"Never underestimate the Argentinians negotiating skills"

The mood is an indicator of business to come. And the mood is good. BERU is plugging its image and brand - and the "Made in Germany" seal of quality. Karl-Heinz Gerescher and Thorsten Irion on the company's commitment to South America.

You are a manufacturer of diesel cold start technology, ignition equipment, sensors and electronics. Your customers are primarily automakers and engine manufacturers. BERU has been present in Mexico since 1994 and also produces locally. Which customers and which countries do you supply from there?
Gerescher: In Mexico, we primarily produce for the local market, we are an OEM for VW and for General Motors. Plus there are exports to the USA and to South America. Here we are still in the expansion phase.

How important is the Argentinean market for your products?
Gerescher: We have been represented in the country by a partnership with an Argentinean importer, the company Lago Hnos, for about 15 years. After Brazil Argentina is the second largest Latin American market for the spare parts business. Moreover, Argentina is especially interesting for us because it is the only market in which diesel-fuelled passenger cars are at all relevant. And we are the world market leader in cold start technology for diesel passenger cars.

What role does your trade fair appearance at Automechanika play in this context?
Gerescher: We are presenting ourselves here as powerful, innovative vehicle component manufacturers. Our aim is to make new contacts and enter into direct contact with our customers who work together with the importer in day-to-day business.

You are mainly interested in wholesalers. Couldn't you contact these customers personally?
Gerescher: To get to know all customers personally, you would have to do a lot of travelling in this enormous country! I estimate that there are around 1000 wholesalers in Argentina who at least have a potential interest in our products. That is the advantage of a tradeshow: Here you will find all relevant customers in one place at one time. And companies from neighbouring countries also visit Automechanika.

Why did you take part in Automechanika even at the height of the Argentinian crisis in 2002?
Gerescher: We did actually consider cancelling our trade fair appearance at the time and withdrawing temporarily from the market. But we understood that we would not quickly regain our good position on the market if we withdrew. So we decided to continue to work in the country and hoped that Argentina would overcome the crisis in a reasonable time frame. And that is exactly what happened: We are now experiencing a clear and lasting upturn again. Our commitment during tough times has earned us a good reputation, which is benefiting us now. However, we still have some way to go before we regain the good turnover we had before the crisis.

How did Automechanika 2004 go?
Irion: The event is the clear lead fair for our clientele in the region. We saw all the customers we wanted to see and we made a few new contacts. The mood was good compared with 2002, a whole lot more optimistic.

About 30,000 trade visitors attended. Is that enough?
Gerescher: It's not the number of visitors that counts but the quality of the visitors - and the quality was good, that was clear. Most of the companies had decision-makers at the fair, which is very important for us.

How did you present yourself?
Irion: In 2004 we had a joint stand with our importer on about 70 m2. There were two booths for meetings. Otherwise we used a very open and accessible design. We emphasised the image and the brand and clearly associated ourselves with the "Made in Germany" seal of quality. One of our communication objectives is to emphasise that the technology we offer has been developed in Germany. That helps us to justify higher prices than local competitors based on the quality and the exchange rate.

Did you use the trade fair as a platform for additional marketing activities or events?
Irion: Of course we had our brochures and technical information at the stand. We also gave several interviews to Spanish-language trade journals. And we used the trade fair to stage a workshop for our importers in the South American region.

Can you get by in English at the stand?
Irion: If you are working with an importer perhaps, but if you want to deal with the next level down as we do, you need to speak the local language or have an interpreter at the stand.

What other aspects have to be considered?
Irion: You have to adjust to the South American way: A lot is done through personal contacts and you have to be prepared for long-term co-operation. And one must never underestimate the Argentineans negotiating skills. The first offer is never accepted, so it is advisable to calculate the price with a certain negotiating margin.

How are you planning on presenting yourself this year?
Irion: The stand will again be about 70 m2. We will continue to put the main focus on the German origins of our products. But we will also concentrate on our new products, of course. We are presenting our diesel cold start technology ISS which we introduced in Europe three years ago but is an innovation in South America.

What does it mean for you that Automechanika is a Messe Frankfurt event?
Irion: Of course, it was a big advantage for our first appearance that we already knew the contacts at Messe Frankfurt from the lead fair in Frankfurt. The Automechanika brand also gave us confidence that we are at the right event for our first appearance in Buenos Aires.

What is your appraisal of the concept of Automechanika in Buenos Aires?
Irion: Automechanika in Frankfurt is the lead fair world-wide and draws a high-calibre international clientele. The event in Buenos Aires is more of a regional fair with a regional South American catchment area.

What could be done better there?
Irion: After a fair, we naturally always weigh up the cost and benefit of our appearance at the event. In this case, we can say: It was definitely worthwhile. Nevertheless, we do consider the price per square metre to be too high and would appreciate a concession from Messe Frankfurt on the cost side.

Could you imagine a yearly event?
Irion: No, every year would be exaggerated. In the odd years, Automec is held in São Paulo. This is also an important show at which we regularly appear. So a yearly event in Argentina would be too often and is unlikely to be accepted by the market.

How do you rate the venue "La Rural Centro de Exposiciones"?
Irion: The venue has been refurbished wonderfully over the past few years and is modern by international standards.

Often a trade fair appearance is the first step towards an agency or even a local branch...
Gerescher: You change your sales system if you are not satisfied with it. As our collaboration with our partner is a very fruitful one, there is no reason to change. It is also a question of cost: If we built up a branch office for a product, we would have to bear all the costs on our own. Importers generally represent five to eight brands and can distribute the costs over several suppliers - that benefits component manufacturers.Interview: Markus Ridder

m+a report Nr.6 / 2006 vom 22.09.2006
m+a report vom 22. September 2006