Exports are goods and services manufactured in one country and sold to customers in another. International trade is made up of both exports and imports.
Exports are extremely significant in modern economies because they provide people and businesses with many additional markets for their goods. One of the primary functions of government diplomacy and foreign policy is to promote economic commerce by stimulating exports and imports for the benefit of all trading parties.
According to Statista, the world's top exporting countries (in terms of dollars) in 2019 were China, the United States, Germany, the Netherlands, and Japan. China exported nearly $2.5 trillion in commodities, most of which were electrical equipment and machinery. The U.S. exported nearly $1.6 trillion in commodities, largely capital goods. Motor cars dominated Germany's exports, which totaled roughly $1.5 trillion, as did Japan's, which totaled approximately $705 billion.
It is now easier than ever to sell goods and services worldwide. The majority of the world's perspective consumers are located outside of the United States, and there is a strong global preference for Made in the USA products and services. Many exporters continue to increase their profits and competitiveness by selling to global markets, and you can, too. Small and medium-sized businesses in the United States—firms with fewer than 500 employees—account for 98 percent of the almost 280,000 exporting operations. The internet, increased logistics alternatives, and many federal, state, and municipal export support programs have made exporting more feasible for even the tiniest firms. The value of U.S. goods and services exports in2019 was an amazing $2.5 trillion. And, as hundreds of exporters will confirm, expanding your customer base through exporting can help you, whether domestic or global economic shifts.
If you are considering exporting, you may be wondering, "Is it worth all the effort?" Exporting can be one of the most effective strategies to grow your business:
· Increase your bottom line (exporting companies are 17 percent more profitable than non-exporting companies).
· Smooth out your company cycles, including seasonal variations.
· Utilize all of your producing powers.
· Protect your home market.
· Improve your market competitiveness across the board.
· Enhance the value of your intellectual property if you decide to license it.
· Increase the worth of your company if you decide to sell it.
As trade volumes increase and trade barriers collapse, competition in a company's home market heats up, particularly from international competitors. Competition in our own neighborhood, as well as entering new markets for our products and services on a global scale:
· Outside of the US, 95% of the world's consumers live. That's a lot of clients to pass up.
· Domestically, foreign competition is increasing. To be genuinely competitive, businesses must explore entering international markets.
· Exporting is a profitable business.
· Exporting teaches businesses how to compete more effectively.
Global commerce in products and services is expected to expand in the coming years. The Trade Facilitation Agreement (TFA), which was introduced in 2013 and went into effect in early2017, can add $1 trillion to the global GDP per year (GDP). This agreement requires World Trade Organization (WTO) members to modernize customs procedures and reduce regulatory red tape, thereby accelerating the flow of goods and services across borders and lowering prices. The United States government has established a "single window" system that provides some of the same benefits and efficiencies as the WTO initiative.
Opportunities with free trade agreement partners in the United States. The United States has established free trade agreements with 20 countries to facilitate the movement of goods across borders, regardless of where your buyer is located. Last year, the United States' FTA partners accounted for over half of all U.S. goods exports. Earning access to FTA benefits implies gaining a competitive edge, such as lower import fees on items in member nations, making these products more affordable to consumers. The accords also create new economic prospects in the United States by enhancing intellectual property rights, simplifying regulations, and easing service sector and government contracting procedures. Countries often regard international companies the same as native ones under FTAs.
With a strong predicted increase in global trade, fueled mostly by more affluent consumers in China, India, and other developing nations, the problem for firms of all kinds in the UnitedStates is determining how to tap into this enormous revenue flow.
As global trade expands, organizations who participate report a shift in income earned from export sales vs. sales in their home markets. According to a survey of U.S. exporters, 60 percent of small businesses derived 20 percent of their yearly earnings from exports, while 44 percent of medium-sized businesses did. When asked if export sales would expand at least 5% per year over the next three years, 77 percent of small businesses and 83 percent of medium-sized businesses answered they would.
"That's all well and good, but do I have what a person in another nation will buy?" you might fairly retort. Companies that manufacture various goods and services have expanded their operations through exporting. Some of what is sold is one-of-a-kind, but the majority is not, relying on other considerations such as exceptional customer service or marketing to seal the deal. The companies and individuals behind them are strong at business fundamentals and enthusiastic about global expansion.
Companies that do not manufacture their own products can benefit from exporting by offering wholesale and distribution services.
Another solution to the question"Why bother exporting?" is that exporting increases the knowledge and abilities of everyone in a company. Doing business in a market outside one's own borders has the potential to transform its practitioners. Forming new friends, getting up close and personal with another culture, working out how to meet the needs of others, and learning how to deal with new business issues a really personally rewarding experiences. It also leads to advances in products and services, making businesses stronger in the markets in which they compete.
If you're a US company looking to export, or a non-US company that wants to import US products, we can help. Send us a message and we'll be in touch shortly.