1. TSIs and the Impact of the New Information Communications Technology (ICT)

The Internet and the new Information and Communications Technology (ICT) are having a major impact on TSIs, as indeed on all enterprises. The key to survival is competitiveness and ICT is both raising the stakes and offering opportunities for increased efficiency and reduced costs.

ICT is rapidly changing the way that we do business. The distinction between domestic and foreign markets is disappearing and giving way to global marketing. The fax machine is being replaced by e-mail, web-sites and portals. ICT is speeding up the time frame within which we can complete an export transaction. This is facilitating movement between every link in the supply chain, from grower or raw material provider, to product or service supplier, to distributor, to consumer. The consumer is becoming more demanding and in turn is getting better quality and service, more quickly and at a better price. Everyone in the supply chain will eventually have to respond to this challenge, or face extinction. TSIs are no exception.

Traditionally, TSIs have assisted exporters by:

• providing product and market information;
• advising on production and trade finance;
• promoting investment and technology transfer;
• providing technical assistance to improve product design, quality and packaging;
• facilitating the processing of import and export documentation;
• advising on the transport and warehousing of goods;
• offering practical help with the distribution and marketing of goods and services; and
• facilitating participation in promotional activities – trade fairs, missions, buyer/seller meets, in-store promotions.

These services are still needed and there has been no significant change in the range and nature of the services offered by TSIs to exporters. However, there has been a significant change in the speed and quality of service which is required and as a result, these services must now be offered differently. There are also some new services required and some new forms of commercially oriented TSIs are emerging, to fill this need.

Internet technology is the name and networking is the game: The importance of institutional and functional linkages in helping a country to effectively respond to the competitiveness challenge has become increasingly apparent. Also, the importance of enterprises working together in clusters, whether on the basis of product sector, or supply chain links, is being reinforced almost daily by the emergence of new specialised Internet start-ups. In many countries TSIs are supporting or facilitating this effort and increased networking in the public and private sectors is becoming both more feasible and a necessity.

Specialised (mainly Government) agencies have become active in ensuring the existence of the necessary banking, legal and regulatory framework and an efficient telecommunications infrastructure to support local Internet connectivity and hence e-business. In some countries like Trinidad and Tobago, this activity is being spearheaded by a national e-commerce committee; in others, by a Government Ministry (in New Zealand, the Ministry of Commerce) or a Trade Promotion Organisation e.g. AUSTRADE in Australia. In Singapore and Malaysia, there are new agencies – the Infocomm Development Authority (IDA) and the Multimedia Development Corporation (MDC), respectively, which have this responsibility.

In many countries, the telecommunications sector has been deregulated, thus encouraging competition and the reduction of Internet access rates. Indeed, the reduction of Internet access rates has been a major policy objective of many Governments, e.g. in the United Kingdom.

Movement of goods through air and seaports has always been a major bottleneck for traders. Aggressive trading countries have made every effort to ensure that their ports are not hindrances to trade, either in terms of time required for clearing goods, or the cost of port services. There are many examples of ports which have declined in importance (or indeed, closed) because of their inability to meet the needs of their clients and been replaced by more modern, efficient operations elsewhere, often within the same country.

Major ports have therefore readily embraced the new technology and engaged in competition to reduce turnaround time and hence efficiency. Modern ports, including those in Singapore and Malaysia, now offer computerised customs documentation services. Traders can process shipping documents without leaving their offices. In some cases, they can also make payments for customs duties and freight through the Internet. These measures have speeded up this process from hours or days, to minutes and has resulted in millions of dollars savings for traders: it is estimated that when fully implemented in 2001, Singapore’s Tradenet Plus service will save its business community about SG $2.8 billion (US$1.6 billion).

Because of their size and resources, multinational corporations have usually been able to respond to major new developments without significant TSI support. The CIT developments are no exception to this rule. Therefore particularly in developing countries, TSIs have emerged as the catalysts or trailblazers to pull SMEs into the world of the digital economy. The major constraints to active participation in the digital economy by developing country SMEs are:

• Lack of awareness;
• Lack of trust in the new system – fearing loss of confidentiality, they prefer to use more traditional methods of communication;
• Cost of computer equipment and software;
• High maintenance costs – Internet charges and IT staff wages.

These findings are supported by a recent survey of enterprises in Singapore. Similar information has been obtained from surveys of businesses in some developed countries, like New Zealand and the United Kingdom.

TSIs are therefore running information and educational workshops on the digital economy and specifically, on e-commerce for SMEs. In some cases, special schemes have been devised to encourage SME managers to use the Internet e.g. in Trinidad and Tobago, Barbados and Singapore, PCs are available at the TPO offices for use by SME personnel, free of charge or at nominal rates.

Singapore’s Local Enterprise Electronic Commerce Programme (LECP) EC aims to jump-start the mass adoption of electronic commerce (EC) among local enterprises so as to exploit the full benefits of EC for all industries. Under the programme, companies receive a grant of up to 50% of the EC project cost, with an upper limit of SG$20,000 (US$11,560 approx.) for each qualified local enterprise. This can be used to cover consulting fees, the cost of hardware and software and subscription fees (for the first 12 months). In Singapore, assistance is also available to the poorer members of the society to enable them to purchase second-hand PCs.

SME Web-sites: Assistance is also being provided to SMEs to create their own homepages (e.g. by KOTRA of Korea) and to promote them through the use of bulletin boards. Increasingly assistance is being provided with trade settlement procedures, with buyer credit information and with legal advice, often from a single TSI web-site (e.g. KOTRA and TDB of Singapore).

TSIs are actively re-examining themselves to assess the impact of the digital economy on their own operations. For many years now the developed country TSIs have focused on computerisation and training of their staff to use the new technology. In the more advanced TSIs all staff are now online and linked by a LAN. As many of their clients and collaborators are also now online, TSIs are responding by carrying out an increasing number of their functions online and offering their services to exporters online (as well as offline). The aim is to use IT as a key enabler, to free up staff time through the "systemisation of non-core activities" and also to shorten the response time to customers. The result is not only increased efficiency, but also a reduction in cost. CITEM (the Centre for International Trade Expositions and Missions) in the Philippines claims to have significantly reduced its communication expenses through the use of e-mail.

Foreign Trade Representation: There are also some changes becoming apparent in the delivery of Foreign Trade Representation. This has been slow to take root in developing countries, but developed countries are making more effective use of their Trade Commissioners, by using the new technology to make them an integrated part of the their head office. In AUSTRADE and the Singapore Trade Development Board (STDB), Trade Commissioners now have direct access to head office files and are online for e-mails and other electronic communications e.g. video conferencing. This increased flow of information is designed to reduce duplication of effort and facilitate work sharing.

In the developed countries, even competitors are coming together, to save developmental costs and speed up the process of developing e-business, e.g. GM, Ford and Chrysler with their components purchasing portal and Sears and Carefourr with their consumer goods sourcing portal. Also, IBM, Hitachi, Nortel, Toshiba and other computer electronics and communication giants have announced the creation of e2open.com.

As with other forms of promotional material, the electronic material must meet the needs of the customer. In many cases it is therefore being made available on the Internet in several different languages, corresponding to those of the countries major markets (e.g. Thailand’s DEP web-sites are in Thai, English and Japanese).

Virtual Trade Marts

In 1998, The US Commercial Service launched its first Virtual Trade Show entitled E-Expo USA. It served as an online catalogue show, enabling US exporters to exhibit their products and services internationally, online, before during and after a specific trade show. Taiwan’s Virtual Trade Mart features 150,000 products from 35,000 Chinese Taipei’s companies, which comprise over 90% of total trade in terms of value. This Mart now runs tailor-made shows to coincide with important international trade shows, in areas like giftware, electronics etcetera. Since 1998, Thailand’s Ministry of Commerce has also been mounting Virtual Trade shows e.g. textiles, gems and jewellery, gifts and decorations, furniture, food, leather products and cooling machines.

This is an excellent promotional tool for SMEs which might be unable to afford participation in an actual trade fair, but can benefit from international exposure through the Virtual Show. They are also useful for international buyers, who might similarly not wish to incur the expense and take the time to attend an actual Show, but are nevertheless interested in viewing and buying the products at the virtual Show.

1. Impact on Developing Countries’ TSIs

Responding to these developments is costly and difficult for countries with limited knowledge-capital in the area of ICT. Even in developed countries, the pressure of demand outstrips supply. Immigration and work permit regulations are being relaxed in order to facilitate the human resource demands of the digital economy e.g. recent measures being proposed in the USA and UK. This will no doubt increase the exodus of IT skilled workers from India and other developing countries to Silicon Valley and elsewhere. The danger therefore is that developing countries will be unable to keep pace with these new developments. They face being left further behind in the race for international competitiveness.

However, a word of caution is in order: emerging economies are at widely differing stages of development. Whereas all indications are that e-business is the direction of the future, before they can join the digital economy, many developing countries have more fundamental issues to contend with, e.g. the need for: a potable water supply, good roads, improved health services, better schools. The same holds true for the individual enterprise which might be exporting quite successfully without engaging in e-commerce. International advisers must work closely with developing countries and their export enterprises to ensure the appropriateness of the new technology and the pace at which it is being introduced. As with any other business decision, there is a need to undertake a cost/benefit analysis before proceeding and also periodic evaluations to assess the impact of the expenditure being incurred.

What can TSIs do? As with export development generally, TSIs have an important role. A good start is for them to develop their own in-house ICT capacity, while identifying the constraints facing exporters and then mobilising appropriate assistance for them. This means accepting the Internet and related ICT tools as an integral part of daily functioning of the organisation. The TSI must also undertake those actions which are within its mandate and resources, to assist exporters in entering the digital economy. They should work closely with other agencies to facilitate what must essentially be a national effort. TSIs are generally key players in national information, telecommunications and e-business committees. They are also active in workshops and seminars to inform and encourage exporters to become e-commerce savvy. Issues to be addressed are:

TSIs can assist with schemes to get exporters online and provide trade information advice, using the Internet. They can facilitate efficient customs documentation and other services online. They frequently start or encourage the establishment of new e-business "dot.coms", virtual exhibitions and other electronic forms of marketing activity. However, they are not the only actors in this important activity and they must be an integral part of a network of agencies working with a common objective.