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Government intervention in defence of local industry
The foreign governments with economic and military powers have gone to the extent of mobilising state intelligence agencies to gather economic data in support of domestic industries. It has been reported in the foreign media that state intelligence agencies in the US, UK and France have clandestinely obtained trade secrets and passed them over to companies so that they could stay competitive. In 1993 the CIA had obtained clandestine information that France had bribed Brazil to award a $ 1.4 billion air traffic radar contract to a French company.
The US Government brought this information to the notice of the Government of Brazil and US competitor to the French company. Raytheon, a leading manufacturer of air traffic control radars, was ultimately able to secure this contract due to Government intervention.
Export industries are subject to stiff competition and it is an uphill task for export managers to keep abreast of the rapidly changing world markets. Access to right information at the right time often enables the export managers to make strategic decisions. Failure to adjust according to rapidly changing trade patterns would be fatal, resulting in his bid for a particular overseas contract being rejected.
Networking and research
How could Government keep tabs on economic developments abroad? The Government has posted economic and trade officers to our diplomatic missions abroad and the main task of the these officers is to keep an ear to the ground and update Sri Lankan exports on the developments abroad and to provide an assessment of possible opportunities and risk factors.
This information must be sent across to export chambers, chambers of commerce and key exporters. In order to assess a huge market as big as the US, the diplomatic mission in Washington DC must be adequately staffed. Trade officers are duty bound to (1) seek out and create opportunities for Sri Lankan exportable goods and services and to ensure that concerned parties in Sri Lanka are informed of the opportunities identified (2) assist Sri Lankan exporters to exploit fully these opportunities through provision of advice and support initiatives and (3) to contribute through systematic reporting programme to the evolution of Sri Lanka’s trade policy and export strategy.
It is imperative for trade officers to engage in extensive networking with all stakeholders in the export and import communities of the host country. Networking is a necessary tool in acquiring economic intelligence as such trader officers are supposed to maintain extensive networks of business contacts and this can be had through personal interaction with businessmen, media institutions, and chambers of commerce.
Trade ‘leads’ whether official or unofficial could be obtained through networking. An unofficial trade lead could help local exporter to be better prepared when the official lead is made known. The other component in economic intelligence is the initiate market research studies for specific products or services. These research reports would enable local exporters to identify the market and perhaps help further develop the product on par with other competitors.
"We have many State institutions engaged in work that could have direct bearing on an export strategy. It is high time a coordinating mechanism was put in place so that all stakeholders in the export market could discuss the export strategy jointly avoiding any overlaps. The mandate of some of the State institutions can be modified to incorporate a provision ‘to assist exporters’ and ‘to undertake research’ in support of export strategy"
Tender notices are of value to the local contractors who would like to bid for overseas projects. A local contractor may perhaps require information on other bidders and it is the responsibility of the trade officer to acquire such information, through his network of contacts. The local contractor would then be able to adjust his pricing strategy.
Market research studies are also required to obtain business leads. The social statistics of foreign countries cannot easily be accessed by export managers. Such research must be based on social demographics. Sri Lanka’s overseas missions can retain or outsource market research firms to obtain social statistics. What does this mean for an exporter?
nAgeing population: the opportunities for selling products that offer comfort, that have an ergonomic design and that can be used during leisure time will increase. The same is true of products designed to meet the demands of the elderly. The ageing population will continue to enjoy an active lifestyle and it is wealthier than the previous generations. Subsequently, it represents an interesting segment.
nImmigrants: this segment of the population can serve as a gateway for introducing new flavours, tastes and styles from different parts of the world. They are already familiar with what is new to Europeans and they can thus act as ambassadors. Moreover, as Europeans are confronted with new and different cultures, their interest and willingness to try out new things will increase.
nRising number of small households: the demand for one-person packages is on the rise and what is generally required for setting up a household.
nWorking women: as women become more financially independent, they spend their money on products that appeal to them (fashion, home design). A side effect of this is that time tends to become scarcer, which in turn gives rise to an increasing demand for convenience products. (Source: Export Manual – Centre for the Promotion of Imports from Developing Countries)
EDB, SLECIC and IDB
We have two State institutions created to enhance our export potential and one on promoting industries. This is in addition to Department of Commerce which too does a significant role in export promotions.
The main task of the Export Development Board (EDB) is to advise the government on export policies to create a conducive environment for exports, monitor the performance of the export sector and also to act as a promoter, facilitator and knowledge provider.
The Sri Lanka Export Credit Insurance Corporation (SLECIC) provides mainly export risk insurance. This writer, at a public seminar, urged the Governor of the Central Bank of Sri Lanka to convert SLECIC into an export import bank with a broader mandate. The time is opportune for creating a National Committee for the formulation of an export strategy so that full potential of all State institutions could be mobilised.
We have many State institutions viz Laksala, NARA, Gem Corporation, Industrial Development Board (IDB) and other State institutions engaged in work that could have direct bearing on an export strategy. It is high time a coordinating mechanism was put in place so that all stakeholders in the export market could discuss the export strategy jointly avoiding any overlaps. The mandate of some of the State institutions can be modified to incorporate a provision ‘to assist exporters’ and ‘to undertake research’ in support of export strategy.
Risks in export markets
Export markets are subject to high volatility due to various risk factors. Medium and small scale exporters are the worst hit when economic downturn hits the global markets. The main risk factors are economic risk, legal risk, sales risk, political risk and competition risk. Trade officers overseas are also required to provide timely risk factors so that an export manager could mitigate these unforeseen costs and eventualities.
(This writer is a freelance journalist and a political lobbying and public affairs consultant. He is a registered member of the American Association of Political Consultants.)
