Please note that the term "foreign technologies" was widely interpreted to mean "Western technologies." Technologies from other CEE countries (not surveyed here) are generally not considered very competitive - they usually fall in a similar price range, and have quality comparable to that of domestic products. Hence, local technologies are preferred.
There was a slight preference (60-70 percent) for buying foreign-manufactured environmental technology from domestic representatives compared with buying directly from the producer abroad. An important factor behind the purchase from an in-country dealer was the availability of after-sales service. Customers buying directly from abroad generally tended to be either foreign-owned companies, or clients requiring very specialized and customized solutions.
Product quality and reliability, warranty conditions, good value for money, lowest possible cost outlay in achieving the required standards, previous experience with a supplier, and references, are determining factors in purchasing choices. Additionally, in all countires except Slovenia preferential credit or financing from the supplier significantly increased the chances of selling products. In the case of R&D institutions, product quality and references clearly take priority over price.
According to respondents, due to the pervasive lack of money, most environmental technology end-users (municipalities, business) select the cheapest technology available on the market that enables them to meet the required standards. Both municipalities, as well as businesses must meet environmental standards (and corresponding deadlines) set by environmental enforcement bodies. At the same time, they are coping with pressing economic issues which are usually perceived as more important. Thus, they try to find the cheapest environmental technology providing a minimum level of compliance.
From this point of view, local manufacturers of environmental technologies enjoy the unparalleled advantages of cheaper products, lower installation costs, and availability of local technical service. It is important to also note that in many countries of the region, public tendering provisions give preference to domestic technologies if they are of similar quality and technological efficiency compared to the foreign competitors.
Other, albeit less significant advantages, included "user-friendly technology" (30-50 percent), and "easy to customize and adapt for specific local needs" (30-50 percent). Frequently noted in the latter category was the advantage of equipment which could be used for a variety of purposes, e.g. measuring equipment, or waste transport trucks.
"Available credit/funding" was a significant factor among a third of the respondents. Interestingly, some experts mentioned that, in practice, such financial support was often rather illusory, because no domestic financing institution would become a funding partner, or, when they did, the preferential foreign funding was made as expensive as a regular commercial credit.1
"Good after-sales service" was rarely indicated as a strength of foreign environmental technologies (20-30 percent). As a matter of fact, several environmental companies complained about the superficial and careless approach of foreign companies to after-sales service.
Not a single expert mentioned low price as an advantage of foreign technologies compared to domestic products. There were comments, however, that some foreign suppliers had the low price advantage compared to other foreign technology providers.
Some experts also believed that verification of a foreign technology by several users in other countries made the technology preferable to domestic products. An interesting comment was made regarding the advantage of foreign technologies which can use locally produced spare parts or substances (e.g. filters, chemical substances for water and wastewater treatment systems, lab chemicals). Such an approach reduces costs, delivery time and the service need.
Another strength of foreign producers was that they provided specialized technologies that could not be manufactured locally due to the limited demand and size of the local market, e.g. equipment for the handling, transport, and storage of nuclear waste.
Generally, local producers have the advantage of offering cheaper technologies. However, the major shortcomings of such local technologies were that they are not available in all categories, and their warranty period tends to be shorter. Many end-users solved this problem by importing only the crucial "hi-tech" components (e.g. pumps, aerators), with the bulk of construction work and low-tech technologies based on domestically-produced equipment. This approach was frequently used in wastewater treatment and water supply projects.
When asked to identify the greatest barriers to buying environmental technology from abroad, between 70 percent and 100 percent of interviewees stated that foreign technologies are too expensive. In some sectors (e.g. municipal water supply, and wastewater treatment systems), the price is seen as uncompetitive in advance. On the other hand, many highly sophisticated foreign technologies (e.g. systems reducing air pollution from power plants, incinerators, technologies for waste reuse or recycling, instrumentation) have found a market niche. In some cases, the disadvantage of high price was offset by high product quality, life-span, or even good after-sales service (e.g. landfill liners, tap water purification systems, etc.).
A single comment reflected the fact that state-controlled prices in the energy and water utilities sector do not really permit the repayment of effective, but expensive, foreign environmental technologies. However, as the prices do increasingly reflect actual production costs, and utilities become increasingly responsible for their own investments, this obstacle to purchasing will gradually diminish in the near future.
Between 30 and 40 percent of respondents were seriously concerned about the access to technical services, and considered the lack of it a disadvantage to foreign technologies (note here that only between 20 and 35 percent of respondents indicated "good after-sales service" as a strength of foreign technologies). Some interviewees commented on the arrogant attitude of some foreign representatives. Clearly, the quality of customer service, and access to technical support will need improvement.
Two marketing-related problems were indicated as significant barriers by respondents, namely: "too little information about suppliers" (15-45 percent of respondents), and "a lack of reliable product information" (20-60 percent of respondents).
The remaining obstacles presented did not appear to be very important. Between 20 and 30 percent of experts indicated that products were not suited to the local conditions and technical culture, e.g. differing standards.
About a quarter of respondents (15-25 percent, except for 40 percent in Slovakia) indicated "import restrictions/high customs duties" were a barrier to buying foreign technologies. In some countries the customs system was confusing, with different customs rates and border taxes being applied to similar products from different countries. It should be stressed, however, that the problem is expected to be eliminated (at least with respect to EU products) by the year 2000.
"Changing environmental regulations" was identified as a problem by some 15 percent of respondents. The system of tax and customs exemptions for environmental products is still undergoing changes, and there are occasional problems with product certification. Changing environmental regulations have been an obstacle in the past, but the transition is proceeding rapidly, and regulatory change should pose little problem to technology purchases in the future. Import restrictions and associated high customs duties and communication problems with foreign suppliers are also expected to become less important in the future.
"Communication problems with a foreign supplier" was indicated by between 10 and 15 percent of respondents. The specific problems raised included long transfer of payments, and the language barrier.
In conclusion, the environmental technology market in the surveyed countries is quite open to foreign suppliers. The majority of purchases are based on the best-technology criteria, and the country of origin is not deemed a critical factor. Suppliers can expect market success if their products are of high quality and reliability (including warranty conditions).
There clearly is room for improvement in marketing and circulating information on foreign environmental technologies and suppliers. This is directly related to opening an in-country representative office. An additional benefit from such an approach would be overcoming concerns about the availability of technical services, indicated as an important factor for buyers.
However, by far the major problem with buying foreign environmental technologies was their high cost. Therefore, foreign suppliers should consider creating conditions that would offset the disadvantage of the high price. It may be possible to offer longer payment periods, better credit conditions, or even, in some cases, to enter "shared savings scheme" agreements.