China to enhance relations with Argentina

Li calls on nations to push forward cooperation in trade and investment

China is seeking to deepen its ties with Argentina "with a more comprehensive and strategic vision", Premier Li Keqiang told a visiting high-ranking Argentine official on Sunday.
Li made the remarks when meeting Julian Dominguez, president of the Chamber of Deputies, the lower house of the Argentine parliament, in Zhongnanhai, the headquarters of the central government in downtown Beijing.

China and Argentina are both important emerging economies and developing countries, and the two should develop bilateral relations "with a more comprehensive and strategic vision", Li told Dominguez during the meeting. He called on the two nations to push forward cooperation in trade and investment and seek joint development.

Li also briefed Dominguez on the economic situation in China, saying the Chinese dream of national revival will become a great opportunity for the world. According to Chinese customs, bilateral trade reached $14.4 billion in 2012. China is Argentina's second-largest trading partner, while Argentina is China's sixth-largest trading partner in Latin America.

Jiang Shixue, an expert on Latin American studies with the Chinese Academy of Social Sciences, said China's business ties with Argentina are in excellent shape, except for Argentina's frequent anti-dumping investigations against China. "In that regard, at the moment it is significant for the two sides to realize the importance of each other," Jiang said.

China is a market with huge potential for Argentina, while Argentina, a G20 member, also plays a big role in China's business in Latin America, he said."And I think Beijing has sent signals that it would like to see the two sides have their eyes more on the comprehensive picture of cooperation and develop it in a strategic way," he said.

By Li Xiaokun (China Daily)

Understanding the hidden costs of international trade

The Trade and Investment Minister Lord Green is campaigning to increase the number of British exporters by roughly a quarter in 2013. If this is achieved, it is estimated that about £36 billion could be added to the UK economy.

Lord Green has been impressed by the way that many firms have seized on the export opportunity since the launch in 2011 of UK Export Week, a national series of events designed to inspire and provide practical advice for new and experienced exporters.

We know that there are £19.5 billion worth of exports generated by companies in London and the South East alone and a recent survey undertaken by workplace solution provider Regus found that of the Berkshire firms that don’t currently trade overseas, 29% are planning to start in the next two years. Clearly there are many benefits to doing business overseas.

A recent research report unveiled by the UK Trade and Investment (UKTI) shows that many UK firms are increasingly venturing beyond traditional export markets such as Europe and the US and into high growth markets in Asia and Latin America. 

The UK has always been a great trading nation and the report shows that those companies that continue this tradition by thinking globally stand to reap sizeable rewards. 58% of entrepreneurs said exporting led to a ‘level of growth not otherwise possible’.

Most economists agree that the biggest story of the twenty-first century will be a shift in the economic centre of gravity from the developed world to high-growth markets such as China, India, Russia and Brazil. Companies of all ages and sizes are increasingly finding success in these markets.

The report also highlighted that two in five small exporters (with less than 10 employees) already do business in at least one high-growth market. Many internationalised firms experience a ‘virtuous circle’ where exporting leads to new innovation, and where those innovations then lead to further exporting. Over half of all the firms surveyed (53%) said that a new product or service evolved because of their business outside the UK.

However, it’s important to recognise that exporting isn’t an automatic passage to growth and a success for everyone. In today’s economic environment it can be a costly mistake for a business to forge ahead with an export strategy simply because growth in its traditional home markets is slowing down, something that UKTI is keen to emphasise.

It must conduct a full and realistic assessment of its business model in the context of the new export markets it wishes to enter; this needs to encompass its products, services and commercial propositions. It is unrealistic to assume that a model that has worked in a traditional, home market can simply be lifted into an overseas one that is likely to be driven by significantly different commercial and cultural characteristics.

Such consideration is particularly true if, like DAV, you are a people based business providing professional services. The European market has a largely consistent and mature view of professional services and, whilst there’s no doubt that competition is driving increasingly sharper deals, it’s still possible to maintain the kind of commercial model that service providers have traditionally enjoyed. But, as we have discovered, it’s a whole new ball game trying to take that model into, say, Asian or Middle Eastern markets which have a very different view of the commercial rates they are prepared to pay.

Unless you are highly differentiated, servicing these markets with UK based staff, with all the cost this implies, is very difficult to sustain, particularly if your people are likely to be deployed in situ over a long period of time. In our experience, this model only works if you are able to establish an ‘in region’ operational presence and have access to suitably qualified and experienced local resources.

Achieving this gives you a commercial model and, if you hire effectively, people that are calibrated to your ‘local’ market. Leaving aside your enhanced competitiveness, this renders you less susceptible to things like currency fluctuations, hidden costs and cultural aspects. It also reduces the likely disruption to UK based staff who may only be at best prepared to work overseas for relatively short periods of time.

So, whilst the UKTI research indicates that exporting offers substantial benefits there are clearly downsides that must be considered. The fundamental principle is that any business thinking of exporting must undertake a thorough due diligence before setting out down this path.

Your export business plan needs to consider a multitude of scenarios specific to your business model and, most importantly, companies need to understand what it is that they are trying to achieve and why, and how well suited their business is to exporting. It is very easy to get carried away with the promise that exporting appears to offer, particularly for firms who are experiencing slower growth rates in their traditional home markets due to the current economic environment. But normal business rules apply and an effective due diligence may show that, in the end, export business may be harder and less profitable than the equivalent generated in this country.
11/04/2013 |www.internationaltrade.co.uk|

China set to boost international trade

By LAN LAN

China's trade policies will become more open to boost its sluggish imports and exports this year, despite being set to miss its trade target for 2012, according to a senior official at a top government think tank.

China is losing some advantages, such as low labor costs, but future reforms will intensify its competitiveness, Wei Jianguo, secretary-general of the China Center for International Economic Exchanges, told China Daily.

"It's expected that overall reform, ranging from the tax and fiscal system to the function of the government, will be accelerated in this year," said Wei, the former deputy commerce minister.

This reform will be a "big bonus" to sustaining China's growth in all aspects, he said.



At the 18th National Congress of the Communist Party of China in November, there were indications that China will further promote its trade in a diversified way, said Wei, a guest economist for China Daily.

First, it should further cut import duties on more consumer goods, he said.

The Ministry of Finance has announced that from January 2013, more than 780 products, including milk powder for infants, robots for vehicle production and some rubber products, will enjoy lower import duties.

But Wei said such efforts lack variety, scale and scope.

"As a responsible country, China needs to increase its imports, which is important in building healthy bilateral trade and reducing trade friction," Wei said.

In the first 11 months of 2012, China's exports grew 7.3 percent from a year earlier, while imports grew 4.1 percent, according to the Ministry of Commerce.

The government had set a target of 10 percent growth for exports and imports last year, but it seems the goal will be missed, according to officials.

Increasing imports are helping China raise consumption.

Wei said he believes China will adopt a more proactive attitude in multilateral and bilateral trade negotiations.

"It has become a trend that countries are trying to abandon the multilateral framework and step up efforts in strengthening bilateral mechanisms," he said.

A free-trade agreement between the United States and South Korea took effect in 2012, with agreement on eliminating 95 percent of each nation's tariffs on goods within five years.

The European Union has completed final negotiations on a free-trade agreement with Singapore.

Under such circumstances, as a key Asian trading partner, China also needs to step up negotiations, and could consider establishing a free-trade agreement with the US, Wei said. The US replaced the EU as China's biggest trading partner in 2012.

More credit financing support will be given to enterprises, but unlike in the past, when such financing was frequently used to develop affiliated businesses such as real estate, more supervisory measures will be put in place, Wei said.

Enterprises will also see significant reductions in costs for logistics, customs, transportation and quarantine.

Dampened by weak demand in major markets, some of China's export-reliant companies have improved their innovative capability and exploration in new markets. However, the external environment remains pessimistic for China's imports and exports.

2013-01-04 |China Daily|

Emerging markets growth gains momentum in January

The HSBC Emerging Markets Index (EMI), a monthly indicator, rose from 53.0 in December to 53.9 in January. That was the highest figure since February 2012, and only slightly lower than the seven-year long-run average of 54.2.

Data broken down by broad sector showed that growth was broad-based across service providers and manufacturers, as the latter posted a third successive month of expansion and the fastest pace of growth since May 2011. Meanwhile the service sector registered the strongest growth in four months.

New business growth in emerging markets accelerated to a 22-month high in January. Manufacturing new orders rose at the fastest rate since April 2011, and across a broad base of economies. Only Egypt, South Korea, the Czech Republic and Poland posted declines in January.

Cost pressures in emerging markets were at their strongest in three months in January. The rate of input price inflation at service providers eased slightly, while manufacturing input cost inflation hit a 15-month high.

Employment growth was maintained in January, continuing the trend shown since August 2009. Manufacturers raised headcounts for the second month running, the first back-to-back increase in 17 months.

“After a difficult 2012, economic conditions in the emerging markets are continuing the improvement which began last August. Both manufacturing and service readings suggest economic activity is not just being supported by resilient domestic conditions, but also now by a pick up in new export orders. Export order PMIs were above the critical 50 level in 11 of the 16 economies surveyed, a level not seen since last April," Pablo Goldberg, Global Head of Emerging Markets Research, said.

“While the strongest readings continue to come from the services sector, which has proved to be quite resilient to a more challenging external backdrop, the good news is the pick up in manufacturing activity. Furthermore, the recovery in the manufacturing sector appears to have legs, as business expectations for a year out are also at their highest level for nine months. Central to this is the turnaround in the outlook for China, which is slowly pulling the rest of Asia with it. Countries closer to the ailing eurozone are still struggling, however.

“The recovery is not without risks. January PMIs show a pick-up in input prices across the board, which need to be carefully monitored, given the recent rally in oil prices. Yet this pressure does not appear to be being passed onto the consumer. Output prices remain contained which should allow emerging market central banks to retain a loose stance for now."

By: Daniel Hunter 06/02/2013 |internationaltrade.co.uk|