The economic troubles that have buffeted Cyprus are well documented: the country is in the midst of negotiating a bailout, mostly to rescue its banks. In the third quarter of 2012, its GDP contracted by 2.1 percent.
It hasn't been easy for Cyprus companies over the past couple of years, but many are using the crisis as an opportunity to restructure or find new markets. And plenty of them are outright benefiting.
For Cyprus firms, exports are key, due to the small size of the island nation's domestic market. In 2011, exports accounted for about 12.5 percent of the country's GDP, according to the Department of Trade within Cyprus' Ministry of Commerce, Industry and Tourism.
And despite the economic crisis or perhaps because of it exports increased by a whopping 24 percent in 2011, to €1.4 billion.
Below we profile eight companies that are finding new and innovative ways to do business during the crisis. Maybe you'll find a profitable business partner among them?
Investing in diversity
Product: Logistics solutions, hydraulic solutions, forklift rentals, water-blasting equipment, retail outlets, among others
Exports as share of total sales: 10%
The Demetriades Group comprises a diverse array of businesses but its international activity mostly comes from its Demetriades Hydraulics member company.
The firm distributes hydraulic supplies from major brands, and products include hoses, gear pumps, motors and filters. The Dememarine division of the hydraulics company is the most active in the group internationally, providing shipping solutions. The company’s engineers are able to fly anywhere in the world to provide services on cargo ships abroad.
The company never had to decrease staff as a result of the crisis. Instead, the company developed its back office, hiring additional staff to do so.
But there were other effects. “We decided to take advantage of the crisis to reorganize,” says Vasos Demetriades, the group’s managing director. “When the market opens again, we will be ready.”
Much of the company’s new solutions, including its own Combi Jet high-pressure water-blaster product and its chain of retail stores under the Ministop brand are designed to provide new avenues for cash flow.
Heating up for exports
Elcora Renewable Energy Solutions
Product: Solar thermal systems
Exports as share of total sales: 0%, but plans to start exporting soon
Elcora makes thermal energy systems – essentially solar-powered water heaters – that are now ubiquitous in Cyprus. But now that the firm has conquered the domestic market, it needs to find new outlets for growth.
“Things are down now, due to the fact that there is very little construction going on [in Cyprus],” says Marios Nicolaou, the sales manager and one of the co-owners of Elcora Renewable Energy Solutions. The company still does business domestically replacing old systems, an activity for which the government provides subsidies. But to grow, it must find new markets.
And when it comes to starting up exports, the company has ready partners in Morocco and Spain – where it is also waiting for the market to pick back up – and is looking at Portugal, as well as Middle Eastern countries such as Lebanon and Egypt. In five years, the company hopes to be exporting to at least two of these countries.
For new markets for this technology, like Poland, Mr Nicoloau has a warning: “They have to focus on quality, you can’t always look at price first. Because if people buy low-quality products, they lose trust,” and won’t want to invest in such solutions – even high-quality ones – in the future. “If you [bring such products to the market] correctly, it will save the Polish people a lot of money,” he says. “In Cyprus, we are focusing on quality. The Chinese helped us with that.”
Piping in creativity
Elysee Plastic Pipes and Fittings
Product: Pipes and fittings
Exports as share of total sales: 35%
Elysee produces pipes and fittings, and exports its products to 65 countries worldwide. That doesn’t currently include the US, but the firm is looking to enter the North American market now.
“Previously we had stayed out because we felt we weren’t ready,” says Panos Protopapas, the company’s general manager, citing specificities of the North American market that aren’t necessarily present elsewhere. But the firm is now making steps in that direction.
The company’s new 10-year strategy to 2020 sees it becoming one of the top players in the plastic piping industry worldwide. “That doesn’t mean we want to be in the top 5 or even the top 20 biggest,” says Mr Protopapas. “It means we want to be considered among the best peer-to-peer.”
The firm also wants to swap its domestic-to-export sales figures, gaining 65 percent of its sales from exports by 2020. Along with North America, the company is looking to increase its presence in Latin America and former Soviet bloc countries.
Staying on the sunny side
Enfoton Solar Ltd
Product: Photovoltaic devices
Exports as share of total sales: 98-99%
Tassos N. Roussos, marketing and sales director at Enfoton Solar Ltd, a Cypriot company that makes photovoltaics, isn’t shy about how he feels about European inaction over Chinese dumping practices. “Europe is doing nothing – it’s waiting to be slaughtered,” he warns. “If Europe wants to be part of what’s coming, they need to get off their asses.”
The entrance of Chinese companies into the market has proven a second dragon that European photovoltaics manufacturers have had to try to slay in recent years, along with the economic crisis.
Still, Mr Roussos isn’t worried about the future of the industry. “The market is there,” especially as a result of European directives, he says. He touts how photovoltaics produce energy in line with consumption habits – they produce energy during the day, when most energy is being used, and none at night, when little energy is being used.
He’s confident in the capabilities of his own company as well. It exports to Germany, as well as to countries “from Spain all the way to Greece,” and everything in between, he says. The company is such a force in Cyprus’ economy that photovoltaic semiconductor devices comprised the country’s fourth-largest export category in 2011, entirely resulting from Enfoton’s sales.
Blaze of success
FirePro Systems Ltd
Product: Fire Extinguishing Aerosol Systems
Exports as share of total sales: 90%
FirePro doesn’t produce your father’s fire extinguisher. The devices most of us are familiar with contain pressurized gasses or liquids that spray forth from a cylindrical canister. This Limassol, Cyprus-based company produces fire extinguishing solutions that are altogether different.
For one, the basic component is a solid, composed of a blend of potassium salts. When the device is set off, it heats this compound to a few hundred degrees Celsius in a matter of two to three seconds, rendering it into an aerosol made up of nitrogen gas and potassium carbonate particles that extinguishes the fire. The units are stand-alone and easy to install, and can be installed in rooms, inside safes or cabinets, or in a rack of computer servers.
“This year our growth in turnover reached 30 percent,” smiles Dr G. Gianfilippi de Parenti, the firm’s executive director. Demand for the company’s products has rocketed despite the crisis in other sectors.
For the future, Mr de Parenti wants to continue to expand his company’s reach, now to the US, where the company has just begun selling its products, and also to Africa and the Far East.
G & L Calibers Ltd
Product: Shotgun cartridges
Exports as share of total sales: 70-75%
G & L Calibers Ltd makes shotgun cartridges for hunting and clay shooting, mostly under the Victory brand. All of the company’s production is produced in Ergates, just outside of Nicosia.
Like other Cypriot companies, the crisis has fundamentally changed the way the company does business. The company pivoted from its focus on the US market towards Asia, particularly the Middle East, but also India, where a growing middle class has brought along with it a growing popularity of clay shooting. India, Kuwait, Dubai, UAE, and Jordan now comprise some of the company’s most important export markets. Some 70-75 percent of the company’s production is exported.
Evelthon Psimolophitis, the company’s managing director, sees positives as he looks to the future. “The crisis will balance out the market,” he says. Once the crisis has run its course, companies that survive will be those that have a quality product and a viable business model, he adds.
Sailing with the winds of change
Karnic Powerboats Ltd
Product: Motorboats 18-30 feet long
Exports as share of total sales: 95%
Karnic Powerboats makes small yachts and motorboats. Some 95 percent of the company’s turnover comes from exports, to around 40 countries in all, company officials say. And the company is willing to move into new and unheralded markets: it exports as far afield as New Zealand, and to places as isolated as Greenland.
Nicos Karaolis, the company’s managing director, says that it has reorganized every year since the crisis hit in 2009, and invested has significantly to do so. It has gone from one building on its site in Limassol, in southern Cyprus, to three. In another change from pre-crisis days, the company now produces two new models per year.
The company’s strategy of changing quickly when the times demand it has held it in good stead, and Mr Karaolis remains optimistic.
“I’m always optimistic,” he beams. “We plan what we are doing. We don’t wait to see what will happen. We have a plan B, we study, and we adapt.”
Product: Cleaning products, detergents, cosmetics
Exports as share of total sales: 15%
ZX Fami makes cleaning products, detergents and cosmetics, many of which you may have used yourself. The company supplies European giants such as Henkel and Schwartzkopf, according to company officials, while also producing under its own brand and for chains such as Lidl and Carrefour, which sell the products under their own brands.
The company is keen to emphasize its eco-friendliness and its innovativeness. It points to its waterless car wash and wax product as an example of both. It boasts of its large number of ISO certifications, some for quality control, good manufacturing practices and environmentally friendly production.
“We won the first environmental award from the Cyprus government for ecological products,” beams Christos Zachariou, the company’s managing director.
The company makes dozens of products, and supplies both the domestic market as well as Middle East and European markets (their share in export sales is 50/50, says Mr Zachariou) – all with just 25 people. That’s a credit to the company’s innovativeness and its investment in R&D, according to company officials.
Want to learn more about potential partners from Cyprus for your business? Contact the Cyprus Trade Center in Warsaw.
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