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RGX Consulting
In the context of the pandemic caused by COVID 19, the SMEs in the region need to make their best efforts to reach new export markets. As a contribution to meet this challenge, RGX recommends analyzing potential destination markets according to the variables below:
When trade agreements are in place, export opportunities increase because products can enter the market on a reduced or null tariff. This enables stronger price competitiveness against other origins.
We will examine the countries where the product of the exporting country is best accepted based on the product’s share of total imports by the country, using trade statistics of the previous year and also evaluating purchases from preceding years.
By analyzing the past 3 years, importing countries that have grown steadily and permanently in imports in general, and in the purchasing of the product under study in particular, can be identified. This “screening” technique will reveal what growing markets are more likely to accept import transactions.
Countries will be prioritized where the distance to the destination market is relatively short to enhance the exporter’s competitive advantage in terms of transportation costs and shipping times. In addition, geographic proximity reduces promotion costs and makes it easier to travel to the destination market, support the client or distributor, and stay closer to retail channels and end consumers.
Based on World Bank estimates, the average import tariff in the destination markets will be taken into consideration. Countries with a high tariff average will be left aside to avoid the impact on price competitiveness of the products shipped to these countries.
This indicator will identify the challenges and opportunities that can improve a country’s logistics performance. In addition, it will evaluate several logistics aspects based on the metrics of logistics efficiency. We will then prioritize markets where logistics performance can facilitate product distribution.
Based on World Bank data, customs clearance efficiency and speed is rated across countries, prioritizing formalities that are simple and predictable. Therefore, markets where customs clearance for imported products is more efficient will be weighed.
Given the current global pandemic, it is necessary to grant higher weight to international markets where the impact is less severe. Therefore, and using Google’s database, it is established that low impact will create a more favorable scenario for a country’s economic recovery.
Taking into account the current health emergency that is having worldwide impact, the major measures and precautions adopted at each recommended destination market will be weighed in terms of trade border operations (ports, airports, customs, bonded warehouse, among others) resulting from preventive actions against the spread of COVID-19.
The correct identification of an export market is an extremely important step to achieve business internationalization. For more information about our “Methodology to select export markets,” please send us an email to customerservice@rgxonline.com
