Jānis Ošlejs, SIA „Primekss” CEO
According to Jānis Ošlejs, CEO of the industrial concrete flooring contractor Primekss, the key to successful exports is developing your business niche where your products have a competitive advantage. This is the approach Primekss is using and it expects to reach sales of EUR 90 million, 95% of which are exports, in 2022.
Based on his own experience, Ošlejs recommends thoughtfully developing products for customers who will be most interested in your offer, since they are the ones who will be willing to buy or prepared to pay more.
This, in turn, opens up broader development possibilities for the company. That is why the ability to focus and not to spread yourself too thin over multiple export markets with too many customers is important.
From Scandinavia to India
“We realised fairly quickly that the Latvian market is small and growth opportunities are limited. So back in 2002, we turned to exports. We started with our neighbouring countries, Lithuania and Estonia,” said Ošlejs. Later, when Latvia joined the EU and many opportunities opened in the single European market, the company began exporting to Sweden. Then the rest of Scandinavia and other countries followed gradually. Currently, Scandinavia is home to our largest export markets, but we also export to Asia, India, Israel and other European counties, including the UK. The USA and even South Africa are also important export destinations. Before Russia’s invasion of Ukraine, we were also working with Russia and Belarus, but now these markets are closed to us.
Follow your customers
Before entering a new export market, Primekss analyses the competitiveness of its products there. Of course, it is easier to start with neighbouring markets that are easy to travel to and where cultural differences are minor. Exporting from Latvia to Lithuania is far easier than to Australia. However, the most important aspects are competitiveness and following customer needs.
“Our strategy is to follow our customers. We have many large customers, such as IKEA, DHL and Volvo. Where these companies go, we go,” explained Ošlejs.
Primekss consciously chose to develop exports to the US, which is a large market with great growth opportunities. “We realised that it was definitely worth going there and we are actively working on that destination,” said Ošlejs.
Scandinavia is close enough geographically and a reachable market for the company to be able to do concrete work for industrial flooring, building frames and foundations using its own resources, but in the US it works with large American concrete work contractors who sell and apply Primekss technologies there.
It is high time to invest in development
“It’s no secret that Latvian export volume is critically low. In comparison with our neighbours, both processing industry and service sector exports are low,” said Ošlejs. He explained that, historically, the amount of bank loans and other industry financing has been significantly lower than in neighbouring countries while production costs were higher. Therefore, local industrial companies have lower income and their development is slower.
The entrepreneur believes that Latvia’s big mistake was focusing too much on transit and bank sector development at the expense of the development of industrial and service export companies. “Now is the time to improve the situation and this is the task for today’s government. Otherwise, we will slide into stagnation,” said Ošlejs, adding that exporting companies are the ones who can achieve unlimited sales volume, i.e. unlimited income which can be used to pay high salaries and increase the number of well-paid jobs. “That’s why today, all countries which have used exports as the foundation of their development are wealthy and prosperous, while countries that support those working in the local market quickly become an oligarch’s paradise because in these countries there is money to be made just by liaising with politicians. With exports, a product is either good or not. There are no schemes or corruption there,” said Ošlejs.
He thinks that, in order to catch up with Lithuania and Estonia in terms of living standards, investments in the development of exporting companies should be much faster and much more active. Bank loans, capital and support from European funds available to businesses for investment in equipment and innovation are not sufficient. “To achieve growth, we need to increase available financing much, much faster. So I urge the government to increase the funding available to exporters at least threefold. It is the bare minimum necessary to overtake Lithuania and Estonia,” said Ošlejs.
Fluctuations bring growth opportunities
“Today, the geopolitical situation and environment are highly volatile. For example, many Latvian businesses have been buying raw materials in Russia at good prices, but these are not available anymore. The existing alternatives are more expensive so production costs go up and profits go down. To continue production, existing production processes should be changed. This means buying new equipment and developing new, better selling products requiring investment in science and development. Regrouping requires investment,” said Ošlejs.
In changing times, manufacturers and service providers face many challenges, but at the same time these are also opportunities. The businessman is confident that every time the economy is volatile, it creates great opportunities for rapid development.
“In every crisis, there are losers, but there are also winners – those who make money from a crisis. For example, now, energy prices are very high, so many households are big losers while energy producers and traders are the winners. Small shops go bust, shop displays in Rīga are empty, but major online retailer sales are growing fast. It is difficult to make products in China and impossible in Russia, so Europe has become the place to do it,” said Ošlejs. He believes that businesses and state leaders should ask themselves: How has the world changed? Customers should be the ones benefiting from the change and the strategic support of the state should be focused on that. During both the Covid-19 pandemic and Russian crisis, Primekss grew and developed rapidly by focusing specifically on its growing market segments,” said Ošlejs.
State support is useful
“Throughout our existence, we have received a lot of support from various Latvian organisations to get where we are now, to be able to export to almost every corner of the world, to become one of the top 20 large companies with the highest average salary and to increase the number of employees and pay taxes,” said Ošlejs.
The company has grown using various state support instruments, such as Latvian Investment and Development Agency (LIAA) support for technology development and the purchase of equipment, Altum Capital Fund support, returning Altum-supported venture capital investments with profit and state support of science and technological development within the Smart Material Competence Centre. State support also helped Primekss to participate in the world’s largest construction industry exhibition, Big 5, in Dubai and various construction exhibitions and fairs in Scandinavia, Germany, USA, etc. “Co-funding of participation in fairs is a very good tool in the support arsenal. We use it a lot,” said Ošlejs. He was also part of several trade missions organised by LIAA. Experience shows that it is especially valuable in markets where the executive branch of the state has more say in things.
“The work of LIAA coordinators abroad should definitely be praised. We have successfully used their support to develop our export markets. We are very grateful to LIAA representative offices for their unfailing detailed support in various regions. For example, in UAE, LIAA representative Inga Ulmane helped us with communication to deal with local bureaucracy issues. State support is also very good and useful when it comes to visas. It is a great example of how the Latvian state can work very well and support local manufacturers and exporters. I think that LIAA CEO Kaspars Rožkalns and his team do very good and important work,” added Ošlejs.