Madhurjya K DuttaProgram ManagerTrade & Investment Facilitation, Mekong Institute

Match making is important

Most successful exporters around

the globe agree

1. Identifying the right markets for the products

2. Developing the right market entry strategy before entry

Therefore research on overseas markets is essential

to avoid frustration. SAVE FROM EARLY DIVORCE

3

In a meeting

• Geographic

WHICH MARKETS SHOULD I GO?

THERE ARE 220 COUNTRY MARKETS

BURKINA FASO US$ 300 per capita GDP

LUXEMBOURG 80,000 US$

WHO ARE MY TOP 10 TARGET MARKET?

Poor Market Selection !• Tang in France– Positioned as a substitute for orange juice at

breakfast, but the French drink little orange juice, and almost none at breakfast

• Pop-Tarts in Britain– Percentage of British homes with toasters is

significantly lower than in U.S., and the product was too sweet for British tastes

• Cake mixes in Japan– General Foods spent millions trying to introduce

packaged cake mixes, but only 3% of Japanese homes had ovens

WHAT ENTRY BARRIERS MY PRODUCT WILL FACE ?

Import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, export subsidies, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc.

WHO ARE MY COMPETITORS THERE IN THE FOREIGN

MARKET ?

WOULD YOU LIKE TO FIGHT WITH ARNOLD?

HOW OPEN THE TARGET COUNTRY MARKETS ARE ?

CHAD

CONGO

VENEZUELA

WHICH MARKETS SHOULD I GO?

WOULD THAT SUIT MY REQUIREMENTS?

WHETHER MARKET DEMAND IS STABLE ?

WHAT NON TARIFF BARRIERS I CAN EXPECT ?

WHAT ENTRY TARIFF RATE I CAN EXPECT WHAT ENTRY TARIFF MY COMPETITORS WOULD BE HAVING ?

WHAT ENTRY BARRIERS MY PRODUCT WILL FACE ?

WHO ARE MY COMPETITORS THERE IN THE FOREIGN MARKET ?

HOW OPEN THE TARGET COUNTRY MARKETS ARE ?

WHAT ARE THE CULTURAL DIFFERENCE I WOULD FACE

What then the intending exporters will do !!! DO RESEARCH LIKE ACADEMICIAN

OR , OR …………

Anticipate ahead of others

• ANTICIPATE : Playing in a foreign market implies competing with exporters from all over the world as well as with local suppliers, all of which implies challenges that can be anticipated and surmounted.

• ANALYSE : Therefore, exporters’ research agendas must consider an analysis of competitors, potential customers and consumers, and other influential market forces.

• DEVELOP KNOWLEDGE : Investigating routes to market, logistics and regulation concerning entry into the chosen market can also facilitate planning practical aspects.

The role of market intelligence in export strategy

• Market identification: Identifying prospective export markets and high-opportunity segments

• Need understanding : Understanding consumer behaviour and how a product can fulfil or create a need

• Decide entry: Identifying the best market entry strategy and product introduction tactics

• Know competitors: Getting insights into competitors’ strategies, operations, strengths and weaknesses

• Market positioning : Finding out the key success factors to play and win in that specific market.

Conducting market research becomes an indispensable business tool

Product market intelligence

Initial Assessments

•Indentifying a product or product group.

•Product or product group situation

• Current selling proposition

Identifying & selecting attractive markets

Global supply and demand Trends

•Trade flows

•Market segments

•Market access

Understanding Target markets

•Market characteristics•Size/growth• Trends• Buyers • Competitors• Regulations• Pricing • Openness of market• Distribution channels•Promotion

Analyzing strengths and Weaknesses

SWOT•Financial resources• Human resources•Production capacity•Quality levels• Commercial practices

Market intelligence Export Strategy Development

Product

Queries of an exporter• An exporter of pineapples is looking to diversify its client base…Which

country should be targeted?

• A shoe exporter needs an overview of trade barriers he/she would face for exports to Malaysia…

• A trade mission needs to know our top export products to Germany…

• Where could you import automotive components from?Who are the largest suppliers in your region?

• What is the current trade between your country and the United States?

Initial answers to these questions and many more are easily found in Trade Map

Trade Map www.trademap.org

• Online application to produce reports on international trade flows

– Every product (HS-6) to and from (almost) every country

• Based on the largest trade flow database in the world

• User-friendly interface, report-ready outputs

• Flexibility for customising reports, analysis

• Graphic presentation of outputs to facilitate analysis

Key characteristics • Where does the data come from?

– National Authorities– COMTRADE, produced by the United Nations Statistics Division

database • What is Trade Map’s geographical coverage?

– Information for over 220 countries and territories using data reported by 160 countries and territories

– Data for non-reporting countries is taken from mirror statistics • What is Trade Map’s product coverage?

– For the Harmonized System• over 5,300 products at the 6 digit level

– For the National Tariff Line • up to 30,000 products for 90 countries (~84% of world trade)

Data classification• The Harmonized System (HS)

– Is used as a basis for the collection of Custom duties and international trade statistics by almost all countries, representing about 98% of world trade

– Developed by the World Customs Organisation – WCO (www.wcoomd.org)

– Harmonised different existing nomenclatures

– Adopted by almost all countries in the world

– Basis for all trade conversations internationally

HS-2

HS-4

HS-6

• The Harmonized System (HS)– Is a numerical classification system of

products used as a basis for international trade statistics by almost all countries.

– is harmonized up to six digits (HS-6) - You can compare HS data between countries.

– Is broken down into 3 clusters:• HS-2: the chapter of the good (sector)

– E.g. 09 = Coffee, Tea, Mate and Spices

• HS-4: groupings within the chapter (sub-sector)– E.g. 0902 = Tea, whether or not flavoured

• HS-6: product(s) within the grouping (product level)– E.g. 090210 = Green tea (not fermented)

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HS-2

HS-4

HS-6

NTL

• National Tariff Lines (NTL) codes– Classification of goods after the 6 digit level of

the Harmonized System classification.– National Tariff Lines go from 8 digits to 12

digits.

• Why use the HS and NTL classification?– The HS classification is standardised

internationally– The NTL classification is not standardised

internationally.Each country decides its own further classification after the Harmonized System. Hence, National Tariff Line codes can be different from a country to another.

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Data classification

AustraliaAustralia 08.04.50.00 Fresh or dried guavas, mangoesmangoes and mangosteens

JapanJapan08.04.50.01.1 MangoesMangoes, fresh08.04.50.01.9 Guavas and mangosteens, fresh

United States:United States:08.04.50.40.40 MangoesMangoes, fresh, if entered during the period from September

1, in any year, to the following May 31, inclusive08.04.50.60.80 Guavas and mangosteens, fresh, if entered during the period

from June 1 to August 31, of the following year, inclusive08.04.50.80.00 Guavas, mangoesmangoes and mangosteens, dried

08 Edible fruit and nuts; peel of citrus fruit or melons.

08.04 Dates, figs, pineapples, avocados, guavas, mangoesmangoes and mangosteens, fresh or dried.

08.04.50 Guavas, mangoesmangoes and mangosteens.

HS(International

standard)

NTL(NONNONstandard)

http://www.doingbusiness.org

24

In a meeting

• Geographic

American: would want a prompt answer

Scandinavians: would take their time

Latin American: would likely to interrupt and argue

Japanese: would close eyes and may sleep even

Arabs: would leave table and attend tel call

Mexican: would arrive late

Italian : would try to make impressive statement

Germans: would insist on background information

Chinese : would argue among themselves

WHAT ARE THE CULTURAL DIFFERENCE I WOULD FACE

www.geert.hofstede.com- power distance,individualism,masculinit

y/feminity,uncertainty avoidance,long term orientation

Group assignment

IDENTIFY THE HARMONIZED SYSTEM CODE OF THE PRODUCT YOU WANT TO FOCUS ON ANALYZE WORLD TRADE FOR YOUR SELECTED PRODUCT

CHOOSE AN IMPORTING COUNTRY AND TRADE PERFORMANCE FOR YOUR SELECTED PRODUCT

FIND IMPORT RELATED NON- TARIFF MEASURES FOR THE PRODUCT IN THE DESTINATION COUNTRY

Group presentation

Steps Identifying marketLogin in trademap (www.trademap.org)Select a product HS code of your country (exporter) use 6 digit codeDecide/Indentify importer (country) of the product (e.g United States of

America)Partner (your country /exporters e.g Thailand)Select Trade indicators- to identify e.g USA imports from Thailand- value, shareImporter (USA) import from world- value Identify top exporters of the product (HS code) to the destination country- list

three top exporters – imported value and share. Non Tariff measures Go to market access map- Quick search- Non tariff measuresE.g a Hongkong exporter of T shirts (HS 610910)wants to know NTM in USA for T

shirts.View results by NTM categories-Reporter field- Hongkong, Partner –USA,

Product/HS code, exporter. then proceed.Cost of doing business- go to www.doingbusiness.orgFind ease of doing business in the destination country, select the country to

observe ranking, trading across border in that country.