Small and midsized exporters want to know on which new export markets they should focus. Until now the best approach available was to look at indictors such as GDP, tariff and non-tariff barriers, political risk and so forth. For exporters who like data and aren’t intimidated by online data tools offered by the federal government, there are data available on what countries historically purchase from the U.S.
Thanks to advances in big data analytics and government’s so far limited use of them, exporters now have a more sophisticated tool to hone in on best markets for specific products. Named Market Diversification, this tool supports a favorite goal of past presidential administrations to get smaller U.S. companies to increase the number of countries they sell to. Historically, the majority of small business exporters sell to only one market, typically Canada, which is geographically close and relatively easy to deliver products to the buyer. So, imagine the impact on employment and bottom lines if U.S. companies can, say, double markets served from one to two!
It is a great reason to celebrate moves by the government that help exporters.
What’s different about Market Diversification is that it scores potential markets based on a number of factors. Instead of dealing in generalities, there is now some quantitative rigor behind selecting markets to enter. And even if the tool does nothing more than validate hunches or less rigorous forms of analyses, the knowledge that a lot of data have been crunched on your behalf should be reassuring.
The first thing you should do is go to the Department of Commerce trade promotion website and the new section devoted to the tool. https://beta.trade.gov/marketdiversification . Here you’ll enter your Harmonized Code Number, a string of digits that represent in general terms the product you are selling. The Code is used worldwide, in part to help customs officials to know what’s in the shipping box, track what comes in and to apply the appropriate tariff to the value stated on the shipping documents. Here’s an online tool for finding your HS codes if you don’t know them or if you do but want to double-check. https://hts.usitc.gov
In addition to adding your HS Code Number, Market Diversification will ask what other countries you export to. This enables the algorithm to determine whether there are similar markets you should be considering. You can filter results by region of the world, specific country, or you can choose to see all of the results worldwide. Eleven factors are involved in the analysis and include:
You will end up with a numerical score. The higher the number, the more suitable your product is for that specific market. One interesting feature is the purported ability of the tool to spot markets that are underperforming as importers of this product compared to other similar country markets. By crunching these numbers, the tool calculates the underperforming in percentage terms. If the number is 1o percent, one way to view it is to conclude that based on the information available, this market could be importing more. While it doesn’t answer the why or how questions, it does suggest a potential market for you and suggests questions to ask during additional research.
Indeed, the government authorities encourage users of this tool to view it as but one means to get a fuller picture of where you might concentrate your resources. We’re not quite yet where we can ask Siri to tell where the best markets are for our products. But we’re getting closer.
Enjoy this blog and want more insight on global trade? Check out the WebPort Global blog at https://www.webportglobal.com/Blog-Community/International-Trade-and-Global-Business
If you want more information on how WPG can help your business grow & go global contact Stephanie Misar at firstname.lastname@example.org for more information.