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    Tomorrow's Trade Promotion Organizations

     

     
     
    International Trade Forum - Issue 1-2/2008 

    To stay abreast of the ever-changing commercial environment, Trade Promotion Organizations (TPOs) are retooling and recalibrating for the future. TPOs have proven their worth over the last decade in the rapidly changing nature of world trade. A recent study found that TPOs have a 'strong and statistically significant impact on exports'. After examining 104 TPOs around the world, the study estimated that, on average, each $1 spent on export promotion led to a $40 increase in exports.

    These positive sentiments were echoed at the World Conference of Trade Promotion Organizations, which took place in The Hague in October 2008. Against a backdrop of the global economic crisis, rocketing oil prices, increasing food scarcity and accelerating climate change, the conference strongly reinforced the critical role of TPOs in contributing to national economic growth.

    The Conference - an important informal network for sharing of TPO best practice - highlighted the window of opportunity for TPOs to take a leadership role in the vacuum left by the lack of consumer and investor trust.

    However, making a difference to export growth can be a challenging task for TPOs in some developing countries. TPOs are increasingly required to quantify their outcomes and to be held accountable for their results. If they are to achieve expansion of trade and reach new clients - and satisfy their governments (or donors) that they are doing their job - they need to be visible and well connected to the private sector.

    It is normal for TPOs to be tuned into specific areas of competitiveness and opportunity in their home economies, and to focus their resources accordingly. However, the most effective TPOs also identify opportunities - for example, in sustainable trade or corporate social responsibility - and obstacles to entering new or emerging markets and work out the best way to facilitate access to those opportunities for their exporters (what Grant Aldonas, in his article on p7, describes as creating an 'enabling environment').

    Bringing value to exporters

    The higher the hurdles, the greater the value TPOs can deliver. By using the tools of trade promotion, such as national pavilions at specialized trade fairs and trade missions, TPOs can shepherd their companies into the most appropriate sectors. This also serves to highlight areas of national competitiveness, and enables exporters to gain leverage off this awareness through their own promotional efforts. Take, for example, China's capability in low-cost manufacturing, or the reputation for information technology in the United States.  

    Accurately assessing the market-readiness of exporters is also vital if resources are to be used effectively. For example, some TPOs provide self-paced assessments online, which are useful because they take participants through key issues that might not have even occurred to them.

    The Internet has revolutionized access to information but only skilled and experienced staff can provide real understanding of market structures, the respective strengths of channel operators, and reputation and capacity to perform based on assiduous investigation on the spot.

    Constantly innovating to develop new products and services that meet the needs and demands of clients is critical to the ongoing success of TPOs. As can be seen from the TPOs receiving 2008 World Trade Promotion Organization Awards in The Hague [see p6], the best performing TPOs are constantly responding to client demand, are success oriented and have a strong affinity with their private sectors.

    Success factors for TPOs

    Recognition and support (including adequate funding) from sponsoring governments is critical. There must be a sophisticated understanding of the TPO's role among the country's leadership, and active involvement to produce system-wide engagement and support. National economic policy should also direct resources into industry sectors that have growth potential, not into propping up industries that are inherently disadvantaged.  

    A further critical aspect is the positive engagement between the business community, industry and exporter associations and groupings. Dialogue should be continuing, future-oriented and collaborative in tone and action. Medium-term rotations of senior specialists across the private-public border can infuse deep industry knowledge and insider access.

    Key performance indicators should be adopted to encourage greater effectiveness, and should percolate down into individual performance agreements so there is congruency and alignment of corporate strategies and individual actions. Targets should be quantified and stretching, but must be believable and not seen as empty posturing or wishful thinking.

    Software-based Customer Relationship Management (CRM) systems record activities undertaken with customers and the export results achieved. This is a vital means of measuring efficiency, return-on-investment and client satisfaction.

    Planning structures need to concentrate not only on short-term operational planning but also on the medium-term horizon, and involve inputs from all levels of the organization. The 'plan' must live and not be a pro forma, box-ticking exercise. Strenuous performance evaluation against the plan must be undertaken so that lessons are learned. Strategy needs to be implemented aggressively and in rapid response to changes in markets and business practices.

    The best TPOs have mastered online communications and their websites meet user needs. Technology keeps TPOs connected to their clients, their markets and their paymasters. It is important for TPOs to monitor usage patterns and seek feedback, as well as to constantly refresh sites to build confidence that the TPO is keeping up with the constantly changing modes of international business and new forms of communications media, e.g. use of SMS messaging.

    Recruitment needs to be focused on attracting and retaining skilled staff in what is often a challenging job in a widely networked, complex global operation. Commercial quick-footedness (and relevant private sector experience) should be sought, rather than a bureaucratic obsession with process. One ultimate test is the skill to be responsive to a request for market information on each product or service, in all its uniqueness.

    TPOs should constantly look to benchmark themselves, internally and externally, against other similar organizations. Discovering that you are lagging against others on key performance indicators can be salutary, and examining comparative data is a critical measure of how your organization is tracking.

    Benchmarking internally provides a link between strategy and measured performance. The measures to be adopted need tight, unambiguous criteria and should be designed so that there are no unwanted side-effects (such as destructive competition between staff in pursuit of individual rewards, or manufactured results which paper over the cracks in a loosely defined measurement system).

    The International Trade Centre (ITC) is expanding and upgrading its benchmarking services to provide best practice information on key TPOs processes. As a neutral, trusted party, ITC can surmount any fears of disclosure by individual TPOs and deliver comparative, aggregated data to participating organizations. This will enable TPOs to assess their performance in key result areas and chart a course for world-class performance.

    Recognizing achievement

    It is vital that governments devote thinking time to their expectations of, and plans for, their TPOs. There is sufficient experience to show the way forward and to learn the hard-earned lessons of how to make a difference to the international performance of their traded goods and services sectors. Through its World Trade Promotion Organization Awards, ITC has been recognizing and rewarding best practices in TPOs. Tapping into this information can be a useful guide to up-and-coming and ambitious TPOs, especially from the developing world.  

    The last decade in particular has shown how it is possible to lift millions out of poverty by taking advantage of more open markets, economic growth and better information flows. More logical processes of deciding where and how to focus will see resources better allocated and produce greater returns.

     The winners of the World Trade Promotion Organization Awards for 2008 are: 

    Afghanistan: Best Trade Promotion Organization from a Least Developed Country

    Jamaica: Best Trade Promotion Organization from a Small Country

    Kenya: Best Trade Promotion Organization from a Developing Country

    New Zealand: Best Trade Promotion Organization from a Developed Country

    Costa Rica: Panellists' Surprise Award

    New Zealand: 'Best of the Best' Trade Promotion Organization

    For information on WTPO winners see: www.tpo-net.com 

     Requirements for a successful TPO  

    1. Recognition, support and funding from sponsoring governments
    2. Positive and future-focused engagement between all stakeholders, particularly the private sector
    3. Ambitious but realistic key performance indicators
    4. Customer relationship management to measure effort against efficiency and results
    5. 'Live' strategic planning and constant evaluation, maximizing the potential of communications and staying abreast of technology
    6. Recruiting and retaining commercially savvy staff
    7. Benchmarking performances and constant comparison to similar organizations