Executive Forum 2002
Managing Competitive Advantage:
The Values of National Strategy

SESSION 6 SUMMARY

Saturday, 28 September, 2002

Session 6: Strategy, Networking and What’s Happening in “e”? 

The objectives of Session Six were to find out whether the techniques the Executive Forum has explored over the past three years have served their purposes, and whether past decisions about export strategy were still valid, said Panel Chair Ramamurti Badrinath, Director, Division of Trade Support Services, ITC. The first Executive Forum redefined trade promotion from assisting exporters, to partnering between the public and private sectors. The 2000 event focused on the role of IT. In 2001, participants recognized more clearly that trade promotion was not the sole focus of TPOs, but that an ever-larger network of players needed to be coordinated.

Thomas Aquino, from the Department of Trade and Industry, Philippines, explained in some detail the Philippines structure, which includes a three year export strategy programme enshrined in law. The reality of Philippines exports, is that more than 90% of exporters are SMEs, while electronics, garments, and auto parts and components, accounts for 80% of the exports. “From a strategic standpoint, we need to have more market place selection and diversification,” said Aquino, noting that decision making on the existing major export sectors remained very much under the direction of MNCs. 

Aquino stressed the close coordination between public and private sector, through a range of agencies and bureaux. There is also an Export Development Council, an umbrella group, which is a major driver and includes government representatives and private sector members selected on the basis of geographic and sectoral criteria.  

Summing up, Badrinath commented that the Philippines example demonstrated that trade promotion would not just take place. “You must have a strategy. You need an active network.”  

Michael Hannah of Trade New Zealand reported that New Zealand, concerned about lower rates of growth than comparable countries, had established a Growth and Innovation Framework to try and increase value-added exports. Agriculture, forestry, processing and fishing accounts for around 60% of exports, while the base of exporters is small, with 115 accounting for 85% of export earnings, and most of that coming from an even smaller group of large producer boards.  

“We needed to address the problem through more than the TPO,” said Hannah. “We needed to enhance our human capital, innovations, access to global networks.” The focus is on ICT, biotech and creative industries, such as the background technical industry that has supported the making of films such as Lord of the Rings in New Zealand. “Within government, the challenge has been coordination and alignment. We need a more efficient face for the private sector to deal with.” 

There are four agencies involved in the framework, which is still an informal network: Tertiary Education Commission: Foundation for Research, Science and Technology, Industry New Zealand (providing regional/business assistance), and Trade NZ, responsible for export development. “The challenge is to provide a seamless service. When you share a common goal, somewhere along the line two agencies are going to cross paths.”  

Industry NZ and TNZ are to merge (by next July), which Hannah said was creating challenges associated with putting together two different business models.  

Q: What measures are being put in place to ensure the two cultures integrated? Any downsizing?

A: There are inevitable overlaps; two boards will become one. There will be some rationalization.  

Q: We’ve been hearing about more mergers. We see the pains they go through. First, do you really believe these two functions should be merged?

A: I’m comfortable where it’s heading now. A year ago FDI was within our organization and we had to make the case for keeping it where it’s related to our export activities. In our country, infrastructure tends to be handled through a specialist area and we haven’t tended to get involved in infrastructure. Whichever agency you put it in, there will be an issue of coordination.  

Faisal Ismail from South Africa, who demonstrated a CDRom depicting the country’s export strategy, said his original experience was as a trade negotiator, and that he had to learn trade promotion, learning from the experience of countries such as Ireland, Sweden, Finland, Canada and New Zealand. “The thing that came to the fore, the most important thing you could do, is to organize the private sector. Our exporters didn’t talk to each other, they weren’t organized.” A series of export councils were set up, South Africa joined the WTO and worked at building up regional agreements within southern Africa and with other “southern” economies.  

Ismail also stressed a sectoral approach to trade promotion and the need to diversify geographically. Another key element, he said, was that exporters initially lacked experience and confidence, imitating foreign designs and image. To correct this, South Africa worked with the councils and successful exporters to help create a new national identity “Proudly South Africa.” 

Comments from the Floor:

Cote D’Yvoire’s Paul Boni expressed doubt that the TPO could be the sole coordinator in many developing countries, and suggested a high-level government sponsor was essential. 

Another delegate noted that, since this was often not possible, the TPO could indeed provide the coordinating role.  

A Malaysian commented that his country’s policy had been primarily driven by the prime minister over many years. “If you don’t have a strong leader committed to this, it’s very difficult to see any progress made.” 

Mike Morris, while agreeing that South Africa’s export councils had in many cases worked well, commented that some had definitely not. He stressed there were two critical lower levels below the top level. “You must have people pushing it from industry side. And it’s critical that the DTI or government institution, has to have an earmarked person who plays a critical role. Internal change agents are absolutely critical. And an external change agent from the government, a a lower, not a coordinating level, is also crucial.”  

E-business

Nicolae Semine of ITC said that, despite the predictions of explosive growth, after the gold rush most of the senior executives found these are hallucinations. E-marketplaces are not universal, mainly industrialised countries. Volumes, private exchanges, invititation only networks. For most developing countries, must accept e-market conditions as they find them. But the bursting of the bubble doesn’t mean e-business is over. The major impact is still to come. 

The dotcoms were an enormously useful phenomena. They were a wakeup call that business cannot operate the way they used to. During the boom, many enterprises realised that e-business business. E-trade is expanding but growth remains slow because of regulatory problems and unfamiliarity. Another aspect restricting growth is the lack of Intellectual Property protections. There is also a lack of capital now and a lack of trust in key business processes.  

Anton Said from Malta reported that exporters want to engage in e-trade and consider themselves ready. Unanimous view that TPOs should support this. National trade support organizations are seen as not being exclusive.  

TPOs develop e-trade support to meet the needs of the local business community, though many are focused on external community. They have more or less the same objective; they all want to encourage new exports and exporters. The national TPO acts as the bait in recruiting potential new exporters and keeping a link with the existing client base on a direct basis between business. Another school of thought wishes to use the web to bring together the activities provided by the TPO further enhance access, and in a way also release the demand on physical resource and facilities. 

TPOs are providing institutional information, trade market and business information, as well as facilities to complete trade transactions. 

Degree of intensity of what a TPO does online and its effectiveness, tends to be related to its success off-line. Other things being equal, its scope is linked to the credibility that the country enjoys as a trading partner. Developing country TPOs tend to be promotional. There is general agreement that TPOs should facilitate access to online services, though there is recognition that there are often the lack of resources to do this. There is no single best practice model. “Nobody knows anything. But there are lessons to be learned and experiences to be shared,” said Said, who demonstrated the Trade Portal Evaluation Tool. 

The ITC is also currently developing an interactive CD Rom tool to help countries develop their national export strategy, the Secrets of Success Template. This tool, demonstrated at the opening session, will be available by the end of the year.  

John Humphrey from the University of Sussex Institute of Development Studies, UK, stressed the huge advantages of e-mail for developing countries. One of the major uses of the Internet isn’t to find new customers, but to reinforce the existing client base. If you don’t you may find you’re losing them. 

The Internet will increasingly be used for supply chain integration, qualify quality, and tracking. "We don’t think the major obstacle to development t of e-commerce is technological or legal, the main reason, is that they have a different business model, based on non-contractables such as trust and repeat transactions that do not work with new customers."