International Trade Blog

I have always been somewhat skeptical towards advertising. Does it really work and if yes how effective it is? I have never been fully convinced that consumers buy goods due to advertisements and that investing money into advertising is foolish and ineffective. A waste of money so to say!

Let’s face it most consumers only buy what they really need and only a small percentage buy just for fun. This of course depends of the wealth of an individual. If the product is good then the quality will speak for itself and the need for advertising is only required in the initial phase when a new product enters a market. When the product has established itself in the market and aggressive advertising campaign can do more harm than good. People get bored or even offended with too aggressive advertising campaigns and may not buy the product in spite. At least that is how I react to overaggressive advertisements. If a product has established a solid consumer base in a market more advertising will not drastically expand the consumer base. Granted it may grow, but the growth might be quite slow and will not cover the extra costs of advertising. Generally more important than advertising is reputation. If a product acquires a positive reputation it is probable that it will establish itself as the market leader because most consumers still mostly rely on mouth to mouth propaganda. The most excellent advertising campaign cannot rival with an excellent reputation. While it may experience temporary success in the ling term the consumers will return to the product with the best reputation.

Of course the role of advertising is important in international trade, but it is somewhat over hyped in my opinion. A good advertising campaign will not save a bad product no matter how much money you spend. None the less advertising can be used as a tool to establish the needed reputation of a product.

After four quarters of steadily decrease in economic activity, the second quarter of this year offers good signs for the overall economy of Japan. Does this mean that Japan has conquered the global economic crisis? Not yet, but they have embarked on the right way to do so.

As most national banks the Bank of Japan has been pumping huge amounts of money into the national economy to stabilize and improve the situation. Now they have decided is the right time to stop all these actions because they could hinder the natural recovery of Japan. So now the banks main objective is to strengthen the national currency. The yen has already improved its value against the US dollar. While this could hurt the export sector as one of Japans main markets is the USA, in the long term it is believed that it will benefit the whole country. Seems quite a risky step as export levels are already down and Japan is very dependent on the economic situation of USA. Although the technological and quality levels of Japan’s goods are up to date they should be vary of one fact. What if USA switches its full attention to China? Granted the quality levels cannot be compared to Japan, but the costs and quantity can be very attractive for US importers. None the less these are finally some good news for Japan. If the global situation keeps improving then Japan surely will overcome the global crisis and reach total recovery.

Of course this will not happen overnight, but these are the first good signs. I really do hope that Japan succeeds in their recovery plans as I believe that Japan is a vital part of overall global recovery. The faster this happen the better for us all.

Trade is as old as world because since the beginning of time people have traded one thing for another. While in Middle and Renaissance ages international trade was considered as trade of natural resources, latter people understood that it is quite wise and profitable to improve a resource or item to increase its value and thus make more money by selling it.

Of course simple trade of natural resources can be very profitable as there are no added costs, just the cost of producing it, but it is only profitable for large countries or corporations with access to an abundance of natural resources. For smaller countries and companies it is actual more profitable to trade items with added value. A simple example – you can trade iron ore which is quite simple to produce and is fairly cheap or you can turn this iron ore into steel. That requires additional time and cost, but the added value significantly increases its value. For countries with few or no natural resources this is the only way to conduct a profitable and sensible trade. So they import fairly cheap raw materials and turn them into items with added value. Generally in long term the trade in value added items is considered more viable. It is also a more efficient usage of raw materials and rare natural resources. Currently many governments encourage their companies to produce and export more value added items. Some governments even offer special beneficial programs for manufacturers of high value added goods.

Well you might say that trade is trade no matter what you trade, but you must remember that sooner or latter we will have used up all natural resources. So a value added goods trade is a better option in the long term. It might be a bit harder to do than simple trade, but in long term the profits will be much higher. But after all what you do is up to you. This is just an opinion.

China is on its way to become a superpower in global market. Even the global economic crisis that is currently wreaking havoc in the rest of the world has not been able to crush the prospering economy of China.

China is gaining power continuously for the pas 20 years. While twenty or fifteen years ago we sneered at the quality of Chinese goods, today we gladly purchase a lot of Chinese items. Yes the quality of Chinese products was really bad a few decades ago. China had a lot of cheap labor which in theory should be a good base of great industrial capacity, but China lacked education and technology. So the government of China, a communist government might I add, opened up the country to foreign investors. A bold move if you ask me, considering the ideology. None the less it worked. Western and USA enterprises allocated their factories to China due to the cheap labor costs thus decreasing the manufacturing costs and the overall price of the produced items. That meant good news for the everyday consumer. They brought advanced technology to China and the people who worked at the factories became more skilled thus increasing the quality not only of Chinese products, but also the quality of life.

Now China exports a lot of stuff all over the world and it means a lot of money. People are not any more afraid to buy Chinese goods as the have acknowledged the increased quality. I myself have purchased some Chinese goods and at least until now I have not been disappointed. If China stays on it course I believe it can achieve global market dominance. Where else can you find a rather cheap labor force numbering in more than a billion?

The export levels of India have decreased quite drastically and now the government has decided that it is the time to perform some countermeasures. A wise choice if you ask me. They have to decide to implement some taxes brakes and waive some import duties. That surely could boost some trade levels.

The main trading partners of India have always been the USA and Western Europe. Although the global economic crisis has not had a crushing impact on India, it wreaks havoc on European and US economies. These economies on the other hand affect the economy of India, meaning that the global economic crisis has caught up with India. Now the government plans to promote trade with Eastern Europe, Australia, Latin America and Africa thus increasing trade levels. If this plan succeeds that should lift the export levels and the whole economy of India.

Actually no matter the outcome the fact that the government is really taking some measures is superb. Lowering the taxes seems like the perfect tool to battle the global economic crisis, though some governments think that it is the time to increase various taxes to increase the overall income of the country. While increasing taxes may seem like a good idea in theory, in real life it has the opposite effect. It actually decreases the income as people have less money to spend and enterprises crumble under the heavy taxes. This is a perfect breading ground for shadow economy, starting form evasion from taxes till salary in envelopes. Sometimes it really seems that the people that we have voted in our governments have absolutely no clue about how the economy actually works.

Let’s hope that India’s example will influence other countries to similar actions, but I would not actually hold my breath about it.

The main experts in USA have proclaimed that the recession of US economy may have come to a halt and there are promising signs of recovery. This is not only good news for USA, but for everybody as US economy has a worldwide influence. Let’s hope that these predictions turn out to be true.

The Dow Jones index rose by 1 % and European markets also increased. US government officials said that it seems that the economy has recovered from the hardest blow, but they also warned that unemployment level will decrease only step by step. Still European officials remind that this recovery is very fragile. In fact US officials acknowledge this fact and do not promise a miraculous fast recovery. The general assumption is that the recovery will be a long and hard process and that at first the progress will be very slow. The International Monetary Fund (IMF) had earlier predicted that the economic growth of USA next year will be zero or even negative, but now they have changed the prognosis to 0.75 % growth.

The positive headlines of the different markets have had an impact on worldwide economy as most countries are starting to pull out of the economic crisis. The general fear of total financial collapse seems to have vanished or at least moved further back in our minds. I really hope that USA has defeated the global economic crisis as it only can mean good news. Let’s be real, the crisis will not stop in one certain day. It will be a long and demanding process, but we have to start somewhere. Stability and a certain financial safety is the key to overcoming the global economic crisis. An increasing consumer spending is the best news for every country in the world. Let’s hope that the good news of USA will convince their people to believe in a recovery.

To successfully conduct business we all need labor force. More precisely we need highly educated labor force. But is this actually true? Well it might not be.

The general conception is that the higher the education the higher the productivity and effectiveness. As a concept it applies perfectly, but in real life world economy would crumble if there were no more uneducated, cheap labor. Like it or not most economies is based on cheap uneducated labor and low salaries. Today it is almost a must to obtain higher education and it actually does not matter in what sphere. Apparently all you need is a paper that states that you have ‘’obtained’’ a higher education. Somehow we seem to have forgotten about professional education and mostly concentrate on academic education. While on one hand it may be a good thing as we increase overall knowledge level, but on the other hand now we have an overproduction of marketing and communication specialists. Do not misunderstand, I do not want a world of illiteracy, I just think we have to remember that there is a technical side of higher education.

Education is somewhat bad news for business people. The more educated the more demanding the people become, meaning that demand for higher salary will increase. Yes currently the labor force of Asia is the preferred labor market for western manufacturers, but as the overall education level of Asia is rising so will the salary requirements. Sooner or later the labor costs in Asia will reach the general level of other advanced countries. Where will the manufacturers turn their sights? Africa, Central America or maybe they will choose a more science fiction approach – AI and robots. I am not ready to predict that. We will just have to wait and see what the future holds.

B2B marketplaces provide excellent opportunity to conduct trade. These marketplaces make the trade process easier and more efficient. Today we will look at another B2B marketplace – www.easytrade.com.

As all major B2B marketplaces, easytrade.com main vision is to become the leading marketplace in the world. Their mission is to fulfill their client needs by providing excellent services.

Easytrade.com was founded in 2002 and in general this online platform was designed to provide assistance to small and medium enterprises. As most B2B marketplaces it is aimed at increasing trade between Western enterprises and Asian suppliers. Even the smallest enterprise can create a showroom via the online platform and sell their products in a worldwide market. Easytrade promotes their products and services in worldwide spectrum. Easytrade provides a series of valuable features and services like; a search engine, huge buyer database, a forum, trade show organization and much more.

Easyrade offers three types of membership; associate, standard and premier. Associate membership is for free so it is possible to give it a try without any additional costs. Of course the more advanced membership types provide more services and features. Easytrade organizes trade shows not only in Asia, but also in Europe and USA. So there are a lot of opportunities for product promotion.

Actually this B2B online platform looks quite good. Of course there are other B2B places and no one can actually tell which one is the best, but in my opinion each and every one provides additional help to conduct successful trade and become filthy rich. Give it a try! It won’t cost you anything, but maybe opens a new route to unseen profits.

Finally some good news arrived from the European frontlines against global economic crisis. The economies of both countries have shown signs of growth between the times April and June bringing an end to a recession that ruled for a year.

This was achieved thanks to a solid collaboration between the governments and population. Governments issued stimulus packages which stimulated exports and the population on the other hand increased spending habits therefore injecting the market with more money. Although some of these actions were carefully planed, the positive outcome was somewhat of surprise because no one actually expected results to be so quick. But this does not mean that Europe as a whole is safe because there is still a small decline of economic activity in Euro zone. None the less the UK market reaction to the success in Germany and France was quite positive as the FTSE 100 index rose. This only strengthens the belief that all economies are connected and that one positive change can influence the whole system.

Increased export and decreased import had a positive effect on the GDP of Germany and this provided the hope that the worst times are behind. But some analysts believe that there still are problems with the banking system in Europe and that this positive effect is dependant on government spending and eventually will come to a hold. So the question remains how strong this recovery actually is?

France also enjoyed positive changes in export levels and consumer spending. Especially the consumer spending is an encouraging factor as it is steadily holding up. This happened mainly thanks to government schemes and lowered prices. Still the experts warn that this economic recovery is very fragile.

No matter what, these are still very good news for everyone. This only shows that there is an end to this crisis and that international markets will sooner or later regain their health. This on the other hand will rejuvenate international trade and general welfare of people. Let’s hope that this happens as soon as possible.

Although Africa has virtually unlimited potential it is still a place of severe poverty, famine and in some cases a war zone. Humanity strives for total democracy and so should the countries of Africa. But this will not be an easy and quick undertaking.

US Secretary of State Hillary Clinton has just began her tour through Africa. Her main aim is to convince the local governments that democracy is a vital part of country development. She is completely right because as long as there will be no stability foreign investors will be afraid invest their money, develop industry and generate trade. Yeah sure foreign companies buy African natural resources, but that is no trade it is more like exploitation. With this visit the US shows that Africa is still a key element of their foreign policies. As the family of the president of USA Obama, is originally from Kenya, now it is even more important. Of course USA understands that the trade between USA and countries of Africa can be very profitable. If achieving democracy is one thing then maintaining it is another.

In general newly turned democracies are very prone to corruption which is a global problem. There is not much difference between a dictatorship and democracy if both governments exploit the country and its nation. Though I have nothing against corruption in small scale, which actually can sometimes be an effective tool, on large scale it prevents successful trade operations.

Will things change in Africa? They probably should, but it will not happen in months, probably not even years. We must realize that democracy is not a magic wand that changes all wrongs and cures every disease. Democracy is important, but it will reach its full potential only when the thinking of people in general will change. If Africa is ready to begin this journey then it is good news for international trade.