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  • ISSUE 1/1999


  • "You have started a fire that will be burning in all of Africa, that will lead the way to good public procurement. A fire that will burn corruption."

    Views from Arnaud Dufour, author of a French best-seller about the Internet, Que Sais-Je, which has been translated in five languages.

    Today's export promotion strategies must reflect the changing nature of the international trade environment, if they are to have an impact.Change in the past several years has taken many forms. Broad changes are affecting international trade, such as the Uruguay Round Agreement and the establishment of the World Trade Organization (WTO). In addition, three major issues have recently emerged that influence export promotion: growing interest in the environment and sustainable development, the importance of small and medium-sized enterprises (SMEs) as exporters, and the scope for increasing trade in services, especially those supplying information technology services and clean technology.This article takes a closer look at one of those issues, trade promotion for SMEs.

    The year 1999 looks promising for ITC beneficiaries. While 1998 marked the end of a comprehensive organizational reform, 1999 and future years will be devoted to increased field activities aimed at national capacity building and benefiting from ITC's enriched technical assistance tools and its ever-growing "product- network" approach.

    How can importers and exporters in developing countries best take advantage of the Internet? A wealth of information exists on the rapid evolution and the benefits of the Internet. Less exists on how to sift through this information for the practical lessons and tips for exporting and importing firms, as well as trade support institutions.

    To reach global markets through Internet, businesses need to adopt a sound business strategy, coupled with flexibility to question traditional practices. This is the real challenge for businesses using the Internet, no matter where they are located.

    Most organizations do not use the Internet to buy goods and services-yet. ITC's trend-trackers in international purchasing and supply management expect this to change, however, as Internet use becomes more widespread. Companies and governments in developing countries and economies in transition should take a second look at using the Internet to save time and money on purchases, and build better relations with suppliers.

    Silk has a miniscule percentage of the global textile fibre market-less than 0.2%. This figure, however, is misleading, since the actual trading value of silk and silk products is much more impressive. This is a multibillion dollar trade, with a unit price for raw silk roughly twenty times that of raw cotton. (The precise global value is difficult to assess, since reliable data on finished silk products is lacking in most importing countries.) To give an idea of the value, however, the annual turnover of the China National Silk Import and Export Corporation alone is US$ 2-2.5 billion.Unlike some other textiles, silk-wearing traditions and demand go back a long way. A good example is India, where the local demand greatly exceeds supply (and hampers export growth). India has thus become the largest importer of raw silk, despite the fact that it is now the second largest producer. Some other silk producers are also experiencing fast-growing local demand, such as China, where consumers are increasingly able to afford the lower price range silk products. This pattern is also expected to repeat itself in Viet Nam.

    Formerly a luxury trade, the silk industry is at a crossroads. New sandwashed silk brought a wider range of affordable silk products within the reach of millions of consumers during the 1990s. Competition from high-tech synthetics has eaten away market share. Raw silk prices have plummeted by half, to the point that they threaten the sustainability of this industry.Traditional producers are cutting back on labour-intensive silk production, as urban industries lure farmers from a business in which incomes dropped radically in recent years. Meanwhile, millions of livelihoods are at stake, especially in rural areas, for this traditional and environmentally sustainable product.

    Should small firms in developing countries take the plunge and invest in setting up an Internet site now? What lessons can they learn from Internet pioneers?There are lessons in a recent Internet study of small and medium-sized exporters in the United States. The conclusion of participating firms: they plan to keep using the Internet for marketing and customer support, although they did not sell as much as they had expected.

    Public procurement reform hurts. It touches vested interests, but improves the lives of individuals. I once visited a university hospital with the full apparatus to carry out open heart surgery, but with no sterilizing unit working. Rubber gloves were not thrown away, but washed with tap water, because replacements were never stocked. There was little chance to carry out heart surgery successfully. Infections spread quickly to all hospital patients. That situation was possible because purchasing decisions were taken by chief surgeons, who did not listen to the nurses and staff in charge of washing rubber gloves. None of these surgeons knew that the surgery instruments they were using were not sterilized.

    © International Trade Centre, International Trade Forum - Issue 1/1999 The Confederation of Indian Industry launched its national version of Trade Secrets: The Export Answer Book at a ceremony held 26 November 1998 in New Delhi, in partnership with ITC and the Indian Ministry of Trade. The meeting attracted over 2

    The Internet can help service firms in developing and transitional economies exactly where they need it most. It helps them overcome two of the biggest barriers they face: gaining credibility in international markets; and travel costs and restrictions that impede export market development.

    Are you looking for timely business information at a relatively low cost? Many companies and trade support institutions (trade promotion organizations, professional associations, consultants) are adopting the Internet to improve their access to information sources, expand their scope of data collection and to bridge information gaps for specific international markets.

    ITC interviews Joel Maloff, an international Internet consultant who writes frequently on executive issues.