Dirk Vandenberghe, Ph.D.

Name: Dirk Vandenberghe, Ph.D.
Occupation: Trade Commissioner at the Belgian Consulate in New York and Managing Director of Flanders Trade Agency in New York.
Backround: Previously served as Trade Commissioner at the Belgian Embassy in Bangkok, Thailand, and Managing Director of Flanders Trade Agency in Bangkok; Commercial Attaché at the Royal Belgian Embassy in Bangkok; Commercial Attaché at the Belgian Embassy in Sofia, Bulgaria, responsible for Romania and Bulgaria; international business development manager at Metallo Chimique, Belgium; product manager, Unilever, Belgium.
Education: BA in Business, State University of Ghent, Belgium; Graduate School Studies at the Solvay Business School in Brussels, Belgium; PhD in Economics at the Karl Marx Institute in Sofia, Bulgaria. Fluent in Dutch, English, French, German, Bulgarian, and Thai.
Age: 37
Family: Married with two children
Residence: New York City

PBN: Why are you in Rhode Island?
VANDENBERGHE: I’m the trade commissioner in charge of the East Coast to promote Belgian exports. I focus on the Flemish State. In Belgium we have three states, Wallovia, the land of the Walloons and Brussells being the other two. Flanders covers about 75 percent of exports, so this is the export oriented state. I do belong to the consulate, but I mainly work with the state government of Flanders. Our goal is to help Belgian exporters find a market here in the U.S., to promote Belgium as a destination for American investment. We also help American companies to export to Belgium, because we are a very open economy. Some of the goods are re-exported. So basically we promote trading in all different directions. I could stay the whole time in New York and could probably meet loads of consultants and lawyers and bankers. But we know that we are an economy of small and medium sized enterprises. The global companies need less and less. We are like a government agency that helps start-ups and medium and small sized enterprises, so we focus on consumer goods, technology, high-tech services. Those are the areas of our interest. If you want to focus on those areas you have to get out of New York. Entrepreneurialism is basically in the countryside. I try to go out one trip a month to another area in the U.S., the East Coast, where there may be more potential for bi-lateral relations.

Is this your first trip to Rhode Island?
This is my first trip to Rhode Island. The idea came from a visit I made in December to the Belgium Higher Diamond Council. Antwerp, Belgium is the most important world center for the trade of diamonds, both industrial diamonds and polished diamonds. Those people told me that they would like to establish stronger contacts in the U.S. and when I speak about diamonds, we speak about jewelry. When we speak about jewelry I came to the idea of coming to Rhode Island and this was the occasion to come here to speak about jewelry. But clearly we’re open to much more than jewelry.

You met with the MJSA. What might come out of those meetings?
First of all as it was for both parties, completely new, so we have to get to know each other first of all. And clearly before we know what we can do together we have to understand what we are all doing. MJSA is definitely an organization that in my opinion is very compatible with the Diamond Higher Council. I cannot speak for them. I am only the matchmaker. I’m going to sell the idea that I discussed with MJSA. I am going to sell it to the Higher Diamond Council. Then the two associations are going to have to make up their minds if they believe in cooperation.

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And the idea being?
The idea is that, in my opinion, MJSA can benefit from support of Higher Diamond Council, because Higher Diamond Council is the promotion association in the whole of the world for Belgium Diamonds, so they basically have excellent contact with the jewelry industry which are the major buyers of Belgium diamonds in Asia and in Europe. So I believe that that network, invaluable network, is very interesting for MJSA, especially for all the people who produce accessories. If Diamond Higher Council could help MJSA to get better access to the jewelry people around the world, that’s one advantage. MJSA could help Higher Diamond Council get better access to the local, all around the U.S., producers of jewelry and help them to get their diamonds more directly from the source. There are still middle men between the source, which is Antwerp, which is the trading center; all the exchanges for diamonds are there. The export price of the American jewelry is going to be increased (by middle men). By going directly you woul

d be able to reduce your export price so you’re competitive. So the competitiveness is going to get much, much better. That is the second area of interest.

The third area of interest that I see is the Diamond Higher Council is not only the promotion organization, but is extremely strong for all kinds of training activities, especially for the high end professional people. How to use diamonds in jewelry. They have the newest techniques. Those people organize courses around the world; they do the consultancy. I believe that it might be worth it to make joint programs with MJSA. We also talked to the people at Manufacturing Extension Programs (MEP), which is from the Department of Commerce and Science and Technology to increase the productivity of the local companies they have a program here for the jewelry sector. I believe that there could also be a role for the Diamond Higher Council. Those people could come in and consult, sell their expertise on how to work with diamonds and precious stones. All the newest techniques. Maybe there are also possibilities to do a transfer of technology the other way around. But there we did not pinpoint anything yet.

Did you have an opportunity to at least make some sort of assessment on the health of this industry in the United States or Rhode Island in particular?
It’s very difficult for me to touch on that. I could only speak from Belgium by experience. It’s only a guess, it might be very similar. In Belgium we noticed that this industry, if they’re not able to go to very high design or innovative production, techniques and materials, they are basically going to be competed out of the market by lower labor cost producers. We have seen many companies that have been expanding around the world. If you look at the jewelry industry in Thailand, for example, about 60 to 70 percent is Belgium owned, directly or indirectly. What Belgium companies have done is two ways. First, they have been moving their production to lower labor countries and they have been focusing what’s left in Belgium on much higher innovative design. They also have been focusing more on new techniques, new materials, new kind of melting systems, laser techniques, production facilities. I believe that was the direction of the Belgium industry, so I suppose it must be similar here.

Belgium is not involved with costume jewelry. You are dealing with the high end.
We are dealing with the high end. If you speak about costume jewelry, I believe there is still some in Italy, but most of it went to Asia.

I presume, that even from your standpoint, it has to be very difficult for the costume jeweler to compete with lower cost countries.
Yes. So I see for American companies, the same solutions for Belgium companies, to branch our their production to other places, which is always a difficult jump because you keep on hopping around. I noticed, having been trade commissioner in Thailand, I worked a lot with Belgium jewelry and diamond companies who were cutting and polishing in Thailand. Many of them now are moving from Thailand into Laos and Vietnam for even cheaper labor. It becomes almost a gypsy life looking for cheaper labor. You keep hopping around. The other possibility is to aim for better design, better marketing techniques, better production techniques. In other words, go upscale. That’s the most feasible way.

You mentioned a couple of purposes, looking for exporting possibilities for Belgium companies. What do you see in Rhode Island as the potential, besides jewelry?
That’s, of course, the million-dollar question. We believe as the U.S. is growing so strong, we believe that basically each Belgium product with a good quality price stands a good chance. Also the American consumers are becoming more and more adventurous. Also from a consumer point of view there are less and less limits. It all depends on the company. I would start with the other way around. If they are ready to make the market and give what the American consumer wants, adapt themselves to the American needs, put in the money, put in the expertise, they can find for many products. Of course this is a very general answer.

We do notice that our fastest growing areas are high-tech products, as it is exactly the same for American exporters. Services, high-tech, software, bio-technology. On the other hand we also notice that there is also a huge potential for down to earth products, like chocolates, like beer, like upholstery material, carpets, so to come back in a fast growing market, which is very open where the consumers are open minded it more depends on the strategy, it more depends on the willingness of the foreign producer to adapt himself to the needs of the local customer. In other words to invest in packaging, to change the products to the local taste, whatever is necessary. Put in money for advertising, sales, basically whatever Belgium company was willing to do that can find the market, as the U.S. is growing fast. If tomorrow it goes into recession, that’s another question.

Projections are that the U.S. economy will slow. Do you get that sense, or do you have a different view?
At this moment, we don’t really notice it yet. Up to now Belgium exports are booming and it is mainly an indication of the strength of the American economy and the strength of the dollar. If, of course, the U.S. dollar is going to tumble 20 percent it is going to be much worse than a growth rate that is going to go down from 4 to 2 percent. Basically, myself, I remain very bullish on the future of the American economy. I don’t see a recession or anything like that showing up. But what is a bigger risk is the dollar. With the rising current account deficit, there is always the risk that it will turn around and we’re going to end up with a much stronger Euro than U.S. dollar. Then at that moment it’s going to be the paradise for the American exporters. So that is the difficult part for exports between the U.S. and Europe, that’s the Euro dollar, which is going to fluctuate between 20 percent and that’s basically the perfect margin.

So companies that are really serious about the American market, Belgium companies, I tell them you have to invest, you have to have a local investment. My advice is exactly the same for American companies. If you want to do serious business in Europe, European Union is as big as America and Canada together.

How important is it for an American company to partner with a Belgian company?
If you can afford the money and the time, do it on your own. Nobody knows better what you want. But be aware of your own potential, and also above all be aware of the necessities of the local market. If you go it alone, which in my opinion is the best way, you have to be able to adapt yourself to the local needs. In other words, you have to leave behind the American way of thinking. You will have to have the European, the consumer way of thinking. Caring about what they want. Don’t impose your own model. Adapt yourself to the market.

What are the biggest differences in the way business is conducted in Europe and here? What do American companies need to learn?
In general, I believe, that in some areas you are much more advanced. I believe the U.S. is much stronger in customer service. Customer service is an American concept. We can learn a lot. I believe American companies can learn a lot about the control of quality in Europe. In general, many of our European products reach a very high quality level, so quality control is extremely important for American producers, producing in Europe. They are very demanding of that. Then, of course, from a customer point of view there are quite a few differences between eating and living habits. It’s too long a list to give all the differences. The differences are in the details. I don’t think you can say big differences anymore. The world is converging very fast. And the differences are in the details, but the market is so competitive, each company has to identify those details.

Is the biggest mistake a U.S. company makes when it exports not doing the research and understanding the market it is going into?
Indeed. The biggest mistake is to transplant American models, just blindly put them into another market and that might completely fail. It might also mean the market is not ready for such a concept. But in general you better adapt yourself. Just to give an example, if you look at McDonald’s. McDonald’s is not strong in Belgium. A local chain is much stronger, which is called Quick, because they adapted their product line. They took over the idea of the (United) States’ basically quick meals, hamburgers, but they adapted the product line to local needs. They put in much more salads, they made it much more healthy, much more juices instead of Coke and soft drinks. So basically they adapted the idea to the local market. If McDonald’s had done that themselves it would have never happened.

How healthy is the Belgian economy and what are its prospects?
Europe came out of a recession in ’96 and slowly has been growing. Unfortunately we have been hit much harder by the crisis in emerging markets than the U.S. was. We have had a cool off effect since the end of last year, the second half of last year. Now the latest signs are quite positive again. If you look at Flanders, the unemployment level at this moment is about 5 percent. That’s basically American levels. When you go to the Netherlands you speak about basically 3 percent unemployment. It depends a little bit from area to area. Belgium as a whole is picking up steam again. We expect a growth rate next year of 3 percent. Very strong and solid growth.

What impact do you think the Euro will have on American exports to Europe?
We do notice that more and more American companies are investing in Europe. Before only the big ones could afford to have a production unit in all those different markets. Now we don’t need production units anymore in each different market, in each different country. With the Euro, it’s basically a unified market, so American companies, even smaller ones can set up a production unit. The market has more than 300 million consumers, the same purchasing power as the United States. I believe the Euro within two or three years is going to be a real boost to even the smaller and medium sized American companies, thanks to the strong Euro and a little bit weaker U.S. dollar, which is going to be a real boost for the American exports.

 

 

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