’ market entry experts give you key advice to succeed your market entry in India.

Understand the complexity of the Indian market

Conduct thorough Market Research

India is a home to a diverse population with varying needs and purchasing power. Before venturing into the Indian market, you will have to conduct a market research in depth in order to understand the market’s dynamics, consumer behavior and competitive landscape. Be careful not to overestimate the market size ; we strongly advise you to establish a market plan (over at least five years) and to define achievable and realistic goals.

What are the Market trends to consider?

India is witnessing a paradigm shift in consumer preferences, driven by the ‘Make in India’ initiative. This initiative launched by the Indian government in 2014 is reshaping the market towards domestically manufactured products, aligning with the growing demand for sustainable and environmentally conscious offerings. The Make in India Program is based on 4 pillars aimed at boosting economic growth, encouraging investment, and strengthening the country’s manufacturing sector:

  • New Processes (Ease of doing business): Simplify administrative procedures, reduce bureaucracy, and facilitate the creation and operation of businesses in India.
  • New Infrastructure: Develop and modernize key infrastructures to support the growth of the manufacturing sector and facilitate the movement of goods.
  • New Sectors: Identifiy 25 sectors in manufacturing, infrastructure, and service activities to promote under the “Make in India” initiative.
  • New Mindset: Change the traditional perception of the government as a regulator (adopt a facilitator role rather than a regulator), fostering a partnership for the country’s economic development.

In addition to the ‘Make in India’ initiative, sustainability has emerged as a key market trend, with many foreign companies investing heavily in ESG, CSR, and other initiatives. This focus on environmental and social responsibility reflects the growing awareness of sustainability among Indian consumers, who increasingly demand products and services that align with their eco-conscious values. Many European companies are recognizing India’s potential as a sourcing destination and align their strategies with this shift, presenting immense opportunities for businesses worldwide.

The fastest growing sectors in India in 2023

The Indian market is going through exponential growth in technology, renewable energy, healthcare, and education. In addition, E-learning platforms, which disrupt traditional education models, have gained immense popularity, especially among the tech-savvy youth. Health-tech solutions, addressing the growing healthcare needs of the population, are capturing the imagination of Indian consumers with E-learning platforms and renewable products.

If you are a European company aspiring to do business in India, know that European products are renowned for their quality and reliability, especially medical equipment and renewable energy products. This reputation presents significant opportunities because the demand of high-end and durable products on the Indian market is steadily increasing. Sustainable products, aligning with environmental concerns, are gaining traction, driving businesses to adopt eco-friendly practices.

Moreover, with a population of over a billion people increasingly connected to the Internet, the e-commerce sector in the country is also becoming more important. In addition to have physical stores, you should also consider your online presence, because even though Indians shop online a lot, they also like to see the products. While youth, particularly the techsavvy millennials, are drawn to innovative, techdriven solutions, rural consumers prioritize pragmatic yet transformative advancements that align with their traditional values.

India, a multiethnic country

The diverse geography and cultural influences in India lead to significant variations in consumption patterns, preferences and even language; the nation’s linguistic landscape encompasses over 120 languages (only 22 are recognized by the Indian Constitution). This diversity can have a significant impact on market entry strategies, product distribution and brand perception. While national trend may provide a general overview, you will have to adapt your approach to specific regions and states. A comprehensive understanding of these regional nuances is a must to successfully set up a business in India and to ensure that business strategies are aligned with the specific needs and expectations of each states.

Appreciating and adapting to India’s rich cultural heritage is essential for gaining consumer trust and loyalty. Cultural sensitivity permeates every aspect of market engagement, from product design and marketing campaigns to customer service interactions. Furthermore, tailoring product offerings to specific regions and demographics demonstrates cultural respect and resonates with local consumers.

India’s dynamic market, characterized by rapid technological advancements and evolving consumer preferences, demands adaptability. Doing business in India implies to embrace change, continuously evaluate market trends and consumer behaviors to refine strategies and maintain market relevance.

Adopt right distribution strategies

Develop Strategic partnerships

The Indian market presents unique challenges in distribution. Due to the complexity of logistical infrastructures and variations in regulations, you will need to have a strategic approach to supply chain management to overcome operational challenges. The logistical landscape in the country is known for its complexity, ranging from diverse geographic terrains to variations in regulatory frameworks across states.

  • Find reliable and experienced partners, experts in the Indian market, to supervise your operations. It will allow you to manage your operations transparently and to provide rapid customer service.
  • Having a partner who knows your business sector and operational subtleties in India will increase your efficiency and effectiveness and prepare you to meet the challenges of storage and material flow.
  • Ask for help regarding import licenses for goods subject to specific foreign trade rules and restrictions.
  • Dialogue openly and directly with distributors to avoid conflict: understand their concerns and points of view, negotiate, and propose win-win solutions. Always have an emergency solution: Explore alternative distribution channels to reduce dependence on a single distributor and broaden your reach in the Indian market.

Invest in Relationships

Building strong relationships with key stakeholders, including distributors, government officials, and business partners, is a key of long-term success in India. Fostering trust, collaboration, and mutual understanding is essential for overcoming bureaucratic hurdles, gaining market access, and achieving sustainable growth.

Want to learn more?

For more content about doing business in India, read the articles on Maier Vidorno’s blog or contact our experts.

The aerospace industry in Mexico

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August 2023

The Mexican aerospace industry has emerged as a force to be reckoned with on the global stage. With its strategic location, skilled workforce, and favorable business environment, Mexico has positioned itself as a key player in the aerospace sector.

As of 2021, Mexico stands as the 14th largest aerospace supplier worldwide, and its growth trajectory indicates a prosperous future for the industry. What opportunities in the years to come?

The aerospace industry in Mexico takes flight as a global contender

  • Looking ahead to 2025, the Mexican aerospace industry is expected to remain stable, with exports surpassing an impressive US $12 billion. This projection demonstrates the robustness and potential for continued growth within the sector.
  • The government’s commitment to promoting investment and creating a supportive ecosystem for aerospace companies has contributed to this positive outlook.
  • One of Mexico’s key strengths lies in its ability to attract foreign companies to its aerospace sector. Numerous international players have recognized the advantages of establishing a presence in Mexico, leveraging its skilled labor pool and competitive cost structure.
  • These foreign companies have become instrumental in driving the growth and expansion of the Mexican aerospace industry. Their investments have not only created job opportunities but have also stimulated the development of local suppliers, contributing to the overall growth of the sector.

Discover the key factors and statistics of the Mexican aerospace sector in our infographic:

aerospace industry mexio altios

Want to learn more?

Interested in Mexico and its other sectors? Check out our most recent article on Tech StartUps: Mexico, a land of opportunities

IT sector in Poland 2023: what opportunities for international companies?

poland it sector altios

August 2023

In 2023, the IT sector in Poland has been experiencing outstanding growth.

Also known as the “IT center of Europe”, the Polish market is home to the highest number of domestic IT companies in the continent. This can be confirmed by the enormous interest of international corporations in opening their branches and large centers of tech services in Poland.

In this article, ALTIOS’ experts share how foreign companies can seize great opportunities in the IT sector in Poland.

IT and software: the Polish market's driving force

The IT sector is responsible for generating 8-9% of the Polish GDP, while the share of software business is increasing.

The value of the market is around PLN 70-85 billion. Looking at the total revenue of companies (excluding micro entities), it can be estimated that the software and IT services sector alone accounts for approximately two-thirds of the entire market (about PLN 55 billion). This share is currently rising towards 70 %, which is typical for highly developed countries, where the demand for IT hardware is lower for the reason of high market saturation.

Following Clutch data, in Poland there are around 50,000 software companies. What an impressive number, considering that this economic sector is relatively new!

Different sized companies make up this market – from micro entities to branches of global corporation.

In 2022, Google has announced a huge investment coming in Warsaw. The company’s purchase of office buildings in the capital is a sign of team development, and engineering recruitment in Cracow.

Other big brands like Samsung and Intel have decided to locate their R&D centers in Poland.

Except for large players, Poland is home to many local, competitive software houses and game developers.

What’s interesting, there are two potential tech unicorns in Poland: Brainly and Booksy, which prove the entrepreneurial spirit of the country.

Investing in the IT sector in Poland: what are the advantages?

The main success factor for the industry is having highly skilled people. Poland appears at the top of all rankings that have the most talented programmers.

The COVID-19 pandemic has accelerated global digitalization process, which rebuild the plans for future – many so far traditional businesses were forced to start thinking about digital transformation or new digital channels.

In Poland, according to the 2021 DESI (Digital Economy and Society Index), Poland is still below the EU average in all categories. It is currently ranked as 24 out of 27 EU countries, while performing better in connectivity (21st position) and digital public services (22nd position).

IT sector poland altios

The low DESI ranking is due to the insufficient integration of technologies in companies. While companies understand the importance of digital transformation in their organizations, most of them do not plan to increase investments in this area, in the coming months. In the future, country market development will be driven by the digitization strategies of the public, business sectors, and the need to invest in labor-saving or productivity maximizing solutions.

What challenges when exploring the Polish IT industry?

Among the barriers to the industry’s development, following issues could be pointed:

  • rising labor costs and talent draining, still moderately advantageous structure of the economy (relatively high share of simple processes and less advanced industries);
  • low awareness of the benefits resulting from IT investments in the SME sector (what could be changed by pandemic situation);
  • companies’ capital shortages.

In 2021, the number of M&A transactions in Poland hit a record high of 329, and a big part of them was in IT/tech sector (around 30%).

In 2022, despite Ukraine War and economic situation, other acquisitions on the tech market could take place, like French group Hardis’s acquisition of Polish Cloudity. On the other hand, Polish tech companies were also active in foreign acquisitions – like Blik’s choice to acquire Viamo, or Vercom’s acquisition of American MailerLite.

There is also visible growing interest in acquisition of cybers security companies.

More opportunities

The IT sector in Poland offer countless opportunitied for international companies looking to invest or expand. In fact, Poland is the:

  • 1st country in CEE (13th globally) by smartphone penetration
  • Cheapest mobile data in CEE (USD 0.7 per 1GB)
  • 2nd fastest growing European market for Revolut
  • 90% of card payments in Poland are contactless

Our teams in Warsaw and Cracow can enlighten you further on this attractive sector, and support you through all the steps of your expansion. Book an appointment with one of our experts to discover our personalized offer.

Want to learn more?

If you’re looking for more insights on the Polish marker, read our most recent article on the subject: What to know about Poland in 2023

Why expand in the UK after Brexit?

local insight uk altios

June 2023

The UK has a population of 67.9 million people, making it the third most populous country in Europe, after Russia and Germany. It is the fifth biggest economy in the world and the second biggest in Europe, with a steadily growing GDP since 1950.
In January 2020, the United Kingdom officially exited the European Union.
Brexit has undoubtedly caused a great deal of uncertainty for businesses operating in the UK. However, with uncertainty comes opportunity, and there are several business opportunities that have emerged in the wake of Brexit.

In this article, ALTIOS’ experts share how foreign companies can still grow their businesses and expand in the UK.

Attractive tax rates and business ecosystem

The U.K.’s corporation tax system is very attractive in comparison to other European destinations.

The UK corporation tax (CT) currently stands at 25%, since April 2023, which is one of the lowest corporation tax rates in the G20. The U.K. also offers a number of attractive tax credits and incentives that companies can take advantage of when expanding their business overseas.

The UK has an ambitious policy agenda that focuses on sectors such as tech, life sciences, chemicals, AI, and renewables, explains Gus Wiseman, Deputy Director of Investment Opportunities & Propositions for the Department for International Trade.

We are trying to attract world-leading talent and firms in these sectors and to do so we not only offer great financial incentives but also a very welcoming business environment

Foreign companies should know that the Department has 32 clusters emerging across the country, where companies, governments, and universities have come together to create eco-systems of global prominence. For example, South Wales is one of the world’s foremost centres of excellence for semiconductors, with excellent infrastructure and supply chain for any companies that want to set up shop.

The universities and schools in the region focus on the technical skills that are important for this sector, there are grants and incentives available, and everything is ready for SMEs to plug in and play.” Gus also points out that the UK government is always looking at policy with an investor lens and focuses on making regulation as easy as possible for foreign investors. “The UK offers major opportunities and supports businesses in achieving success

Expand in the UK: subsidiary set-up

Brexit has not changed the opportunities of setting up a company in the U.K. in any fundamental way. It can still be a much faster and cheaper process in the U.K. than in other European countries, even for European companies.

There are three types of entities foreign investors can choose from when settling in the UK: the Limited Liability Partnership (LLP), the UK Establishment (Branch) and the Limited Liability Company (LTD).
Whilst the Limited Liability Company remains the most commonly used option, each entity type carries varying advantages, as well as legal and compliance requirements.

Setting up a business in the UK is a very straightforward process. Usually, companies are incorporated electronically either on the same day or within one to three working days.

To register a limited company, an article of association is needed. This is a legal statement signed by all initial shareholders agreeing to form the company. The articles of association do not need to be written from scratch and can be amended further down the line by way of special resolution if needed.

Besides this, contact should be made with HM Revenue & Customs (HMRC) to complete the registrations for corporation tax (CT),
pay-as-you-earn
(PAYE), and value-added tax (VAT) if the taxable turnover will be over £85,000 per year. Companies need to look into employer’s liability insurance, property insurance, and other areas that need to be covered.

subsidiary set up uk

To set up a company, the UK only requests proof of address and proof of identity of the future director(s), in order to create an electronic signature with the Registrar. It is not necessary to have a bank account while setting up the company, because this can be a time-consuming process in the UK.

Mergers and acqusitions

Until the beginning of 2022, mergers above a certain size needed to be cleared by EU authorities, because the UK remained subject to EU rules governing anticompetitive behaviour during the transition period. From January 2022 onwards, major transactions involving multinational entities active in the UK must comply with a new UK competition system as well as the existing EU one.

Larger deals involving companies with activities in the UK now need to be assessed by the European Commission and the Competition and Markets Authority in London. Even relatively small deals, which in the past would have been waved through by the EC, will need to be formally assessed by UK authorities.

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At the same time, the UK government is in the process of tightening its regulation for clearing deals ,
which could lead to more deals having to be assessed by the Department for Business, Energy, and Industrial Strategy than in the past. Up to now, only one or two deals were called each year for further examination, but under the new proposal, M&A across a much broader range of sectors will now have to notify the BEIS department. This includes sectors such as energy, transport, technology, communications, data infrastructure, and computer hardware. If deals are not reported in these areas directors may face criminal charges and the deals could be declared void.

uk brexit

Brexit may also affect the smooth running of major debt restructuring deals. Previously, EU regulations effectively allowed court judgments in one jurisdiction of the EU to be recognized throughout the Union. No For this reason, support from our local teams can help with these updates.

The UK has also lost access to some of the benefits under EU Directives that facilitate cross-border M&A within the EU.

For example, the EU Cross Border Mergers Directive allows mergers between companies established in different European Economic Area (EEA) member states. Before the end of the UK/EU transition period, this included the UK but, following its expiry, UK companies can no longer participate in EU cross-border mergers.

Any merger between a UK and an EEA company must now take the form of a share or business transfer, followed by a dissolution/liquidation of the transferring entity.

Similarly, in a taxation context, UK companies have now lost the benefit of the EU “Parent-Subsidiary Directive” and “Interest and Royalties Directive”.

UK companies receiving dividends, interest, and royalties from companies established in the EU/EEA, will no longer be able to rely on those directives to optimize their international tax scheme (withholding taxes will now follow the domestic laws of EU/EEA member states).

Why expand in the UK through M&A?

Even though a merger with or acquisition of a UK company might require more steps and checks after Brexit, it is still one of the fastest ways for international companies to establish themselves in the mature and competitive British market.

An acquisition gives you instant access to a new market, which makes it the quickest
and most efficient way to grow your business in a foreign country.

Instead of having to wait numerous months to get the proper accreditation or invest a lot of time and energy in developing a commercial partnership with an uncertain outcome, an acquisition gives you clarity in where you stand from day 1.

When you buy a company, you buy an established brand that is known by customers and suppliers. You buy an existing client base, technology, patents, contracts, the employees, and of course existing turnover and profit.

Alexandre Kaplan
Corporate Finance Director ALTIOS

Kaplan warns companies that are looking for M&A opportunities in the UK to not only take regulatory differences into account but to also be aware of cultural differences in the negotiation process.

European owners are, generally speaking, less direct than Anglo-Saxons when it comes to discussing strategy or negotiating the terms of an agreement“, explains the finance director.

It is, therefore, advisable to seek assistance from a third party with local experience and knowledge, that can help you adapt your speech and to bridge the cultural gap. Understanding the key steps of an M&A process and establishing trust between the two parties are essential elements for a successful outcome.

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Alexandre Kaplan

ALTIOS teams can help you succeed your M&A operations, as well as guide you through the entire subsidiary set-up process. Book an appointment with one of our experts to discover our personalized offer.

Want to learn more?

If you’re looking for a more in-depth and step-to-step guide to expand in the UK after Brexit, download our whitepaper: How to expand in the UK after Brexit?

Digital transformation
in the Italian manufacturing industry

local insight italy altios

April 2023

The Italian manufacturing sector has experienced outstanding growth in 2022 and 2023.

Moreover, thanks to the steady advancement of digital innovation, 4.0 technologies at the service of companies and workers, particularly in the engineering and manufacturing sector, will be able to trigger a virtuous circle destined to foster strong growth in the next three years.

How are companies in Italy preparing to face this incoming wave of innovation? And what advantages are there for international firms interested in developing their business in the Italian manufacturing industry?

Italian manufacturing companies expect even greater technological transformation

Digital Transformation - First img

Interesting data has emerged from the 2022 survey conducted by Fòrema, with reference to two interrelated processes, namely digital and green transitions. Supporting the extent to which this scenario represents the future, also on a global level, the report The Rise of the Smarter, Swifter, Safer Production Employee‘, carried out by Ericsson IndustryLab, analyzed the ongoing transformation from which comes out a growing demand for greater productivity and efficiency.

Needless to say that automation technologies have enabled manufacturing to absorb the impact of the economic crisis generated by the Covid-19 pandemic.

In fact, 78% of Italian manufacturing companies declared their financial performance unchanged or even improved.

The research carried out by Assindustria‘s training organization, in detail, focused on how companies will change in the coming years, both in terms of activities and functions as well as organizational relations. According to the survey included in Fòrema’s study, 30% of companies, the vast majority of which are part of the manufacturing and engineering sectors, expect an increase in activities, while 17% expect a radical change in the company. Larger companies are expecting more radical transformations than small and medium-sized companies, in both quantitative and qualitative terms.

Digital Transformation and sustainability as major shifts

On the subject of Digital Transformation, 52% of the companies stated that they had already carried out training actions to adapt technical and behavioral skills in the digital sphere: this testifies to the fact that digitalization processes have therefore involved the majority of the companies surveyed, even if these paths mainly concern the design and management sectors and to a lesser extent the more operational profiles. On the issue of sustainability, on the other hand, less than half of the companies stated that they had implemented specific actions to equip themselves with skills for greater corporate sustainability: a topic on which further efforts are needed.

Digital Transformation - Green

How are Italian companies adapting to this speeding transformation?

In order to face a situation of continuous change, companies must focus on recruitment and the acquisition of new professional skills, such as hiring figures such as Chief Technology Officer-IT managers, and technicians capable of identifying the best technologies to apply to the products or services the company produces, but also Digital Manufacturing managers, i.e. profiles that know how to use innovations in production processes.

Above all, however, the focus is on figures capable of redesigning and planning production and the management of incoming and outgoing material flows on production lines: in this period of crisis in the cost of materials, these figures are fundamental for keeping the production cycle profitable.

Moreover, according to the research, ‘The Rise of the Smarter, Swifter, Safer Production Employee’ Italy is confirmed as one of the most advanced countries in terms of the use of ICT tools, with 48% of companies using at least three of the technologies considered, compared to 41% of the global average. Now more than ever, investing or expanding in Italy for international companies means a booming market for excellent business growth.

Navigating the Italian manufacturing sector with the right partner

There are a number of challenges that the Italian manufacturing sector faces in an environment still affected by the pandemic, such as international competition, the need for greater flexibility, and the challenge of increased job security. Furthermore, to keep up with the evolution of technology, companies are faced with the need to upgrade machinery and equipment, make processes more efficient to meet the need for greater sustainability and increase the resilience of supply chains. These challenges represent a fascinating path full of development opportunities for the Italian manufacturing industry.

However, navigating this promising market without a third-party expert can be risky. Our Italian teams can provide personalized offers and support you throughout your international expansion journey.

Book an appointment with our experts in Milan and Turin to know more.

Want to learn more?

Discover our most recent article on Italian companies and internationalization: Crédit Agricole Italia in Trento with Altios International to promote the companies internationalization

China is back to business: opportunities for international companies

china is back to business local insight

May 2023

Three months after celebrating its Lunar new year of the “Water Rabbit”, China is fully open and functional for business after 3 years of restricted borders.

On the 8th of January, 2023, after 1,016 days closed to the outside world, China finally opened up its gates. In February, China’s COVID-19 regime eased after months of protests against a policy that included frequent testing, movement restrictions, and mass lockdowns adversely affecting the nation’s economy.

Following three years of closure of sea and land crossings with Hong Kong, mainland China has ended quarantine requirements for incoming travellers, dismantling the last pillar of the zero-COVID policy, which separated China’s 1.4 billion people from the rest of the world.  A sharp change was seen at all the international airports, from earlier COVID-19 protocols to eager families awaiting returnees.

This reopening is anticipated to energise the $27 trillion economy that suffered its slowest growth in nearly half a century. However, the sudden reversal of policy triggered a massive wave of infections that overwhelmed hospitals and disrupted business in December 2022.

China's current economic snapshot

With the country’s sudden reopening, a surge of infections resulted in millions of people being out of work at the same time. However, over the last four months, China has seen a recovery from the loss of its workforce.

A spike in mixed sentiment towards China has occurred since the government abruptly axed almost all internal controls earlier this month. Although bullish investors acknowledged that the reopening process has been difficult, it was nevertheless perilous. While the tone of many investment banks’ research reports, including Morgan Stanley, has changed over the past few weeks, it remains unpredictable.

In the aftermath of the disruption of the economy, retail, industrial production, and fixed asset investment suffered, while the COVID-19 outbreaks and lockdowns primarily affected consumption power. Due to rising unemployment and bleak income prospects, Chinese households have cut back on spending and prioritised saving. And when consumers do spend, it is on premium products that are quality-oriented, with a competitive price in the market. Premiumisation is at its peak after customers have seen growth in the quality of local brands with reasonable pricing.

Economists broadly expect consumption to rebound robustly later this year, as a result of the withdrawal of the Covid-Zero strategy and the reopening of the country’s borders, following the infection peak during the first quarter, and unleashing the pent-up demand and economic activity. Chinese leaders prioritised stimulating domestic demand despite geopolitical tensions and concerns regarding the global economy. A trend has been observed since Chinese New Year in which Chinese companies and delegations are visiting their trade priority countries in an effort to further strengthen their trade relations. This is China’s way of demonstrating its commitment to the international marketplace.

Challenging times for the Chinese economy?

With valuations and earnings expectations at low levels in late 2022, and investors’ positioning at low levels, China is completely focused on rebuilding its economy in 2023 with the assistance of its international trade partners.

The challenge to contemplate for the Chinese economy is if the old positioning of companies in the market will still be accepted by the changing behaviour of the consumers. According to Mckinsey’s 2023 China consumer report, the middle class continues to rise and premiumization will stay in momentum. It is explained that this is due to consumers making smarter choices and not trading down on products. Innovative brands are upping their game to provide quality with controlled prices, which has changed the dynamics of consumers’ habits.

china economy

Because of the disruption of the global supply chain resulting from COVID-19, the Chinese economy has shifted from solely reliant on imports to a blend of foreign and domestic production. Consumer behaviour has evolved in recent years to a more quality-oriented approach with competitive prices. In local markets, consumers have lower consumption power and are more susceptible to increases in prices for products. It is expected that the alteration in the purchasing power of local consumers will have an impact on market trends.

However, Chinese consumers are experiencing difficulties. This is because most of the local products still struggle to meet the quality, design and aesthetic standards that international brands can provide to the Chinese market. The main challenge remains on how companies can find quality products with reasonable prices to accommodate the changing consumption trends in China.

Is this an opportunity for foreign companies to take over the market segment of quality products with yet reasonable prices?

The first half of the year is expected to be bottomed as the government adjusts its policies and provides supportive policies for different sectors to generate more inbound investment and growth. A full reopening is expected to take around the first half of the year and experts are indicating a GDP growth of over 4% in 2023.

According to Bloomberg Economics, the Chinese economy has an increased possibility for a faster and stronger rebound later in 2023, after the likely slow start till March, with growth projected to pick up by 4.8%.

Beijing is prioritising relief monetary and support policies for infrastructure systems under the 14th Five-Year Plan, to accelerate growth with a proactive fiscal policy. Policies are now being coordinated to form synergy for high-quality development with intensified macro-control measures. Policymakers are stressing the need to support rational financing demand, mergers and acquisitions, and reorganisation… While it is too soon to predict the results of these policies, this is China’s way of embracing its openness after 3 years.

China is back to business: new booming industries

Automotive

In the automotive and mobility sectors, China is widely acknowledged as a global powerhouse due to its consistently high performance and immense potential.

According to the Ministry of Industry and Information Technology, domestic vehicle production will reach over 35 million by 2025 VS. 26 million in 2021, making China the world’s largest automobile producer.

Several industry trends are emerging in China’s automotive sector, because of its rapid development.

However, the Chinese automotive industry is further relying on locally produced suppliers. In their efforts to secure a foothold in China’s fast-growing automotive market, many foreign companies need to access the right location – one that combines cost and convenience as well as reliable industrial partners.

New material industry

China launched the Science and Innovation Board to support new material enterprises, financial support and R&D innovation enhancing the transformation of upgrading the sector.

The output value for the industry is projected to reach 10 trillion in 2025. The industrial structure is mainly distributed into functional materials, modern polymer substances and high-end metal structure materials, accounting for 32%, 24% and 19%.

Foreign investment in China’s new materials sector has seen a significant increase in the last decade and will see continuous growth specifically due to the development of high-end goods, long R&D cycles, large capital requirements and highlighting cost advantages. There are many incentives and investment opportunities in Beijing to promote the growth of industries, which may be critical for the success of the company. However, how to protect intellectual property (IP) while simultaneously doing business in China is something to take into consideration before investing in the country.

High-end equipment

High-end equipment manufacturing, as a pillar of the manufacturing sector, is the heart of China’s industrial economy. The current market size is between 200 billion yuan ($29.98 billion) and 300 billion yuan, making it the leading country in development scale and production capacity, with opportunities for foreign investment in various high-end and core technologies.

China is prioritising the application of technical innovation, institutional advantages, the improvement of market-oriented mechanisms for technological innovation, and the strengthening of businesses’ leadership positions in innovation. Companies localized in China, which have decided to upgrade their production capacity to match Industry 4.0 standards, are receiving important subsidies from public authorities.

china high-end equipment

Foreign players can use this as an opportunity to showcase their products and attract Chinese clients. Nevertheless, they will need to adapt their solutions and develop a strong reputation to generate large volume thus foreign players will need to invest in the long-term both in product adaption and business development.

Doing business again in China with ALTIOS

Companies interested in taking advantage of China’s opening gates should consider learning more about different industries, which is the best way to penetrate the market.

At ALTIOS, we have over 30 years of experience in helping our clients explore their international potential. By successfully combining a full range of market entry and expansion services, with a powerful, global and well-positioned network of 22 offices, Altios has helped +3500 companies identify, qualify and collaborate with ideal local partners regarding distribution, joint ventures and acquisitions.

With our expertise in FDI and a Shanghai-based team of experts, we can allocate resources suitable to navigate the entire Chinese opportunity. To discuss more about the market opportunities, book a consulting session with us.

Want to learn more?

Discover our most recent article on one of China’s most profitable sectors: China’s Medtech market

The 5 key steps to prepare your M&A operation in Germany

M&A germany 5 key

April 2023

External growth is one of the quickest ways, for SMEs to grow their business and expand their operations (activities, services, clients) abroad. However, a Merger & Acquisition process faces many challenges, especially in an international
context.

5 prerequisites are critical, before beginning your M&A operation in Germany.

Integrate external growth into your development strategy

External VS Organic growth: Define the best way to enter a new country, new market. External growth strategies (M&A or Strategic alliances), can be quicker in most cases, but preliminary analysis is mandatory before launching a full process. It can lead to value loss if not done correctly.

Verify your financing capacity (level of Enterprise Value) to assess the size of the target you can aim for.

Appoint a Project Manager

Name a Project Manager within your organization that will link all parties involved in the M&A operation (advisors, targets, banks, etc.)

Depending on the size of the project, define the scope of responsibilities of each member involved in the project.

In Germany: It may take some time to get initial feedback from the German targets, but once the interest of a target has been validated, it is important to be reactive and to be able to introduce the same people to the Germans, to ensure a good follow-up throughout the mission.

Define the ideal target

  • Define the company size (employee, revenue/EBITDA, balance sheet.)
  • Define the activity/services/products/sectors/ clients
  • Define the geographical scope (region, country)
  • Define the other criteria (type of ownership, type of acquisition, type of clients, management team, etc.)
target

Adapt to cultural differences

/ Approach the potential targets: The first approach in the M&A operation is always complicated as we do not know if the targets are ready to sell their companies or open to sharing information. The idea is to create the opportunity. Each approach must adapt to cultural specificities to maximize the chances of opening the door and getting information.

In Germany: Our local teams approach the targets directly by phone and organize the first meeting in German to discuss your company and your objectives and those of the targets. The first approach in German allows to reassure the interlocutors a little and allows first fluid exchanges.

/ Negotiation phase and the M&A process: Adapting to cultural differences is key: respect the agenda/calendar, communicate clearly, do not rush, and communicate in advance, if changes any.

In Germany especially: Your presentations and arguments have to be explicit. well-founded, short, straight to the point, instructive and technical during exchanges. The relationship is not limited to meetings: make sure you stick to the schedule and if you have to cancel or postpone a meeting or a call, let your contact know well in advance and agree on a new date.

Specify the schedule & prepare your documents

Define the planning of the M&A operation for the main steps: Duration of each step (2 months for the screening, 2-3 months for the approach phase, 4 months for Due Diligence, etc.). It’s mandatory to be structured and plan.

Adapt to the agenda/calendar of each target (might be quicker than expected if the target is in an active sale process/longer if the target is initially not ready to sell).

A M&A operation requires a large number of documents. You need to prepare the following:

  • The Letter of Intent (LOI): A document outlining an agreement between two or more parties before the agreement is finalized.
  • Data rooms (online data room): running a data room process requires gathering confidential documents that third parties (lawyers, investment banks, chartered accountants, etc.) may then access more easily during the process
  • Due diligence: the process through which a potential acquirer evaluates a target company or its assets for an acquisition. The relevant areas of concern may include the financial, legal, labor, tax, IT, environment, and market/commercial situation of the company.
  • After due diligence is completed, the parties may proceed to draw up a Definitive Agreement, known as a “merger
    agreement,” “share purchase agreement” or “asset purchase agreement” depending on the structure of the transaction.

ALTIOS teams can help you succeed your M&A operations, as well as guide you through the entire subsidiary set-up process. Book an appointment with one of our experts to discover our personalized offer.

M&A germany 5 key

Looking to move into Germany?

How to choose a manufacturing site in Vietnam

local insight vietnam altios

March 2023

Vietnam ended 2022 with a GDP growth rate of 8%, placing the country at the top World GDP growth rate. With its dynamic economy, and as one of the major ASEAN countries in China + 1 Strategy, the demand for having a manufacturing site in Vietnam has skyrocketed. Now more than ever, companies should seize the opportunity to expand in the country. But how to pick location that meets your business’ needs?

In this article, ALTIOS’ experts will share with you 3 key steps for a mistake-free choice.

1. Secure your manufacturing site in Vietnam's location

This is the key bottleneck for site selection. Many projects were denied after the site check because the government had not approved of the location or park.

In fact, each park has a previously admitted sector list: light and heavy industries can locate in it, as well as sectors whose wastewater reaches National Type B. In other cases, certain parks accept safer industries.

To maximize your and your investor’s time, make sure to secure your business’ location approval and feasibility.

2. Consider these 6 factors for optimal selection

Location:

A well-connected location will become a unique value for a manufacturing site in Vietnam. In fact, the country is divided into 3 main zones: North, Middle, and South, and each one contains different regions with unique advantages. In addition, the presence of possible and future clients, as well as the proximity with local suppliers, also plays a huge role in your factory’s success. Choosing where to set up your business will have a major in pact on its profits.

Manufacturing site legal conditions:

Vietnam has the overall rule for IRC, ERC, environmental, and fire certificates. Certain regions are more preoccupied with investment quality and environmental security, so further documentation may be required, along with evidence for the investors.

These aspects should be well-defined and clarified before the final decision. Moreover, an expert operator can strategically guide the investors to complete processes.
Our international expansion specialists can support you through these crucial steps.

Infrastructure:

Logistics supports:

Every manufacturing site in Vietnam is legally obliged to include:
an internal traffic system, electricity and water systems, a drainage system, a wastewater treatment system, fire prevention and fighting systems, and telecommunications systems.

Since not all locations meet the legal infrastructure standards, ensuring that is the case for your factory will make a huge difference.

Pay close attention to wastewater treatment systems. International investors need good wastewater treatment support to ensure the commitment to the cross-country compliance and ESG values of the global group.

An incidence in a subsidiary can diminish the stock price of the whole group on the Nasdaq or Euronext.

When choosing the right location for your manufacturing site in Vietnam, it is important to consider logistics availability in its varied aspects.

Transportation (road, highway, inland waterway, seaports), high-quality transport supplier–forwarder, as well as the cost for the distance between the different locations.

Abunding with logistical options can positively impact your business’ adaptability to variation.

Keep in mind that the logistics cost in Vietnam is still higher than neighbor countries Thailand and Singapore. For this reason, a fine decision needs to be made to insure an optimal cost

Human resources:

Nowadays, general workers have a fluctuating supply in Vietnam. In some periods, it’s very easy to hire. Sometimes, it’s extremely rare to find general workers. Finding a location that can provide
a stable supply of workforce
is important if your business needs
a high quantity of workers.

As for hiring skilled workers, it is another story. Skilled workers’ availability depends on the current businesses on the site and the existing training and formation in the region. Some training is rare in Vietnam, like die-casting or dyeing. Some training is only concentrated in big cities like IT, and finance.

A good scan of human resources availability needs to be made before choosing your manufacturing site in Vietnam to facilitate recruitment in the future.

Facilities for staff relocation:

When developing abroad, numerous businesses relocate experts and managers from other countries. To ensure international standard lifestyles, the new factory must be well connected to a modern city with international education and healthcare systems.

A prior scan before the final decision can help not only in location selection but also in cost estimation.

3. Build your Business Plan

A check of your manufacturing site in Vietnam will give you many details, including land price, legal consultancy cost for the administrative procedure, current local salary, relocation costs, etc. With this information, the investors can estimate the P&L project.

In many cases, land price is much higher in an adequate location than it is in a less appropriate one, in addition to the logistics costs.
In other cases, every other condition is good, but the lack of international facilities limits the foreign expert relocation.

An optimal decision always needs local insights, that’s the reason why third-party consultation does a great contribution to the expansion’s success.
Reach out to one our experts for more information.

Want to learn more?

If you are interested setting up in Vietnam, read our article How to ensure effective interultural communication for doing business in Vietnam