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How China is consolidating its position as the world's leading exporter?

Mon, 01 Feb 2021 19:56:05 GMT

Active networks and innovation, the 2 strong pillars of Chinese international development

China continues to weigh on the international stage. The country further increased its market share in world trade during the crisis. According to a note published by Euler Hermes, its market share among the world's top 20 exporters now stands at 25%, compared to an average of around 20% over the period 2017-2019. Despite the pandemic, China posted growth of 2.3% in 2020. The country's growth remains impressive, China's GDP has multiplied by 12 over the past 20 years while that of the USA has just doubled over the same period. With a current level of 16 942 billion dollars, it is now close to that of the Americans which weighs 21 921 billion dollars (Source - IMF)

This growth is not an accident. China has been woven a network for 30 years when we entered the era of globalization after the fall of the wall. In the country of Sun Tzu, mastermind of indirect strategy, an internationalization strategy is based on 3 steps:

1. a good knowledge of the different ecosystems through continuous Market Intelligence.

2. an art to prioritize and target the growth market segments.

3. a gradual allocation of the necessary resources without disturbing its foreign partners.

The two strong pillars of the international approach are the active networks and the innovation. Both are putting the country now in a more than favourable position to consolidate its position as a world leader in exports. A magical combination for China because networks provide an ideal framework for the integration of innovations and their commercialization. In return, the innovations consolidate the networks because they will be accompanied in the future by the creation of technological centres in the main foreign growth markets.

What can we say about these 2 pillars?

1. Active networks :

China has been able to observe and learn the lessons of export champion countries such as Germany and Japan. The strength of a large exporting country is based on the proximity of companies to customer demand and in their functioning in partnership networks which ensure the fluidity of the dissemination of know-how. In addition to partnerships, China has understood that a strong network presupposes mastery of the essential components of a value chain, whether upstream or downstream. Thus, the country now controls the reserves of rare metals, essential for the construction of batteries for electric vehicles, and it has become a benchmark in the field of logistics by positioning itself as the leading investor in strategic port areas for world trade.

In 2020, China has asserted itself even more against Europe and the USA. The regional partnership or RECEP, ratified on November 14, 2020, places the country in an ideal position as a locomotive in an area that represents 30% of the world's population and where a 90% reduction in customs duties is looming. By taking the lead of this zone, the country will be able to sell its new products even more easily and consolidate its position as the world's leading exporter.

2. Innovation:

It is clear that China is no longer just the workshop of the world but that it is gradually turning into a pioneer of innovation. The country no longer intends to play solely on incremental innovations and is gradually positioning itself on breakthrough innovations. Its strike force in the world of digitalization, with BATXs (Baidu, Alibaba, Tencent and Xiaomi) which already compete with GAFAM, create ecosystems and innovation clusters that benefit other industrial sectors. Its immense reservoir of economic and financial resources now allows it to accelerate in promising sectors driven by innovation: AI, energy transition, additive manufacturing (3D), robotics, electric vehicles ...

In addition, digitization will allow Chinese exporters to exercise their creative intelligence and to show even more their responsiveness in studying needs and setting up corresponding services. A recent example of agility is the Chinese company Shipparts, which offers a new e-procurement portal specializing in marine spare parts. The company supplies spare parts for boats and offshore installations. According to Shipparts, the digitization of procurement processes could soon reduce the time taken to process spare parts orders by 80%. Indeed, additive manufacturing technology has the potential to revolutionize the aftermarket industry. Parts can be produced on demand, close to the location of the demand, bypassing logistics, storage, shipping and customs procedures. It is interesting to note that this type of innovation further strengthens the network and allows Chinese players to be in contact with many foreign companies in strategic import / export locations such as port areas. Innovations do not just meet a need, they are part of a strategy of internationalization.

Conclusion

China has sowed seeds on most continents for 30 years and is now reaping the benefits of its approach to international trade. More than a lesson in economics, it is also a lesson from Asian philosophy where time is the best of allies. Besides a long-term strategy, the foundations remain solid and pandemics have not really damaged the edifice of its exporting economy. China has become formidably effective because it has taken the time to organize itself and place itself at the centre of the ecosystems of global export activity. This mastery in the art of moving and this continuous adaptability can only facilitate the introduction of new products sustainably around the world.

Do you speak digital in your export business development ?

Tue, 15 Dec 2020 00:00:00 GMT

A cocktail of digital Marketing and intercultural negotiations skills

Do you speak digital? A prerequisite for international development. In the 90s, the new era of globalization opened up new horizons and any young manager had to show an ability to master English language to make an international career.

Today, 30 years later, you need to master the “digital language” for your Marketing, which is coupled with the mastery of foreign languages for your intercultural negotiations. Facing fewer business trips with the current crisis, the time has come for an English /Digital composite cocktail to gain agility and efficiency. But what exactly does it mean to speak digital?

Speaking digital means being able to take ownership of the digital tools at our disposal, to communicate properly with your foreign client remotely, exchange quality content, and offer them creative solutions. Animating your community of international customers, partners and suppliers now requires a careful mix of remote discussions upstream and physical meetings downstream, in particular for the last few meters of final negotiations.

This new language takes into account 2 mantras of Steve Jobs' Marketing philosophy: focus and simplicity - As remote discussions are shorter, like videoconferencing or webinars, it is key to be focused on the predefined subject and to keep your presentation simple and understandable.

Beyond the fundamentals of the managerial profession, it is now a question of having more muscles, by combining skills in digital marketing and intercultural negotiations to become augmented business developers. The more the manager is trained and supported, the more he will have this famous confidence which is sometimes lacking to certain export business developers facing experimented competitors.

Digital, which remains a means and not an end, is undoubtedly a great asset to allow innovative medium-sized companies to reach and develop as many markets as possible abroad.

Japanese trading houses and international development

Sat, 21 Nov 2020 00:00:00 GMT

Long term strategy and positive attitude

International trade is not dead and export still has some great years ahead. In September 2020, Warren Buffett has $7 billion invested in 5 international Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. This shows that he believes in their model and in their resilience already demonstrated in the past.

It means above all that these International Trading Houses or “sôgô shôsha” are some kind of indicator or sextant for business companies who tend to navigate in the current sea of clouds. What matters is to be patient and see in the long term and not be short-seeing limited. Crisis or not, they have 2 strengths that continue to grow: firstly, their resilience to risk through the diversification of their activities, and secondly, their ability to discover and exploit new needs and numerous profit opportunities in a wide variety of fields.

Despite wars, economic crises, tsunamis, earthquakes, or pandemics, the sôgô shôsha continue expanding as one-of-a-kind businesses because their positive attitude in the face of hardship makes them capable of constant renewal.

They are finally a model for any exporter currently iterating its business model. Stay patient, positive and as it is said in Japan “Fall seven times, stand up eight”