SKAKO A/S – successful start up in Russia via OMIR-business concept
The leading Danish producer of concrete equipment SKAKO A/S has been using the services of DIBD Moscow Office since 2006. The company started with a market study at the first stage and later on decided to enter the Russian market via the “Own Man In Russia” business concept which allows Danish companies to have a Russian representative without the troubles and costs connected with traditional set up.
SKAKO A/S - concrete equipment for concrete results
SKAKO A/S produces world-famous concrete equipment and solutions such as concrete batching plants, silo systems, control systems, proportioning and other equipment. The company employs more than 100 persons and enjoyed a turnover of 195 mio DKK in 2007.
SKAKO began its history back in 1963 and has by now carried out numerous installations all over the world, including such a bench-mark project as supply of 10 offshore concrete plants for construction of the Oresund Link. Over 90% of the produced equipment is exported to more than 40 countries. SKAKO has subsidiaries in Germany and the USA as well as sales representatives in the 20 most important export markets.
Russia – a pie which is hard to bite
Booming construction in Russia in the early 2000s implied strong potential for SKAKO. However, back in 2006 Russia looked like terra incognita on the map of SKAKO’s export markets. SKAKO's management was aware of the developments in the Russian construction industry, but it was unclear whether there would be customers for the expensive high-quality solutions, what entry-mode should be adopted, and how to start the investigation of Russian market. These questions SKAKO addressed to DIBD Moscow Office in the middle of 2006.
Step-by-step start in Russia – with DIBD Moscow Office
The entry strategy for Russia was developed in cooperation with DIBD Moscow Office. In the summer of 2006 DIBD Moscow Office prepared a market study for SKAKO focusing on potential customers and their interest in SKAKO equipment, information about competitors, and trends in the Russian construction industry. This analysis gave SKAKO extensive knowledge of the market and provided the tools for the next step into Russia.
In September 2006, SKAKO's management visited Moscow to meet Russian companies who had expressed interest in company’s products. As a result, SKAKO gained a clear understanding of the local companies and their needs. There was no doubt that there would be customers for SKAKO, however, without a strong set up in Russia, effective competition in the Russian market was impossible.
OMIR as an entry mode
Based on the preliminary investigation, SKAKO accepted “Own Man In Russia” (OMIR) business concept to start business in Russia. DIBD Moscow Office provided recruitment services, and in 2007 the employee working full-time for SKAKO via DIBD Moscow Office was hired.
The key functions of SKAKO’s representative in Russia are to promote the company’s products, increase awareness of the brand, intensify sales efforts, and to coordinate market activities with the local sales agents. Thanks to its OMIR employee SKAKO gains better control over its Russian market.
Later in 2007, SKAKO entered an agreement with a local engineering company Wilmix who had a good experience with the concrete industry, customer service, and delivery of spare parts. Cooperation with Wilmix helps SKAKO reinforce its local presence and offer the Russian customers better technical support.
Results
Today, the SKAKO equipment is under operation in a number of Russian regions, and the Russian customers are gradually growing more aware of the producer’s name.
In 2008, SKAKO sold another batching plant for roofing tile production to the St. Petersburg-based company Baltic Tiles. The plant is to be commissioned in the summer of 2009.
SKAKO is now well prepared for its development in Russia and CIS. Despite the global economic slowdown, company’s managing director Bjorn Peters is positive about SKAKO’s perspectives. According to him, the Russian market is among the most important ones for SKAKO in the years to come because of its size and potential. The company will obviously strive for a larger market share in Russia and intends to increase its local presence in the future.
SKAKO's representative in Russia, Konstantin Stepanov, believes that the company has very good prospects in Russia. “Our efforts in the upcoming years will be focused on marketing and sales of complex solutions for pre-cast, and we will try to accustom the local producers to our Modular plants for ready-mix. For a long time SKAKO has been manufacturing and selling Rolls Royces for the international concrete industry and I hope the clientele in Russia will be glad to meet us once this slowdown is over”, says SKAKO's representative.