Is International Trade Right for You?

Dear M & M: With all the news about international trade and selling to other countries is this something I should look into as a business owner? Janice

Dear Janice:

International trade is defined as the exchange of goods and services between countries.  According to the World Trade Organization, total world trade, exports plus imports in 2017 was $34 trillion.  That’s 17 trillion in exports plus $17 trillion in imports.

One-quarter of trade was in electrical machinery, computers, nuclear reactor parts, and scientific instruments. Automotive contributed 9 percent. Commodities like oil, iron, and diamonds added 19 percent. The United States (US) consists of 5 percent of the world population, why shouldn’t we consider selling to the other 95 percent of the world population?

International trade isn’t something new, it dates back to over 2,000 years ago as the silk roads connected the Asian markets to the rest of the world. While international trade is more expensive due to transportation, currency exchange, other distribution costs it can be a way to generate additional profits by attracting a larger audience.

The United States has numerous government agencies set up to facilitate, govern and monitor international trade. According to the United States Census Bureau, only 5 percent of our companies export. Looking at goods-producing industries in manufacturing sectors, small businesses make up 96.5 percent of exporters, but only 18.9 percent of export value.

Additionally, only 28.4 percent of small manufacturing firms export. For service-providing industries in wholesale trade sectors small businesses consist of 99.2 percent of exporters and 64.8 percent of export value. Similar to manufacturing sectors, only 32.3 percent of small wholesalers export. Large businesses exhibit much higher participation levels in exporting, both overall 38 percent and in manufacturing sectors 71 percent.

Other countries companies are competing in your (US) markets taking away your customers, why aren’t we going after some business in their local markets taking market share from them, especially if we have better products or services? Not every country is right for you. Not every product or service is exportable. It must be considered one product and one county at a time.

What are market conditions? What political forces, currency exchanges or tariffs will you encounter? If people are calling you from other countries wanting your stuff or if you think people beyond our borders want your stuff, serious considerations needs to be taken to see if exporting is right for you.

Cochise College Small Business Development Center is your local resource to guide you to see if there are any opportunities for you to export. Call Rachel Norton at 520-515-5478 and schedule a time to speak with a counselor.



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