Jump-starting exports in a tough global economy
rabino

Marketing professor Sam Rabino. Photo: Lauren McFalls

June 19, 2009

With the recession reaching the remote corners of the globe, governments and international firms of all sizes are searching for ways to increase sales. Marketing professor Samuel Rabino discusses the challenges and makes some recommendations. He is the author of numerous articles on industrial marketing, international marketing, export incentive programs, product planning, and brand strategies and development.

Governments, worldwide, appear to be looking for ways to stimulate exports as one step toward re-energizing their economies.  What recommended actions do you have for governments to help jump-start exports of local businesses?

There are many ways by which governments can stimulate exports (like providing networking and market research information), some of which might be harmful (e.g., depreciating their country’s currency or depressing wages of workers in the export sector).  Efforts should be concentrated on expanding productivity, especially in the high value-added sectors of the economy, like the high tech industries, including telecommunications.  The object should be making the overall economy more competitive in terms of its trade with other nations.

Do small and medium sized enterprises face greater challenges (than large business) in exporting?  Are these challenges magnified by current world economic conditions?  How should a small business owner respond to these challenges?

Small exporting firms that supply only a few customers overseas depend on their customer’s economic well-being and their ability to access credit.  Large companies with a broader base of customers are less exposed to this risk.  In the same vein, when the home market currency appreciates, exporting firms suffer more than large companies who are diversified and have the ability to manufacture goods in low cost countries.  The biggest advantage of the small export firm is their ability to change product portfolios, reach customers via online sales, and identify new market niches.

Are there certain consumer products that are more immune to world economic conditions? 

Conventional wisdom suggests that high-end luxury products are more immune to economic downturn.  Otherwise, most luxuries suffer more than necessities.  For example, a recent study by Nielsen Co. indicates that some kinds of foods (e.g. seafood, pasta, beer) are more immune to a recession than others (like carbonated beverages or tobacco).  Very large clothing wholesalers are also able to leverage on liquidations.  When factories close, they buy the products and resell them to their vendors or in an online store.

Are there particular products that are really hard-hit?  What steps do these business leaders take to maintain adequate exports to survive until we have an up-turn?

Exports that depend on demand from sectors such as the automotive and manufacturing industries, especially of durable goods, machinery, and parts and components, are particularly hard hit.  Until credit conditions and consumer demand, as measured by consumers’ overall confidence in the economy, and discretionary income reverse their negative turn, there is only so much that small enterprises can control.

Are there any world geographic segments where consumer demand is holding up and might be pursued by firms looking to export?

China and, to a lesser extent, India, appear to be relatively unaffected by the current crises due to a high domestic demand.  Likewise, Brazil benefits from trade agreements with China and India that also invest heavily in Brazil’s manufacturing sector.  Overall, however, recession 2009 is global in scale and, if not mitigated, it will cause every economy to suffer contraction in its economic growth.

For more information, please contact Samantha Fodrowski at 617-373-5427 or at s.fodrowski@neu.edu.

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