All posts tagged 'Export'

Export organization: special new legal (company) entity form is required

I touched on export organization on several blog posts

One can often see that many very export oriented companies like Nestle, LVMH and Kettering (French fashion conglomerates of many brands) condensate many brands below a single umbrella, even if single brands retain their identity. This facilitated the entry into new markets, because of their critical mass.

I was thinking why several independent companies could not do the same. While in a home market they fiercely compete, in international markets they struggle because they are just too small.

So, if they congregated into one organization solely for export? yes, surely it would lower costs of shared offices and sales reps in foreign countries.

Since export is very important to many countries, it would be useful to create a new type of company entity congregating many or most industry players into one organization, e.g. called EXP Ltd. This type of company entity should only be allowed to do foreign sales and should have a lower taxation.

This is also mirrored in the Sovereign Economic Model, which among other de-taxation policies, proposes to tax exports 50% less.

A more conveniently organized and less taxed export activity would benefit both the companies and the country itself.

Sovereign Economic Model and Japanese-style economy

One of the ways Japan build its post-war economy was a peculiar method on how they organized both internal competition and exports.

1) In the internal market, Japan applied strong protectionism to impede imports from foreign firms.
2) They selected a number of national champions (usually between 5 and 8) with a similar structure of suppliers
3) National champions competed furiously for market share, without one ever grabbing a too big share
4) As result of this fierce competition, the Japanese companies became competitive in the international market
5) The companies began to export, not individually, but as a syndicate -in a collaborative way- to gain critical mass

Japan had huge success with this stratagem. Also Keiretsu - which is a Japanese term, for a strong relationship, even mutual equity stakes between a group of companies - is a strong bond when working and trading internationally. This system is still in place in the Japanese economy.

I believe a sovereign economy should consider the Japanese method of building up entire industries, it has worked before successfully and can work now.

Strategies for industrialization: Export promotion

The are several keywords:
Export-oriented industrialization
export led industrialization
export-led growth

While import substitution is a necessity for sovereign economies, it can create a number of issues in market dynamics. By itself import substitution is not the most efficient way to strengthen an economy,. It needs to be combined to a strong export policy, not of raw resources, but of manufactured goods.
Prime examples of this are East Asian countries: Japan, South Korea, Taiwan and China.
The export-oriented industrialization allows goods, built with import substitution policies, to be exported abroad. This relieves the market of over production.
Export led industrialization, by combining both import substitution and push for export, leads to massive industrialization. These policies increase growth, trade balances and and many other benefits.

Export Organization and Sovereign E-Commerce

I recently researched the organization of export of countries.

I must say I found most countries quite disappointing.
Most developed countries have a static structure: Chamber of Commerce, Export banks, Export insurance, support for large organizations, usual trade shows. Some are doing deals via respective ministries for items like arms, agriculture.

Meanwhile China uses advanced e-commerce like Alibaba/Aliexpress to sell directly to consumers of US and Europe.They have advanced logistics, agreements with organizations like US Post Office for international deliveries. They have a lot of trade links, any continent, any country. And they supply anything to anybody, anytime, any currency.

India is quite peculiar. They are very strong in IT services, Pharma and other services. India does not have very strong trade structures, but Indian companies are carpet bombing people by offering services via social sites like Linkedin.

I would like to see a better type of export organization. In this age e-commerce and the related logistics component are the most effective tools to put the good in the "shop window" and target the consumer directly. I blogged recently about the fact that e-commerce is de-facto a business infracture
And export is another reason to consider it.