“Expanding overseas is not a decision to be taken lightly. A detailed evaluation needs to be undertaken. In your evaluation I would recommend you start by carrying out a SWOT (strength, weakness, opportunities and threats) analysis of operating in this new country.
A few considerations before expanding overseas include the following:
- Penetrate a market in a country which is not already well serviced by locals. Venture only in countries where you have a competitive edge otherwise it will be difficult to win business over the local suppliers;
- Obtain familiarity of the culture, religion, politics, traditions, weather, community values, practices especially their festivity season and most of all keep abreast with local news;
- Factor in time difference between your home country and overseas venture and evaluate whether this will impact your modus operandi;
- Obtain an understanding of the legal structure of doing business overseas, such as licenses, tax system, sanctions, health and safety rules. Compare these to your home country and bridge any gaps between the two systems. Determine whether you can manage these gaps.
- Decide on whether you will be requiring a local partner to be part of the business undertaking. This can be of great value especially if he/she supports you in obtaining a fast track understanding of the laws, regulations as well as how to go about in managing day to day business. A partner can be of great help in choosing suppliers of services to your business and reducing your operating costs structure;
- Repatriation of funds. All profits derived from an overseas joint venture need to be repatriated to the foreign shareholders. Ensure the country you are operating in allows the repatriation of funds. Also obtain an understanding of any withholding tax payable on dividends/management fees due on payment of monies;
- Hedge yourself against currency risk between the currency of your home country (head office) and the overseas country you are operating in;
- Allow yourself time to understand the market and environment you will be operating in by spending considerable time in the foreign country you intend venturing into. This includes being in country during various time of the year. This will give you an insight of when is the holiday season, which is the most productive day of the week;
- Language barrier; lost in translation. Engage someone who can carry out proper translation of your meetings with stakeholders involved in your business decisions. Wrong tenses/verbs may at time be used by your stakeholders which results in a completely different message being communicated to you, ending up agreeing to something not to your liking;
- Understand the definition of punctuality in the country you will be operating in. E.g. in one culture a meeting/social event starting at 8.00hrs means everyone turns up at the precise time, in another country a meeting commencing at 8.00hrs means that the meeting starts at around 8.00hrs;
- Appreciate distances, coming from a small island nation everything is close by. Countries are huge and distances and modes of transport need to be taken into consideration when planning your meetings;
- Last but not least respect the local culture and gain acceptance by the local community, partners and stakeholders. An entity venturing overseas solely with the intention to solely make a short-term gain/profit will be perceived negatively by the local Authorities and the local community. It will be short lived. Demonstrating and providing in country value secures your long-term presence in the overseas country one intends setting up shop.”
A full transcript of the interview is below:
Monique: Welcome to our Established Business Person series with me Monique Chambers and my guest this week is Karl Bartolo from MEDSERV.
Now you’re the CEO now, but you’ve been there long, long, long, long time.
Karl: Yes. I’ve been with the company for over 10 years now. Started off as a financial controller.
Monique: Ooh [Laughs]
Karl: And obviously as the company started growing, I started getting more involved in the management side of the decision making and the process and as we’re going to look at the projects, so eventually have grown up more and joined the management team as CFO and eventually took the role as CEO after shadowing PVC over a couple of years.
Monique: So what did MEDSERV do when you joined and what do they do now?
Karl: Okay so MEDSERV at the time back in 2008 was primarily just an oil and gas service
center and logistical base for the Libyan offshore markets.
Karl: As the company had taken the direction of increasing its geographical spread and reduce risk of dependence only on one market. So at the time we were looking at Cyprus, being one of the new places and then after that Portugal, some projects in Egypt and then went even to Tanzania and following that I decided that we need to increase not only our geographical spread but also our client base and our services so we looked into the Middle East being the market we saw that at the time we anticipated that there is going to be a downturn in the oil and gas industry as price began to collapse so we focused on the Middle East being such low cost area to extract oil as compared to some place like Alaska.
Monique: Yes longer way to travel. [Laughs]
Karl: Yes. So at the time we decided to acquire a company in the Middle East which had already three operating locations which were Iraq, Oman and UAE and so after adding that to the portfolio, additional projects started and more opportunities started coming as we presented ourselves in a total of five locations.
Karl: Our main client had also taken a drive to look at Egypt at the time so then we followed their lead and evaluated the Egyptian market and invested in a project there on a long term basis because this is only 18 and now we have a new location concern which is a few pieces in South America close to North and close to the Caribbean Sea.
Monique: So that’s awful to have to travel to isn’t it? [Laughs] Karl: No it’s quite a good place to go, a bit different. [Laughs] Monique: So what do you do? What does MEDSERV do?
Karl: Okay MEDSERV serves the oil and gas industry. It’s main two segments are the shore based logistics so in layman’s terms we manage a shore base, could be our own shore base, could be the client shore base, could be just a pop up shore base which is the place where all the supply vessels working on an offshore project will call to collect the material, unload the material, waste and all the related products. Imagine you have an island in the sea and it needs all the support for foods, for supplies. So that’s the time that needs to be supplied versus are supplying the platform and that’s the shore base where all the contractors are meeting at a certain point.
Monique: So it’s not just waste of oil and gas it’s the waste that has been on the ship. Karl: Exactly.
Monique: Ah okay and can you deliver their food and that kind of thing as well?
Karl: That’s only worship thing, we do more for the project side of thing so we don’t own any material, we are managing it. So we are managing pipes for our client, we are managing chemicals.
Monique: And managing logistics.
Karl: Exactly and apart from pipes and materials, we manage heavy duty equipment, and heavy lift equipment. All this is needed at different stages of the project; this is going to the rig and then
coming back from the rig. So we do all that management and all that stocktaking of high value equipment.
Monique: I imagine it being like one of those war rooms where you’re shoveling like this truck is here, this platform is here. We need to get this to this and this to that sort of thing.
Karl: [Laughs] Well we started off pretty much the way you are saying but obviously thank God technology has taken a different process. Imagine your work process; there are different shore bases. This is known as four pH shore base where you have more real time management so the client can quote the stock you have on site, where is location of your vessels etc. so this is all done today with thanks to technology.
Monique: Is there like restrictions of where that ship is coming to and going from and what they can have? Is there anything like that or it doesn’t count?
Karl: Yes one of our departments is the shipping department; a very important role where they have all the certificates so whether the item or even the type of material is a hazardous material, non hazardous, radioactive etc. so there are all different categories for which you have to have all the necessary certifications and storage capability and packaging and how to manage and lift that material.
Monique: The people, the right gear and all of that stuff etc.
Karl: Exactly but that is only one side obviously then you have the other side which is supply chain management; where you have what we do is that you’ve got the oil company and you’ve got the pipe supplier and international oil companies-the big boys- who have a global agreement with a pipe supplier, one of another big boys and these agree on a global level to say, for the coming years I will be purchasing so much tons of pipe and so much costing trillions, not millions but trillions of pipes but because of the new world of how the oil and gas industry operates the caches is important so no one is acquiring the pipe immediately but that pipe is [Monique interrupts]
Monique: Okay that’s something like you acquire the pipe where you sort of rent it while you’re putting your stuff through it.
Karl: Okay to explain it a bit; so you’ve got five companies, the oil company makes a global agreement to acquire pipes from global pipe supplier, obviously they will actually acquire pipes;
they’d say listen; for the next four years we’re going to acquire this much tons of polymer pipes over this period and we’ll pay this price for the cold steel pipe. So what we do is that the oil company will say okay I will need for the coming year 100,000 tons of that and so basically it’s pay per use. So what we do is that the pipe manufacturer will supply the pipe in the region and we collect that pipe, manager it and then sell it as soon as it leaves the gate so basically Just-in- time sort of process. In summary, no oil company wants to hold stock of material because it’s dead money. Pipe suppliers want to sell so one of the pipe supplier is taking the management of the pipe and the oil company will only purchase the pipe on consumption. So we have the supply chain management for that, and this is something which is one of our biggest jobs in Oman let’s say.
Monique: It’s quite complex as well.
Karl: Yes, I mean we manage our own seventy three trailers a day in Oman and so in terms of volume it’s twelve to fourteen thousand tons a month. But to put it in perspective sixty to seventy trailers a day.
Karl: Just seeing those in front of your doorstep.
Monique: And I guess in each country, obviously there are different laws, different requirements.
Karl: Different cultures.
Monique: Cultures, yes that must be quite something as well.
Karl: Yes HR. I mean there’s a whole management team. You’ve got HR as the key drive because you’ve got Middle East who have different cultures, you’ve got Indian, Pakistani workforce and Egypt is North Africa.
Monique: And doing the deals.
Karl: Yes, it has an impact and you have to play along and sometimes maybe as we are coming from Europe and we meet here today they’d ask what was the reason. Usually the process is much more longer, you first gain their trust and their comfort and then you can move on to actually start negotiating.
Monique: So all others are quite close together but Suriname? [Laughs]
Karl: Well it wasn’t on the radar as you can see. Basically Suriname came to the picture through our reputation so at the start we always wanted to venture out of the Mediterranean and after that Middle East was the geographical spread and with that we got the increasing client base. Obviously that gave us also another segment; international shore base logistics what we call ILSS – Integrated Logistic Support Services and OCTG which is Oil Country Tubular Goods so we have created two new segments, we have created a new geographical market and then also additional clients.
Obviously we said listen; we need to spread even within the individual units so our shore based logistics was very centric to one dominant player which is based in Mediterranean base so we were putting our eye on BP.
At the time we as a state had participated in Trinidad in the Caribbean and we actually lost the tender but we had taken the position to shut down all our costs there. Then one fine morning we received an invitation from Statsali, why not consider it as okay so it doesn’t cost us any money and you can use the same information we had for Trinidad and sort of just put in a desk you know research. So we did that and from June last year all of a sudden with 30 million contract over 15 months period which in terms of culture is a completely different site.
Monique: Yeah especially in Eastern or other things.
Karl: Everybody is smiling there’s no problem and yeah. So but obviously this is something
which we started recently so it’s going to be a learning curve for us.
Monique: So on a typical day now what happens are you in Malta often or do you visit your sites often how does it work as now CEO?
Karl: Originally as I started off I was very much Malta based. Here I really don’t need an office in Malta, I do have an office but I hardly need to be there.
Monique: A hot desk? [Laughs]
Karl: Yes basically a hot desk [Laughs] And at a typical day normally you’ve got the regional managers for each area so I would correspond with them; I can even work from home and get the updates it so now you’re talking of seven days a week because you got the Middle East and North Africa which is a Sunday and Friday that you’ve got Cyprus and Portugal which is Friday and same like Malta.
Monique: And long lunches? [Laughs]
Karl: [Laughs] Yes, we do have those an then you have got Suriname which is a four hour difference in time zone. So, Dubai is always two hours ahead of us, then it’s Malta, then it’s Suriname where people wake up
Monique: And you’re finishing off almost.
Karl: Exactly. I spend my time usually chasing new clients. I mean today as a CEO my role is not managing the people but more taking responsibility for their decisions. The management role I think has developed more as just getting informed of what they’re doing and where they feel they need to consult something before taking a decision.
Monique: Do you still sort of cut deals and do the numbers behind things or you have a team now that does that?
Karl: No when it comes to a new project, obviously with our CFO and his team does the actual crunching of numbers but then the final decision I’m usually involved in there and say listen; what should we do? I mean are we comfortable with this? So yes I would get involved at that level but not for routine work or for a new project let’s say Suriname. So Suriname is something new, it’s a new client, like can we trust in terms of credit worthiness? It’s a new region. I mean you can have all your credit checks but then you’re going to come and ask if you’re comfortable with taking that decision
Monique: And also the currency rates and the fluctuations all that stuff?
Karl: Luckily the oil industry is very much dollar based so that’s covered. I mean in fact we are a Europe based company but we’re moving towards dollar. But obviously then I travel to meet the clients.
Monique: In the right seasons? [Laughs]
Karl: [Laughs] When needed. I usually concentrate to areas where we are restructuring and where we need more support. I mean the target is results very much as obviously I come from a finance background but obviously evolved from that before I used to think finance is the beginning and end of everything and they’re the most important people in the company, obviously as you progress you realize that other areas are equally important like HR, IT, HSC so everyone has an equal balance and not be skewed towards finance. I tend to concentrate my time and focus on areas which need more energy to get that going as because of bureaucracy, political risk and all that.
Monique: There might be some interesting situations I guess and we’d like to say different nationalities almost every year
Karl: Yes different people , different cultures, I mean tomorrow I’m in Tripoli, following week I’m in Cairo then in Dubai so even in terms of your standard of living all of sudden this is like you’re staying in the hotel etc.
Monique: When you come home and you don’t have a butler. [Laughs]
Karl: But I mean in certain countries or in some remote locations you could pay whatever you like what this is what there is. I think things which you encounter and get used to and maybe you don’t find them you really get immune to them is all the airport security checks I mean, the places I go to aren’t normally places which is EU, Shenghan.
Mostly we’re going to Libya, I mean at passport controller and customs. There’s always some story and there’s a reason why are you here and all the different questions. What are you carrying?
Monique: Do you speak other languages as well?
Karl: I’ve picked up Arabic obviously because of the Maltese language. Monique: That helps a lot. Just try a bit.
Karl: Exactly so that is yes. Apart from that Italian obviously because our main client is Italian. Monique: Okay, that’s enough languages. [Laughs]
Karl: It’s also about learning different cultures I mean one of our clients is Japanese how you go about with the process of greeting them and all that. I think what is more important is to get to know what’s happening in those countries.
Monique: Yes, being aware.
Karl: What’s happening in Egypt and Middle East because that is equally as important.
Monique: You can’t drop jokes or say something because you just don’t know the inside story or anything and it can be sensitive.
Karl: Exactly. Some regions I go to I mean they’d even ask about your children you know, you went out for dinner with your wife, just coffee with a male friends and nothing to do. Well they have got the different culture.
Monique: Do you have training in that or it’s just something you learn over time?
Karl: I haven’t got official training and that’s what you learn over time. I mean, I’ve been out in years and thanks to the senior team and boards people like Anthony trained me to understand this. I mean there are simple things which I learned by accident. So like say what not to do in Ramadan. Ramadan, you can’t even drink water. I mean in Ramadan if you open the bottle to drink water in middle of the road, people would say what are you doing?
Monique: The trick is to not travel in that time? [Laughs] Or get them to come and see you.[Laughs]
Then I think things can change slightly But no, because it’s such a minefield of knowing what to do and what not to do. My partner travels a lot for business and he comes back sometimes you’ll never believe. [Laughs]
Karl: I mean even the means of transport in some places. I’ve been to lots of places in Africa, I’ve been to Senegal, Mozambique, Mauritania, I mean is that car still functioning? [Laughs] And I mean six people on a motorcycle?[Laughs]
Monique: Must be a great photo book. [Laughs] So you’ve got this global team you travel almost every week?
Karl: Yeah you can say pretty much yeah. But every other week for sure.
Monique: And what about any other things? Are there things that you just think oh I hate this part of being a CEO. Is there something you just like oh I wish I was still the finance director because I wouldn’t have to do this if I was a finance director?
Karl: Obviously sometimes you find yourself alone in certain decisions because everyone is going to turn to you and say this is now your call you have to decide obviously awkward decisions, I mean difficult ones like no one likes taking them. So that is the area maybe and in finance you have always a team around you.
I don’t think there’s anything in particular that I find difficult. What I like most about it is the challenge to achieve the result and getting their competition.
Monique: But because you’ve been in the company for ten years and obviously you’ve done very well but is it like now no one says well done anymore? Because now you’re at the top and you’re the one that says well done?[Laughs] Because you know you don’t have anyone to pat you on your back. Or is it different within MESERV?
Karl: No. I obviously report to the board of directors. More than all that you’ve got the general public now.
Monique: Yes you’re right.
Karl: So now you’re facing around 400 shareholders, bondholders. So ultimately, you’ve got the whole audience of public and even a simple stockbroker can praise you or criticize your decision making. So it’s all there at the same time, but more public I think.
Monique: And what are the best bits about having worked your way through this company?
Karl: I would say the best thing is that I could see there’s still lots of potential and I can be part of that team that is around me, which I’m pretty pleased that I think we’ve got a very good solid team. I think the next I would say in last one to four years we’ve got tremendous growth opportunities and being on the surfboard and riding the wave of that obviously we passed through quite a tough two to three years so this is now the opportunity.
Monique: And you’ve got one base now in South America who knows what’s next? Karl: Yes I mean, the pipeline of business is always running.
Monique: Ah the pipeline. Sorry [Laughs]
Karl: [Laguhs] Yes I mean that the business opportunities, more you spread the more you learn and then with success you start getting and we have a nice team and we have reached a level where sort of working on a region let’s say Lebanon where the client said oh no MEDSERV does not need to complete the questionnaire documentation because its already recognized as international service provider and this was something we got from international oil company so very comfortable as your preceptor me before we’re very much Libya Malta centric. Now we are really international but I think the thing which I would say going back to your question was when we signed a new deal and the new contract I mean, then you put all your hard work and your patience pays off at the end.
Monique: And the midnight phone calls.
Karl: Yeah, that’s the other side. The pressure is always there, especially when you’re having a tough period. That is the area where you feel will we make it through? Will this succeed? Is this the right decision? Have I taken the right choice?
Monique: But now I’m just thinking because now you’re sort of way outside of the MED you’re going to change your name. [Laughs]
Karl: [Laughs] We did have this thing. I mean we were obviously originally MEDSERV Malta and that was the original name. It was MESERV and then it was MEDSERV Malta our domain our logo. Obviously we’ve changed that to MEDSERV Energy because it’s more energy service
company. Obviously it still has connotations as you put it. I mean on international level the most common is that MEDSERV is a pharmaceutical company, that is the one which is the most common when it comes to registering in a new country but other than that No we are not intending. I mean we can call our brand name as MEDS in the Middle East. We didn’t change as a member of MEDSERV. The other thing to add to that is that we’re not really limited to even when it comes to how do you operate in certain remote locations we will play a much tighter to the old company to the national company. So the feedbacks of BP, Shell share and the native service providers Halliburton they know us internationally, that place for us is not really changing the method of operations so MEDSERV doesn’t really have its link to the Mediterranean per say
Monique: So let’ say if I interviewed you again in five years time how many more countries do you think you’ll have travelled to? Numbers man. [Laughs]
Karl: [Laughs] I mean in our positions it’s more about how many have you secured and that’s more important I would say. In terms of geographical spread I would say we have grown quite quick fast in a very short time, there’s also a lot of opportunities in the existing regions we are operating because of development and the recovery of the industry but I would say if I had to put a number on how many new areas I would say two at least if not three. I mean biggest new areas today you’ve got are West Africa, Senegal and Mauritania. We have a project in specifically in Uganda we’re following through. I think it’s stuck on a bureaucratic level more than the client has awarded us the contract but they need to get the government approval. Mexico is another big area.
Monique: Now that’s a great place to travel to, Best field in the world.
Karl: The industry over there, the government has liberalized and opened on international level
for service providers to enter and set up shop there before that it was all state controlled. Monique: Okay
Karl: Soon I was going to bring something to the table there is Guinea which is quite big in the region and next neighboring Suriname so I would say at least two to three.
Monique: Fantastic well I’ll be watching your progress thank you very much that’s Karl Bartolo from MEDSERV and me Monique Chambers.