How did the export path for Kennerton headphones begin?
Our first brand Fisher Audio appeared in 2006. According to the research group GFK, we became one of the top three best-selling brands of headphones in Russia. However, the economic situation was unstable, and in 2008 I realized it was the time to peruse my dream: to see my product being sold all over the world.
We spent several years researching what exactly foreign customers liked and disliked. By 2012, I was certain that the only thing that could interest them was something unique, created as a work of art.
Analyzing the quality of popular brands of headphones at the time, I concluded that their popularity is the result of good marketing; the sound quality was not very high. I realized that we could greatly improve the sound that the user was accustomed to.
So we created an additional luxury brand, Kennerton Audio Equipment, intended primarily for foreign markets.
In your opinion, how should goods be promoted abroad?
The first, obvious, condition is that the product should really be high-end. The second is participation in international exhibitions. They will notice you there, they will talk about you, you will generate interest. The next step is finding the right partners. Dishonesty of our first client in Germany cost us 32 thousand euros. This threw us six months back; we could not go on with our developments. And vice versa, France became our main market thanks to the fact that we chose the right distributor.
How do you find clients?
The easiest way is to understand who your main competitors are, contact their distributors and offer them terms that are slightly more interesting. They may be interested in working with you, if only because the headphone market is rather narrow, and if you do not work with them, you will work with one of their competitors.
What are the main difficulties you face while conducting cross-border trade?
Difference of mentality, language barrier. Another difficulty consists in our inability to draft contracts. In the West, they fight for each comma, something that we aren’t used to. What if the goods get damaged through the fault of the carrier, and it is discovered not at the moment of acceptance, but 3 or 4 months later? These are all details of contract-drafting that must be studied.
What countries are you currently represented in?
In France, Germany, Switzerland, Great Britain, Spain, the Netherlands, Belgium, Luxembourg, Poland, Ukraine, Israel, Japan, Singapore, Malaysia, Indonesia, Taiwan, Korea, Hong Kong, USA, Canada, Australia and New Zealand.
You have listed a very large number of states. What are the features of doing business in them?
Swedish market, for example, is traditionally complicated. The Swede is a patriotic consumer. If the Swede has a choice between a foreign and a Swedish product, he will always choose the domestic one.
The French are very open and verbose in terms of discussions. If he likes something, he writes detailed reviews on the Internet, and by doing so carries out a huge amount of marketing work for free. Nevertheless, the French are not wasteful when it comes to making purchases; they are ready to make their choice in your favor only on condition that the product makes up for every cent invested in it.
In the South-East Asian countries the words "Made in Russia" are a guarantee of quality. This is a chance that you can and should use.
Americans are curious. Even if they do not know your brand, they will study all the forums to gather information.
How are the promotion strategies different?
In the United States, there is a resource called Massdrop, where customers can make collective purchases. For example, the regular price for a model of headphones is $ 1099, but there during one week it will be sold at a price of 699 dollars, but on condition that a certain number of orders will be collected. As a result, we reach sales volumes that are comparable with the volumes of a good distributor.
In addition, a very good way to promote a product in the States and countries of Southeast Asia is to get feedback from opinion leaders respected by professionals. They publish their reviews on various forums and thematic portals. It works like this: I release a model and send it to these people. They test it, write a review, create branches dedicated to this model on their forums and blogs, and then send headphones to the next blogger. At the same time, they do not receive money from us. If the product is good, then the reviewer will definitely want to write about it.
In Singapore, for a product to be sold, it must have a story. In our Singaporean staff, we had a man who wrote marketing texts. I used to blush every time I read them. It was all true, but the truth was too embellished. It turned out that without it there can be no successful sales in Singapore.
What are your export plans for the near future?
Enter the most capacious market - Chinese. This is my main dream.
Furthermore, we do not have a distributor in the USA. We tried to work there, but did not understand the specifics: the US is so large that you can not have an exclusive distributor in this country. The English-speaking population uses one kind of resources, Hispanic and French-speaking uses another, so there should be a lot of distributors, ideally - one in every large state. This is what we are trying to achieve now.
I would like to improve our positions in the UK; I am also looking for partners in Argentina.
What does export mean to you?
Today, export is 85-90% of my turnover. If there were no exports, the Kennerton brand would not exist either.
Tell us about your company - what do you manufacture?
We make studio microphones. This equipment is used for professional recording – it’s a very specific niche product.
Originally, we didn’t have plans to produce, we only wanted to sell Russian microphones. However, we didn’t find anything that would conform to Western standards on product positioning and marketing. We realized that we would have to create our own product, and this product would have to be of top quality. It’s a very small market, and the smallest mistake is immediately spread all over internet forums.
In other words, export was your original strategy.
Yes, from the very beginning we were export-oriented. We realized that Russian market of studio microphones is ten times smaller than the global one.
What were the first steps you took in direction of export activity? What difficulties did you face?
Finding investors took us a long time, we spent a whole year on that. Eventually, we found the money that helped us launch production. Everything that followed was easy. In fact, export is much easier than it seems. The most important thing is finding a partner who would be interested.
In what regions of the world is your company present today?
Our main markets are USA, Germany, Japan; in China our sales have been growing. Then we have Italy, Poland, we’ve also been registering good sales in Chile and United Kingdom.
Is exporting to all of these countries equally easy?
It is, the only difficulty we’ve had so far is with China – they require an expert conclusion that the product is not a dual-use item, that it is not used to create weapons of mass destruction. However, even that presents a challenge rather for our Chinse partners. As far as we are concerned, paperwork is not the difficult part, selling is - finding a company that would believe in your product and recommend it to their clients.
How did you manage to accomplish that?
It was very important to understand where on the market there was a gap – you aren’t likely to interest anyone in only a mediocre product. There is a market demand for vintage microphones produced in the 50’s, 60's and 70s – clients are willing to pay good money for those because they were assembled by hand and produced a very distinctive sound. Today the situation is changing - everyone is moving towards reducing the cost and starting to use mass production technologies. So we decided to create our microphones using that old technique and that it would be our distinctive feature.
Is it true that the turning point for your company was when Radiohead’s producer purchased one of your microphones?
Yes, I personally delivered that order. However, it doesn’t work like that everywhere. In the US, there is a celebrity culture, people say, «Look, this guy got it; he is cool, so I need it, too». Nevertheless, in the United Kingdom, for example, the only thing that works is personal recommendations. Japan and China are completely different; they use very different promotion strategies.
What role in the success of your microphones did their design play?
Many of the microphones on the market today are very similar to each other, and we decided that we needed to stand out. My partner David worked on the design for a very long time, starting with a drawing on a napkin and ending with blueprints and a 3D model. Design is what makes us stand out, it’s our business card.
Have there been any attempts to steal your design?
Yes, and it’s actually a good indication. Nobody would forge something bad, and in a way, we are even proud that someone has finally forged our product!
How do you plan to increase your export volumes?
When it comes to handmade goods, much depends on the human factor. One person can assemble a certain amount of microphones. The biggest difficulty here is scalability. For two years in a row, our sales doubled, and we are facing the problem of physically not being able to provide the amount of microphones that the market demands. Right now, we are still on the edge, but very soon, we won’t be able to keep up with the orders. We would prefer to avoid that. We realize that if we don’t do it – someone else will. We have to increase production volumes, but in doing so, there is a risk of losing quality. Right now, we are implementing quality management system in order to build the scalable processes that would allow us to maintain the quality while increasing the quantity.
Are there any markets where you are still not present, but would like to be?
India is a big market, Bollywood and all of this industry. There is a serious potential in Latin American countries – Argentina, Brazil.
Have you ever received any information and financial support from government organizations?
Yes, we have. In 2017, I found out that in Tula, my hometown, there is a Support Center for exporters in the framework of the Committee on Enterprise Support. They conduct educational programs developed by the Russian Export Center and provide other support to exporters - translate their websites into English, cofinance product certification, allocate money for market research. Largely due to their help, we were able to launch certification process of the quality management system: they reimbursed 80-90% of those expenses.
What advice would you give to a producer who has a good product but is afraid to start exporting?
First, I would suggest going to a foreign industrial exhibition. Talk to dealers, competitors, find out how your product correlates with what is trending, and find a partner. You need to find an insider, a person who is working on this market.
Second step would be participating in an exhibition with your own stand. However, the essential thing is to know what to exhibit: if you make a mistake here, you will never get a second chance.
Overall, export is great. You realize that something you produced is actually popular abroad. You created a value that people in the West paid money for, and this money came back to your region, you paid salaries. There is a great export potential in Russia, and everything depends on how people use it. Do your thing, look for partners, promote yourself, don’t be shy! Open your mind, be ambitious – and everything will work out!
Please, tell us about your company. How was the idea, originated from Boston, developed in Moscow and returned back to global markets?
Boston is one of the largest start-up capitals in the USA, where people take a lot of care about their health. There we met university professors, mentors, business-community representatives that are completely involved into healthy lifestyle. At those times we did not think, that this trend will reach Moscow soon. However, in 2012 a new trend was born in Moscow – to do sports. Running communities were the first to appear. New lifestyle raised demand for new products, and in 2012 we launched our very first line of products – Bite with fruits and nuts. We organized production in rented premises, and later on opened our own factory in Moscow, completed international certification and got the possibility to expand to international markets.
On which markets are your products represented?
We export our products to 14 countries: Western and Eastern Europe, UAE, Saudi Arabia, Kuwait, Bahrain, China and Canada. For me, it was extremely important that as much domestic high quality products as possible will be represented on the Russian market. Products, that are respectable on the international arena.
Originally, we built an international company and the product that is easy to be exported. The name is in English, the packing is according to European standards. By the way, our package is easily adjusted to specifications of the country we are launching our products in. And the requirements differ from country to country.
Your company is represented on Tmall.com. What is the specifity of operation in China?
We co-operate with Tmall.com and have several potential wholesalers, however, for now we sell within border zone. It is much more difficult to make the packing for Chinese market rather than for the European. They have a lot of details: strict import policy, domestic producers protection. For example, we had to discard completely several product description phrases. Nevertheless, Chinese market is interesting for us, we are planning to continue cooperation with it, move towards offline sales. Currently we negotiate with Chinese supermarkets.
Could you please tell about partnership with the London Marathon, where your product was enclosed to the participants’ package?
One of the strategic directions of our company is the promotion and support of sport activity in Russia. Our special interest is in running, triathlon and tennis. Today we support the best running communities in Russia and perform as the official snack sponsors of the Moscow marathon. We accidentally found out, that the London marathon had announced the contest between American and European snack suppliers to be distributed in participants’ packages. So, we sent our product in London. And Bite became the best snack of all. 40 thousands of the London marathon participants were running with the Bite. Undoubtedly, this is a great honour for us. We also appreciate the recognition of the product quality. Today we receive a lot of requests for products from the UK and are planning to accelerate distribution there.
Do you plan to develop and launch the additional assortment?
To this moment, we launched natural and healthy snacks for children from 2 years old called Bitey. This innovative product is created to help parents habituate their children to healthy lifestyle. Soon we are planning to enlarge the children snacks assortment.
Young and ambitious
LED effect company entered the market of energy-saving lightning systems in 2009. Today we are in top-10 rating of the largest Russian LED manufacturers. The average age of our employees is 30 years.
From Russia with light
During this period we reached the planned level of sales in Russia, patented our own technology FINEFREE, that was highly evaluated by our foreign partners and decided, that it is the right time to diversify sales channels and develop export direction.
For this, we had to:
· Receive CE marking
· Improve the production technology under foreign partners requirements
· Develop international skills of Russian staff
· Overcome high competition with Chinese products
· Change the habits and prejudiced attitudes of foreign consumers to everything that comes from Russia
What did the export change for our company?
Undoubtedly, there are differences in the Russian and Western approaches to production process. We have successfully passed the European Union safety certification and received the CE marking, the UL-certification for the USA and the receipt of certificates for other markets are on the turn. The acquisition of CE marking forced us to switch to the purchase of other wires, to change the technologies for soldering and manufacturing printed circuit boards. As a result, Russian consumers gained the opportunity to purchase products that are manufactured according to European standards. And we are sincerely happy about this.
Our priorities
In the first place, we entered the markets of Kazakhstan, Belarus, Ukraine. Today we are planning to expand to Europe, Latin America, to the north of Africa.
Feedback
In Russia, it is used to yell at all the domestic in general and the government in particular. But on the contrary, we received the State support as soon as it was requested. In Russia, there exist export support programs until 2020 in the domain of product certification and patenting, representation of producers through trade representations. Also, participation in exhibitions is partially compensated. Moreover, there exists an opportunity to get preferential financing and insurance of export-oriented deals! And Russian exporters should know about all this.
Canoe is one of the largest Russian companies specializing on headwear production. Every year it produces a million units and the annual turnover of the company exceeds 400 mln RUR.
Why Canoe?
‘Because always forward and upstream’, comments company owner Valeriy Tuniyants thinking back to its launch in 1996. Recently the company has celebrated its 20th anniversary.
When did the work with foreign partners begin?
In 2001 we signed a contract with American Walt Disney and Warner Brothers to produce goods for 15 countries.
How did the company enter foreign markets?
Through exhibition activities. In 2003 for the first time we presented our goods in Europe on a German exhibition CPD. There we signed a contract to organize distribution on the EU territory. In 2004 we started cooperation with Caps World company in products delivery for retail in large malls of China and Hong-Kong. A contract with Intersport gave us an opportunity to settle in the sporting goods market. In 2005 we started distribution to USA, Maldives, opened Canoe retail shops in Baltics and Armenia.
What did the crisis of 2008 bring?
The crisis of 2008 ruined many of our plans, but at the same time brought unexpected results. The company rapidly increased its turnover, as Russian and world’s largest companies started to cooperate. From 2009 to 2017 Canoe signed contracts with Metro Group, Debenhams, Stockmann, Ott, Quelle, JD.com, Snezhnaya Koroleva, Wildberies, Lamoda.
What foreign markets are the most interesting?
Today the most prospective markets for us are the USA, China and Hong-Kong, whereas everything started with Europe. We sold our products wholesale in Europe, opened our first office and warehouse in Augsburg, Germany. We launched our own retail shops in the Baltics and the CIS. Today we have our own show-room and warehouse in Austria. However, I must say, that by attractiveness Europe loses to America and China. Business decision-making takes too long, employees spend more time studying labour legislation than actually working.
What is the major administrative barrier for international economic activity for small and medium businesses today?
I will not reinvent the wheel, if I say that two major barriers are the tax system and the document preparation procedure. We will not see an increase in SME export volumes as long as the problem with VAT reimbursement is not solved. High broker price for documents issue also slows down development. It raises the price of small goods and obstructs frequent deliveries to warehouses or to European online shops.