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    Promoting Exports of Services: How to Make It Happen

     

     
     
    © International Trade Centre, International Trade Forum - Issue 2/2005 
     

    Photo: Photodisc 

    Trade support institutions can promote national strengths in services. This helps firms in their own marketing and improves the country's overall image.

    Creating a national image of quality providers is one of the most important trade promotion initiatives to boost exports of services. Trade support institutions (TSIs), which represent business communities such as national trade promotion organizations, professional associations or chambers of commerce, can develop a few core messages about competitive strengths that can be used in all promotional materials. They can also collect and publicize "best in class" success stories, set up an awards programme, publish national services trade data which include services whenever exports are mentioned, and provide databases of service providers on a national web site.

    The majority of service exporters in most economies are very small firms with fewer than ten employees, according to ITC and Service-Growth Consultants research in over 50 developing countries. It appears from their findings that at least 40% of all active exporters in developing economies are service firms with fewer than five employees. To support these small entrepreneurs, trade initiatives should be efficient and require little initial investment.

    A starting point for government agencies is to review export development plans. Often, the potential for expanding service exports is overlooked in national export development planning because of inadequate statistics and a lack of familiarity with the export activities of service firms.

    National advantages

    When weighing national advantages, consider the following examples:
     

    • Geographic advantage. For example, Panama is known as a transportation and distribution hub due to the Panama Canal. Based on its information and communications technology infrastructure and links for four submarine fibre optic cable systems, it can market itself as the regional hub for e-services.


    • Language or cultural advantage. Peru has large Japanese and Chinese immigrant communities.


    • Human resources advantage. Jordan has numerous professionals trained in France, the United Kingdom and the United States, and has extensive work experience in the Arab Gulf countries.


    • A reputation for being business-friendly or familiar with other ways of doing business. Barbados has a reputation as a politically stable, open economy with more than 8,000 offshore businesses.


    • A reputation in a particular sector that can be leveraged as a country image. Jamaica has a global reputation for reggae music, which is being leveraged as a lead sector.


    • Access to a range of other markets. A CARICOM (Caribbean Community and Common Market) country such as Trinidad and Tobago can position itself as the gateway to the Caribbean (and South America through links with Venezuela) for services such as market research.


    Which services to promote?

    Selecting priority services for promotion poses a challenge because opportunities are constantly changing. Businesses are probably already exporting a range of services. The following are indicators for public and private sector bodies to consider in the selection process:

    • Selecting and promoting a cluster of services can help build a national reputation. 
    • Services where national service firms are already known, where they have an edge.
    • Ideally, some existing export success: success stories that can be promoted.
    • Services where there is a critical mass of providers to develop the sector, including availability of skilled staff and professionals.
    • Presence of related supporting services and infrastructure of good quality.
    • Evidence of competitive service provision; an appropriate mix of quality, price and innovation.
    • Growth market in a trade partner - at least one other market likely to purchase the services from national suppliers.
    • Post-secondary training in the service that attracts foreign students or executives.
    • An industry association interested in actively promoting the service.




    ="subhead">Targeting export markets

    The ITC studies showed that service providers are already exporting services to an average of 33 export markets. Criteria to shortlist target export markets include: 

    • Existing trade links.
    • Preferential trade agreements.
    • Official technical assistance agreements.
    • Source market for inward foreign investment.
    • Source market for in-bound tourists.
    • Source market for in-bound foreign students or trainees.
    • Existing memorandums of understanding, for example, in the areas of research and development, education and/or environment.
    • Large communities of expatriates.



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    Focus on solutions

    Goods promotion typically focuses on the tangible product, but services are another story. Promoting services needs to emphasize the solutions that service companies can provide. Today's customers are particularly interested in one-stop or "bundled" solutions. For example, a consortium that includes architecture and design, engineering, construction and project financing is more competitive than any of those services individually.

    A wide range of services is being exported, but from a trade promotion perspective, they fall into five general categories that benefit from slightly different promotional approaches:

    • Infrastructure services, including architecture, engineering, construction, transportation, distribution and financial services.


    • Information technology (IT) and related services, including computer consultancy, software development, data processing, database management and call centres.


    • Business services (non-IT specific), such as research and development, equipment leasing or maintenance, market research, management consulting, translation, investigation and security.


    • Professional services, including licensed professions such as accounting, law, medicine and dentistry.


    • Quality-of-life services, such as education and training, and services related to health, entertainment, culture, recreation and sports.

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    Success starts at home



    Because services are exported whenever they are sold to a foreigner - whether at home or abroad - an easy place to start promotion initiatives is at home. A logical target group is foreign investors who are probably already purchasing some services locally. Urge them to expand the range of national services they buy and encourage them to refer national suppliers to other customers in their home market.

    Targeting business tourists, foreign students, embassies, high commissions and national offices of international organizations is another strategy. Yet another possibility is to attract potential customers and referral sources by hosting a regional conference which positions the national economy as a leader. If the country hosts conventions, design ways to showcase national services and service firms.


     

    Partnerships are pivotal

    Partnering with institutions in other countries can help to open doors and provide credibility for first-time exporters to those markets, providing access that would otherwise prove difficult. Service industry associations can develop friendship agreements with sister associations in target export markets to help service suppliers learn about the market, find foreign partners and develop contact networks. They can cooperate to support their members in building multi-service consortia and promoting unique bundles of services.

    Service opportunities develop primarily through contact networks and referrals, not through market research. By expanding the groups of people who know the capabil-ities of their service exporters, trade support institutions can help service suppliers take full advantage of growth opportunities in world markets.
     


     

    Dorothy Riddle heads Service-Growth Consultants and can be reached at driddle@compuserve.com 



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