In order to serve the biggest retailers in Europe, Van der Erve works in exotic locations such as India and Bangladesh. A hub in China benefits daily from the support of the local KBC branch.
Van der Erve concentrates on the design and sale of successful licensed clothing products: T-shirts with Mickey Mouse, hats with Hello Kitty or Star Wars pyjamas. For production purposes the founder, Rob van der Erve, father of the present CEO, went originally to Portugal; over the course of time the circle of suppliers has become ever more extensive, with particular emphasis on the East. Van der Erve works mainly to order. The company outsources the requirements of major retailers throughout Europe to external suppliers. So that the latter can be carefully selected, and in the interests of smooth communication with them, Van der Erve set up separate branches in those countries, operating under the name Beconnected.
‘If that separate name leads you to suspect that they also have their own angle on the business,’ says CEO Martijn van der Erve, ‘you'd be quite right. To begin with we had these offices solely for sourcing purposes: finding suppliers and tracking orders. Van der Erve does however operate in the conviction that the best chance for our company to grow is if we allow our people to grow. And so we give them quite a bit of autonomy. At a certain point these Beconnected establishments began finding new clients themselves in their own locality.'
The result of that evolution? The Beconnected establishments are responsible for all the sales of private label products, without any intervention from Belgium.
A bank account at the local KBC branch
There are Beconnected establishments for China (in Shanghai), Bangladesh (in Dhaka), India (in Tirupur) and Ethiopia (in Addis Ababa). Their original task remains that of tracking Van der Erve orders. ‘We source the goods directly from the factories and our local branches follow these orders up. We pay them a fee at market rates for doing so. Big retailers now do the same for their private labels. They can then decide whether to place the order directly with the factory, and pay Beconnected for the tracking, or purchase from Beconnected itself.’
In this way the establishments serve three functions: the tracking of orders for Van der Erve, the tracking of orders for other customers, and the distribution of private-label products to three or four major clients, in both the EU and Asia.
The Beconnected establishments are autonomous and complete units: they employ merchandisers and quality controllers and have staff for compliance, finance and logistics. ‘They act in coordination to ensure that the goods get shipped.’ Staff and suppliers therefore need to be paid and the first thing that such an office needs is a bank account. In places where KBC has a branch of its own, for example Hong Kong, this is something the bank can also offer. On top of that there are all the other solutions available in Belgium.
Ideal for the supplier's peace of mind
In order to provide further details on the financial requirements of this arrangement, Martijn van der Erve turns to his financial man. Quinten Versaen: ‘When purchasing goods from foreign factories we use the normal trade finance instruments. We hedge the dollar in advance, with ordinary forward contracts or with TPFs. These involve an option meaning they can sometimes be cheaper. In addition we make use for our payments in Bangladesh of Letters of Credit (L/Cs).
Drawing a distinction between what KBC does for an establishment in China and for Van der Erve in Belgium is not straightforward, as the operations are so integrated and everyone collaborates with everyone else. In this context Van der Erve refers to KBC as a highly accessible partner: ‘With their corporate office here in Diegem they are no more than ten minutes away. They also drop by every week with documents. In Hong Kong a dedicated contact person is in touch every week with our people on the spot. They work over there just as they do here.’
KBC has been Van der Erve's partner for a very long time: ‘First of all they pooled their thoughts with us in Belgium. We grew rapidly and they always accompanied us flexibly: something which, given our-long financing cycle – what's ordered must first be manufactured and then has to be shipped – should not to be taken for granted.’
When Van der Erve moved abroad, the obvious arrangement was to keep working with KBC wherever possible.
They've known us for a long time, they're very familiar with us, sometimes they even know our needs before we do ourselves.
Martijn van der Erve, CEO Van der Erve
Particularly when Beconnected itself also began trading with external parties abroad, KBC's knowledge of the field proved to be a major asset: ‘In the case of Hong Kong we really needed a bank,' Versaen explains. ‘KBC has a branch there and they went to great lengths to help us and our entities abroad decide on everything we needed. In Hong Kong too, therefore, they also arranged the trade finance and support. They in fact offer the same services as here in Belgium, such as credit lines.’
Networks across the borders
Van der Erve values KBC particularly for its no-nonsense style, accessibility and loyalty without borders: ‘Even where they don't have a branch, they have contacts. In Bangladesh they helped us find the right local bank.
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Do you require a safe means of payment, also internationally? Then the documentary credit (Letter of Credit) is the ideal solution.