knowhow exchange
The business
of EMU
What'sNewS Issue 8' August 1998 9
The introduction of the euro will do
more than put the same currency in
a couple of hundred million people's
pockets. It will open up a whole new
competitive playing field in which
companies of all sizes will have to
evolve in order to survive. The EU has
recently been focusing heavily on
^reating a fertile environment in
hich small and medium-sized
enterprises (SMEs) can flourish in this
new marketplace. To do that, the
people behind this European
legislation and dedicated programs
need information. Member of the
European parliament Karla Peijs
explains what the euro will mean,
what the EU can do for our customers,
and what we can do for the EU.
Easy access
Two-way streef
Rethinking strategies
Surviving EMU
While SMEs may not appear
immediately relevant to Rabobank
tnternational's core business, no one
vithin the organization should forget that
in its domestic market, Rabobank has
around 40% of the total small and
medium-sized business market. 'And,'
says Karla Peijs, 'no one should forget
that Philips started in someone's garage,
as did Microsoft and many other of the
huge multinationals. SMEs are crucial to
alrnost all economies; they generate most
of the new jobs, especially in mature
economies, such as the US, where 90% of
all new employment comes from SMEs.'
It was the realization of just how
important this group is for everyone's
economy that has led the EU to prioritize
SMEs and to put in place programs to
Hcilitate their access to, for example,
capital and financial instruments. 'When
I arrived in the parliament,' Peijs says,
'SMEs were not an issue. Everyone was
talking to the huge multinationals.
In fact, they don't need Europe. If a
multinational wants to expand cross
border or piek up market share in another
country, it buys a domestic company. It is
the small firms, the young companies that
want to export or build cross-border
market share, that need open borders;
they need all the help they can get, they
need harmonization, they need the easy
access to financial instruments in order to
export more easily. If we do not succeed
in creating an environment in which these
companies can expand and grow into any
and all the markets of European member
states, then we will have failed.'
Peijs sees the role of Rabobank and other
financial institutions in facilitating this
expansion as crucial. 'The banks are in a
position to act as intermediaries between
companies and the EU,' she believes. 'By
establishing a presence
in Brussels, you can help
build an exchange of
information through
which we can improve
the legislation we write
and, for example, the
programs created to
support SMEs. It is the
account managers at
banks who are at the
cutting edge, who know
which companies want
to export, what their
problems are in growing
their business, and so
on. That knowledge is
truly useful to us in
Brussels.' Diederik
Conijn and his
European Union Advisory Services
(EUAS) team are ideally placed to channel
this information to legislators like Karla
Peijs. Recently, a centre of competence
was established for all Rabobank
customers looking to tap into EU support
programs or merely seeking information.
'In this way,' says Conijn, 'it becomes a
two-way street. Obviously, we hope to use
our lobby to raise the interests of our
customers. But that lobby is also useful
for people in Brussels because it can
provide them with practical insight.'
And these realities should not be
underestimated. According to Peijs, the
penny - or more appropriately the euro-
Karla Peijs - raising euro awareness
cent - has still to drop on just how much
will change with the arrival of the single
currency. 'It will influence every aspect of
how we do business,' she says.
'Companies will have to rethink their
whole marketing strategies because the
market will change dramatically. Prices
will be totally transparent. Companies -
and suppliers of financial services, for
that matter - will have to ask themselves
how to ensure customers continue to buy
their products, rather than those of a
cheaper competitor. And imagine those
competitors are all readily accessible
through Internet. Imagine that and
perhaps you will understand how
significant this development is. What
every company has to do is think: How
can we reach the customer and convince
him that our product is better? That our
firm can deliver a better service and that
is why it is worth paying a little more?'
Paying is what we will
all be doing if we do
not wake up to the
significance of EMU.
Asked if in her
experience people are
aware of what the
euro will really mean,
Peijs says: No.
Everyone is talking
about price lists and
software; too many
people think they don't
need to worry about
EMU until 2002. They
couldn't be more
wrong and it is very
worrying.' Clearly,
Peijs is concerned about the seeming lack
of urgency in the business world when it
comes to the euro, especially in SMEs. For
her, becoming euro-proof as quickly as
possible and rethinking corporate strategy
is imperative. After all, come 1 January
1999, absolute transparency will mean the
nature of competition will change, there
will be more of it and it will be tougher
than ever. Usually we complain about the
bureaucracy and conflicting messages
coming out of Brussels - this time the
signals are as transparent as pricing in
euros: anyone who is not prepared may
not survive.
If you would like flirther information on
EUAS, please contact Diederik Conijn
on +32 2 S02 4539.
