Increased automation of the manufacturing industry with a greater focus on machine safety will create continued high growth for Axelent's products around the world. Stefan Axelsson, Export and Marketing Manager at Axelent, talks about how the strategy for global expansion has progressed over the years and the challenges faced by Swedish companies looking to establish on the global market.
What is your background and role at Axelent?
I was born and bred in the countryside near Hillerstorp. You could say I’ve been fed mesh walls since birth because my father and uncle founded Troax, a company that makes the same sort of products as Axelent. Troax was eventually sold to an investment company and my family has not been involved with them since the late 1980s.
I’ve always had an interest in sales. While still in 10th grade I ran my own company through a Junior Achievement scheme. When I was nineteen I worked as a seller in a company that sold lampposts to road and energy authorities in Scandinavia and the Middle East.
A year later I founded Axelent together with three of my cousins. Two years later it became my fulltime occupation. The company has gradually progressed and, at the turn of 2000, the ownership changed when Johan Axelsson and I bought out the others. We brought in a third partner, Mats Hilding, as CEO. Back then the company was represented in ten countries and had annual sales of around SEK 53 million.
What is the historical timeline of your global expansion?
Initially, we focused our international establishments in Europe, which became considerably easier when Sweden joined the EU in 1995. At about the same time, a new norm for the standardisation of machine safety was introduced within the EU, which further benefitted our expansion on the continent.
The plan was to remain in Europe for a ten-year period up to 2005, but four years earlier than expected we crossed the Atlantic to the USA, and not long after set our sights on Japan, Australia and New Zealand.
In 2008/09 the EU standards were revised and became the Machinery Directive, and about a year later the SS-EN ISO 12100:2010 standard was introduced that harmonised with the directive. Methods and principles that we had in practice implemented since 1995 began to be used outside Europe, which again favoured our expansion. This time globally.
The expansion also attracted curiosity among potential dealers who were interested in becoming agents for our products. It became the natural way for us to establish on several markets. Today we are represented in close on 60 countries with total sales of around SEK 650 million.
How do you establish on new markets and what is the focus going forward?
When we enter a new market, in eight out of ten cases we seek assistance from Business Sweden. They help us find good dealers / agents. In some countries we get help from their chamber of commerce and other interest organisations to find suitable partners.
It usually begins with a dealer or agent for a couple of years. In some cases, the partnership works so well that they eventually become a subsidiary. Today we own twelve sales companies abroad, in addition to which we have a couple of partnerships in France and Thailand. The decisive factor in establishing a subsidiary in a new country is the size of the market. There has to be sales grounds for it to be strategically viable.
Thus far Axelent has met the expansion goals and is expanding by one to three new countries a year. We are still very big in Scandinavia and Germany but are even growing rapidly in the USA and Asia. In some countries we have only scraped the surface.
In 2018 our focus will turn to Asian markets. In Thailand, for example, we are building what we hope will become a logistics hub for Thailand, Malaysia, Indonesia, and, eventually, other countries in the ASEAN free trade area.
Also, in Hillerstorp we are expanding the business with a new logistics centre and an even more efficient order management system to ensure profitable flows and speedy deliveries to all corners of the earth. The aim is to leave all manufacturing in Sweden, but in the long term it might be necessary, for logistical reasons, to establish manufacturing in other countries as well.
Can you name some of the factors behind Axelent’s international success?
Our system has been boltless since 2008. It just clicks together these days, cutting assembly time by half. Being easy to assemble is, of course, a massive success factor. Another is our turnkey solutions through a range of peripheral products. Wire trays and other accessories have been a great success.
In addition to our excellent product portfolio, we are especially adept at listening to customers and adapting to their needs.
Speed is another one of our strengths. When asked for a quote, we reply within four hours with a drawing and a price along with an offer of speedy delivery through our network of efficient logistics centres. This is based on a concept that broke through around the turn of the year 1999 and which has greatly contributed to our expansion. We were also first in the industry to custom-pack everything on pallets to make handling and unpacking easier for the customer.
What are the greatest challenges in establishing a Swedish company abroad?
Cultural differences and language barriers are naturally great challenges. Within the EU we often have the same ideas and want to move forward on the same path, a joint approach that is lacking in many other parts of the world.
When you enter a new country, you do not know what is expected of you as a supplier either, or what you can demand of authorities and partners. In some countries there are moral aspects to consider also. For example, the labour they use, which can be a sensitive issue in Sweden. The security risks are often greater than in Sweden and could pose a challenge.
While there are many challenges in establishing abroad, one should also bear in mind that Sweden has an excellent international reputation. For Swedish companies, the way has been paved by the likes of Volvo, Scania, ABB and Ikea, who have been active on most markets around the world for many years. The Swedish Royal Family has also meant a great deal for the Sweden brand, not least in Asia. In many Asian countries there is a lot of interest in our Swedish royalty.
What advice would you give to companies looking to establish abroad?
Number one: employ people who are better than you are and let them grow within the company. Lifting our own employees is what has made our journey possible. We have a good example in the UK where one of our team there began by doing technical drawings when he was 16. He is now the Sales Manager for Europe.
Number two: do an in-depth market survey. Find out what the needs are, if there is a basis for a good turnover of your products there and which solutions already exist on the market.
A useful tip: ask interest organisations and the foreign ministry for information about the country in question. How to conduct oneself and other things to consider. I do this prior to most trips. If you find an interest organisation you are happy with and can trust, you can draw up a list of potential agents and avoid phoneys.
Lastly: when choosing dealers, it is important not to offer an agency assignment to somebody who already has plenty. Choose those who will live off your product.