Hello friends. It gives me immense pleasure to share here the text based course titled – How to Become a Successful Exporter?. You will find the different lessons of this course here in the text form in daily posts. Here is the lesson 2 for your reading. If you wish to enroll to my this course on UDEMY with video lectures you can ENROLL HERE.
Glamour of Exporting
So one very obvious benefit of exporting is that the international market is very vast, it has unlimited potential and due to advancement in technology, especially in the areas of international transport of goods and people and information and communication technology, it has become very easy to set up export business because of the easy flow of information.
At the click of the button, you can get a lot of information about
the international markets and what is happening there.
- how much is the demand?
- which are the markets to enter?,
- how to enter international market?,
- how to market their products?
- whom to contact for setting up business?
These things have become very easy, but it is very, very important to learn faster that you have the requisite skills which you learn for exporting to be successful in these endeavors.
Another reason, friends, of people going into export business is that they feel that exporting is action packed.
- It is glamorous.
To some extent it is true. Yes, it is glamorous. It is action packed because the exporters go to the international markets, they travel there. They meet new people, they see new opportunities, they see new methods of operating in the different markets, and they learn a few things which they are able to apply in their domestic market. And to some extent they are able to outdo their competitors. So definitely the life of exporters becomes action packed, glamorous.
Another point is that many of the exporters want to involve their immediate family members into the export business because they think that by doing so, if the business expands, they can allow their family members to relocate themselves in different countries, especially the exotic countries like Singapore, Dubai, Mauritius, London, Paris. And they feel that by this relocation, the life of their family members will become better, their future will become better, their career prospects will increase.
So this becomes another very motivating factors for people to enter into export business.
One of the other motivation of entry into international market, friends is the possibly large size of domestic market, especially for manufacturing and providing services in different areas and several sectors of business.
So for example India is a country, which is able to produce and provide services in a host of areas and many of these areas have a lot of potential and demand in the Int’l market. So many of these mfrs and service providers in India, they are not at this stage that they themselves can export their goods or provide services to overseas buyers.
So many people take this opportunity and they start merchant exporting business and they source of their goods and services from different places in India, and they export those goods and services in the int’l markets.
Another reason, friends, is that the foreign sales is very dear to most of the domestic governments in the case of India, for example, the Indian government give cash incentives to exporters who are able to bring a good amount of FX for the country. This foreign exchange is very important Friends, for every country, because foreign exchange brings prosperity. It helps the growth of economy of all the countries. So many governments in many countries, they give incentives for foreign sales.
Another reason Friends for going into international market and exporting is the possibility of accumulating several foreign resources. These foreign resources, Friends can be in the form of physical resources, or it can be in the form of human resources or it can be in the form of capital resources.
So Friends, as I had given you an example of Haldiram’s businesses in my earlier lesson, many of these businesses have set up their own factories, the international markets. They have set up their outlets, their restaurants. So these properties which they have bought, these resources, which they have accumulated, can bring a lot of benefits for these businesses so they can diversify their business risks in one country to the international market, and they can mitigate several of these business risks by having resources in different countries.
Friends, another reason of exporting and the benefit from exports, is the accumulation of foreign knowledge, friends in the int’l market is a very large market. It is more modern. It uses new methods of manufacturing, new methods of marketing, new methods of operating. And when you are an export business, you meet different people in the market.
- You learn new things.
- You learn new opportunities.
- You learn new technologies.
- You learn new methods of doing marketing.
Many of these skills can be very much paying for these exporters when they apply these skills in the domestic market. So this becomes one of the major motivating factors for people to go into export business.
Another benefit of exporting is the possibility of locating new, more efficient and more reliable supply sources in the overseas market.
So I’ll give you one example for this.
Many of the exporters from India in the rice export business traditionally had been exporting to international market, the basmati variety of rice from India. And because of the export of basmati rice, which is available throughout the year for these exporters to export, they were able to forge very good relationship with many of the large buyers in the international market who are the buyers of large quantities of basmati rice.
But at the same time, they are also buyers of non basmati varieties of rice, also which the Indian export has found not very easy to export because many times the availability is not there for non basmati rice in India and many a times Indian govt. bans the export of non basmati for exports from India.
So. To exploit the opportunity of the large demand for non basmati rice, these exporters from India who have made very good relationship with many of the largest buyers in the Intl’l market, they start looking at other countries who can reliably supply good varieties of non basmati rice at reasonable prices.
So many of these rice exporters, for example, in Thailand, Vietnam, Cambodia, many of the suppliers who are very much reliable, they are able to supply very large quantities of non basmati rice, almost throughout the year. So they forged relationship with these suppliers in these countries and they are now doing something called third-country export. So they source their goods from these countries for non basmati varieties and export these and export these varieties to their regular buyers of basmati rice friends.
Another benefit of exporting is that many of the businessmen who are facing very strong competition in the domestic market. By resorting to export business before anybody else do, they are able to contain competition in the Indian market.
Also, one very good example of this is the denim fabric mfr, which is Arvind Mills, which is based in Gujrat. Now, India is a very large manufacturer of different varieties of cotton fabric. Denim fabric is completely made of cotton, which is easily available in the Indian market. Now, because there is a lot of competition in manufacture of denim fabric. Arvind mills started manufacturing very large quantities of denim fabric using the best technologies and they and a very large portion of this manufacturing of Arvind Mills was being exported and is being exported in the international market and because of this non dependence exclusively for the Indian market, Arvind mill is able to compete with the other manufacturers of Denim in India. And because of this Arvind Mills, has become the number one manufacturer of the Denim fabric in India.