“Developing a Successful Export Trade Strategy”

By | 2014-09-14T23:09:33+00:00 September 14th, 2014|0 Comments

An Excerpt from Chapter Twelve of Unleashed: A New Paradigm of African Trade with the World

Unleashed: A New Paradigm of African Trade with the World takes a look at the success stories of the Asian Tigers: South Korea, Singapore, Taiwan, and Hong Kong. Before they became global trading juggernauts and economic powers, these nations and territories (in the case of Hong Kong) were in a state similar to much of present-day Africa. But with exceptional leaders, the Asian Tigers met economic challenges using then-unconventional trade strategies that have put them where they are today. The Asian Tigers are global trade leaders and home to internationally renowned companies such as Hyundai Group, LG, SK Group, Hanjin, Formosa Plastics, and Samsung. On its own, Samsung is responsible for almost 20% of South Korean GDP and has more than 80 companies in the group.

It is also important to add that the countries now known as the Asian Tigers, from whom modern China copied most of its strategies, were not the originators of the Export-Oriented Industrialization Strategy (EIS). That country is Japan. In their effort to overcome the devastation they suffered in WWII, Japan turned to the country that had totally vanquished her, the United States of America. General Douglas MacArthur, Allied Commander in Charge of rebuilding Japan introduced numerous political innovations including universal suffrage. However, the most important gift he bestowed on Japan came from his frustration about the phone system in post-war Japan. He requested someone who could use statistical means to help Japanese industry to understand quality control. The Army sent him W. Edwards Deming a statistician and quality control expert and the rest, as they say, is history. That is how Gen. MacArthur inadvertently gave Japan the genie that unleashed the industrial export juggernaut that eventually made Japan the second largest economy in the world, a position that China now holds. It was W. Edwards Deming that taught the Japanese industry how to produce high-quality goods that could compete and win (market share) in the global market from established Western manufacturers.

Below is an excerpt from Chapter Twelve of Unleashed, “Developing a Successful Export Trade Strategy” that focuses on a three-step process that African countries can use to implement a successful export trade strategy that will help African countries to rise up in the global trade market like the Asian Tigers.

By developing export marketing agencies, the Asian Tigers put social, economic and business kinetic energy behind their commitment to the type of society that they envisioned. It was to be led by dynamic economies which would evolve as planned and grow and prosper by aggressive export competitiveness. In the end—and to the eternal credit of the foundational leaders—they created a plan that reflected their goals and commitment to export competitiveness. They had the foresight to support it with the institutions needed to turbo-charge their plans by establishing organizations like the export marketing company, staffing every aspect of the organization and committing the resources of the country with their best effort, and putting their best foot forward. Park Chung Hee of South Korea, in one of his memoirs, Korea Reborn: A Model for Development, described South Korea’s turn around in this manner: “As a reward for our hard work and dedication, the decade of 1970 has been turned into one of the most significant in the annals of Korea. By overcoming such trials and tribulations as perhaps no other people have gone through, the Korean people now proudly step in line to join the rank of nations around the world. Not only have we awakened ourselves from long lethargy and stagnation to knock on the doors of a new historical era; we have begun to tap our national potential…vivid changes and developments are everywhere. The poverty and aimlessness that marked our life at one time have been replaced by a new confidence and determination to bring about an affluent society. In the place of instability and disorder, a new foundation for stability and order is being laid out. Having rid ourselves of our history’s legacy of subservience to bigger nations and cast away our age-old temptation to depend on others, the Korean people have become vibrant in the new spirit of jaju—political independence—and economic self-reliance.”[i] The attitude of Park Chung Hee is emblematic of the response of South Korea and the other Asian Tigers to the existential threat of the prospects of cultural annihilation if they failed to find their bearing in the economic affairs of their country. They knew what was at stake in the effort to evolve an export-driven economic strategy.

What is at stake now is trillions of dollars in global trade for which moving the needle a few percentage points in the right direction will actualize the dream of economic prosperity for many if not most African countries. It is a fight that African nations have to approach in the same manner as the rest of the successful world: bringing all the forces and resources it can muster to the process and leaving no stone unturned in the effort. The vehicle of external trade development needs to have the priority status attendant to a critical task force with ministerial level powers. Whether it is given a ministerial portfolio depends on individual countries and the size of the organization. However, the level of priority and power accorded it has to be the same as an important ministry. The export competitiveness process requires a country to identify trade opportunities and advantages as well as the resources available to exploit them. It also needs a careful analysis of the soft and hard target markets where export products will be directed.

Constructing an export development and marketing organization

Establishing the organization is a three-step process. The first task is to identify the source and manner of perpetual, self-propagating funding for the organization. This a great place to start because often the insurmountable object that dams the flow of good initiatives is funding. In this case export promotions can help its cause when tethered to international trade and travel. Creating a self-funding export promotions and marketing program should start by a country establishing an export trust fund (ETF), into which the proceeds from all ETF-related revenue initiatives will be deposited. Creating an ETF is an initiative that has been tried and proven to be successful. For instance, for its funding initiative South Korea added a small tax to all imports into the country and used the funds to build its export promotions apparatus. It was a very wise approach because imports are a drain on the foreign reserves of the country and as such subject every citizen to sacrifice in order to make foreign goods and services available to those who consume them. This is only one option and because every country imports goods and services then it is one that every country (if they so desire) can implement. There are many other ways to approach the issue depending on the internal politics of the country and the skill of its leaders. An additional approach is to levy a small (painless) charge on citizens—not tourists or business visitors—traveling abroad which can be used to boost an export promotion fund. The goal is to evolve an on-going source of funds which will be used to build international marketing of a given country’s products to foreign consumers and markets. The beneficiary is the entire population of the country, not just the businesses who are participating. As such the ability to design a revenue system rests on the persuasive powers of each nation’s leaders.

The second task is to build the administrative infrastructure in the home country. This is the foundation of the program because it is responsible for executing all the various programs formulated under the aegis of an export oriented economic development policy. This office will also be the accountability office. It will not only manage the external offices in foreign markets but liaise with the proper supervisory mechanism within government, to ensure that progress is being made on a timely pre-arranged basis. Along with this task is bringing the productive sector of the economy into the process; an all hands on deck clarion call to action. All the business organizations—including manufacturing associations, chambers of commerce, small and large private and government-owned businesses—must be marshaled to participate in the effort to evolve an export oriented economy. There are specific policy considerations (which this work will only briefly touch upon), but the relevancy of a fully engaged and participating body-politic in every country cannot be over emphasized. The task of re-orienting the economy of nations to export-led development should be consigned to the people of the country by involving them in the process, activities and expectations. Invariably it is people; the business community; the civil servants; the informal sector and the public at large, who will make a success of any policy or program.

The third task is to build the external part of the organization. That requires deciding on the initial thrust of export marketing, including: which areas the country will focus on; which products and industries will be promoted; and which countries to market in and how many offices are required in each target market. An additional responsibility of the home base of the export development organization is to supply the necessary logistical support platform for marketing the country’s products in the target markets. They include:

  • Establishing offices in key metropolitan areas in the target markets.
  • Staffing offices with superbly groomed knowledgeable professionals.
  • Equipping offices with collateral materials, including sales brochures of specific export products and general information about doing business with exporters in the country as well doing business there.
  • Creating and managing a public relations and advertising campaign in selected markets.
  • Hiring local professionals to do detailed marketing analysis and survey on consumer products in order to publicize it to their export manufacturers so that they can target products to the market.

[i] Park Chung Hee, Korea Reborn, A Model for Development, pg. 12

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About the Author:

The author, John Akhile, is a man of varied entrepreneurial accomplishment in several fields. His range of interest includes fields as diverse from one another as; international trade, real estate and restaurants, demonstrating his keen interest in international affairs and in the cultural underpinnings of society. In many respects he is as a true "Renaissance" man because he has great depth of knowledge and command in many diverse fields. However his central passion has been the African continent and people, having concentrated on the issues hindering development and growth in African countries for more than more three decades. It has led to one self-published book and Unleashed.