How to Find Your Next Supplier in Europe

Tags: Global Logistics, Logistics, Supply Chain

Frederick Crosby is Chief Revenue Officer and Head of Marketing, Veem

Small businesses seeking a competitive advantage in the global marketplace would be remiss if they ignored the power of working with a supplier in the European Union (EU). Not only is the EU the largest manufacturer of exported goods and services, its 28 member countries account for 16% of the world’s imports and exports. The EU is an economic powerhouse that many domestic small businesses can leverage to enhance their profile among consumers, competitors, and peers.

Domestically, consumers are savvy and price-sensitive. These days, they are also focused on quality. However, small business owners understand that quality comes at a cost, and many overlook the profit potential behind working with EU suppliers. They shouldn't.

In the European Union, products can flow freely among its 28 member countries; the North America Free Trade Agreement (NAFTA) is more restrictive. With the Euro being the EU's primary currency, foreign exchange fluctuations between member countries that could have negative implications on international wire transfers are less worrisome than when working with a supplier outside the EU.

Product components can be sourced elsewhere in Europe and the final product assembled in a single country, all at the same cost to the purchaser. This is one reason why the UK was named the cheapest country in Western Europe to manufacture goods in 2014.

The bottom line is that a goods supplier in Romania, where labor costs are cheapest in the EU, has the same competitive advantage as Sweden where manufacturing costs are more than eight times higher. Conversely, this wouldn't be the case if components were sourced from China (Yuan), Germany (Euro), and Mexico (Peso), and assembled in Canada (Canadian Dollar) for export to the United States.

The EU Niche: Semi-Manufactured Goods

If last year’s EU export statistics are any indication, today’s small businesses rely primarily on supplier relationships in the EU for machinery and transportation equipment as well as ‘other manufactured goods.’ Both of these areas have shown strong growth over the previous five-year period.

The latter classification – 'other manufactured goods' – is where many small businesses operate, consisting of semi-manufactured goods (e.g. components), leather rubber, wood, paper, textiles, metals, building fixtures, clothing and accessories like shoes, watches, etc., scientific instruments, clocks, and cameras. Ultimately, every industry in which goods-selling small businesses operate can obtain their inventory from a supplier in the EU.

Stay Abreast of EU Regulations and Brexit

Although there are clear benefits to partnering with a supplier in the EU – stable political environment, the Euro currency, open transportation of goods across its member countries, third largest economy in the world – it’s worth noting some of the challenges.

The most common would be the complexity of the legal and regulatory system in the EU. While many things are standardized across member countries, other regulations are interpreted and implemented within each country. This causes variations in implementation across different countries. For small businesses, this means that privacy laws in Bulgaria might be different than how those same laws are interpreted in Portugal.

Legal and regulatory misinterpretations will be most obvious to small businesses when it comes to sending payments to EU suppliers, as banking regulations will vary from country to country. The result is that a supplier’s bank in the Czech Republic might hold payments for the same payment sent to a bank in Spain. The lack of transparency in today’s payments system combined with different bank regulations can make the process frustrating for everyone, particularly your suppliers.

Another key challenge facing small businesses is Brexit, and this may cause some turmoil in the region, particularly economically. Most of the world is on the edge of their seat in an anxious wait-and-see attitude.

Resources for Finding Your EU Supplier

It can be a bit tricky finding a supplier in the EU, becoming problematic because there are so many member countries--but certainly not impossible. Some of the top resources are:

  • Europages.com – this business-to-business directory of European companies can connect you to more than 3 million companies and thousands of products
  • Trade B2B – this is more of a directory (think Yellow Pages) for B2B companies in the EU, offering referrals to hundreds of sites that specialize in all types of supplier partnerships.
  • Europe Factory – a website dedicated to global businesses seeking suppliers in the EU.