Environmental Technologies Industries
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Market Plans

Portugal Environmental Export Market Plan
Chapter 6-Positioning an American Company in the Market

Portugal in the European Marketplace

According to an analysis of the top 200 environmental firms in the United States, conducted by Engineering News-Record and published in July 1997, the European market continues to be the top revenue draw for the American environmental companies, accounting for 36 percent of worldwide exports. Despite strong competition from European companies, American know-how is competing well in the market. As a member of the EU, Portugal is a battleground for advanced technology from Italy, Germany, France, the United Kingdom, the Netherlands, and Spain.
The Portuguese environmental market is a mature market, in which many competent companies operate. As of 1997 there were at least 51 universities, technical institutes, and other institutions of higher learning with environmental technology programs in Portugal. Limited funding, not lack of know-how, has been the main reason for the deterioration of the environment in Portugal. This situation is in the process of being reversed with financial support from the EU.
Although the environmental sector has very strong potential in Europe, it may be difficult to target this market on a pan-European basis. Environmental operations and sanitation have been a local business, a community business. Thus, it is important for American companies to have community ties in Portugal, or elsewhere in the EU, to counteract the parochialism that favors European suppliers.

The European Union Factor

The environment is a growing political and economic concern in the EU. Environmental issues attract wide media attention, and public opinion in the EU strongly favors pro-environmental policies. This concern is reflected in the number of new regulations and directives enacted by the European Commission. American companies interested in selling environmental technology, goods, and services in Portugal or any other EU member country need to educate themselves on EU standards and normal European business practices to be successful. This familiarization with the EU must encompass more than the directives that apply to the environmental market, since this important and growing sector is intertwined with so many other areas, from power generation to food processing and packaging.
For example, after December 31, 1999, all products sold in the European Community will be required to have only the metric system of measurement on their labels, manuals, product descriptions, etc. Dual labeling using other systems will not be allowed. The only measurement units allowed will be the International System of Units (SI). This means that special labels, manuals, etc., will have to be prepared, printed, and distributed for American products in the European Community.
The EU also maintains a home page on the Internet with procurement notices. The Internet address site for Tenders Electronic Daily (TED) is http://www2echo.lu/ted/ tedhome.html. American companies should not watch the Portuguese market separately from the overall EU market, but should instead watch for EU procurement notices and perhaps try to bid jointly with Portuguese or other European partners for environmental projects.
Potential bidders on EU-funded projects in Portugal should obtain copies of the following publications:

Green Paper on Public Procurement in the EU,
WTO—Government Procurement,
The Bidder’s Guide,
Glossary of Terms used in Public Procurement and Purchasing,
EC—European Public Procurement Directives, and
Guidelines for the creation of a European R & D Consortium.

All of these publications are available from the European Union. The U.S. Mission to the EU in Brussels can assist in obtaining them.
A subject that has been discussed often in the Portuguese press in relation to EU financial assistance for infrastructure projects is that Portugal has failed to make full use of these funds. Perhaps a problem faced by smaller communities in Portugal is that they simply do not have the expertise to develop the necessary proposals to present to the national government and to the EU for funding of infrastructure projects.
A possible strategy for American companies is to find a Portuguese joint-venture partner company and work with it to help local and regional governments obtain financing and prepare bid papers. Although it may be difficult to obtain sole source contracts or funding for unsolicited proposals, it may be worthwhile to explore this possibility in association with a Portuguese partner. Since the source of the funding is European, it is highly advisable to pursue this strategy together with a Portuguese company or other EU partner.
As was already pointed out, construction companies are prime candidates for joint ventures with American companies, as they try to diversify into environmental services. Some resentment is detectable in the Portuguese market because companies from other European countries have successfully bid for sanitation contracts in Portugal. American companies could break into the market by providing the know-how and the technology to Portuguese companies that want to enter this business but need a partner with experience.

Knowledge of Business Practices

The government is the prime contractor for environmental services and equipment. It is highly advisable to obtain local legal and technical assistance for bidding on government contracts at all levels in Portugal. In some cases the national government has elected to hold limited competition for contracting environmental services. For example, for the contracting of waste collection and sanitation for the 1998 Lisbon World's Fair, only about half a dozen local and international companies were asked to present bids. To participate in these contracting opportunities, it is advisable to have local representation and to present bona fides to the Portuguese contracting authorities with a letter expressing interest in participating in future environmental projects. Among the 305 municipal governments in Portugal, some have acquired a reputation for not paying their bills on time. The national government may take around nine months to pay bills. Bidders should take into account such potential additional costs associated with conducting business and adjust prices accordingly.
Considerable delays and red tape are common in Portugal in accomplishing such basic tasks as registering companies, filing taxes, and receiving value-added tax refunds. As the Portuguese economy moves toward convergence with the levels of economic stability prevailing in the core EU countries, these problems will be reduced.
The large Spanish and French companies that have taken over environmental services throughout Spain and are now winning concessions for environmental services in Portugal are aggressive and do well as a result of their understanding of the local business culture. The best approach is to have a local or EU partner to help navigate these waters. Relationships are everything in this market. Just as one should obtain legal assistance early on for bidding on environmental projects in Portugal, it is also advisable to carry out due diligence in checking the background of potential joint venture partners. A number of American companies and international banks can provide assistance on a fee basis. The American Embassy can also provide lists of lawyers with a good track record in assisting American clients.

Physical Presence in Portugal

A key component of a successful marketing strategy for an American company in the environmental field interested in entering and prospering in the Portuguese market is physical presence in the country. This can be achieved either through the opening of a branch office, through a joint venture agreement with a Portuguese firm, or through an agency or representative agreement. It is important to react quickly to private and public sector requests for proposals (RFPs). This is particularly true for successful competition in the major projects area, where suppliers need to nurture clients, present credentials, and influence the drafting of the RFPs well ahead of their publication. Partnering with a reliable local firm is probably the best way to operate effectively in Portugal.
Acquisition of a local company has been a traditional strategy of American companies to enter a foreign market. American investors should maintain due diligence and be aware of what they are buying, which could include substantial liabilities associated with the labor force.

Portuguese Environmental and Professional Associations and Chambers of Commerce

Portugal has active professional organizations in the environmental field. They hold seminars and trade events, and provide an excellent source of information on the Portuguese market for environmental technologies. These organizations can be helpful for networking and finding business opportunities. They include the following:

Associação Portuguesa de Engenheiros do Ambiente (Portuguese Association of Environmental Engineers)
QUERCUS—Associação Nacional de Conservação da Natureza (National Association for the Preservation of Nature Zones)
APEMETA—Associação Portuguesa de Tecnologia Ambientais (Portuguese Association of Environmental Technology Firms)
AIP—Associação Industrial Portuguesa (Portuguese Industrial Association)
The addresses and telephone numbers for these organizations are listed in appendix B.

Some of these organizations also sponsor environmental technology trade exhibits, another important mechanism for penetrating the Portuguese market. Other European environmental trade events should also be considered as tools to enter the European market.
A common marketing strategy for companies to sell their know-how is through the publication of academic articles in European technical publications in the environmental field, such as Ambiente e Economia and Tecnologias do Ambiente. Such articles can be used to introduce new concepts and technologies to the market. The following are some possible candidates for this strategy:
Ambiente Magazine (Environment Magazine)
Revista Ambiente (Journal of the Environment)
Revista Engenho—Ordem dos Engenheiros (Journal of Engineering—Order of Engineers)
Revista Fórum Ambiente—Caderno Verde (Journal of Environmental Forum—Green Notebook)
Revista Tecnoambiente (Journal of the Tech-environment)

Companies in Portugal are legally required to join a chamber of commerce. Portuguese chambers of commerce offer many services to their members, including helping to identify business opportunities funded by the EU and other organizations. They can also assist in finding joint venture partners.

Best Prospects: The Portugese Environmental Industry’s View

Several Portuguese environmental specialists were asked to offer their views about the country's market and best prospects for American companies. No reliable estimates were obtained about the size of the market for areas of deficiency in local and European production and/or know-how. The purpose of this exercise was to determine industry's perception of areas in need of imported technology.

1. Several large Portuguese companies are interested in entering the environmental services area, as the government moves to privatize these services following EU directives. So far, European companies, particularly from Spain and France, have been successful in winning contracts for privatized services. The Portuguese would like these business opportunities for themselves. American companies interested in selling technical expertise to Portuguese companies in the environmental services area may be able to win important contracts that could also lead to some partnership or joint venture arrangement as a minority partner. Construction companies and engineering design and consulting firms offer some of the best opportunities in this area.

2. Technology and know-how for soil recovery and treatment of contaminated sites are not available locally or from European companies. This area offers good opportunities for American environmental companies, since they are recognized leaders in this area.

3. EU and national funding generally is allocated for building infrastructure-for example, water treatment plants, potable water distribution systems, and wastewater collection and treatment plants-and improving collection and treatment of urban solid waste. For the most part, these projects involve basic traditional building technology that is locally available. Portuguese and other European companies know how to pour concrete and build pipelines. Nevertheless, there are opportunities for American engineering design companies and equipment manufacturers with experience in specialty areas in environmental technology. For example, technology for secondary and tertiary treatment of wastewater, as well as for potable water treatment, is in demand. This technology includes microfiltration systems, membranes, separators, and water filtration systems.

4. Cost recovery for all environmental sectors is in high demand. The most important challenge faced by Portugal as new environmentally friendly practices are introduced is to find ways to recover costs and create systems that the nation can afford in the long run. Technologies which meet these needs include analytical accounting systems, information systems, municipal or concessionaire fee-collection systems, etc. Cost recovery is of prime importance in Portugal.

American companies active in Portugal and Portuguese companies that already do business in the United States or seek to increase business relations with American companies can join the American Chamber of Commerce in Portugal. This organization provides networking opportunities as well as a potential client base. Its address is:

American Chamber of Commerce in Portugal
Rua D. Esteffnia, 155-5.E
1000 Lisbon, Portugal
Tel: (351-1) 357 25 61
Fax: (351-1) 357 25 80

U.S. Government Assistance

The Commercial Service office at the U.S. Mission to the European Union (USEU) in Brussels, Belgium, monitors procurement notices of the European Union published in the Supplement to the Official Journal of the European Communities and on the EU website Tenders Electronic Daily (TED). The Commercial Service reviews the tenders that are published each week, separates the open procurement from those that are restricted, and makes the information available to American companies. These trade opportunities are published in the National Trade Data Bank (NTDB). Information on the NTDB can also be obtained through the U.S. Department of Commerce Internet home page, or by contacting one of the Export Assistance Centers of the Commercial Service throughout the United States.
Important and time-sensitive procurement information can also be obtained by calling the USEU at (322) 508-2675. The international mail address of the Commercial Service office at the U.S. Mission to European Union is:

International Mail Address:

Commercial Service
U.S. Mission to the European Union
BD. DU. Regent 40
B-1000 Brussels, Belgium

The mailing address is:

The U.S. Commercial Service
U.S. Mission to the European Union
PSC 82 Box 002
APO AE 09724

Finally, the Commercial Section of the American Embassy in Lisbon, part of the worldwide operations of the U. S. and Foreign Commercial Service (Commercial Service) of the U.S. Department of Commerce, can help American companies seeking agents or distributors and up-to-date market information. The Commercial Service also has an office in Oporto. The industry specialist for environmental technology, who is a Portuguese national employee of the Foreign Service, works out of the Oporto office. Both the Lisbon and Oporto offices can provide assistance to American companies interested in breaking into the Portuguese market or increasing market penetration. These offices carry out research on the Portuguese market on an ongoing basis and prepare industrial sector analyses and alert reports that are entered into the U.S. National Trade Data Bank (NTDB). The Commercial Service maintains a database of information on business opportunities in Portugal, as well as in the rest of Europe, under the program Showcase Europe. This database can be consulted on the Internet at www.sce.doc.gov.
Countless hours and expense in research and travel can be saved by using the NTDB for source of international trade information. In addition to the Commercial Service, the Department of State's Political and Economic Sections at the American Embassy in Lisbon also contribute information to the NTDB covering the environmental sector in Portugal. For additional information about the NTDB, contact the U.S. Department of Commerce, Office of Business Analysis, HCHB Room 4885, Washington, D.C. 20230.

Best Prospects in the Environmental Services Area

Among the strategies suggested by the European Union (EU) and adopted by the Government of Portugal is the privatization of environmental services. The privatization has created a market for environmental services companies in Portugal. These are some of the areas that offer the best opportunities for U.S. environmental services companies:
Environmental impact studies. As of 1990, Portuguese legislation requires that environmental impact studies be carried out before any major project, including construction of new highways, airports, ports, agro-industrial projects, etc. Since 1990, approximately 411 environmental impact studies have been conducted. Although there are competent Portuguese companies with experience with these studies, there is a potential market for American consulting services in very technical areas.
Hazardous waste. American environmental services companies are regarded by the Portuguese as leaders in technology to handle hazardous waste. It is estimated that as of 1994, Portugal produced at least 1.37 million tons of hazardous waste annually, of which at least 55 percent was disposed of without controls of any kind. An estimated 15,000 tons of hazardous hospital waste were produced in 1994, with most of the treatment provided at individual hospitals with a wide degree of effectiveness. A new integrated system for treatment of industrial waste (STRI) has been designed, with the goal of improving the system by the year 2000. This offers excellent potential for American companies to provide consulting services to Portuguese organizations interested in expanding their business operations in this area.
Privatization of water and wastewater treatment. American environmental services companies could benefit from market conditions by offering consulting services and technical know-how to Portuguese companies that want to branch out into becoming service providers. Competition from European companies, however, will be
very strong. Since 1995, the Portuguese Government has been moving toward privatization of water treatment services. Portuguese construction companies have attempted to move into this area, in part, to obtain steady business and shelter their companies from the ups and downs associated with public works projects. In some cases, they have associated themselves with Spanish, French, and British firms to enter this business. In other cases, they have tried to do it on their own. Some municipal authorities have also attempted to retain their traditional service operations by creating new government-owned corporations to bid for projects, but the national government has moved to disqualify them and keep them from circumventing the intent of the national government in truly privatizing the sector. There is a tug-of-war over privatization of services with private companies naturally supporting the exclusion of government-owned companies.
Privatization of street cleaning, waste collection, separation, recycling, incineration, and operation of sanitary landfills for urban solid waste. American companies have potential for selling technical consulting services, possibly taking equity positions in startup Portuguese environmental services firms. Subsidiaries of construction companies are good candidates for joint ventures. As in the case of municipal water and wastewater treatment, the national government is pushing for the privatization of urban solid waste services traditionally provided by public institutions. Essentially the same group of Portuguese construction companies that has tried to capture the waterworks has moved to enter the solid waste privatization's, but they have faced very strong competition from experienced foreign European firms with know-how and capital. Specific technical support services in environmental technologies are needed.

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