What Could Go Wrong With East Asia

The triumph of East Asia may be dazzling, but it’s foundations could easily be swept away. It is based on the continuing willingness of Western Europe and North America to provide a reasonably open market for exports from the region, the continiued importance of consumer electronics (and to some extent motor vehicles) in international trade, and a continiued guarantee of external security from the US. East Asian economies have structural weakness which need to be acknowledged. Among these are:

• The narrow product range of East Asian Exports. (Japan for example, is really a successful exporter in only two main areas, consumer electronics and motor vehicles)
• Heavy dependence on the North American markets
• Weak infrastructure
• Dependence on imported raw materials, including energy
• Failure of the education system to generate original research
• Failure to develop service exports

What’s Hot, What’s Not

 

Industries – What’s Hot, What’s Not

Hot

• Hospitality, Food Service & Tourism
• Personal services
• Professional & Business Services

Neutral

• Chemical and Plastics
• Consumer Goods
• Education and Training
• Food and Beverage
• Furniture and woodbase manufacturing
• Healthcare, Pharmaceutical and Biotechnology
• Oil and Gas, Mining & Energy
• Telecommunications & ICT
• Transportation & Logistics

Cold

• Automotive
• Construction, Property Development & Building Materials
• Electrical & Electronics
• Industrial & Commercial Products
• Retail
• Trading & Wholesaling

Why Companies Export and How To Get Started?

Why Export?

• To diversify markets and reduce risk
• To expand sources of revenue
• To enhance competitiveness through product improvement and economies of scale.

Are You Ready?

Before venturing into export markets, companies should consider:

Production Resources

• Secured sufficient raw materials
• Able to expand production capacity
• Multi skills and multi-lingual work force
• Able and manage original equipment manufacturer (OEM) production and/or Original Brand Manufacturer (OBM)
• Ability to cater for export demand
• Adequate supply of raw materials

Financial Resources

Internal

• Sufficient cash flow to sustain the export business (at least 3 months)
• Strong financial standing
• Strong financial support from banks and financial institutions

External

• Access to government financial incentives
• Commercial banks
• Deal effectively with different monetary systems

Human Resources

• Availibility of local staff
• Knowledgeable and experiences export staff
• Dependence on foreign staff
• Requiremnet of foreign expert/skilled workers

Marketing Resources

• Sufficient marketing collaterals that meet international standards
• Able to sell direct to buyers/importers either through personal contacts or appointed agents
• Work with buying houses, procurement agents and representative offices
• Knowledge in market entry requirements and market needs

Legal Resources

• Comply with international legal requirements
• Protection on intellectual Property Rights
• Understanding of Free Trade Agreements (FTA)

Malaysia External Trade Statistics – May 2009

Malaysia’s exports in May 2009 expanded by 4.5% to RM42.95 billion compared with April 2009. Imports decreased by 2.3% to RM32.93 billion. This has resulted in a total trade of RM75.88 billion, 1.4% higher from a month ago. A trade surplus of RM10.02 billion was recorded in May 2009, making it the 139th consecutive monthly trade surplus since November 1997. On a year-on-year basis, exports in May 2009 decreased by 29.7%, while imports were lower by 27.8%. Total trade registered a decrease of 28.9% compared with a year ago. Total trade during the first five months of 2009 was valued at RM360.78 billion, a decrease of 25.3% from the corresponding period of 2008. During the same period, exports were lower by 23.5% to RM205.45 billion, while imports contracted 27.4% to RM155.33 billion, resulting in a trade surplus of RM50.12 billion.

Updated Trade Statistics

US – NODX to the US decreased by 5.0 per cent in June 2009, after the 35 per cent decline in the previous month, due to lower electronic NODX. Electronic NODX to the US declined by 37 per cent in June 2009, identical to the decrease in the previous month, on lower domestic exports of ICs (-46 per cent), telecommunications equipment (-77 per cent) and parts of PCs (-20 per cent). On the other hand, non-electronic NODX to the US rose by 40 per cent in June 2009, in contrast to the 33 per cent contraction in the preceding month. In particular, the rise in non-electronic NODX to the US was led by higher domestic exports of ships and boats, medical apparatus (+38 per cent) and electrical power machinery (+157 per cent).

China – NODX to China decreased by 9.0 per cent in June 2009, after the 18 per cent decline in the previous month, due to lower electronic and non-electronic NODX. Electronic domestic exports to China decreased by 22 per cent in June 2009, following the 32 per cent decline in the previous month. The contraction in electronic NODX was led by lower domestic exports of ICs (-31 per cent), telecommunications equipment (-86 per cent) and parts of ICs (-24 per cent). Non-electronic NODX to China decreased by 3.2 per cent in June 2009, following the 9.8 per cent decline in the preceding month, led by lower shipments of heating and cooling equipment (-82 per cent), petrochemicals (-17 per cent) and primary chemicals (-31 per cent).

Malaysia – NODX to Malaysia contracted by 23 per cent in June 2009, identical to the decrease in the previous month. The decline in NODX was due to lower electronic and non-electronic NODX. Electronic domestic exports to Malaysia decreased by 24 per cent in June 2009, following the 13 per cent contraction in the previous month. The lower sales in electronic domestic exports was mainly due to reduced domestic exports of parts of ICs (-81 per cent), other computer peripherals (-95 per cent) and parts of PCs (-28 per cent). Non-electronic NODX to Malaysia decreased by 23 per cent in June 2009, after the previous month’s 29 per cent contraction. The contraction in non-electronic NODX was mainly because of lower domestic exports of petrochemicals (-35 per cent), iron or steel scrap (-78 per cent) and specialised machinery (-50 per cent).

Indonesia – NODX to Indonesia contracted by 18 per cent in June 2009, following the 21 per cent decline in the preceding month, due to lower sales of electronic and non-electronic NODX. Electronic NODX to Indonesia declined by 22 per cent in June 2009, following the 27 per cent decrease in the previous month, largely due to lower domestic exports of consumer electronics (-52 per cent), parts of PCs (-26 per cent) and parts of ICs (-48 per cent). Meanwhile, non-electronic NODX to Indonesia declined by 17 per cent in June 2009, following the 19 per cent contraction in the previous month. The contraction in non-electronic NODX was mainly due to decreased sales of petrochemicals (-30 per cent), electrical machinery (-37 per cent) and metal manufactures (-60 per cent).

Hong Kong – NODX to Hong Kong declined by 3.6 per cent in June 2009, after the 0.7 per cent decrease in the previous month, on lower non-electronic NODX. Electronic NODX to Hong Kong registered a 0.3 per cent increase in June 2009, after a 7.9 per cent rise in the previous month, due to higher domestic exports of parts of PCs (+29 per cent), consumer electronics (+34 per cent), and diodes and transistors (+13 per cent). Non-electronic NODX to Hong Kong decreased by 8.6 per cent in June 2009, after the 12 per cent decline in the previous month. The decrease in non-electronic NODX to Hong Kong was mainly led by lower sales of petrochemicals (-62 per cent), food preparations (-82 per cent) and electrical power machinery (-73 per cent).

Japan – NODX to Japan declined by 22 per cent in June 2009, following the 29 per cent decrease in the previous month, due to lower sales of electronic and non-electronic NODX. Electronic NODX to Japan declined by 22 per cent in June 2009, following the 32 per cent decrease in the previous month, on lower domestic exports of ICs (-12 per cent), parts of ICs (-37 per cent) and disk drives (-29 per cent). Non-electronic NODX to Japan in June 2009 decreased by 23 per cent, after a contraction of 27 per cent in the previous month, mainly due to lower sales of petrochemicals (-53 per cent), specialised machinery (-72 per cent) and disk media products (-10 per cent).

Emerging markets⁴ – NODX to emerging markets increased by 27 per cent in June 2009, following the 31 per cent increase in the previous month. The increase in NODX to the emerging markets was mainly because of higher shipments to Latin America.

China A Threat?

Does US market matter and how should Malaysian companies remain competitive despite “China Pricing” factor in the world’s largest economy (United States) ?

US market represents 14.5% share in the total world merchandize import for consumption ^{*SOURCE A}, the largest in the world. The second and third largest economy, namely Germany and China together, are smaller than California and Texas economy combined.

For the past many years, US remains the biggest importer in the world with import volume of in excess of USD 2.1 trillion^{*SOURCE B} in 2008 (rank 1^st in the world on both product and services import). After inclusion to the WTO, China has risen as the biggest trading partner to the United States with 16.1% share on total US import in 2008.

As the world trade processes is further flatten by advances in information technology, coupled with China’s living standard continues to improve, China’s main competitive advantage which is low labour cost is starting to diminish. Malaysian companies and other Asian countries will soon again see themselves competing on an improved if not equal ground for a piece of pie in United States and the World.

Today, United States is still the number one export destination for Malaysian companies. However, without addressing the constantly evolving competitive landscape, Malaysian exporters are slowly loosing ground to China, and the signs of decline for Malaysian exporters to US has happened for the past 3 years (2006-2008) from US36.5Billion to US30.7Bil while US imports increase from 1.6 trillion to 2.1 trillion (2006-08) ^{*SOURCE B}.

Today, when Malaysian company lost on US opportunities in general, “China Pricing” factor is no longer the main contribution factor, but often on Malaysia businesses ability to compete equally in other areas such as customer acquisition and opportunities qualification ability, speed and quality in response to opportunities, accuracy and details in understanding the competitive landscape and initiative to start addressing the gaps through brands, products, process and service innovation to sustain long term advantage.

The above challenges are not only faced by Malaysian exporters alone. It is a common set of challenges worldwide by exporters, and it is a common and essential practice in developed countries to utilize powerful information technology tools to address these challenges (a trend that are starting to take shapes in developing countries) and allow the harnessing of valuable information and in turn speed up the entire marketing, sales cycle from customer identification to closing across international borders.

WEXPOT, a trade facilitation company provides the same powerful tools and trade facilitation services designed uniquely for Malaysian exporters in addressing the above challenges. In the process aim to increase opportunities, reduces risks, save valuable resources and allowing company to make informed decision in their international business undertakings.

WEXPOT is a Malaysian company with its HQ located in San Francisco, California. WEXPOT has years of experience in trade facilitation and have worked with many Malaysian companies in  diversified industries ranging from commodities manufacturer, rubber parts manufacturer, car parts traders, furniture distributor and others on gaining market share in the United States.

Information Sources Origin:

A http://www.wto.org : World Trade Organization,

B http://tse.export.gov : Official US Government National Trade Data

Problems To Expand Your Business To The United States ?

 

HOW TO INCRAESE YOUR BUSINESS TO THE BIGGEST IMPORTER IN THE WORLD AND INCREASE YOUR COMPANY’S REVENUE

Dear Manufacturers 

Are you looking for ways to expand your business to the North American Market? North America is the biggest trade market and yet most Malaysian companies are loosing the opportunity to tap into this market. In addition to that, Malaysian companies do not know the know how on how to penetrate into this huge market. Exporting to the USA can be a great opportunity to grow your business and increase profits.

 IF YOU CAN OFFER QUALITY AND COMPETITIVE PRODUCTS, THE NORTH AMERICAN MARKET IS A KEY MARKET YOU SHOULD CONSIDER.

 Wexpot Sdn Bhd, a company wholly owned subsidiary of Wexpot Inc, USA provides bilateral trade facilitation, management services and shared services in the North American market and other countries. We can help your company identify new business trends, untapped market potential and constantly develop solution and partner across Asia and North America.

With one of our well known product, COMAT is designed to save your international business a tremendous amount of hassle, work, time, energy and money in winning world wide clients through harnessing the power of global business intelligence and cost effective trade facilitation services.

 With COMAT you can:

 Understand your total market size and target specific market segment.

• Pinpoint client buying history
• Study the competition
• Get in touch key decision makers
• Local and reliable support to assist you.
• Target the right customers in the North American market.
• Taxes, duty and legal considerations for exports to the North American market.

CALL US NOW FOR A FREE DEMO ON COMAT. NO OBLIGATION TO PURCHASE.

 CJ Hor

Tel: 603 – 5621 6710

Fax: 603 – 5621 6712

EMail: cj.hor@wexpot.com

Cell: 012-2911340

Website: www.wexpot.com