Read this week’s guest blog by Anthony Cambas, an International Trade Specialist, on the Challenges and Opportunities in International Trade for Entrepreneurs and Small and Medium Size Businesses.
It is an oft repeated maxim that almost 96% of potential consumers live beyond the borders of the United States. Of course, not every human being on the planet is a potential customer for the products and services offered by entrepreneurs and small businesses; however, it is safe to say that failing to even consider such opportunities is short-sighted. In these unsettled days of the COVID-19 pandemic, businesses of all sizes need to consider new approaches to how they identify new customers and get their goods and services to buyers.
There has never been a better time to take a closer look at international trade in my view. According to the U.S. Census, in 2019 US exports of goods were valued at $1,652,806 and services at $845,228. Of course, these figures were for a period of time before the coronavirus wreaked havoc on the U.S. and global economies, but I firmly believe that opportunities will abound for those who understand what international trade means in the 21st century and are flexible and agile with their business models.
In my experience, when entrepreneurs and small business owners think about international trade (if they do at all), more often than not, the first thing that comes to mind are tangible items such as clothing and coffee that are shipped across borders by plane or ships in containers or as bulk cargo. Of course, trade in goods is still prevalent, but in recent years globalization and improved technologies have led to a transformation of how international business is conducted. This had been facilitated to a great extent by a profusion of E-commerce platforms that connect buyers and sellers, process payments and get products shipped to buyers.
Increasingly, international trade includes electronic transmittals of data and information and services. In 2020, many people are still unaware of the fact that information and services are also traded internationally and that this is importing and exporting. For example, a U.S. based translator who gets paid by a company in Mexico while working from their home office translating documents into English is an exporter of services. A developer of smart phone apps who has buyers around the world is also an exporter. A business and marketing coach who has developed training videos and live Zoom sessions is an exporter if his or her clientele includes international buyers. Services are also exported when foreign tourists travel to the United States, stay in hotels, eat in restaurants, and consume goods and services.
Opportunities in Uncertain Times:
Businesses of all sizes that are engaged in importing and exporting of goods and services have been challenged by the COVID-19 pandemic. The disruption to “business as normal” has been painful, especially to entrepreneurs and small and medium size enterprises (SMEs). In addition to lost customers and worker layoffs, access to the products and services needed by those firms to conduct business have been severely disrupted, as have the supply chains deployed to get goods and services to consumers.
In the United States (and other countries), local, regional and national governments have deployed various programs in the form of loans and grants to inject liquidity to help small businesses, including exporters, to survive and keep workers on their payrolls. Very soon we will need to start helping entrepreneurs thrive and not just survive.
International trade will change going forward but will continue. Trade is one of the oldest activities that humans have engaged in. At the same time, it is one of the newest and most modern activities that humans engage in. In the coming months and years, I anticipate a trend towards a decrease in trade volumes of cargo moving in containers and an upswing in smaller transactions of goods and services. Technology will play a vital role with E-commerce transactions leading to more small packages being sent across borders to consumers. On the service side, exports can be facilitated through independent contractor websites.
It is important to emphasize that these trends started before the COVID-19 pandemic. For example, in my work providing international trade assistance with the Small Business Development Center networks in Illinois, Oklahoma and Mississippi, I have helped many an entrepreneur and small business successfully export goods and services. Interestingly some of the service exporters I assisted did not understand at first that they were “exporting” their services. A few years ago, I traveled to the West African nation of Benin and met with an entrepreneur who is paid to translate documents from English into French by clients in Europe and the United States, and gets paid through transfers that he receives on his smart phone. This is a great example of an entrepreneur who is a service exporter
It is important for small businesses to understand that conducting international business requires planning and information to find international buyers, get paid, and comply with laws and regulations in the United States and other countries. The coronavirus pandemic has brought some new legal requirements for shipping Personal Protective Equipment (PPE) into and out of the United States and other countries. In addition, some technologies developed in the United States, such as drones and communications software, may have U.S. export controls and require an export license even for low value transactions.
Certainly, the laws and regulations that govern international trade can be daunting; however, there is plenty of help available to entrepreneurs and small and medium size businesses. I highly recommend that entrepreneurs and small and medium size businesses avail themselves of the diverse resources available to them in order to pursue international opportunities. These include individual consultants and advisors as well as International Trade Specialists from Small Business Development Centers (SBDCs), State trade offices and the U.S. Department of Commerce’s U.S. Commercial Service.
Anthony Cambas is an International Trade Specialist at the University of Mississippi – Small Business Development Center in Oxford Mississippi. You can contact him at avcambas@olemiss.edu.
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