Environmental Technologies Industries
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Market Plans

Venezuela Environmental Export Market Plan
Chapter 11
Positioning Yourself in the Market

Tapping into the Venezuelan environmental market and maximizing the chance for success is largely based on the U.S. company's ability to comprehend local conditions and needs and to craft a strategy that effectively takes these conditions into account. The Venezuelan market for environmental equipment and services is a growing one, but it is not as structured and carefully defined as the U.S. market. Therefore, U.S. companies must be flexible in their business approaches. The principles given in the following two subsections should significantly enhance U.S. companies’ chances for success in the Venezuelan environmental market.

Strategic Advice

Understand the Market: A successful market presence is constructed on the foundation of a thorough understanding of the Venezuelan market and its major customers. A baseline effort should be made to build an understanding of the marketplace and its dynamics, the regulatory framework, business culture, the major government and business players, the competition, and the market niches that offer the best opportunities for profit. Such an understanding will allow the U.S. company to identify the critical success factors pertinent to the market, which then provides the appropriate grounding for comprehensive strategy formulation, and hence, effective market positioning.

Develop a Local Presence: Environmental markets often require the development of a local presence. Local presence is particularly important to keep pace with and understand the effects of regulatory changes on clients and products. Frequent regulatory changes mean frequent changes in client needs. Successful consulting assignments may also require knowledge of local, state, and federal regulations that often conflict with each other.

A local presence can be developed by assigning a local representative or distributor, especially if the U.S. firm is primarily an equipment supplier. U.S. firms seeking to provide a broad range of equipment and services often look to partner with an existing, local environmental firm that can provide staff and technical support. In this situation, the U.S. company contributes know-how and technology and the local firm contributes local environmental technical knowledge, a knowledge of the regulations, and relationships with local clients.

Offer an Integrated Package: Developing an integrated marketing package that encompasses equipment supply, consulting services, and financing support can boost the chances of success. Venezuelan entities for the most part lack access to affordable financing (PDVSA excepted). The U.S. company that can offer financing to qualified buyers will have a competitive advantage.

Offering training and support services to Venezuelan clients can also provide a competitive edge. Given the short history of the environmental market in Venezuela, there is a limited talent pool of highly qualified people in the field. Building human capital can be a good business tool to enhance long-term equipment and services sales.

Promote Visits and Exchanges: Technical visits and exchanges are a proven means of acquainting buyers on the value of U.S. goods and services as they enable perspective buyers to see their effectiveness “in the field.” Visits and exchanges also allow U.S. companies to develop personal relationships, which is an important part of successfully doing business in Venezuela. Venezuela's proximity to the United States makes visits and exchanges an affordable and effective option to familiarize buyers with the benefits of U.S. technologies. The U.S. Department of Commerce, U.S. Trade and Development Agency, U.S. Agency for International Development, and other U.S. Government agencies support technical visits and exchanges.

Develop a Team of Local Professionals: Assembling a team or network of trusted professionals, especially legal and accounting professionals, is critical for developing an effective market presence in Venezuela. These professionals become an additional set of eyes and ears in the country and are valuable in protecting the U.S. company's long-term interests. There are many issues to be managed such as trademark and patent protection, distribution agreements, service agreements, and even taxes for which local advice and input is important to avoid problems later. It is often a plus to work with local professionals accustomed to dealing with U.S. companies.

Appreciate Cultural Differences: While the United States and Venezuela have long-standing ties, understanding the differences in business culture can affect a U.S. company's success in the market. U.S. executives assigned to Venezuela should understand these distinctions and factor them into all business planning and interactions.

For example, personal relationships are important to success in Venezuela. In general, Venezuelans prefer to do business with individuals whom they feel they can trust absolutely. To most Venezuelans, personal trust is more important than the written contracts that the U.S. business culture emphasizes. In a country where the rules of doing business--laws, regulations, government policy, and even constitutions--have changed over the years, the personal relationship between two business executives is seen to be a more predictable, lasting, and dependable force.

Spend Time in Venezuela: Executives who will play an oversight role in establishing their companies’ operations in Venezuela should spend as much time there as possible. Without visiting the country, it is difficult for most executives to understand the dynamics of the market or to appreciate the effect that cultural issues have on business practices and market opportunities. Spending time in Venezuela is also important to allow the U.S. executives to build important personal relationships that cannot be developed by phone, fax, or e-mail.

Set a Focus: Due to the significant resources needed to enter any overseas markets, U.S. firms with limited resources are best served by initially focusing on market areas in which they are most competitive. Focusing on and achieving success in one or two market subsectors can earn a U.S. company fundamental experience and contacts as it moves through the layers of the business and public policy communities, negotiating the deal, and getting to know the key actors and their importance. In contrast, casting too broad a net may result in only a superficial involvement across market segments and fail to generate the early successes that can be critical to building energy and enthusiasm for the U.S. company's marketing effort.

Guard the Company's Reputation Carefully: Venezuela's business community and government tend to be linked through friendships and family. As a result, reports of success, failure, and reputation spread quickly and often irreversibly. Thus, new market entrants must be cognizant of the intense scrutiny that they will receive during the market entry process. Inappropriate cultural behavior, alliances with less than reputable local firms or individuals, or any hint of less than above-board dealings with government officials must be avoided. On the other hand, a firm that manages the entry process well will establish a strong reputation and will increase the number of opportunities available to it.

Establish Local Market Credibility: Regardless of the reputation and size of the U.S. firm in its home market, a U.S. company gains most credibility by demonstrating success in Venezuela. Venezuelans, like most of their Latin American neighbors, consider their country a unique market. Foreign firms that have no local track record are viewed cautiously. For the most part, U.S. firms that are focused and work hard to generate sales early will enhance their market credibility immensely. Venezuelans want evidence that the new-to-market company is committed and able to successfully manage projects or sales.

Information Sources

Market knowledge is a key component of success. Fortunately, there are a number of valuable sources of market information available on a no-cost or low-cost basis. Among the best sources of information on environmental business opportunities in Venezuela are the following:

U.S. Government Sources: The U.S. Department of Commerce publishes a substantial amount of information, from reports such as this one to more specialized assessments of individual subsectors. These market assessments, as well as lists of government contacts, environmental companies, and environmental trade shows, can be found on-line via the National Trade Data Bank, through the Environmental Technologies Export office, or through the Department of Commerce's Export Assistance Centers located throughout the United States.

The Department of Commerce's staff of commercial officers at the U.S. Embassy in Caracas also provides extensive fee-based services for companies interested in obtaining more tailored market information. These services include reports on specific sectors and the Gold Key Service. The Gold Key Service is custom-tailored for U.S. firms planning to visit a country. It provides assistance in developing a sound market strategy, orientation briefings, introductions to potential partners, interpreters for meetings, and effective follow-up planning.

Venezuelan Governmental Institutions: The Venezuelan Ministry of the Environment and Renewable Natural Resources (MARNR) provides environmental market information. Eager to attract international expertise and capital, it is a very useful source of general market information and insights, as well as specific project opportunities. Within MARNR, HIDROVEN is an excellent source of information on water-related opportunities. In addition, the Venezuelan Investment Promotion agency, CONAPRI, is available to provide general information on market conditions in Venezuela, as well as information on upcoming projects.

Potential Business Partners: U.S. companies should use the process of interviewing and selecting local business partners as a way to gain important market information and insights. These business partners are often very knowledgeable about local market conditions and are willing to share their insights into the market.

Associations and Business Chambers: Venezuelan business chambers can be a good source of market information and contacts, particularly on the needs and activities of their members. Many chambers now have committees or staff dedicated to following environmental matters.

One such important chamber is the National Chemical Chamber (Asociación Venezolana de la Industria Química—ASOQUIM). This chamber has an environmental department that provides support to its members on environmental technology selection, regulatory compliance, and relations with the MARNR. The chamber is now doing an inventory of all the pollution generated by the chemical industry. It is also evaluating how its members deal with the different environmental problems such as hazardous waste storage, wastewater treatment, etc. For more information, contact ASOQUIM at telephone (582) 762-5104 or fax (582) 762-0597.

Another important resource for U.S. companies is the Venezuelan-American Chamber of Commerce and Industries located in Caracas. This chamber is similar to other local American Chamber of Commerce offices in Latin America in that it provides information resources and networking opportunities for U.S. companies in the country. It will often provide introductory information to new-to-market companies although the focus is on member services. For more information, contact the chamber at telephone (582) 263-0833, or fax (582) 263-1829, or e-mail Venam@net.

The Venezuelan Chamber of Consultants (Camara Venezolana de Consultores—CAVECON) represents the country's consulting industry, including environmental consulting firms. The chamber is a source of contacts for potential partners or representatives specialized in environmental matters. For more information, call CAVECON at telephone (582)761-8440 or fax (582)762-2658.

The Venezuelan Association of Environmental and Sanitary Engineering that is associated with the School of Engineering (Colegio de Ingenieros) is also a good source of market information and contacts. It hosts the Congress on Environmental Issues annually. For more information on its activities, call (582) 577-3372 or fax (582) 577-4512.

Additionally, the National Chamber of Construction (Camara Venezolana de la Construcción) is a good source of potential partners or construction contractors. The group publishes a member's directory containing over 300 names. To get a copy of this directory, contact the organization directly at telephone (582) 761-4011 or fax (582) 762-7258.

Foundations and Institutes: There are a small number of foundations in Venezuela dedicated to supporting environmental awareness and education. While these foundations are not focused on environmental business issues, they can be resources to understand Venezuelan environmental needs, as well as to follow environmental regulatory trends.

One of the more important foundations is the Environmental Education Foundation (Fundación de Educación Ambiental—Fundambiente). This organization is associated with the MARNR and is responsible for the development of a “environmental culture” in Venezuela. The Polar Beer Company in Venezuela has established a foundation called the Fundación Polar dedicated to raising money for environmental protection, as well as promoting environmental planning within its parent company.

Venezuela has also established several important institutions designed to coordinate activities around critical environmental rescue efforts such as those for Lake Maracaibo and the River Tuy. These institutes have broad mandates to promote the restoration of these areas and are willing to assist U.S. companies with information and guidance on involvement in these efforts. The most important are the ICLAM (Lake Maracaibo) and the ACRT (River Tuy).

Private Consultants and Researchers: Private providers of market information and industry contacts are an increasingly important source of information as they fill a void in the market. In choosing private consultants or researchers, professional credentials and experience need to be carefully reviewed.

Specialty Business Publications/Conferences. There are an increasing number of specialty publications and conferences focused on environmental issues in Venezuela. These provide not only an overview of what is happening in the sector but can also be a source of good local contacts. Reading the local press also provides a U.S. company with a sense of the topics of most current interest and priority from a Venezuelan perspective.

Publications that provide insights into the market include:

Ambiente: This magazine is published every three months by Fundambiente and includes the latest news about environmental issues in Venezuela. It is more an environmental periodical than a business magazine as it focuses on the resources of the country in terms of its flora and fauna. It does provide good descriptions of the environmental problems and MARNR functions and activities. For information on subscriptions, contact Fundambiente in Caracas at Edificio Sur, CSB, Plaza Caracas, local 9, Mezzanina, telephone (582) 408-1016 or fax (582) 408-1016.

La Nueva Química Hoy: This publication is produced monthly by the National Chemical Chamber. Every issue contains a chapter on environmental issues of importance to the chemical industry. Questions on subscribing or getting back issues should be directed to the Chemical Chamber (ASOQUIM) at Av. Francisco Solano López, Edf. Centro Solano, Piso 1, Oficina 1-A, Caracas, telephone (582) 762-44 69 or fax (582) 762-0597.

Soluciones Ambientales: This publication is produced by Ediciones Ambientales GLOBAL. It is the only publication in Venezuela that focuses exclusively on environmental business issues. For information on subscriptions, contact Soluciones Ambientales, Apartado 17.183, Caracas 1015-A, telephone (5832) 722 884, fax (5832) 732 887, or e-mail globals@ven.net.

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