Dr. Gabriele Suder: EU Business Now

Current business opportunities and challenges in the EU marketplace pose interesting and diverse topics for discussion! Join host Gene Cunningham as he sits down with Dr. Gabriele Suder to break down key elements at play: Brexit, the Green Deal, Asian market integration in Europe, and the role of senior executives in the EU marketplace.

International business management and strategy expert Dr. Gabriele Suder is currently a Professor of International Business at RMIT University and member of the EU Centre of Excellence, in addition to an award-winning business and scholarly publication author. Dr. Suder joins host Gene Cunningham, current faculty member in the Chaifetz School of Business at Saint Louis University and retired Aerospace Executive with a 41-year career in International Business, Strategy, and Operations.

To learn more about the Boeing Institute of International Business and the Executive Master of International Business program, visit biib.slu.edu.

Dr. Gabriele Suder:
Prof. Gabriele Suder | LinkedIn
Doing Business in ... Asia and Europe - YouTube
Doing Business in Europe | SAGE Publications Inc
Doing Business in Asia | SAGE Publications Inc

Gene Cunningham:
Gene Cunningham | LinkedIn

Special thanks to Bayer for sponsoring this episode. 

Transcript

Voiceover Artist: 0:02

SLU International Business Now: Conversations That Matter is a podcast developed by the Boeing Institute of International Business in Saint Louis University's Chaifetz School of Business. Established in 1984, the Boeing Institute of International Business offers a breadth of global business resources for the university community and beyond, with nationally ranked academic programs and extensive corporate partnerships. The Boeing Institute today stands as the premier academic institution for the teaching and practice of international business. This podcast series is an extension of the Institute's mission, bringing together critical thought leaders from around the world to address current key global business topics. Our aim is to promote future discussion among our listeners and encourage community action based around those international business conversations that matter. Special thanks to founder Dr. Seung Kim, for his grant to support the launch of this podcast.

Gene Cunningham: 1:11

A warm welcome to our listeners joining this inaugural podcast from Saint Louis University's Boeing Institute of International Business. I'm your host, Gene Cunningham, bringing you conversations that matter. As a 41 year veteran of international business, I've been fortunate to meet many inspiring people and to visit countless amazing places. Using these experiences, we've created a podcast series we believe you'll find enlightening, entertaining, and provocative enough to challenge the way you approach international business. We're honored to have Bayer, a global leader in agriculture, pharmaceuticals, and consumer health as our sponsor for this inaugural episode. Bayer's vision is health for all hunger for none, and through important work of supporting farmers with new ways to grow our food, providing doctors and patients with improved treatments for critical diseases, or by helping consumers with products to enhance their lives, Bayer harnesses science, and innovation to help find solutions to the world's most pressing challenges. For today's episode, we're going to discuss the state of the European Union marketplace, and we'll explore how recent challenges in Europe are creating new opportunities for international business. My guest is one of those inspiring people, Dr. Gabriele Suder, an expert in market integration. Dr. Suder is professor for international business at RMIT University in Melbourne, Australia, a member of the EU center of excellence, an award-winning author, and a YouTube business series host. She also works with and advises universities and multinational businesses across Europe, Asia, and Australia. Dr. Suder, thank you for joining us today.

Dr. Gabriele Suder: 3:09

Thank you very much, Gene Cunningham. Thank you for having me in your inaugural podcast series. It's a real pleasure and a real honor, and thank you very much to the Boeing Institute of International Business altogether and of course, to your audience.

Gene Cunningham: 3:26

Well, we appreciate that and we certainly appreciate your time. So let's get down to business. Let's chat about Europe. You've written an exceptional book"Doing Business in Europe", now in its third edition. From all of your work in this evolving market, can you give us your top level perspective of the current business environment across the EU?

Dr. Gabriele Suder: 3:49

Sure, absolutely. And look, this is a short question for a huge topic, of course. So where to start, where to end, but look, I just put it into a nutshell, which is really what European marketplace is today. And it has now been for few years actually. I think the most important is a single market, right? So really interesting in terms of international business, when we're looking at doing business in Europe, is that a mighty thing and quite unique whole of continent approach, then we can use to strategy. And you were mentioning that how I merge international business marketing and strategy. That's a unique setting here where through markets integration of course, all of this based on what came out of post-war European project to bring peace and stability on the political sites, but using economics radiated to drive that using business relations, to drive that, et cetera. All of that has set a scene where you today have 27 countries, sovereign countries that have come together in a really unique way when you compare it to anywhere else in the world, around the elimination of internal tariffs of common, the creation of external tariff, the free flow of capital and labor and more the harmonization of certain economic policies, et cetera. So you can really see how there's an interrelation between this ambition for political stability and economics and business relations, and certainly a tool and a driver for that. So when we look at it really from the corporate side of things, we have this harmonization of key business conditions in an environment where we see that certain business standards, rules, et cetera, provides a fair degree of conspiracy and clarity and predictability that reaches that's not actually, how can I say down to a country to country approach, but that is an almost'whole of the continent' approach. It's a very attractive proposition for business in that you have for most of what concerns this cross border trade and investment, very, very similar, if not identical rules and conditions. And at the same time, such a lot of diversity between how the consumer functions, what the priorities are when it comes to marketing strategy, et cetera, what's the state of innovation, what's the skill set of potential employees. So you've got really this fusion of diversity and at the same time, harmonization, that is quite unique. Thinking of the free flow of labor, for example, where there's the record condition of professional qualifications across the EU members. So within 27 countries, you can, when you enter those markets actually tap into talents that might be from any of the 27 and that flow freely. So no matter where you are actually opening your subsidiaries, if that's what you're doing, you can recruit people from a very vast pool with a very different skill sets. So, I think in a nutshell, we find it provides unique marketplace, a single market approach, certainly quite a few challenges as well with it, the free movement of goods, service, capital, and people four main freedoms across the EU basically, and essentially only ever been suspended by the member states now. So since the World Health Organization has declared a pandemic, this is a unique setting in which we are, of course, you know, around the world, we are battling with that and making sure that we manage this as good as we can. That is probably the only really, truly crucial moment during the European project where that has been suspended amongst the member states. So it is a fairly complex matter, but because there's that sort of unifying approach again, that takes us to a certain uniqueness of the marketplace.

Gene Cunningham: 8:31

Excellent. Well, thank you for that enlightenment, in terms of the marketplace at the European Union level. You mentioned the COVID challenges that are out there. Forbes magazine had suggested prior to COVID that there were really a number of challenges for the European Union. One of those was Brexit. Another was their interest in the Green Deal. And a third was China. Can we talk about Brexit for a second? And your thoughts on how the UK separation going from 28 to 27 has now affected business across Europe and is it creating opportunities?

Dr. Gabriele Suder: 9:13

That's a great question. It's actually fairly difficult to currently separate the impact of Brexit from COVID and other challenges. So we probably more rely on things that happened pre-COVID, just to be fair in terms of the data that we can look at, but already before Brexit was, how can I say, well Brexit isn't an event-- Brexit is a process, but already before that process had actually kicked in, there was a lot of movement of companies that were preparing for this scenario and that type of movement happened in particular, as you would expect, from remaining EU states and companies headquartered there, but also non-EU players in the field. So that's really quite, quite interesting because it was actually found that only just about half of UK companies with interests across the EU were having any planning in place before Brexit was negotiated and signed basically. And so that's, that's a really interesting one I think. We know, for example, that companies in automobiles, aerospace, industrial supplies, Honda, Nissan but also BMW, for example. Toyota closed plants in the UK, Panasonic and Sony moved, plan to move their European headquarters from London to Amsterdam and they're not the only ones-- Phillips had already, so that conglomerate had already closed its UK factory two years before it all happened. So there had been quite a bit of planning in the making there from a corporate side. And it's really interesting because Brexit doesn't seem to have resulted in those companies having closed their UK business, right? It's been a re-shuffle, re-coordination, a re-structure or diversification, in particular of supply chains. And we think manufacturing in particular, but also a reshuffle in financial services of course as well given the importance of London for that and continental Europe, if we can call it like that and certainly benefited to that, to some extent. I'm just thinking of where...of course, Frankfort and Paris, Amsterdam as well. But also Berlin for example, in terms of small, medium sized enterprises and startups. That innovation ecosystem which typically tend to go to London for all sorts of reasons; including ease of business, including incentives, really that sort of... of course, English speaking as well. So we have market reach across the world that additional advantage of then being part of the European Union has vanished. And so that has definitely led to major investment flows into Berlin, for example, when we think of innovation. So a lot has happened, a lot has happened definitely.

Gene Cunningham: 12:41

Are there some unique opportunities for businesses outside Europe that they should be focusing on? Are there new opportunities in the UK because of distance that may have been created or are there voids that have been created in the European side?

Dr. Gabriele Suder: 12:58

Yes. Know that the term void is certainly an interesting one because as companies have had to think about how to reshuffle and how they thought about how to make their supply chains more resilient to Brexit has left them to think, to rethink about where do you procure? So if you would procure out of the UK into the EU, great advantage pre-Brexit, because of course, you know, no tariffs, no quotas, all of that. Post-Brexit, the situation is different. And so you think about where do I procure? Does it make a difference if I procure out of the UK or out of China or the US? The UK is rolling over some of the free trade agreements that it was part of through the EU directly. So there are still interesting considerations too, or when I look at I'm located in Australia as we speak-- new free trade agreements. So entering the UK, but also being able to look at free trade agreements, for example, with Australia that are currently being negotiated. So a new network of fairly harmonized conditions, depending of course, on the free trade agreement, but as a gateway into other markets as well. A lot of this has changed, but if you make the UK, your main location across Europe, that's what you're going to look at at this moment in time. So less now at the EU as a single market, as a gateway in; but it's more into new free trade agreements that the UK is negotiating.

Gene Cunningham: 15:02

So many new points of contact have been created really by the separation. Interesting. Very interesting. Well, thank you. So Gabriele, when we look at again, the challenges that are facing the EU, they want to be net zero on emissions by 2050. And certainly they're looking at the penalties, the incentives that will drive business to move in that direction. From your perspective, can a business trying to enter Europe, whether it's in the energy sector or not, leverage some of this interest in being net zero. And is it focused primarily on companies that are already moving in that direction or could you be an offender and still bring benefit to the table?

Dr. Gabriele Suder: 15:55

That's a great question. It's so timely. So with the Green Deal, corporate interests need to keep in mind that here is a very ambitious climate action plan with a very coherent, significant seven years budget, including a COVID recovery budget. Those called the next generation EU all of this is a cross strategy for net zero. So across the EU, there is, and across the 27 players, but also 27 marketplaces that come together, is a strong belief that we need to act. And that by 2050, we need to have accomplished this. All the sectors need to contribute and all players need to contribute. That means that there are certain milestones depending on the sector, also, depending on the countries, because you know, contexts do vary from one member state to the other, but all together, there's this, there is very strong dedication to this and their political, but also economic milestones and settings and incentives and initiatives that are maybe to be used, or maybe not to be used. Right? But that's the goal for this one objective. So the climate pack that was launched last year for all stakeholders, it's just one sign off that, that basically a community of stakeholders that get together in addition to work that EU's doing already and propose climate action, that's going to be ongoing. So not only do political decision makers say, here's what we're going to do, but this is a much broader initiative and plan, an action package where companies where NGOs, where consumers, they are all part of that. And I think that's a really interesting feature of the EU as well, that principle of subsidiarity, where you're trying to do things. They're complicated enough when you have 27 interests coming together, but bringing that down and actually back to grass roots and making sure that the region, the locality, the people that consumers are represented, that the NGOs have something just to say, it's like also that understanding that not everything is decided from a corporate perspective or from an influencing perspective in process, by large multinationals. The system is set up from learning that that is very shortsighted. There needs to be consequent, continuing voice by the small and medium size enterprises, as well. So basically what I'm saying is everybody is part of that. And you coming in with a non-European company, or it's a European company, it makes no difference you're expected to be contributing to that objective. For example, if you just think of farming this, the farm to fork initiative, to reduce the footprint of everything that has to, you know, the entire food chain, basically, including pesticides, deforestation, et cetera, et cetera in each and every sector, we have those initiatives with milestones because 2050 is actually now a legally binding date. So the 27 have decided they have to achieve that. That's a really, really strong push. It's a strong push as well, because the European union actually often serves as a forerunner for those initiatives, thinking of other environmental initiatives and just thinking waste to energy, for example, and how best available technologies have been promoted and spend it's set in that field that then have actually made their way across the world and have been adopted by others. Why reinvent the wheel? If there's a marketplace that is doing it really well and companies have actually adapted to that, I think that's a really crucial part of it. I know off doing business in Europe, when you're come in from a foreign country, from a different location non-European location, is that it is going to be challenging. There are those ambitions, right? But you can be fairly sure that once you've adapted, that is actually an adaptation you can use worldwide.

Gene Cunningham: 20:49

So in a sense, your European activities can be your laboratory for finding what works and then use that for your global strategy going forward. Assuming everyone is going to be striving to reach these same objectives somewhere in the future.

Dr. Gabriele Suder: 21:08

That's very well put absolutely Gene. I speak to a lot of CEOs of companies, whether that's the large multinationals, all that, that's more global type of ventures who almost utilize the European union as a test place for the innovation also because the European consumer and client is very demanding. And so once you've adapted to the legislative and the business environment, and you might get, and in Europe and across borders in Europe, exactly, as you said, that sets you up very nicely for global operations as well. And there's a lot of learning, or maybe un-learning, there's both, of certain business practices that will feed into global, and that may feed into certain other regions as well. Maybe not all of them, but there's really that, learning curve that a lot of executives talk about when they talk about doing business in Europe.

Gene Cunningham: 22:24

You pointed out, there are times when you're sitting on the other side of this microphone, you're where I am and interviewing global leaders as well as CEOs of multinationals and you bring up their insight of this. I use Europe as a test in some ways. What other insights do you get from those conversations? Are there some general notes about the European marketplace that come to mind?

Dr. Gabriele Suder: 22:53

Yeah, absolutely. I might just go back a little bit to IB theory, if you don't mind and some of the principles that we, we like to use when we're in the classroom with, with our learners; which is really that when you're going across borders, you're most certainly market seeking, resource seeking, asset seeking or efficiency seeking, any of that and the combinations of that. So this is the goals that you're having as a company and the selection of your location is correlated with those. Now, when you have a single market like that, or any other form of integration, you can actually leverage locational advantages. So I hear a lot about leveraging capabilities, enchancing firm competitiveness in and across several marketplaces because you're in a region and really that regionalization reflecting the interplay between the boundaries of a firm's scope and its capabilities to manage those boundaries. Most companies that call themselves global are actually very regional. So, I mean, we know it from literature it's well documented nowadays that most multinationals operate regionally rather than global. Well then 70% of large European multinationals, if you just looked at, you know, the European ones as it's concentrated across Europe. So within the EU, it's really strong. You can really feel that feature off the harmonization basically provides a new view on what's the risks and the returns of going across borders. When we look at the regional effects in international business theory, we know that effective contemporary imagination strategy comes from the firm specific advantages that are combined with country specific advantages-- that sort of classic international business theory, isn't it. But then what we know as well for the last few years, is that you need to add for a true effective cross border strategy...you need to add the RSA. So the region specific advantages-- that is very strong and there's just so much happening in the world. When you look at, for example, TPP in Asia, or across the world, the way in which we see integration happening has multiplied and has taken a different shape from 10 years ago when we were still really in that phase of globalization, this seems to have been replaced by regionalization. That that is much more manageable.

Gene Cunningham: 25:54

Excellent. So let's play with the Asia side for a second if we can. You've also written a book"Doing Business in Asia", providing great insight into the cross Asia market, market investment strategies, cultural diversity...what impacts might Asian market integration and in particular, Chinese expanding business interests, have on doing business in Europe?

Dr. Gabriele Suder: 26:21

To answer that question, I think we might want to start with what really is the main benefits from that multiple integration, you know, that's diversified integration phenomenon. Like we see today from an international business perspective, we see that in the EU, see that in Asia, you see that anywhere else depending on what form free trade agreements or they're more sophisticated forms take, which is a reduction of risk and uncertainty impacts for companies and really in an access to a variety of advantages across not only countries, but regions such as talent, innovation, funding, et cetera, et cetera, that companies try to merge with those more region specific tariff reductions, or eliminations, lower barriers to trade, less red tape, reduced investment risks and reduced liability of foreigners, which is for me, one of the concepts that are really important when it comes to doing business across regions that are integrating. You have a political way of influencing the liability of foreigners, because the underlying idea, no matter what's the free trade agreement or the form of market integration is, that you actually wants to make people and goods and services and capital, whatever it is, you just want to bring it all together, much, much closer, right? So that systems, processes, ways of doing behaviors, ways of working, et cetera, at the same time, actually becoming less foreign. And instead of at the end of the day, having a liability of foreigners, you might actually, in the idea case, be able to speak of an advantage of foreigners. Yes, I'm part of European or Asian integration. Yes, they are harmonized conditions. They are beautiful ways of culturally, politically, socially, or in any other way, getting closer to each other. But at the same time, we continue to be different from each other. And that is an advantage. That is something we can leverage in all sorts of ways to learn from each other, to, you know, innovate, to better our ways of working to be more aware of how enriching it actually is to work together. And for me, that's really an interesting aspect of integration. Let's not forget, this is about finally a tool to bring that social welfare. I think that's something really important that often is forgotten. It's about at the end of the day, sometimes we forget it's about the citizen and it comes back to the question of the Green Deal, for example, it's for us, it's our climate it's what do we do with it? It's, you know, there's really that circular thinking, that that's what it comes back to from a pure business perspective. Once you know how you can use the benefits from market integration for your international business strategy and action for your planning, for your supply chains, et cetera. Once you've tapped into that, that becomes a very attractive proposition and you will be looking to replicate that in other parts of the world. So when we look at TPP or RCEP, which is even more of an in-depth form of integration across Asia, it leverages on each other, but it's also a facilitator for more interaction. And that's really the logic, isn't it? Let's interact more. Let's make our supply chains more resilient because there might be COVID, there might be Brexit. There might be whatever it might be if we can actually help each other being resilient and supporting each other when we need the oxygen, when we need masks, when we, you know, whatever it might be that we are needing, we have something at hand, do we use it? Do you we use it effectively? That's a different question. We have to obviously keep learning on how to do that effectively, but we have the firm to do it. And we have the best conditions to actually manage those situations as best as we can.

Gene Cunningham: 31:13

Excellent. That's actually a wonderful closing for this conversation. I think it puts it back in perspective of what can we do? How are we getting better? And by pursuing these international integrated marketplaces, that gives us the advantages to reach those objectives. And it's wonderful. So thank you very much, Gabriele, it's been a pleasure chatting with you today. Any other closing remarks you have for our listeners today?

Dr. Gabriele Suder: 31:47

Oh, look, maybe it's just an in summary, the EU can be a challenging market to enter-- it's diverse and it's also uniquely harmonized. Don't think that because it's called the single market, it is actually entirely even harmonized. That's something that we shouldn't fall into, but that the EU requires a certain investment. And it's focus in this to comply with and have that awareness that, yes, there's a lot of market integration that you can benefit from, but at the same time, you need to learn to do business in Europe and you need to do that across all of the different occasions you might have in mind. There's potential gains that enormous when it comes to ease of doing business across the 27, you know, about the single currency, in terms of organizational learning and innovation capabilities. We talked about that so many of the challenges actually set you up really well globally. In terms of cost effectiveness, we mentioned lower red tape, all sorts of benefits that you would be getting from the standards that apply across the EU and often into other countries. The EU has an enormous network internationally, that also foreign owned companies tap into-- same thing for the funding streams. Where we talked about the Green Deal, but also all sorts of other ambitions, they are open to foreign, so non EU companies, under certain conditions, often that condition is that you actually have an EU partner. Even the better, because we talked about the liability of foreigners. That's something you can reduce through partners of course. So they are speaking in particular funding, of course. Yes, demanding customers, but using best practice coming to best practice that you can leverage in other regions and worldwide is certainly a really interesting proposition. So I wish everyone who is listening the very best in your project of doing business in Europe. And I thank you for the appreciation of my textbooks, but in particular Gene to you and the Boeing Institute of International Business, thank you so much for having me.

Gene Cunningham: 34:16

Thank you again. And it's been a great conversation-- enlightening and energizing. There's no doubt about that. I really appreciate that. To our listeners, we hope you've enjoyed the conversation we've had with Dr. Gabriele Suder today, expert in global market integration and the subject area being,"how can we take advantage of the ongoing evolution of the EU marketplace?". I think this has been a wonderful, engaging discussion. We hope you'll join us for our next podcast focused on facing the global COVID business challenges. This is your host, Gene Cunningham, having conversations that matter. Thank you and good day.

Voiceover Artist: 34:58

Thank you for tuning in to the SLU International Business Now: Conversations That Matter podcast. We invite you to subscribe to this podcast series so you don't miss any future episodes. To learn more about the Executive Master of International Business program, please visit biib.slu.edu. Again, that's biib.slu.edu. Currently we are accepting applications for the Fall 2021 semester.