Competing for the same buyer: how mid-sized European exporters position in this market

A Ukrainian mid-sized manufacturer buying production equipment will typically receive quotations from suppliers in four or five countries. Each one is competing on a different basis, and the differences are consistent enough to be described.

The positions

German and Austrian suppliers compete on engineering precision, durability and documentation. Highest price, longest expected life, most rigorous specification and the most demanding installation requirements. They win where the buyer's own customer imposes a quality standard that must be demonstrably met.

Italian suppliers compete on configurability and price-to-capability. Machines built to a customer's specification rather than a catalogue, at a price meaningfully below the German equivalent, with the trade-off usually being in expected service life and documentation depth.

Polish and Czech suppliers compete on proximity and cost. Short delivery distance, fast service response, familiarity with the region's operating conditions, and a price structure that reflects a lower cost base. Their advantage has grown steadily as their own manufacturing has moved up in capability.

Turkish suppliers compete on delivered cost, speed and flexibility on terms. Short sea freight, willingness to work with buyers that larger suppliers consider too small, and a track record in markets with similar operating conditions and similar currency volatility.

Nordic suppliers compete on a narrow specialism — process control, materials handling, energy efficiency, environmental compliance. Rarely competing across a whole plant; usually holding a defensible position in one part of it.

Chinese suppliers compete on capital cost and have moved up substantially in capability. The remaining constraint is service network depth, which matters enormously in a market where a stopped line costs more than the price difference saved.

What this means for a buyer

Do not compare quotations on headline price. Compare them on delivered cost of ownership over the expected life: purchase price, installation, spare parts availability, service response time, energy consumption and the cost of a day of downtime.

The last item is the one most often left out and it usually dominates. A machine that is fifteen percent cheaper and takes four days rather than one to get a technician to is not cheaper.

And ask specifically about the local service arrangement. A supplier with a service partner already operating in Ukraine is a different proposition from one who will fly someone in.

What this means for a supplier

Know which position you actually occupy. A supplier who thinks they are competing on quality while the buyer is comparing prices has already lost, and one who discounts to win a deal against a competitor with a genuine cost advantage has bought a loss.

The two positions that travel best into this market are the specialist with something hard to substitute, and the regional supplier with a real service presence. The general mid-market position without either is the hardest one to defend, because it is exactly where the largest number of competitors are standing.

The buyers here are experienced and comparison-shop thoroughly. That is a feature of a market that has been served by many origins for two decades, and it rewards suppliers who are clear about what they are selling.

Related in this archive

• Ukraine and Hungary: transit, energy and a minority question
• Turkey and Ukraine: the shape of a Black Sea trade relationship
• Who the largest foreign investors actually are, sector by sector
• Ukraine Annual Review 2012: stagnation with one door opened

I hold a position in this table myself and I know where I win: not on price but on service distance. For a Ukrainian mid-sized manufacturer the moment of decision is who turns up the day after the machine breaks. Germany competes on quality, Poland on price, and we compete on proximity and on the language spoken — and the third of those decides more often than people think.