Exporting to Asia (Part 3)

There are no recipes for becoming a successful exporter. Nothing can replace true entrepreneurial talent. However, there are good policies and good practices, which are, in turn, appropriate to a given country’s market. This is what I intend to briefly address below, combining observations that apply to exports in general with those which are especially relevant to the Asian region.

1. We need to put more emphasis on the Chile as a brand.

It is an undeniable fact that Chile, in general, remains a little known country in Asia.  When Asians do “remember” Chile, we are often associated with our geography, copper, and, more recently, with wine.

The aim should be to make the phrase "Product of Chile" on our products induce positive feelings, rather than unfamiliarity and questioning.

The slogan "Chile All Ways Surprising" perhaps may have been appropriate during the early stage of “country branding”. Depending on initial assessments of this marketing phrase’s impact, we would have to take the next step beyond simple “surprise”.

2. We must develop export sector cohesion.

This involves, among other things, developing national export trade associations, binational Chambers (of Commerce) business committees. These should focus on Asia, Chile-Japan, and, in order of importance, Chile-Korea and Chile-China.

Private sector business associations are not feasible if they do not represent the majority of exporters, including smaller-scale operations.  This type of professional association guarantees that interested parties may rely on the respective entities’ representation, and that the sector is subject to healthy competition among its members. As such, it is important that trade associations represent all companies within their respective sector, or trade with a given country.

The Trade Association theme also implies public-private partnerships, through partners such as ProChile (Chile’s official export commission), etc. Achieving, maintaining and possibly improving the "harmony" between public and private actors is a constant challenge. This strategy requires State officials have adequate resources; a challenge in itself, especially when comparing Chile’s ProChile to competing nations export bureaus (JETRO, etc.). They must also understand the characteristics and needs of exporters. The State must keep its role subsidiary to that of exporters. Both sides must develop objective and professional mission statements, act as a team and not pollute the actions of one another and with unrelated matters, such as Chile’s internal politics.

3. It is essential to have more and better market intelligence.

The key to offering good exports is to offer what the market demands, and not simply what a company usually produces for the domestic market or for other export markets. For example, in Korea a best-selling food product is the manta ray - not exactly the type of “seafood” that one would intuitively offer as an exporter. But we must not forget that the customer is always right, even in the export business.

Exporting to Asia requires more than the usual market intelligence. Its markets are less known and more difficult to understand for exporters, due to its heterogeneous nature and deep cultural differences.  While ProChile usually provides basic information to exporters, many times it is necessary for exporters to deepen their understanding, something which requires dedication and study. Eventually, it also involves hiring consultants. When well planned and managed, investments in education can be very profitable.

4. An additional requirement is doing business in each export market.

Generally, this topic addresses Business 101 topics, such as: business cards, conversation, conventions and social customs, negotiations, etc. But beyond the obvious, there are a number of substantive items: commercial, financial, banking, administrative, legal, etc. These require constant review and updating so that exporting occurs under the optimal conditions.  Here, too, once a certain level of complexity is reached, outside advice is a virtual must.

5. Last but not least, the exporter is required to reach a stable commercial presence.

Exporting production can meet economic needs, but the lack of a well-formulated business plan will doom any successful export strategy: what to export, quantitative goals, on what time horizon, through what channels, for which customers, facing what internal and / or external competition... and so on.

This is not the forum to develop in detail any of these aspects. Nor is it my intention to discourage anyone. On the contrary, business in Asia can be extremely profitable. But do not underestimate the complexities and high transaction costs. For these reasons, among many issues, I would like to emphasize the need to consider in particular the decision to go to markets alone vs. the advantage of trading companies, agents, representatives, partners, and so on. Trying to bypass the middlemen may be a good idea, but taking into account the above factors, especially for exporters not 100% familiar with the Asian markets, it may also be an unjustifiable savings.

Some time ago I read a report entitled "Mind the Gaps - Singapore Business in China" from Sreekumar & Siddique, the world-renowned Singapore consulting firm. The authors emphasized the complexity of doing business in China, constant change and the multiplicity of factors to be considered, as well as the challenge it presents to Chinese entrepreneurs in Singapore, whose mentality is that of a developed economy where rules are stable.

The report also stresses that Chinese distinguish between doing business with other Chinese (first circle), with people like them (second circle) or with others, such as Westerners (third circle). In the second and third circles the difficulty of doing business increases, because the communication codes are less reliable and efficient, and there is no sense of belonging or loyalty to the group. If the second circle feels the gap, the third circle feels it even more.

However, this gap can be narrowed, even though exporters are Chilean. A stable business image helps a great deal. For example, and returning to the theme of trade associations, it can be very expensive for SMEs to maintain a permanent presence in certain markets. However, putting together a group of SMEs to provide common services (secretarial, vendors, consultants, etc.) can be a great way to reduce transaction costs. I would add, in conclusion, that there are Chilean “traders” who have taken the step of setting up in places like Shanghai or Singapore. They have taken the risk of starting almost from zero in almost unknown market to Chileans. I celebrate this entrepreneurial spirit, and I am confident that Chile’s exporters, which have done very well in markets where Chile was virtually absent, have ushered in a new era for our products and services in Asia. This will contribute not only to their individual success, but also to the entire nation’s prosperity.