The Brainport region is an important growth engine of the Dutch economy. It is therefore very important, both for the region itself and for the country, to further strengthen this position. The fact that this not only increases the earning capacity but also makes it possible to tackle numerous societal challenges, makes that goal all the more relevant. In a series of 12 articles, Innovation Origins looks at the most striking issues within this endeavor. In this, we are guided by the research report ‘Brainport at the top‘ that Rabobank published in collaboration with Strategy Unit. Today, in the fifth article in this series, we look at the importance of internationalization.
The collaborative system of high-tech companies within Brainport is so successful that people sometimes think out loud about exporting the entire ecosystem to an interesting location abroad. One suggestion that emerged from the roundtable discussions Rabobank had with the regional stakeholders is the formation of ‘Brainport hubs‘. That way, “you can copy the success of the Brainport region to other places in the world”. Whether that can really work, we may soon know, when the Sino Dutch High-Tech Innovation Port in Suzhou, near Shanghai, has shown what it is capable of.
Founder Hans Duisters of Sioux Technologies has been committed to this initiative for more than two years already. The idea could meet the various needs of companies that want to focus on the Chinese market, he thinks. “We are building a safe landing place for companies from the Netherlands. A trusted environment in which you can share things like recruitment, sales, cleanrooms, assembly, showrooms, and even R&D, without the risk that the Chinese will immediately walk away with your idea. You have to see it as the collaboration model that we also know from Brainport Industries, for example”.
Several major companies from the Brainport region have already made the step towards the Suzhou region, such as – in addition to Sioux itself – Frencken, NTS, VDL, Prodrive, and Neways. And that’s quite understandable, says Jos van Rooij, Senior Relationship Manager for the Industry Sector at Rabobank Corporate Clients. “It has major advantages: it strengthens the bond in the value chain, but it also makes it easier to find new talent on location, for example. This enables the suppliers to grow along with the OEMs, which reduces their risk.”
His colleague Hilde van Gastel, Credit Risk Manager Corporate Clients, even sees a mutual interest. “The internationalization of the suppliers started by following the steps of the OEMs. Not only the suppliers but also the OEMs themselves benefit from a better spread of risks for their suppliers. Internationalization creates new customers, suppliers can grow as a result and are more resistant to more difficult periods. As a result, the one-sided dependence decreases with the result that an OEM sees its own network of suppliers become stronger.”
Opportunity and threat
The Rabobank report mentions internationalization as both an opportunity and a threat. “In order to prevent companies from relocating abroad, investments must be made in those environmental factors that make it possible for companies to continue to operate internationally. The unique partnership in the Brainport region will therefore become even more important.” According to the stakeholders, this collaboration can then also be used to compete in the global market. “By making use of each other’s networks, you help small companies to gain access to other large companies as well.”
Of course, this does not have to be limited to China. According to the interviewees, there are also sufficient opportunities within Europe. “As an industrial producer, we are looking at examples and areas where competencies cluster,” says one of them. “The shortage of technically trained personnel is one of the reasons for this. There are also regions elsewhere in Europe, with a technological profile that is very good for us, and qualities comparable to those of Brainport Eindhoven.”
In order to be able to really take steps, it is not only necessary for companies from Brainport to be able to spread their wings abroad; something also has to happen ‘at home’, says Yorick Cramer, Sector Specialist Industry at Rabobank and one of the authors of the report. “It only works if both aspects are taken care of: local facilities and international opportunities go hand-in-hand. The region itself will have to invest locally in facilities such as infrastructure, the availability of capital, but also in knowledge. And at the same time, connections will have to be made to open up a network that will enable suppliers to achieve their assignments elsewhere. We need this combination of actions if we want to reduce their dependencies.”
Naomie Verstraeten, Program Director International for Brainport Development, is at the heart of this effort. She and her team help Brainport-based companies to establish contacts all over the world. “With organizations such as Brainport Development, Brainport Industries, BOM, and HightechNL, we focus on the needs of the companies. We do this by conducting dozens of interviews using a structured format and then bringing them into contact with relevant networks. Experience shows that these networks are often closer to home than you would initially think.”
With small-scale meetings and round tables, Verstraeten and her team bring together small, large, regional, and regionally based foreign companies. “All these companies have relevant international networks that they can easily and quickly make accessible for each other. From our point of view, internationalization starts here in the Brainport region. Of course, it is good for Brainport partners to work together abroad to join forces and open up new markets as a region, but at the same time, this should also be used to entice relevant companies and institutes from that region to become active here.”
Verstraeten hopes that this strategy will make foreign organizations so enthusiastic about “our way of working” that they themselves want to become part of Brainport. “In this way, we will broaden and strengthen our own ecosystem. And it prevents us from building a copy of the Brainport ecosystem elsewhere in the world without the incentive for those foreign companies to become active here in our region as well. Only exporting activities from here without getting something in return as a region would bring us nowhere. So working together under the Brainport banner, with the Brainport partners, in the Brainport way is definitely a good thing, but only with the strength of the ecosystem here as a starting point. That is the way to ensure that we continue to grow and diversify in our own region in the future.”
Far from enough
No matter how good the initiative of Sioux Technologies in Suzhou is, for Hilde van Gastel it is still far from enough. “We know Suzhou is not the only place where you can see a Brainport-like collaboration emerging beyond the country’s borders. It’s also happening in southern Germany, for example, and there are other places where it’s being tried out. But we could tackle this in a much more structured way. The collaboration that has been so successful here within Brainport is still too rarely seen abroad.”
According to her, this is particularly necessary because the challenges within Brainport are already high enough. “Look at how much effort it takes us to find the right talents. If the growth of Brainport companies would only be in this region, that challenge will only grow.” That’s why she thinks it would be better to continue to expand Brainport’s ideas in other parts of the world. “The name ‘Brainport’ can create the leverage you need. With such a strong brand name, your introduction is way more effective than when you try it as a single supplier. This has proven to be efficient in the past as well: as a company, on your own, you need an incredible amount of money, energy, and time to penetrate a new market, and even then – certainly in the high tech industry – there is no guarantee of success. Under the flag of Brainport, this can be done much easier. This is a big opportunity for the future.”
Internationally, Brainport is a much stronger brand than many people in the region are perhaps aware of, says Yorick Cramer. “This brand can open doors, companies can benefit enormously. Just take a look at how Brainport Industries has tackled this: by collaborating across competitive boundaries, a lot is also possible abroad.”
Hans Duisters can only confirm this. “If we work together instead of competing, we can make the cake bigger for everyone.” In other words: what applies to China could also become a success elsewhere.