Too small to grow?

International markets are a major challenge for small and medium-sized enterprises: on the one hand, they can often only increase their growth significantly through exports, but at the same time seldom have the necessary resources to compete in all markets. ROPEX has been asserting itself in this field of tension for many years.

When planning international business trips, Jochen Kühner and Michael Bischoff typically use the weekends for travelling. "Then we won't miss so much of the day-to-day business during the week," says Bischoff, one of the two managing directors of ROPEX Industrie-Elektronik GmbH. "We want to take good care of our customers on our own doorstep, but still grow into international markets."

Until now, the company grew step by step, first in Europe, then in North America. Expansion in China is currently being accelerated. "We mostly followed our customers into new markets. In a second step, we also set up our own local sales structures," explains Jochen Kühner.

At the moment he is mainly looking at the Asia Pacific region. Macroscopic trends such as urbanization, changing hygiene requirements, population and prosperity growth, the higher quality of products and the tightening of legal and industrial standards are causing the demand for high-quality packaging to rise disproportionately. As a result, the demand for high-quality welding seams is also growing. According to Kühner, this is further reinforced by a further development: "We are seeing an increase in more and more complex packaging worldwide, with complicated geometry and high aesthetic demands.”

"Competition for skilled workers is extremely fierce in Stuttgart as a business location, and we have to hold our own against large corporations.”

Scarce resource: qualified personne

The prospects are therefore promising. Yet, in order to tap this potential small and medium-sized companies such as ROPEX first have to deal with the reality of their scarce resources and increasing challenges. According to Michael Bischoff, this applies, for example, to specialist personnel: "Competition for skilled workers is extremely fierce in Stuttgart as a business location, and we have to hold our own against large corporations.” Competition is particularly fierce for competencies such as customer engineering and software development, which are tailored to highly sought-after university graduates. At ROPEX, these experts are also very intensively involved in day-to-day business with customers and hardly have the capacity to accelerate an international growth process as well.

These lean personnel structures are typical for family-owned, owner-managed companies, as the founders often take on many tasks for which jobs would be created in other companies. "The size of the company often simply does not allow for consistent double staffing", says Jochen Kühner. "And if it does, it is not easy for us as a small company to find suitable candidates with the necessary qualifications and realistic salary expectations."

So how to grow? If one cannot do it on one’s own, then one needs good partners. In North America, ROPEX has been very successful in establishing itself with this strategy since the turn of the millennium. Today, almost one in ten euros of revenue is generated overseas.

Asia, on the other hand, is still in its infancy. "We are looking for experienced market contacts there that we might consider as partners," explains Bischoff. For this reason, he and Kühner travelled to Hong Kong and China at the end of 2017. There, they spoke with the leading distributors in their technology segment, but also with individual entrepreneurs or still small, very young companies. "We were particularly convinced by these small traders, who are still hungry and want to build something together with us. But the selection is difficult, the number of interested parties is large, you are courted everywhere – you have to look very carefully to find the right person," Kühner reports.

For Bischoff and Kühner, this decision is based not only on the partner’s understanding of the technology but also his character qualities such as integrity, loyalty and the will to succeed. "We also ask how often they visit trade fairs, industry events and conferences to see how innovative and willing to learn they are," says Kühner.

Another major challenge for ROPEX's international expansion is the highly complex technologies behind its products. "A film sealing bar needs explaining in many ways, you don't just sell it," says Kühner.

Customers and distributors must be trained in the use of sealing tools. ROPEX also offers its sales partners regular training courses so that they are always up to date with the latest technology. This knowledge is a prerequisite for the optimum use of the complex products at the customer's end. This is the only way they can deliver maximum performance and the best possible quality, but above all not suffer any damage themselves.

For example, some product lines are manufactured with ceramic surfaces. This requires proper use, high quality awareness and special appreciation of the product. Improper use could quickly damage the sensitive technology.

It is also clear that ROPEX serves a premium segment that is not always in demand at this level in markets such as China or India. If you want to grow there, you also have to supply products for an entry-level segment. "Simplifying highly developed technologies is also an issue for us," says Bischoff. He means that highly complex products can proverbially be slimmed down a little, they are offered with fewer features and perhaps a lower performance spectrum, but at a competitive price.

"Knowledge is a prerequisite for the optimum use of the complex products at the customer's end."

New options

An additional option for the growth strategy presents itself, since Obermark became the owner of the company. From then on, Kühner and Bischoff have also been able to give more thought to the topic of acquisitions. "Obermark not only supports us with capital, but more importantly with expertise," says Bischoff. "We are supported by specialists from Obermark who are familiar with takeovers, understand balance sheets, check contracts and draw up financing". Small family businesses rarely have this know-how, which as a consequence makes it difficult for them to take decisions that may lead to successful acquisitions.