Five ways to beat a quiet home market

As engineering group Setec seeks fresh opportunities abroad, the firm shares its experiences on exploring the market in Brazil and elsewhere.

Engineering consultancy Setec has been focusing on major projects in its French backyard. But with big infrastructure on the decline at home, it is now following work elsewhere – starting with Russia, Brazil and Qatar.

As engineering group Setec seeks fresh opportunities abroad, the firm shares its experiences on exploring the market in Brazil and elsewhere.

Look beyond the home front

Setec has long enjoyed a presence outside its native France. But for a long time, its foreign investment activities were sidelined while the company focused chiefly on major projects at home.

No longer. "Because of ecological pressures, there's less and less infrastructure being built in France," says Pierre Lescaut, the group's corporate secretary.

Brazil is a country where you can't just build a business by bringing in expats

"Also the completion of the French high-speed rail programme and the major highway networks means there is unlikely to be a need for big infrastructure projects of that kind for some time. It makes sense to take our experience to other places which still have some catching up to do."

Target Brazil's second cities

While it has subsidiaries in Russia, Tunisia, Egypt, Morocco, Greece and Senegal, Setec has most recently set its sights on Brazil. It has established offices not just in São Paulo but in the north-eastern coastal city of Fortaleza – and that's no accident.

"In Brazil's major cities, there's quite an extensive engineering capacity," says Lescaut, speaking as he planned to attend HSBC's International Exchange to Brazil. "But there is an unmet need in the medium-sized cities with population of around one million upwards."

"These cities are growing rapidly, and currently rely on buses and other out-of-date transport systems. These cause a lot of accidents and pollution. We're hoping we can help to provide a more modern and reliable kind of transportation for these cities."

Melt in to the local culture

Setec decided to enter the Brazilian market by acquiring an existing company there. The firm it chose specialises in dams and hydraulics and is long-established – it has operated even longer than Setec itself, which was founded in the 1950s.

"Brazil is a country where you can't just build a business by bringing in expats," says Lescaut. "In fact, 90% of our business in the country will be handled by associates from the Brazilian business – we'll just be adding a touch of French experience.

"They will help us with the regulation, which is heavy and rigid. But we still need to make an effort to understand the Brazilian culture and be accepted in the engineering community there. Our aim is to melt in."

Keep up the African connection

In Senegal, Setec took a different approach, setting up its own subsidiary. Its projects there include the design of part of the motorway from Dakar to its airport. Now it is also seeking opportunities in creating railway systems to serve the mining industry.

The Senegalese government welcomes foreign investment and it takes just 10 days to establish a foreign-owned limited liability company – among the fastest in sub-Saharan Africa.

"There's still some French culture in Senegal, though recently you almost find there are more educated people speaking English," says Lescaut. "But there are many opportunities in what we call linear infrastructure – motorways and railways – and the more interesting field of tunnels and bridges."

Consider Qatar

Setec's next target is not another of the BRICs, but Qatar. Lescaut says the company regrets missing opportunities linked to the growth of Dubai and Abu Dhabi.

In this territory, Setec plans to set up an international branch, working mainly with resources from France and other foreign companies.

"The Qatar World Cup may not be till 2022, but there are stadiums, hotels and convention centres to be built," says Lescaut. "Being employee-owned and relatively flexible, we expect to be able to adapt to the market very quickly."

Key points

  • Many of Brazil's transportation systems are out of date and need modernizing
  • Brazil's second cities present a market opportunity
  • Smaller markets such as Senegal and Qatar are also presenting opportunities for engineering group Setec
Best Global Trade Finance Bank, GTR Leaders in Trade 2014

More from HSBC

Back to top