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Business- competition gives you success

Loss of Chinese Textile Exporters is India’s Gain

Limitations ordered by the U.S. over textile exports of China within the first half of 2006 has benefited other countries with active textile exporters. The U.S., as the world’s biggest trading economy, began importing its textile needs from other exporters. The Indian textile industry is among the major textile exporters to benefit from these restrictions judging from the increase of its profits in the U.S. Although China is fast becoming another economic giant, its administrative body cautioned its own textile export industry of possible decrease or growth slow down for the rest of 2006.

The Chinese export industry reportedly generated a meager $8.23 billion in sales of textile exports for the months of January to July. This is a decrease of 76 percent compared to the textile sales posted last year. The year 2006 is marked as the only year when the Chinese textile exporters suffered this much loss. The Communist country attributed these losses to the U.S.-imposed restrictions. Conversely, Indian exports reportedly registered an increase of 18 percent within the same time period.

It can be recalled that Indian Textile Minister Sankersinh Vaghela has expressed optimism about the chances of his country’s textile exporters against indomitable competitors like China. Vaghela had clearly foreseen the effects of the U.S. restrictions on one of his country’s main rivals in the textile exports industry. With its improving textile exports economy, India has projected plans to exceed the set fiscal target of 19.7 billion for the fiscal year 2006 to 2007. This is an increase of more than two billion in profits. The bulk of this excess is credited to Indian textile exports industry which is projected to reach the $40 billion mark by 2010. Plans to upgrade the country’s manufacturing community through building integrated textile exports manufacturing parks are underway with a projected budget of Rs.1.4 trillion.

The restrictions imposed on China’s clothing industry were founded over concerns by the E.U. and the U.S. that Chinese exporters may stifle competition in the textile exports industry. China has been accused of unfair trade practices because of its tendency to swamp markets with cheap clothing and surplus textile products. This behavior of the Chinese textile industry was traced to the lifting of the quota system, which limits global textile sales of countries. The lifting of the quota system was soon followed by an unprecedented increase in Chinese global textile exports. By imposing the restrictions, the U.S. economy is attempting to prevent the advance of a new world capitalist. By limiting China’s access to the U.S. market, China’s capitalist streak is controlled.

China has sought a compromise with the two capitalist powers and both have already reached agreements with China and its exporters regarding the issue. The U.S. signed a trade agreement with the Communist nation that will hopefully help resolve the dispute. This agreement, which allows Chinese clothing and textile exporters a rise of an initial 8-10% this year, will undoubtedly have an effect on India’s own clothing and textile exports. This is a development that the Indian nation should closely monitor.

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B2b Negotiations and Import and Export

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-The Art of B2B Negotiation

Business to business negotiation, besides debt arbitration is overwhelmingly being accepted by global sourcing and B2B communities. Business to business negotiation requires stronger positions in areas like governmental policies on foreign trade, bargaining power and cultural aspects. Thus, B2B negotiation, for global sourcing must be seen both as an art and science for the issues to be addressed and an agreement is possible. B2B negotiation in case of global sourcing is frequently attached to the making use of tactics, especially in import/export deals.

-Stumbling Blocks to B2B Import and Export

Business to business requires exposure to international culture, especially in an import & export and global sourcing market. No doubt this renders B2B negotiation longer and frustrating when the global sourcing partners are unable to see your point, for any reason for that matter. If import and export or global sourcing deals fail or get prolonged, the main reason to attribute for this are easily the stumbling blocks of B2B negotiations.

-Governments’ role in the B2B and Global Sourcing

Governments, on their part are expediting the steps to eliminate bottlenecks, procedural and legal, in order to ease import/export into US. Once this is in place, import/export from China will no more be screened for security, unless called for. US is also concerned about the diversion of Chinese import & exports away from US. Despite this, import/export with China is surging ahead each year.

Look at the trouble area for import and export in the United State’s global sourcing policy. Chinese import/export of vegetables, seafood, fruits, dairy and poultry products and meat are encountering SPS problems frequently. Export and import of agricultural produces reached US$20 last year and now, China enjoys the priority global sourcing status for import and export since 2005 as a global sourcing destination. Federal level negotiations on removal of bottlenecks to business to business (B2B) resulted in the surging of Chinese exports and a near collapse of import/export from free trade preference countries.

-Major advancement in Import & Export and B2B

Simultaneous to above, China’s import and export in garments/apparels, falling under the quota-free categories have increased by 55%. Whereas, Chinese B2B expands across continents, restrictions over import/export with China is being relaxed gradually. On its part, Chinese officials are concerned about price rise of import/export which could hurt millions who rely on the country’s import/export boom riding on the global sourcing success.

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The Benefits of Exporting For a Small Business

Somehow, people have the perception that a small business does not export. A business that is going international is usually assumed to be a large company, and with this perception in mind a lot of small business owners shy away from trading internationally. It is the problem of scale that frightens them, but is this indeed true?

They likely think this way because of the huge capital outlay that is needed to get into exporting, but in reality, a significant percentage of exporters are small businesses. Take note that the size of the company is not always important. It also does not need to have a huge marketing department just because it is going international. This is particularly true when the company sells in only smaller quantities or sells occasionally. The success of a small business in the exporting industry is dependent on the quality, competitive pricing and continuous availability of products. Despite the risks involved, which are actually part and parcel of any business, exporting brings a number of benefits to small businesses.

One of the benefits of trading internationally is the potential increase of sales and profits that international trade brings, although this is significantly influenced by the quality and success of your product. With an expanded market, sales of products will definitely increase if consumers discover how much they need or desire these products and if the company continuously supplies and retains good quality products, innovates and invests in product development when needed.

A small business can also gain market share globally through exporting. Obviously, when a company starts doing international trading, it becomes part of the global market. It will have a good opportunity to expand its customer base, and this will bring about better potential for long term growth.

Most small businesses start with the domestic market first before going into exporting. By achieving domestic success they will attain the background knowledge needed to break into foreign markets. Without a good level of success in their home markets, companies will be unlikely to achieve success abroad. If you can’t make it at home then work on that before expanding your borders.

In working to achieve this level of domestic success, your business will likely become a prominent competitor in your home market, and this competitiveness will help you to be successful in the wider world markets that you will face when exporting.

Another possible advantage of tapping the international market is the lower cost of production. With the increase of supplies needed for a wider target market, the cost of production per unit of product should decrease.

The next significant foreign trade benefit for small businesses is the potential gain of knowledge. By entering the international market, a company can gain various experiences which can be used to improve both its domestic and foreign businesses. It can gain information on new technologies, new product and marketing ideas, and much more. Such knowledge can be used to develop better products and sell them more effectively.

Diversifying risks is one more advantage of exporting. With the company’s expansion to other countries, risks such as economic downfall and market changes are more evenly distributed. While domestic companies may be wholly affected when misfortune hits the domestic market, a company with foreign interests will not suffer such great losses.

A small business can also benefit from selling its excess products internationally. If the company exports its goods, it does not have to give huge discounts to its domestic market or throw away excess products. Excess products can be sold to other markets that are not so important to the long term future.

And lastly, exporting can lengthen the life of a product. A typical product has a life cycle of launch – growth – maturity – decline. An exporting business is able to extend these stages and significantly extend the lifetime of its products by launching it to export markets while the domestic market is still in maturity. Product development to replace that product in the home market can then be financed by export sales and hey presto! Your entire product cycle becomes self-sufficient and one financial strain on your business has been eradicated.

With these benefits that come with exporting, owners of small businesses should consider tapping the international market. The size of the business is irrelevant: what matters is the will to succeed in the export markets. All it needs is high quality and useful products, and a good entrepreneur who is a risk taker in order to succeed.

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