After our book tour, and a string of recent wins, we’re proud to say that ExportNow has been receiving increasing attention in the news. In addition to features on USA Today and BusinessWeek, which we’ve previously covered here, we are very pleased to be getting coverage in the Chinese media, in addition to the US media.
Today’s roundup includes some of the various Chinese websites that have joined us in our journey to help bring US Businesses into the world of Chinese shopping online.
Though our western readers may be less familiar with media sources from China, we feel it is important to recognize and give thanks where due, regardless of the language the thanks is given in!
We are grateful to the Chinese media for their interest in our mission, and in the broader international economics and cultural dynamics at work behind our cooperation with T Mall. We take our business very seriously, and appreciate it when we are able to help bridge cultural barriers, and introduce some of the best parts of western culture to a country whose economy and infrastructure are developing at such a rapid clip. So, to all of our Chinese readers out there, 感谢各位！
If you are interested in getting your products in front of the eyes of the biggest online marketplace in the world, or have been thinking about Export to China as a strategic move for your business, please drop us a line here. We’d love to chat with you!
Industry Report: Alibaba on the Rise While Google and Amazon Wage War at Home
Export Now | Industry Report
Anyone wondering about the future of E-commerce in China doesn’t need to look far to see emerging trends, and massive market growth. Die-hard followers of news in the export industry will already be aware Alibaba.com is China’s largest eCommerce portal. What they might not be aware of yet is the fact that Alibaba.com’s sales are set to outstrip both Amazon and eBay this year. Amazon and eBay combined, that is.
While eCommerce wars rage at home between giants Google and Amazon, massive online markets continue to develop and mature in China.
Trying to stave off the competition from Amazon, Google has recently changed Google Shopping to require e-commerce companies to pay to be included in shopping results, so product listings are now ads. Inclusion used to be free. If a company does not pay to be listed, consumers will not see what they have to offer.…
ChannelAdvisor, a marketing firm for e-commerce companies, said that among the hundreds of retailers it manages, 63 percent have begun paying. For those sites, revenue per click on a product listing has tripled. One, ToolKing.com, an online hardware store, said traffic from Google and the number of people who make purchases had both risen more than 50 percent.
Will this ruffle feathers over at Amazon? You bet it will. If paid listings on Google get results like this for online vendors, you can bet Amazon will be firing back with a response of their own in short order. Media and PR firms will be on the story like their lives depend on it, market shares will shift around, but the size of the market will remain the same. Guess where the size of the market is continuing to balloon?
That’s right. Over in China.
Zeng Ming, the chief strategy officer of the Alibaba Group, China’s largest e-commerce company, told reporters this weekend that the firm’s sales this year will be greater than Amazon (AMZN) and eBay (EBAY) combined.
Ming also said that the company is aiming for 3 trillion yuan ($473 billion) in annual transaction value from its Taobao e-commerce units on average over the next five to seven years. The Taobao unit’s sales for 2012 are expected to hit 1 trillion yuan this year, company founder Jack Ma said last year. Alibaba does not how much Taobao contributes to the top line, but Taobao is the main retail brand of Alibaba Group.
So if you want to give paid listings in Google a shot, or wait to see how Amazon responds, go for it. Maybe you’ll see your revenues go up like the source quoted in the FT article above. However, if you are a long term thinker and have a macro level perspective on the industry, you’ll see Alibaba as the new gold standard. As the bread and butter of the future of online commerce.
As the legacy online giants in the US go to war over market shares and try to exclude each other from the search engine rankings, lesser known and grander opportunities abroad become more and more appealing.
If you and your company have been considering expanding into into the Chinese eCommerce space, feel free to check out additional informational posts on our blog, or drop us a line and speak to one of our Export Now specialists.
In the wake of “Linsanity” (or Lin fengkuang) and Li Na’s continued ascent to the top of women’s tennis, China’s attention to sports has increased sharply. The international prominence of these athletes is changing the often self-imposed stereotype that China’s athletic success is limited to individual, Olympic-style athletic competition and has raised questions about the merits of China’s institutionalized, drill-oriented sports training system.
(In fact, had Jeremy Lin grown up in mainland China, he would most likely not have been selected to attend one of China’s basketball development facilities given that his height of 6’3’’ falls well short of the preferred height of 6’6’’.)
More and more young Chinese, inspired by the success of these ethnically Chinese sports superstars, are picking up basketballs, tennis racquets, and a host of other sports equipment as foreign leagues continue to compete to win the attention of 1.3 billion potential athletes and fans. This increased demand, coupled with the shift in perception of China’s ability to compete in sports outside the Olympics, badminton, and ping-pong has raised the hopes of foreign athletic apparel companies.
Looking to take advantage of this change in consumer preferences, Nike – which has been in the country for over 30 years – has released a series of web videos targeting female consumers. The brief advertisements feature female college athletes talking about their dreams to become professional athletes, dancers, and yoga instructors.
Nike hopes that this appeal to female athletes will continue to encourage women to participate in sports at all levels, and of course, buy the top-of-the-line Nike apparel associated with these activities. Companies like Nike are in a challenging position. In order to sell their products, they first need to create demand. That means selling the activity associated with their products. With the help of successful Chinese athletes, this task is a little less daunting than it once was.
Even companies in non-sports related industries are utilizing the success of ethnically Chinese athletes. L’Oreal, the second largest cosmetics company in China behind Procter & Gamble, became the official sponsor of the Shanghai Rolex Masters Tennis Tournament in 2011. The tournament was watched by over 10 million people in China, giving L’Oreal an incredibly popular advertising platform
As sports continue to gain ground in China, at the urging of companies like Nike and thanks to star athletes, expect more attention to Chinese sports leagues and greater participation among athletes at all levels. This creates opportunities for companies of all sizes, sports related and non-sports related alike, looking to tap into the rapidly growing Chinese market.
American exports are expected to rise faster than imports over the next five years, with exports to China expected to grow at an annual rate of 7.1% according to an HSBC Bank forecast. Imports from China are expected to grow at a rate of 4.3%.
Many cities and states are seeing exports grow at a much faster rate. As more regions recognize the economic benefits of exports and take steps to encourage global trade, those area will enjoy the steepest growth rates.
Companies in Illinois boosted export revenues by 29% last year according to the International Trade Administration. The state’s largest export category was machinery, which brought in $17.8 billion in revenues for 2011. The Chicago assembly plant of Ford Motor Company is just one of many beneficiaries of this increase in exports, which were mostly sold to buyers in Canada ($19.2 billion), Mexico ($5.7 billion) and China ($3.9 billion).
Texan exports rose by 21% last year, pulling ahead of all other US states. Texas export revenue totaled $249.9 billion. As with Illinois exports, most Texas exports were sold to buyers in Mexico, Canada and China. The Houston-Sugarland-Baytown area alone sold exports that totaled more than $65.8 billion in 2009.
Ohio is also among the states that have ramped up export revenues in recent months. According to the Dayton Business Journal, Ohio companies boosted their export revenue by about 12% last year. The Cincinnati-Middletown metropolitan area exported $15.5 billion worth of merchandise last year, nearly doubling the export revenues of the next best Ohio metropolitan area, Cleveland ($8 billion). Ohio’s exports went mostly to Canada, with Mexico and China trailing close behind.
Not only are US cities exporting a plethora of profitable merchandise, but companies across the country are exporting to essentially the same markets. If these impressive increases in export revenues show anything, it’s that these foreign markets are not saturated and have great potential for more American companies interested in exporting their products.
The February push by President Obama for a “unified federal trade budget” to help American exporters could help more businesses sell more goods to China.
Increased American trade assistance through the US Export-Import bank would be a direct result of the initiative.
A central part of the plan is an effort to establish equitable international standards for government financing of private exporters. The US and China agreed in February to cooperatively develop a set of “guidelines” for export financing through government-backed export credit agencies, or ECAs.
The guidelines are expected to be agreed upon by 2014. The goal of the guidelines that the US and Chinese Exim banks are working out would be to equalize regulations for both countries, leveling the international playing field.
This is good news for American small businesses that are considering or are already exporting to foreign markets. ECAs act as intermediaries between the government and private exporters. Stronger government investment in ECAs will help US exporters establish themselves in foreign markets.
Guidelines agreed to by the US and Chinese governments should reduce any artificial assistance and therefore make competition in the international market more closely resemble domestic competition. ECAs are a standard part of developing export businesses in a national economy, but can distort international markets. As international markets are balanced by regulating government investment in ECAs, private exporters become increasingly confident that their work will become profitable and sustainable.
What’s on your nightstand? We put together this list of books to help any executive develop strategies and plans for 2012 that will open new markets and build strong connections to new customers.
1. The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means to You Helen Wang, who holds a masters from Stanford, is a business consultant, entrepreneur and the founder of a venture to help women in business in developng countries. She is a native of China who has lived for two decades in the United States and her book “The Chinese Dream” reflects her years of research into the Chinese middle class.
2. The End of Cheap China: Economic and Cultural Trends that will Disrupt the World Shaun Rein, publication date March 27; described as a “practical, must read for anyone dealing with China, doing business there, or simply trying to understand what is going on” by Ambassador Nicholas Platt, President Emeritus, Asia Society.
3. China’s Emerging Middle Class: Beyond Economic Transformation edited by Cheng Li, presenting a range of scholarship on employment, demographics, politics and other issues shaping the contours of one of the most important transformations in China, and what that means to the entire globe.
4. Export Now: Five Keys to Entering New Markets by Frank Lavin and Peter Cohan, with a foreword by Gary Locke. Practical steps from the Lavin, the founder of the export service company Export Now, and Cohan, a prominent business writer and policy analyst.
5. Capturing New Markets: How Smart Companies Create Opportunities Others Don’t Stephen Wunker, a business consultant and writer who has worked around the world, explores fundamental forces that allow innovative businesses to enter new markets and win customers.
John Bryson, the new US Secretary of Commerce, traveled to China earlier this month, accompanied by US Trade Representative Ron Kirk. Both attended a meeting for the US-China Joint Commission on Commerce and Trade (JCCT). The meeting was also attended by Chinese Vice Premier Wang Qishan who represented China in the 22nd session of the annual meeting. Discussions at the meeting were centered around US exports into China and possible measures the Chinese Ministry of Commerce (MOC) could implement to further facilitate trade between the two countries. Previous efforts of the MOC led to the usage of United States made airport vehicles at the Beijing airport, which Secretary Bryson got to see first hand during his visit. Last year’s JCCT meeting strengthened intellectual property rights enforcement and made revisions to China’s indigenous innovation policies and pushed them through to the WTO’s Government Procurement Agreement. Other initiatives, led by the U.S.-China Business Council (USCBC), are also being pushed to help small and medium American businesses export their products to China.
This is not the only example of the US government taking special interest in exporting to China. Many state governments have started programs of their own that help businesses within their state expand through exporting. The Virginia Economic Development Partnership (VEDP), created by the Virginia General Assembly in 1995, assists Virginia businesses through aggressive business recruitment, expansion assistance, and trade development. The VEDP works business development partners to help Virginia businesses establish themselves and be successful in their home market, but the main goal of the partnership is to help Virginia businesses expand their export base abroad. The VEDP not only helps companies identify new markets, but also creates market entry strategies and connects Virginia companies to foreign distributors. Participating Virginia businesses are given a summary of the most current economic and demographic information of their selected site, as well as individually tailored research for suitable land and other manufacturing necessities. The partnership can also assist with navigating foreign regulations and tariffs, further lessening the difficulties for businesses looking to expand internationally.
Export Now is also doing its part to help manufacturers of all sizes export their products to China at lower costs and with greater convenience. Not only does Export Now take all the headaches out of exporting your products to China; it also makes your products available to hundreds of millions of Chinese consumers by listing them on an exclusive storefront on Tmall.com, China’s premier B2C platform. The US Government sees exporting as an integral part of the future success of American business. Export Now wants to help American businesses realize that success.
This excerpt of “Export Now was adapted for The Globalist, and can be found online at: http://www.theglobalist.com/StoryId.aspx?StoryId=9345
Discussions of trade frequently lapse into jargon or take on a pessimistic tone. The gloom is understandable, as recent years have seen a series of challenging developments in trade policy. Headlines proclaim that the Doha Trade Round—the trade- negotiation round begun by the World Trade Organization (WTO) in 2001—is in trouble. The lapse of the U.S. president’s Trade Promotion Authority—effectively killing future trade negotiations—is cheered in Congress. Protectionist pressures mount in major economies such as the United States, the EU, and China. Trade liberalization seems to be on a slow path. Meanwhile, the number of formal trade actions and antidumping and countervailing duty cases hits record highs.
These recent developments highlight the central economic paradox of our era: although international trade has never been more important to the world economy, political support for trade seems to be at a historical weak point. To take one example, a recent poll shows that 68 percent of the U.S. public believes that “trade restrictions are necessary to protect domestic industries,” and only 24 percent support free trade. If trade is so good for us, why does it not enjoy broader support?
Trade’s High Benefits and Low Support
First, let us revisit the good news. Even in the midst of a painful global economic recession, trade continued to do very well. In 2009, global trade was near its historic peak, in both dollar terms and as a percentage of gross domestic product (GDP). Let’s look at some U.S figures as a reference point. U.S. merchandise exports totaled US$1,278 billion in 2010, up 21 percent from 2009.3 More companies than ever are competing and winning overseas. Every nine months the United States exports the equivalent of the entire economy of Brazil. The fourteen nations that have free trade agreements with the United States account for only 7 percent of all of its trading partners’ GDP, yet they take in 42 percent of U.S. exports. Merchandise trade as a share of global GDP has risen from nearly 9 percent in 1960 to 160 percent in 2009.5
These FTAs help in another way: they help drive inward investment. When a foreign company invests in the United States, or Australia, or Singapore, it attains access not only to those markets, but also to the market of all their FTA partners. The U.S. FTA market in aggregate is almost six hundred million people; the Australian FTA market is a bit larger, as it includes ASEAN; and the Singapore FTA market is almost two billion, as it includes China. Free trade agreements work. The world is in the middle of a sustained export boom. The success of trade is real.
But this also means that the world is in the middle of a sustained import boom as well, and there is a real basis for the criticism of trade policy. Particularly in a period of economic softness, there is a willingness to view trade as the enemy—as an agent of misery, not a spur to prosperity.
This disconnect between the benefits of trade and the support for it is perhaps due more to sociology than to economics. The rate of change in the modern economy outpaces most people’s comfort level, so people project their various economic concerns—job insecurity, a perceived decline in manufacturing base, a sense of economic vulnerability—against trade. So a domestic political discussion on trade sometimes escalates into a general expression of economic unease or descends to political criticism of the incumbent administration.
Accelerated Economic Change
Merely presenting the bare facts concerning the negatives of trade deficits or the benefits of free trade agreements does little to address the unease concerning trade. Economics alone cannot explain the discrepancy between the boon of trade and the lack of political support. Why has the pace of economic change accelerated in recent years? The answer can be found in three developments that have collectively created a seismic shift in the world economy over several decades: three billion new customers, the death of distance, and the overthrow of trade barriers.
The emergence of three billion new customers reflects the transformation of the world economy brought about over the past three decades as China, and later India, moved to market economies. Consistent with this trend, and somewhat prompted by it, has been a move to market rationalism in much of Latin America, as well as the integration of central Europe and much of the former Soviet Union into the world economy. This massive shift in economic behavior suggests not only three billion new customers, but also, perhaps, three billion new competitors—a more troubling, if inaccurate, prospect. In short, the economic population of this planet has effectively doubled in one generation.
The death of distance refers to the rapid decline of geography as a business constraint. Goods, people, and ideas move around the world rapidly and inexpensively. Business activities that once had to be undertaken at one locale can now be disaggregated and spread around the world. The advent of e-mail, the Internet, mobile phones, and webcams has led to a collapse in the cost of communication. The emergence of global express delivery, integrated logistics, containerized shipping, and discount air travel has led to a sharp reduction in transportation costs. Goods and ideas move around the world cheaper and faster than at any time in history. Many services, from accounting to design to customer relations, can be handled without regard to the location of the customer or the service provider. Mumbai is next door. Monterrey is your best customer. Shanghai sits next to you in class.
The elimination of tariffs refers to the cumulative impact of sixty years of reductions of trade barriers by the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) along with the benefits of the over six hundred free trade agreements currently in place..
In sum, this seismic shift means that unparalleled prosperity goes hand in hand with unparalleled anxiety. The world is spinning faster.
The Business Impact
The economics of trade tell us this is all good news. But the business side can present a more mixed picture.
First, every company needs to think about exporting. It is no longer safe to remain content in your home market. Sooner or later, you are likely to face threats from foreign entrants. You need to find a way to take the offensive and enter new markets.
Second, this means a shift from vertical skills to horizontal skills. Most businesses exist in the vertical. They have a small set of core competencies, and they devote their business life to successful execution of that skill set. Now you have to develop horizontal skills. How can you evaluate a market you have never visited? How can you sell to someone you have never met? How can you navigate government regulations in foreign countries?
Third, your business will need to develop a culture of flexibility and innovation. This does not mean that every day you will generate a new product, or that every new market will require a new approach. However, markets, customers, and opportunities differ, and a wise business knows how to take advantage of these differences.
Trade will create more winners than losers, but there are likely to be losers, including companies that cannot adjust to a more competitive environment, companies whose entire approach to trade is defensive, and companies that are unable to experiment. These companies run a higher risk of failure than their counterparts.
Every company has strengths and weaknesses, and because trade places these attributes in a broader market, we can say that trade brings into play a “magnification effect.” It magnifies your company’s strengths and weaknesses. If your company has a weak warehouse and distribution system selling in your domestic market, you can expect those weaknesses to be magnified when you start selling into foreign markets. On the other hand, if your company has a killer app tech product that dominates the sector in your home market, you could be well on your way to dominating that sector in new markets as well.
In this sense, the stratification that comes from trade is somewhat similar to the economic impact of the advent of a new technology. For example, not everyone benefits from the Internet, but it does confer economic benefits. High school graduates who cannot use the Internet will find themselves much less attractive to employers. The challenge of trade is similar to the challenge of a new technology: how can we shape the benefits to be as inclusive as possible? Trade and technology create many more winners than losers, but there is an asymmetry between good news and bad news. Factory closings tend to make the front page, but factory openings are more likely to be a note inside the business section. Additionally, human psychology ascribes importance to relative loss, apart from any absolute loss. So even if a group of workers receive real salary increases, they may have a sense of grievance if those increases have been outpaced by those of other workers.
A Trend or a Shift?
Interestingly, just as the political anxiety over trade seems to be peaking, the economic dislocation from trade may be abating. Astronomers tell us that a supernova burns the brightest as it moves toward collapse; we may have a similar sociopolitical phenomenon unfolding.
We must remember that the three major trends—three billion new customers, death of distance, and the end of tariffs—are perhaps more representative of a shift in the economic landscape than of an economic trend. In other words, once the economic adjustment to the improvements in logistics has been made, additional efficiencies are more marginal. Similarly, the early stages of China’s integration into the international economy cause more of a jolt than the latter stages. And once tariffs have been cut 90 percent, there is not likely to be as much economic dislocation from the remaining 10 percent.
Recent trade statistics point to a rough equivalence in the growth of imports and exports. In 2010, total imports into the United States were up 22.6 percent and total exports from the United States were up 21 percent. Admittedly, these imports are on a higher base, so the trade deficit itself continues to grow, but that rate of growth is tapering off. These numbers capture a world economy on the rebound after the 2008 financial turmoil, so the 2010 numbers probably outpace the longer- term trend. The point is that even though the three trends are somewhat permanent economic features, their effects are more similar to one-off phenomena.
It could take a generation of economic adjustment to fully understand these trends, but we are already seeing increasing economic anecdotes from China that the current high rates of economic growth are likely to attenuate. A growing body of literature discusses the decline in China’s competitiveness due to rising wage rates, congested infrastructure, and constraints in its finance and legal systems. To this are sometimes added costs of pollution, health care, demographic challenges of gender asymmetry and declining birth rates, as well as a changing tax policy. China’s economy should continue to perform strongly for the near term, and even if it slows down it should outperform the rate of growth in the United States. It should surprise no one over the next decade if the rate of growth in U.S. imports from China looks increasingly like the rate of growth in imports from other countries. In other words, as China’s economy matures, its trade patterns will look increasingly similar to the patterns of other countries. This is not the beginning of the end for China’s exports, which are driven by a mammoth and successful economy. But to paraphrase Churchill, it is, perhaps, the end of the beginning. The United States needs to stop devising trade policy by looking in the rearview mirror.
A recent report by Credit Suisse analysts indicates that Apple Computers could generate an additional $18 per share and $68 billion from sales in emerging markets by 2015. It is the growing middle class in these markets that will fuel this robust growth.
By 2015 244 million consumers in emerging markets will have incomes comparable to middle class consumers in the United States and Europe. Even more striking is that Apple won’t need to drastically alter their product lines or marketing strategies in order to appeal to these customers. Middle class consumers’ desires, despite cultural differences, appear to be relatively consistent. A white-collar worker in China or Brazil wants an iPod just as much as his counterpart in the United States or Germany.
This is good news for companies looking to tap into the growing consumer base of emerging markets. Behind solid economic growth, the middle class is growing in countries like Brazil, Russia, India, and China. And while many companies may find their domestic market to be stagnant, with consumer growth leveling off, the environment abroad is quite the opposite. Emerging markets are environments that exporters need to access.
With political tension in Washington and economic troubles nationwide, Americans are preoccupied with one thing–jobs.
According to the Bureau of Labor Statistics, the unemployment rate in the US stayed at 9.1% this month, meaning that 14 million Americans are out of a job.
On September 8th, President Obama delivered a speech that introduced the American Jobs Act and spoke about fostering business growth, remarking, “If American’s are driving Kias and Hyundais, then I want to see folks in South Korea driving Fords.”
Obama emphasized again and again the opportunities lying abroad for American business and the need for American business to embrace exporting as an essential factor in economic growth.
Already the administration has eased export control regulations, simplifying trade between the US and Canada and making it easier for American companies to sell military and duel-use technologies abroad. By instating a tiered export regulation system, more products are cleared for exporting and many loopholes that needlessly complicate exporting have been fixed.
Clearly, the Obama administration, in its quest to revitalize the economy, has turned to the prospect of exporting as a way to encourage economic growth in America. “Made in America” doesn’t have to become an unknown phrase in the international economy.