The modern business world is fast-paced. Which isn’t inherently bad, it means it’s dynamic and full of opportunities. But speed often leads companies to focus on instruments at the micro-level or simply favor only ultra-modern tools and paradigms.
Slower-burning, more traditional considerations are often ignored or undervalued by local businesses, though their importance remains paramount.
We’re talking about the conventional idea of trade barriers in the realm of export businesses.
Trade barriers are predominantly viewed as a negative (thought they have their upsides and downsides, depending on your viewpoint), but they should also be considered as a competitive opportunity.
Not in and of themselves of course, but the existence of any obstacle means there’s a built-in opportunity to grow and surpass your competition if you overcome the challenge.
On the one hand, any local business looking to boost (or launch) its exports must first understand that trade barriers (tariff and nontariff alike) are still a serious and persistent phenomenon in the world of modern commerce.
2019 alone (!) has been a very “hot” year when it comes to international trade restrictions. After the WTO granted the United States permission to tax up to $7.5 billion European exports each year, there’s been a steady stream of hints and concrete actions
in this area of policy. October saw tariff imposition announcements on European aircraft, French wine and cheese, Spanish olive oil and several other prominent categories of export goods. There’s also the November 14 deadline that determines whether the U.S.
will/can impose up to 25% security tariffs on European vehicles and parts. The topic of China-related restrictions (both “by” and “against”), as well as the history of trade barriers in 2017 and 2018 could fill several articles or a small book.
Trade barriers have had a “good” couple of years, while export-oriented businesses have been looking at new difficult challenges.
On the other hand, when your competition is paying higher tariffs in certain regions, it gives you the opportunity to surpass them globally, by prioritizing trade in other more lucrative areas of the world.
The appearance and disappearance of export trade boosts can also come in different forms and along with different events. It’s important to stay open to opportunities, as even seemingly negative phenomena can become chances for business growth.
An example of this has been the situation around UK export activities in light of the looming Brexit fears. Despite the fact that an upcoming possible severance with the EU free trade zone in its current comprehensive status signals a possible imposition of
trade barriers in the near future, this hasn’t stopped UK businesses from posting record export figures in 2017.
A survey done by HSBC also found optimistic projections by UK business owners that expected their international trade to grow in 2018-2019.
A lender’s trade forecast also showed positive projections for UK exports, promising a 10% increase (a six-year record of growth).
Local financial analysts (such as Craig Durnell, the managing director of Bibby, a firm focused on services for SMEs) note that this growth has predominantly been due to the decrease in the value of the pound. He emphasized that boosting international trade
will be the key to the UK's economic well-being post-Brexit.
This serves to highlight two important points:
- Global trade opportunities are often present even if they’re not immediately obvious. You should be armed with the best technological and research tools to recognize them and take advantage.
- Having instruments to boost your international trade activities is important, as trade barriers are an omni-present threat you should be ready to sidestep.
So, that’s exactly what any export-motivated local business should think of in the current trade climate: how can you boost your global sales, grow and develop by seizing shifting (and long-existing) opportunities?
Direct financial benefits
Let’s start with some obvious opportunities and pathways. The clear answer for many companies, when looking at mitigating new tariff impositions are Free Trade Agreements. Going back to our UK example, there’s been a considerable rise in interest regarding
the topic of SMEs leveraging FTAs, as the final notes of Brexit loom ever closer. Articles, blogs, e-commerce solutions, you name it.
The dominant goal of most FTAs is to lower import tariffs between the two signing countries, making trade freer and more lucrative for companies. Goods also become more accessible for consumers. While the reality of some international deals reflects a gradual
reduction of import duties, the final point is often declared as total abolition of such barriers.
This is a clear export business advantage. Lower import tariffs translate to better profit margins, more money invested into growth, more buyers attracted to your products and so on.
How exactly can technology help in leveraging FTAs to avoid trade obstacles? The biggest hurdles for many local businesses considering global trade… are information, planning and analytics.
While transnational corporations may have entire teams or departments dedicated to finding the best avenues for international trade, less titanic business may need to take advantage of technological tools.
Analytical solutions for building export strategies leveraging free trade are still not that widespread. Stand-alone tools are present, but their big question (or even flaw) is “how do I apply this data once I receive it?”.
What’s often missing for local enterprises is an analytics tool integrated into an e-commerce platform.
The huge benefit of the analytic is its seamless integration into a B2B e-commerce platform that already facilitates everything an export company needs: a robust marketplace, communications tools, a business dashboard with shipping, payments, etc.
While there are many solutions on the market, including powerhouses like Deloitte or PwC, not everyone can afford such services or make sense of stand-alone results. Integrated instruments in e-commerce platforms, on the other hand, are low-cost
and ready-to-go for practical application.
One should note, however, that dedicated e-commerce platforms often face the pitfall of focusing nearly exclusively on customer acquisition and user experience (which are very important, to be sure) and not giving enough attention to Free Trade Agreements.
So, when choosing an e-commerce platform solution - choose wisely.
Once we’ve tackled the topic of financial tariff nuances in using FTAs and tech tools, let’s take at least a quick glance at the non-financial (or indirectly financial) barriers you can overcome.
The elephant in the room here for local businesses is definitely the question of technical regulation, standardization and certification of goods and production. This is a costly, arduous process that large corporations are ready to absorb, but which can
hinder or even seriously damage the growth of medium/smaller businesses.
Taking advantage of harmonized legislation and standards of goods can be even more of a boost for a local business than avoiding direct import duties.
FTAs can save you the headache of analyzing complicated legislation and the backbreaking costs of certifying and licensing a myriad of business and production aspects.
Such agreements often aim to bring national standards to a common denominator. In simple terms: if you’re good to go in your own country, you’ll have an easier time entering a foreign market as well.
This simplifies shipping, customs and negotiating deals with buyers.
Another indirect aspect to overcome and boost your export capabilities is what’s traditionally called natural trade barriers. This means everything unrelated to government-imposed restrictions. Cultural barriers in trade negotiations and buyer psychology,
language barriers, inexperience, lack of specific knowledge, etc.
What’s the technological solution here?
Once again, we have to look at complex tech instruments: platforms. While there’s literally no alternative to personally learning and expanding your experience as an entrepreneur… there’s a lot to be said for the advantage of having a support system
and a community.
The benefits of e-commerce platforms are:
a) The company’s dedicated support staff (the role of which is to enhance your use of the integrated IT tools)
b) The accompanying knowledge base (most e-commerce platforms develop robust blogs with expert articles)
c) But most importantly - the platform’s community, which empowers you through like-minded and diverse entrepreneurs you can exchange knowledge and experience with.
In closing, one should note that a diligent business manager (owner, employee, etc.) should also never neglect the basics. Reading, researching and broadening your information horizons may not have as much depth as AI-driven analytics, but it can still save
you from planning an export strategy into a protectionist market, choosing the wrong customs jurisdiction or simply misinterpreting the simplest trade data.