Just over a month into 2017, the year is shaping up to be a tumultuous one for businesses engaged in international trade. There are talks of a U.S.-led trade war sparked by President Donald Trump’s efforts to build a wall across the U.S.-Mexico border and institute a tariff on Mexican imports into the United States. Across the pond, the U.K. is still trying to figure out how it will fit into the global market following the Brexit vote. The Trans-Pacific Partnership is officially dead.
So what should you do as you make plans for your business for the rest of 2017? If you are looking for new ways to grow your business, forge better trade routes, find new suppliers or locate new international markets for your products, consider doing business with smaller countries.
If you tend to look toward more traditional trade partners, you might be surprised at the benefits of trading in comparatively small or emerging economies.
Some reasons to do business in small markets include:
1. Fewer trade restrictions
Smaller markets tend to have fewer trade restrictions, according to researchers, and companies who do business there can find lower fees and less paperwork. The lower level of restrictions is aided by the governments of many small countries: seeing the value of international investment, officials are working to lower trade barriers and attract business.
2. Free trade agreements
Similarly, you might be surprised how many emerging economies have signed free trade agreements with larger countries. Canada has long sought out free trade agreements in smaller markets, and economists have speculated that small markets will become increasingly important to U.K. businesses as the government works on post-Brexit trade deals.
3. More direct trade routes
Those who move goods internationally know that supply lines are very rarely straight. Small markets might be able to help. If your trade routes are currently jagged and inefficient, you might be able to find more convenient or direct routes by sourcing or manufacturing your goods in smaller countries.
4. Surprising goods
If you are looking to import goods that aren’t currently available in your market, exploring smaller countries might help you find the unique good you’re looking for. Representatives of Britain’s Gaucho restaurant chain like to share the story of finding their wine supplier in an unexpected market — Chile — after visiting the country on a trip organized by a local chamber of commerce.
5. A growing workforce
Overwhelmingly, emerging markets have younger populations, with the largest demographics falling in the 20s and younger crowd. That means that if you invest in an emerging economy, you will find an up-and-coming workforce to support your business.
6. A growing consumer base
Similarly, with populations growing into adulthood and entering the workforce, emerging economies also make for growing markets if you are looking for a place to export your goods. Many emerging economies are importing more, rather than relying on an export market, and are encouraging domestic consumption.
If you are ready to shake up your global supply chain, find a new source of goods or a new market in which to sell your goods, now is the time to look at small markets.
A great place to start is by researching which emerging markets have trade agreements or strong trade ties with your business’s country of origin. And, as you would with any new market, do your research to examine the demographics, economy, culture and stability of small countries that might be a good fit for your business.