Changing needs, changing role

“Despite favourable trade trends, competition continues to rise, and national trade bodies find themselves at the centre of national effort to ensure that their client enterprises, particularly small firms, become or remain globally competitive. This requires trade promotion organizations (TPOs) to be more proactive, to constantly seek ways of improving their customer relations management, establishing closer and longer-term relationships.

Targeting entrepreneurs

“Our slogan in the Egyptian Business Women’s Association is: financial independence gives you the power of choice and voice. We have a marketing committee that goes to women entrepreneurs to see what products they have and what they need, such as product development, finishing and quality control. We bring them together into sectors — we have a very good sector for garments, textiles and jewellery. And we try to create marketing tools — brochures and CDs — and organize fairs locally, regionally and internationally. If they cannot be present, we make the contacts for them.”
Amany Asfour, President, Egyptian Business Women’s Association

Reducing intra-regional barriers

Recent research by the Organisation for Economic Co-operation and Development shows that the potential benefit from freer South–South trade may indeed be at least as large as the gains that developing countries can obtain from better access to rich countries’ markets (North–South trade). Intra-regional trade agreements in Latin America and the Caribbean, such as MERCOSUR or CARICOM, are fostering trade between neighbouring countries. For example, over the last 30 years, internal trade in the Andean common market grew five times faster than trade with outside partners. (Source: Oxfam)

Competing and selling: Dance with the Dragon

“Our industrial investors, we tell them, learn to dance with the Chinese, the Chinese Dragon, because they export so much. You have to face reality.”
Enrique Mantilla, President of the Argentinean Chamber of Exporters (CERA)

Branding

Investing in trademarks, geographic indicators of origin and other intellectual property initiatives can help countries add value to a variety of commodities, manufactured goods and services. Brazil is seeking to protect its national drink cachaça by negotiating agreements with the WTO and the European Union on intellectual property rights and national indicators of origin. While only 500,000 litres of cachaça were exported in 1995, 20 million litres were exported to more than 60 countries in 2003 and sales are expected to rise to 38 million litres by 2010. (Source: Brazilian Cachaça Development Program)

When South Africa broke with apartheid, the country had to rethink its approach to business and trade. It selected ITC as the partner to help rebuild its trade strategy. Here is a portrait of an evolving strategy that helped South Africa fast-forward from isolation to integration in the global economy, boost incomes and become a magnet for investment.

The global trading system is redefining business. Being competitive in today’s interconnected economy means working within the rules of the trading system, as well as responding to more demanding markets. To meet the challenge, small firms in developing countries need efficient, innovative business practices and a proactive trade support infrastructure.

Globalization is changing business. Falling trade barriers, lower transport costs and communication technologies blur the lines between “domestic” and “international” markets. Whether businesses compete in foreign markets or compete locally with foreign firms, most of today’s firms face sharper competition and are obliged to think more internationally than they have in the past.

For small firms to meet the significant and growing challenges of globalization, they need governmental and institutional back-up. A three-pronged approach can help build and strengthen competitiveness: closer business-government partnership; effective networking of national agencies involved in the value chain; and optimal use of new technologies.

World trade has risen rapidly over the past two decades. It grew by 4.7% in 2003 and is estimated to reach 7% this year, according to UNCTAD. That growth has extended to many developing countries.

Trade talks, fighting corruption, outsourcing, value chains, technology and EU enlargement are among the topical issues that affect the shape of trade to come.

ITC has captured these trends, and their relevance to business in developing countries, in a special report from the World Economic Forum's annual gathering in Davos, Switzerland.

Companies and multilateral organizations are moving against corruption in business life, bolstering national efforts to stamp out bribery.

A revolution is looming in the world of goods and services procurement. It will fundamentally change the relationships between costs and returns.

“Worldsourcing” — global outsourcing — is benefiting a number of developing and transition economies. It is also fundamentally changing the structure of firms.

Can countries create and sustain export strategies that will foster growth and development as well as exploit commercial opportunity? Not all countries have explicit national export strategies, and fewer still have documented and measured strategies that improve export earnings and increase employment.

A business environment that fosters national competitiveness pays dividends across the board. Whatever its stage of development, export strategies that support innovation and use of technology will help a country move forward.

Tourism is a key industry to promote for a country seeking to increase its foreign revenues. For national strategy-makers, both optimism and caution are in order.

For a country, maintaining competitive advantage means managing the system which supports export development — and measuring performance. The tools are available. Nevertheless, they are rarely used, particularly by developing countries. Why is this so?

Proposals for the export strategy-maker

All companies today face a highly competitive economic environment in global markets. Large corporations often have the resources to develop a competitive edge without recourse to trade support institutions. But for enterprises in developing and transition economies, finding the means to improve their competitiveness and showcase their products internationally is far more difficult. They must be able to meet the basic prerequisites for international participation: goods and services available for export that meet the standards and expectations of the market; and the ability to develop export management skills.

During the Third WTO Ministerial Conference (Seattle, 30 November – 3 December 1999), U.S. President Clinton invited the heads of several multilateral organizations to share views on what their agencies could do to support the least developed countries in building national capacity to take advantage of trade liberalization. The following summarizes the views expressed by J. Denis Bélisle, Executive Director of ITC.